Procurement Bill [HL] (HL Bill 4)

Procurement Bill [HL]Page 40

(b)if the parties agree, on the day on which the invoice is issued.

(5)Any term purporting to restrict or override the implied term is of no effect.

(6)An appropriate authority may by regulations amend this section for the
purpose of changing what it means for an invoice to be in the required
5electronic form.

(7)Before making regulations under subsection (6), an appropriate authority must
consult such persons as the authority considers appropriate.

63 Implied payment terms in public contracts

(1)The terms in subsections (2) to (5) are implied into every public contract
10entered into by a contracting authority, except a public contract that is—

(a)a concession contract,

(b)a utilities contract awarded by a private utility, or

(c)a contract awarded by a maintained school, an Academy or a sixth form
college corporation.

(2)15Any sum due to be paid under the public contract by the contracting authority
must be paid before the end of the period of 30 days beginning with—

(a)the day on which an invoice is received by the contracting authority in
respect of the sum, or

(b)if later, the day on which the payment falls due in accordance with the
20invoice.

(3)The term in subsection (2) does not apply if the contracting authority—

(a)considers the invoice invalid, or

(b)disputes the invoice.

(4)On receiving an invoice from a payee, the contracting authority must notify the
25payee without undue delay if—

(a)it considers the invoice invalid, or

(b)it disputes the invoice.

(5)A contracting authority may rely on a payment made by a third party to satisfy
the term in subsection (2) only with the agreement of the payee.

(6)30Any term purporting to restrict or override the terms implied by this section is
without effect.

(7)But nothing in this section prohibits the parties to a contract from agreeing that
a sum due under the contract must be paid earlier than would be required by
the term in subsection (2).

(8)35For the purposes of the terms in subsections (2) to (5), an invoice is valid if—

(a)it is an electronic invoice issued in the required electronic form, or

(b)it sets out the minimum required information and meets any other
requirement set out in the contract.

(9)The minimum required information is—

(a)40the name of the invoicing party,

(b)a description of the goods, services or works supplied,

(c)the sum requested, and

(d)a unique identification number.

Procurement Bill [HL]Page 41

(10)An appropriate authority may by regulations amend this section for the
purpose of changing the period within which a sum due under a contract must
be paid, but the period may not exceed 30 days.

(11)In this Act—

  • 5“Academy” means a person who is the proprietor, within the meaning of
    section 579(1) of the Education Act 1996, of an Academy within the
    meaning of that section;

  • “maintained school” means the governing body of a maintained school
    within the meaning of section 19(1) of the Education Act 2002;

  • 10“sixth form college corporation” has the meaning given in section 90(1) of
    the Further and Higher Education Act 1992.

(12)In this section “payee” means the person due to be paid under the invoice
concerned.

Notices about payments and performance

64 15Payments compliance notices

(1)Before the end of the period of 30 days beginning with the last day of a
reporting period, a contracting authority must publish a payments compliance
notice if during that period—

(a)the authority made a payment under a public contract;

(b)20a sum owed by the authority under a public contract became payable.

(2)A “payments compliance notice” means a notice setting out—

(a)specified information about the contracting authority’s compliance
with the term set out in section 63(2) (payment within 30 days), and

(b)any other specified information.

(3)25For the purposes of this section, a reporting period is—

(a)the period beginning with the day on which this section comes into
force and ending with the 31 March or 30 September following that day,
whichever is earlier, and

(b)each successive period of six months.

(4)30An appropriate authority may by regulations make provision about the
preparation of a payments compliance notice, including provision requiring
that the notice must be approved by a person of a description specified in the
regulations.

(5)In subsection (2), “specified information” means information specified in
35regulations under section 86.

(6)This section does not apply to private utilities.

65 Information about payments under public contracts

(1)A contracting authority must publish specified information about any
payment of more than £30,000 made by the authority under a public contract.

(2)40The information must be published before the end of the period of 30 days
beginning with the last day of the quarter in which the payment was made.

Procurement Bill [HL]Page 42

(3)An appropriate authority may by regulations amend this section for the
purpose of changing—

(a)the financial threshold;

(b)the time limit for publication.

(4)5This section does not apply in relation to a public contract that is—

(a)a utilities contract,

(b)a concession contract, or

(c)awarded by a maintained school, an Academy or a sixth form college
corporation.

(5)10In this section—

  • “quarter” means a period of three months ending with 31 March, 30 June,
    30 September or 31 December in any year;

  • “specified information” means information in regulations under section
    86.

66 15Assessment of contract performance

(1)Subsection (2) applies where a contracting authority has set key performance
indicators in accordance with section 50(1).

(2)At least once in every period of twelve months during the life-cycle of the
contract and on termination of the contract the contracting authority must —

(a)20assess performance against the key performance indicators, and

(b)publish information specified in regulations under section 86 in
relation to that assessment.

(3)Subsection (5) applies if—

(a)a supplier has breached a public contract, and

(b)25the breach results in—

(i)termination (or partial termination) of the contract,

(ii)the award of damages, or

(iii)a settlement agreement between the supplier and the
contracting authority.

(4)30Subsection (5) also applies if a contracting authority considers that a supplier—

(a)is not performing a public contract to the authority’s satisfaction,

(b)has been given proper opportunity to remedy the breach or improve
performance, and

(c)has failed to do so.

(5)35Before the end of the period of 30 days beginning with the day on which this
subsection first applies in relation to a particular breach or failure to perform,
the contracting authority concerned must publish the following information—

(a)that this subsection applies,

(b)the circumstances giving rise to its application, and

(c)40any other information specified in regulations under section 86.

(6)Subsection (5) does not apply in relation to a light touch contract.

(7)This section does not apply to private utilities.

Procurement Bill [HL]Page 43

Sub-contracting

67 Sub-contracting: directions

(1)This section applies in relation to a supplier if—

(a)a contracting authority, as a condition of awarding a public contract,
5required that the supplier sub-contract the supply of certain goods,
services or works to another supplier, or

(b)the supplier—

(i)indicated to a contracting authority that it intended to sub-
contract all or part of a public contract to another supplier, and

(ii)10relied on that other supplier to satisfy any conditions of
participation (see section 21(7)).

(2)The contracting authority may direct that the supplier enter into a legally
binding arrangement with the other supplier for the purpose of that supplier
performing all or part of the contract (as required or indicated).

(3)15If a supplier fails to enter into a legally binding arrangement as directed by the
contracting authority, the contracting authority may—

(a)choose not to enter into the contract with the supplier,

(b)where subsection (1)(b) applies, direct the supplier to enter into a
legally binding arrangement with another appropriate supplier, or

(c)20if the contract has already been entered into, terminate the contract.

(4)In subsection (3), an “appropriate supplier” means a supplier that—

(a)is not an excluded supplier, and

(b)could have been relied on in place of the supplier referred to in
subsection (1)(b)(ii).

(5)25In subsection(1)(a), the reference to a condition of award includes, in the case
of a direct award, any condition attaching to the award of a contract.

(6)For the purposes of subsection (1), a supplier is not to be treated as having
relied on another supplier to satisfy conditions of participation if the
conditions were satisfied by the first supplier alone.

68 30Implied payment terms in sub-contracts

(1)The terms in subsections (2) to (5) of section 63 (implied payment terms in
public contracts) are implied into every public sub-contract.

(2)But for the purposes of subsection (1)

(a)references in those terms to the contracting authority are to be read as
35references to the person to whom goods, services or works are supplied
under the public sub-contract, and

(b)subsection (8)(a) of section 63 does not apply.

(3)Any term purporting to restrict or override the terms implied by this section is
without effect.

(4)40But nothing in this section prohibits the parties to a public sub-contract from
agreeing that a sum due under the contract must be paid earlier than would be
required by the term in section 63(2).

