Rising tide of supplier challenges brings danger

LinkedIn +

Buyers beware, supplier challenges are on the increase. Research undertaken by Nottingham University into the number of supplier challenges brought under the EU procurement regime in the UK points to a recent sharp rise in the number of cases reaching the courts.

What’s more, in 37 per cent of those cases at least one claim was supported by the courts. Begging the question: How many more cases were settled out of court?

Dealing with supplier challenges is a costly headache for purchasing professionals, taking months to resolve and in many cases, costing hundreds of thousands of pounds in compensation or settlement out of court.

Then there are the delays to contracts and costs of disruption to projects.

Findings from the study, which used information available through the online resource for EU procurement legislation, THEMIS, indicate that the reforms to the remedies system introduced in December 2009 have had a dramatic effect, with a significant jump in the number of challenges in 2010 when 18 challenges were reported.

The trend continues in 2011, with 10 challenges occurring in the first six months of the year – up to the end of the period covered by the study.

It seems apparent that the new rules have made it easier for suppliers to challenge. More information must be provided to suppliers losing a procurement competition and suppliers can now halt the award of a contract through an ‘automatic suspension’ mechanism if court action has been started.

Considering the current squeeze on the public purse, suppliers are going to be more inclined to take their chances with the courts. So watch out buyers.

Clearly, those doing the procuring are going to have to ensure that their procedures and contracts are ‘water tight’ and in line with current legislative requirements.

However, the same cuts to public spending have left many procurement departments lacking the necessary ‘in-house’ experience. Information, guidance and expert knowledge is going to be increasingly important to procuring organisations if challenges are to be avoided. And we all know how expensive legal advice is.

Perhaps buyers should think along the same lines as the researchers and turn to the THEMIS online resource for EU procurement legislation.

Share this story: