Procurement Act 2023: Debarment Regime 

The Procurement Act 2023 creates a new public procurement rulebook in England, Wales and Northern Ireland. The Act is expected to enter into force on 24 February 2025 (see our September 2024 update). In this update, we consider the key features of the new debarment regime. 

Key takeaways

• Suppliers' names can be added to a centrally maintained debarment list for a period of up to five years, which will be published.
• If a supplier is included on the debarment list for a mandatory exclusion ground, contracting authorities must not allow the supplier to bid for or to be awarded public contracts.
• Where the supplier is included on the debarment list for a discretionary exclusion ground, the supplier may be permitted to bid for, and be awarded, a public contract only if the contracting authority has good reasons for doing so.

Background

Public procurement law is due to undergo one of its biggest reforms in many years in February 2025, when the Procurement Act 2023 enters into force. The Act consolidates and replaces the current patchwork of EU-derived legislation.

The Act maintains many of the key features of the current regime including rules, which enable contracting authorities to exclude suppliers from participating in procurements where they pose particular risks to public procurement. As is the case under the current regime, the Act defines both mandatory and discretionary exclusion grounds. Many of the exclusion grounds listed in the Act are aligned closely with those contemplated under the current regime. The Act does, however, introduce some new exclusion grounds. 

The most significant area of reform to the exclusions regime is the introduction of a new debarment mechanism.

What is the debarment mechanism?

The Procurement Act 2023 establishes a new debarment list which will be published by the Cabinet Office. A Minister of the Crown can put a supplier on the centrally-published debarment list if the Minister is satisfied that a supplier is an "excluded" or an "excludable" supplier.  

A supplier is an "excluded supplier" if a mandatory exclusion ground applies and the circumstances giving rise to the exclusion ground are continuing or likely to reoccur.  A supplier is an "excludable supplier" where a discretionary exclusion ground applies and the circumstances giving rise to the exclusion ground are continuing or likely to reoccur.

When a supplier is on the debarment list in relation to a mandatory exclusion ground, a contracting authority must not allow the supplier to participate in a competitive flexible procedure or to be awarded a public contract in any competitive tendering procedure or by way of direct award and must disregard any tender submitted by them. There are some limited exceptions to this rule.

Where a supplier is on the debarment list as a result of a discretionary ground, it is still possible for a contracting authority to permit the supplier to bid for and be awarded a public contract. However, the statutory guidance urges contracting authorities to exercise caution and recommends that they should only proceed with an excludable supplier if they have good reasons for doing so. 

Contracting authorities are encouraged to check the debarment list before allowing any supplier to participate in a procurement and before deciding to award a public contract.

Debarment investigations and decisions

A supplier will not be added to the debarment list automatically after a contracting authority has decided in a particular procurement that a supplier is an excluded or excludable supplier. Contracting authorities must notify a Minister of the Crown, the Welsh Ministers or a Northern Ireland department if they exclude a supplier and if the supplier challenges an exclusion decision.

The Minister of the Crown may consider suppliers for potential debarment based on either a referral from Welsh Ministers or Northern Ireland departments, or on their own investigation. Investigations will be led by either the Procurement Review Unit (PRU) or the National Security Unit for Procurement, depending on the exclusion ground in question. The PRU may also use notification of supplier exclusion to initiate a debarment investigation.

The supplier must be notified if an investigation is opened and the supplier must be given an opportunity to make representations. Suppliers may be requested to provide information or assistance during the investigation. Although suppliers do not have a legal duty to comply with requests for information or other assistance, failure to do so could result in debarment by virtue of the mandatory exclusion ground for failure to cooperate with an investigation.

Contracting authorities may be required to provide information and assistance during an investigation of a supplier for potential debarment. Unlike suppliers, contracting authorities are under a legal duty to comply with such requests, unless they are otherwise prevented from doing so by other legal duties (such as restrictions on information sharing).

Before making a debarment decision, a Minister of the Crown must conclude whether an exclusion ground applies and whether the circumstances that gave rise to the exclusion ground are continuing or are likely to reoccur. Where a Minister determines that both of these tests are met, he/she is able to make a debarment decision.  However, the Minister may decide not to put a supplier's name on the debarment list for a variety of reasons, including where there is an overriding public interest in allowing the supplier to continue to bid for public contracts.

The supplier will be provided with a copy of the investigation report. A Minister is also under a duty to notify a supplier before entering its name on the debarment list.  Reports of investigations must be published, unless the Minister considers it necessary to redact, withhold publication or limit the disclosure of the report to safeguard national security or to prevent publication of commercially sensitive information where there is an overriding public interest in it being withheld from publication.

The Minister is under an obligation to keep the debarment list under review and must remove a supplier's name from the list if they are satisfied that there are no longer an excluded or excludable supplier. This will be the case where, for example, the exclusion ground no longer applies to the supplier due to expiry of the relevant time period or where the supplier has provided sufficient self-cleaning evidence. 

Duration 

A supplier will usually remain on the debarment list for up to five years. The starting point for this time period depends on whether a supplier is excluded on the basis of a mandatory or a discretionary exclusion ground: 

• for mandatory exclusion grounds, it starts from when the relevant event occurred; and
• for discretionary exclusion grounds, it starts from when the Minister knew, or when a reasonably well informed decision maker would have been aware, of the event.

Suppliers can also apply for removal or revision of their entry on the debarment list where there has been a material change of circumstances. 

Appeals 

Suppliers have the right to appeal debarment decisions. After a supplier is notified of the decision to add them to the debarment list, they will have eight working days (known as the debarment standstill period) to apply to the court for temporary suspension of the decision. If the appeal is submitted during the debarment standstill period, the supplier will not be added to the debarment list until the appeal has been concluded or discontinued. 

Appeals can only be made on the basis of a material mistake of law. An appeal must be commenced within thirty days from knowing, or from when the supplier should have known, of the minister's decision.

Comment

The debarment regime is part of a package of measures introduced in the Act intended to mitigate risks associated with poor performance of public contracts, and to ensure public confidence in the honesty, integrity of suppliers involved in the delivery of public contracts. The Government therefore expects the introduction of the debarment mechanism to incentivise suppliers to achieve excellent corporate compliance and standards of behaviour.

It remains unclear how much significance the debarment regime will have. In most cases, it should not to be necessary to add suppliers to the debarment list: the threat of being added to the debarment list ought to provide most suppliers with a sufficient incentive to take the necessary self-cleaning steps to demonstrate that the relevant circumstances will not reoccur. We therefore expect the debarment regime to be used in exceptional cases, for example, to deal with recidivists.

Clearly, decisions relating to debarment can have far-reaching consequences for suppliers. Where a supplier is added to the debarment list, we anticipate that there would be a reasonable prospect of an appeal being brought. However, any supplier wishing to overturn a debarment decision will need to overcome a high bar.