Procurement Bill [HL]Page 44

(5)In this section, “public sub-contract” means a contract substantially for the
purpose of performing (or contributing to the performance of) the whole or
any part of a public contract.

(6)This section does not apply in relation to a public sub-contract that is for the
5purpose of performing (or contributing to the performance of) the whole or
any part of—

(a)a concession contract,

(b)a utilities contract awarded by a private utility, or

(c)a contract awarded by a maintained school, an Academy or a sixth form
10college corporation.

Modifying public contracts

69 Modifying a public contract

(1)A contracting authority may modify a public contract or a contract that, as a
result of the modification, will become a public contract (a “convertible
15contract”) if the modification—

(a)is a permitted modification under Schedule 8 (permitted
modifications),

(b)is not a substantial modification, or

(c)is a below-threshold modification.

(2)20A contracting authority may also modify a public contract or a convertible
contract if the contract is a light touch contract.

(3)A “substantial modification” is a modification which would—

(a)increase or decrease the term of the contract by more than 10 per cent
of the maximum term provided for on award,

(b)25change the overall nature of the contract or materially change its scope,
or

(c)materially change the economic balance of the contract in favour of the
supplier.

(4)A modification is a “below-threshold modification” if—

(a)30the modification would not itself increase or decrease the estimated
value of the contract by more than—

(i)in the case of a contract for goods or services, 10 per cent;

(ii)in the case of a contract for works, 15 per cent,

(b)the aggregated value of below-threshold modifications would be less
35than the threshold amount for the type of contract,

(c)the modification would not change the scope of the contract, and

(d)the modification is not within subsection (1)(a) or (b).

(5)For the purposes of subsection (4), the “aggregated value of below-threshold
modifications” is the amount of the estimated value of the contract after
40modification that is attributable to below-threshold modifications.

(6)Subsection (7) applies if, on modifying a public contract under this section, a
contracting authority considers that—

(a)the modification could reasonably have been made together with
another modification made to the contract under this section, and

Procurement Bill [HL]Page 45

(b)that single modification would not have been a modification within
subsection (1) (and, accordingly, would have been subject to Part 3).

(7)The modification is to be treated as not within subsection (1).

(8)Except as provided for in paragraph 9 of Schedule 8 (modification permitted
5on corporate restructuring), a contracting authority may not modify a public
contract so as to change the supplier.

(9)Part 3 does not apply in relation to the modification of a contract under this
section.

70 Contract change notices and publication of modifications

(1)10Before modifying a public contract or a convertible contract (see section 69(1)),
a contracting authority must publish a contract change notice.

(2)Subsection (1) does not apply if—

(a)the modification increases or decreases the estimated value of the
contract by—

(i)15in the case of a contract for goods or services, 10 per cent or less;

(ii)in the case of a contract for works, 15 per cent or less;

(b)the modification increases or decreases the term of the contract by 10
per cent or less of the maximum term provided for on award;

(c)the public contract or convertible contract is a light touch contract.

(3)20A “contract change notice” is a notice setting out—

(a)that the contracting authority intends to modify the contract;

(b)any other information specified in regulations under section 86.

(4)Subsection (5) applies if, on making a modification to a public contract that is
within subsection (2)(a) or (2)(b), a contracting authority considers that—

(a)25the modification could reasonably have been made together with
another modification made to the contract, and

(b)subsection (1) would have applied to that single modification.

(5)Subsection (1) is to be treated as applying to the modification.

(6)Before the end of the period of 90 days beginning with the day on which a
30contracting authority makes a qualifying modification under section 69(1), the
authority must publish a copy of the contract as modified.

(7)A “qualifying modification” is a modification which modifies, or results in, a
public contract with an estimated value of more than £2 million.

