Public Sector: Banning failed suppliers

 As a result of the Fujitsu/Horizon/Post Office scandal coming to wider public attention there have been a lot of questions about why the government has not banned them from future contracts.  Some people have alleged all sorts of reasons included stating that it was not possible to ban them.

The reality is a bit more complex.  Firstly, the contract would have been awarded under the regulations in place in 1999, and to be honest I am not sure what they would allow in terms of banning suppliers.

Secondly, until now despite the clear and obvious problems that have been known for 25 years, at no point has the contract with Fujitsu  been terminated, nor as far as I am aware have damages been sought.  The principle up until now has been that the IT system was perfect, and the post masters were the ones in the wrong - a principle that was wrong from the start.  (David Allen Green has a good blog discussion of this).  So, as far as the government was concerned there was no grounds for banning Fujitsu because they had done nothing wrong (I know - not the reality).

Next, it is very likely that time had run out on both warrantees and the rights to claim damages for non-performance (and remember, until now as far as the Post Office and government were concerned there was no non-performance to challenge - they blamed the Post Masters).

So, what other avenues are there.  Well in the Public Contract Regulations 2015 there are provisions for Discretionary Exclusions of companies who fail significantly in a material element of a relevant contract - fuller details are in these PPNs here and here.

The relevant text is :"In particular, an economic operator (i.e. company) may be excluded if it has shown significant or persistent deficiencies in the performance of a substantive requirement under a prior public contract, a prior contract with a contracting entity or a prior concession contract which led to early termination of that prior contract, damages or other comparable sanctions."

But remember again, until now the contract was NOT seen to have significant of persistent deficiencies.  Difficult to believe when Computer Weekly first raised it in 2009 (and have stuck at the story to their credit).

But IF the contract were terminated and/or damages sought then Fujitsu COULD be barred from bidding for futures similar contracts at the Selection Questionnaire stage.

The new Procurement Act 2023, which starts in October 2024 looks to give the government more powers (which of course they have to choose to utilise).  Under the PA2023 the government not only has similar powers to exclude failing suppliers from the bidding process, but also the ability to debar suppliers for a period of 5 years if so authorised by a Minister of the Crown (and after representations from the supplier).  Lots of legal discussion of this - here is one.

Sounds like a step in the right direction to me, though there is some concern this is a lack of clarity , and it will be a brave Minister who is the first to invoke it. 

(Incidentally there is a growing trend for government communications about such matters to be written as party political publicity, which is both annoying and worrying.  It is the same path previously reputable newspapers went down when they became unable to separate truth and opinion. It damages our democracy).

Anyway, the key point is that Fujitsu were not made liable for their failings and consequently it is rather difficult to see how they can be punished.  They could voluntarily step away from UK government contracts for a while (though a recent conversation with a delegate suggests they are not doing so) as one consultancy did after they upset Prime Minister Theresa May through a leak.  I am decidedly against that - it is corruption to step away from contracts to curry favour with politicians.  Much better for us to properly manage our contracts, be brave enough to admit when they are not working, and use the powers the regulations are (belatedly) granting.