(8)Subsection (6) does not apply in relation to a modification of a contract that
35was—

(a)awarded by a devolved Welsh authority, unless it was awarded under
a reserved procurement arrangement or a transferred Northern Ireland
procurement arrangement, or

(b)awarded under a devolved Welsh procurement arrangement.

(9)40This section does not apply in relation to a modification of a contract that
was—

(a)awarded by a transferred Northern Ireland authority, unless it was
awarded under a reserved procurement arrangement or a devolved
Welsh procurement arrangement, or

Procurement Bill [HL]Page 46

(b)awarded under a transferred Northern Ireland procurement
arrangement.

(10)This section also does not apply to—

(a)defence and security contracts, or

(b)5private utilities.

(11)A Minister of the Crown may by regulations amend this section for the purpose
of changing—

(a)the value thresholds in subsection (2), or

(b)the financial threshold in subsection (7).

71 10Voluntary standstill period on the modification of contracts

A contracting authority may not modify a public contract or a convertible
contract before the end of any standstill period provided for in a contract
change notice in respect of the contract.

Terminating public contracts

72 15Implied right to terminate public contracts

(1)It is an implied term of every public contract that the contract can, if a
termination ground applies, be terminated by the contracting authority in
accordance with this section.

(2)Each of the following circumstances is a termination ground—

(a)20the contracting authority considers that the contract was awarded or
modified in material breach of this Act or regulations made under it;

(b)a supplier has, since the award of the contract, become an excluded
supplier or excludable supplier (including by reference to an associated
supplier);

(c)25a supplier (other than an associated supplier) to which the supplier is
sub-contracting the performance of all or part of the public contract is
an excluded or excludable supplier.

(3)The termination ground in (2)(c) is not available unless the contracting
authority—

(a)30requested information under section 28(1) (information about sub-
contractors) in relation to the award of the public contract, and

(b)before awarding the public contract, did not know that the supplier
intended to sub-contract the performance of all or part of the contract
to an excluded or excludable supplier.

(4)35Before terminating a contract by reference to the term implied by subsection
(1), a contracting authority must—

(a)notify the supplier of its intention to terminate,

(b)specify which termination ground applies and why the authority has
decided to terminate the contract,

(c)40give the supplier reasonable opportunity to make representations
about—

(i)whether a termination ground applies, and

(ii)the authority’s decision to terminate.

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(5)Before terminating a contract by reference to the fact that a supplier to which
the supplier is sub-contracting is an excluded or excludable supplier (whether
under subsection (2)(b) or (c)), a contracting authority must give the supplier
reasonable opportunity to—

(a)5cease sub-contracting to the excluded or excludable supplier, and

(b)if necessary, find an alternative supplier to which to sub-contract.

(6)A public contract may contain provision about restitution and other matters
ancillary to the termination of the contract by reference to the term implied by
subsection (1).

(7)10But any term purporting to restrict or override the implied term is without
effect.

(8)In subsection (2)(b), the reference to a supplier becoming an excludable
supplier includes a reference to—

(a)a supplier becoming an excludable supplier on the basis of a
15discretionary exclusion ground that—

(i)did not apply before award of the contract, or

(ii)applied before award of the contract by reference to different
circumstances, and

a contracting authority discovering that, before award of the contract,
20the supplier was an excludable supplier.

(9)In this section, “material breach” means a breach that the contracting authority
considers could reasonably result in a successful legal challenge under Part 8
or otherwise.

73 Contract termination notices

(1)25Before the end of the period of 30 days beginning with the day on which a
public contract is terminated, a contracting authority must publish a contract
termination notice.

(2)A “contract termination notice” is a notice setting out—

(a)that the contract has been terminated, and

(b)30any other information specified in regulations under section 86.

(3)In this section, a reference to termination includes a reference to—

(a)discharge,

(b)expiry,

(c)termination by a party,

(d)35rescission, or

(e)set aside by court order (whether or not under Part 9).

(4)This section does not apply to private utilities.

Part 5 Conflicts of interest

74 40Conflicts of interest: duty to identify

(1)A contracting authority must take all reasonable steps to identify, and keep
under review, in relation to a procurement any—

Procurement Bill [HL]Page 48

(a)conflicts of interest, or

(b)potential conflicts of interest.

(2)There is a conflict of interest in relation to a procurement if—

(a)a person acting for or on behalf of the contracting authority in relation
5to the procurement has a conflict of interest, or

(b)a Minister acting in relation to the procurement has a conflict of
interest.

(3)A person who influences a decision made by or on behalf of a contracting
authority in relation to a procurement is to be treated as acting in relation to the
10procurement.

(4)In this section—

  • “interest” includes a personal, professional or financial interest and may
    be direct or indirect;

  • “Minister” means—

    (a)

    15a Minister of the Crown;

    (b)

    a member of the Welsh Government;

    (c)

    the First Minister, deputy First Minister or a Northern Ireland
    Minister;

  • “member of the Welsh Government” means a person referred to in section
    2045 of the Government of Wales Act 2006.

75 Conflicts of interest: duty to mitigate

(1)A contracting authority must take all reasonable steps to ensure that a conflict
of interest does not put a supplier at an unfair advantage or disadvantage in
relation to a procurement.

(2)25Reasonable steps may include requiring a supplier to take reasonable steps.

(3)Subsection (4) applies if a contracting authority considers that—

(a)a conflict of interest puts a supplier at an unfair advantage in relation
to the award of a public contract, and

(b)either—

(i)30the advantage cannot be avoided, or

(ii)the supplier will not take steps that the contracting authority
considers are necessary in order to ensure it is not put at an
unfair advantage.

(4)The contracting authority must treat a supplier as an excluded supplier in
35relation to the award of the public contract.

(5)In this section, “conflict of interest” has the meaning given in section 74.

76 Conflicts assessments

(1)Before publishing a tender or transparency notice in relation to a procurement,
a contracting authority must prepare a conflicts assessment in relation to the
40procurement.

(2)Before publishing a dynamic market notice in relation to the establishment of
a dynamic market, a contracting authority must prepare a conflicts assessment
in relation to the establishment.

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(3)A conflicts assessment must include details of —

(a)conflicts or potential conflicts of interest identified in accordance with
section 74 (duty to identify), and

(b)any steps the contracting authority has taken or will take for the
5purposes of section 75 (duty to mitigate).

(4)If a contracting authority is aware of circumstances that might cause a
reasonable person to wrongly believe there to be a conflict or potential conflict
of interest, a conflicts assessment must also include details of any steps the
contracting authority has taken or will take to demonstrate that no such
10conflict or potential conflict exists.

(5)A contracting authority must—

(a)keep any conflicts assessment under review,

(b)revise the assessment as necessary, and

(c)when publishing any relevant notice, confirm that a conflicts
15assessment has been prepared and revised in accordance with this
section.

(6)Subsection (5) does not apply after—

(a)a contracting authority has given notice of its decision not to award the
contract (under section 53),

(b)20a contract termination notice is published in relation to the
procurement, or

(c)a dynamic market notice is published in relation to the market ceasing
to operate.

(7)In the case of a contracting authority that is a private utility—

(a)25the reference in this section to notice of a decision not to award a
contract is a reference to the decision;

(b)the reference in this section to a contract termination notice being
published in relation to a procurement is a reference to the contract
being terminated;

(c)30the reference in this section to a dynamic market notice being published
in relation to a market ceasing to operate is a reference to the market
ceasing to operate.

(8)In this section—

  • “conflict of interest” has the meaning given in section 74;

  • 35“relevant notice” means—

    (a)

    a tender notice,

    (b)

    a transparency notice,

    (c)

    a dynamic market notice in relation to the establishment of a
    dynamic market,

    (d)

    40a contract details notice relating to a public contract, or

    (e)

    a contract change notice;

  • “terminated” is to be understood by reference to section 73(3).