When the Procurement Act 2023 ("the Act") came into force, the conflicts of interest regime was one of the areas that attracted significant attention. In our earlier article, we explored the statutory framework under sections 81 to 83 of the Act. This article looks at what those provisions mean in practice, particularly in light of the Government Commercial Function's Guidance on Conflicts of Interest.
Where the Guidance adds value
The Guidance fills in the practical detail that the Act itself left open, particularly what the statutory requirement to take "all reasonable steps" (the standard used in both the duty to identify conflicts under section 81 and the duty to mitigate them under section 82) looks like in a real procurement. Three key themes stand out.
1. Thinking broadly about who may be affected
The Guidance gives examples of persons who may be relevant when considering conflicts, namely that of the senior responsible officer, the budget holder, the commercial director, management board members, commercial staff, evaluators, external experts, private sector secondees and consultants, non-executive board members, special advisers and Ministers.
For local authorities, this is an important reminder that conflict assessments should extend well beyond the procurement team. Councillors involved in decision-making, external consultants advising on the procurement strategy and secondees from the private sector may all need to be considered.
In practice, some of the most significant risks arise where external advisers have commercial links to potential suppliers, or where an individual involved in designing a procurement could provide a connected supplier with an unfair advantage.
2. Taking practical steps to identify conflicts
The Guidance suggests a number of measures that contracting authorities can use to identify conflicts, including requiring procurement-specific conflict declarations, reviewing existing declarations and registers of interests, and seeking confirmation from individuals involved in the procurement process.
For local authorities, standing registers of interests remain an important starting point, but they should not be relied upon in isolation. Procurement-specific declarations should be obtained from everyone involved in, or capable of influencing, the procurement and should be refreshed whenever personnel change or new individuals become involved.
3. Mitigation in practice
The Guidance sets out a range of mitigation measures, including reassigning conflicted individuals, using multiple evaluators with documented moderation, appointing independent observers and ensuring procurement information is shared with all suppliers at the same time.
Significantly, the Guidance also identifies cancelling and re-running a procurement as a potential mitigation measure where a conflict cannot be adequately addressed. This underlines the importance the new regime places on protecting the integrity of the procurement process.
The emphasis on information barriers and independent assessment is particularly relevant where a consultant involved in designing a procurement has links to a potential bidder.
Keeping the assessment under review
The Guidance makes clear that a conflict assessment should not be treated as a one-off exercise. It should be a living document that is reviewed and updated throughout the procurement lifecycle.
This is particularly important where there are changes in personnel or responsibility for the contract. For example, responsibility may move from the procurement team to contract management or operational teams following contract award.
In local government, where staffing changes and organisational restructures are common, it is easy for conflict assessments to become outdated. Building regular reviews into existing governance processes, such as gateway reviews and contract management meetings, can help ensure compliance with the Act.
The importance of perceived conflicts
The Guidance also recognises that perception matters. Contracting authorities should consider not only whether an actual conflict exists, but also how the circumstances may appear to suppliers, stakeholders and the public.
For local authorities, procurement decisions often attract significant public and political scrutiny. Addressing perceived conflicts at an early stage and recording the rationale for decisions can help protect both the integrity of the procurement process and the authority's reputation. Such measures also mitigate the risk of a procurement being challenged on grounds of a conflict of interest being present, and will assist in defending such proceedings should they arise.
What should local authorities be doing now?
- Embed conflict assessments into procurement governance arrangements, ensuring they are reviewed at key stages from initial planning through to contract management.
- Undertake appropriate due diligence on external advisers, consultants, secondees and subject matter experts to identify any commercial connections with potential bidders.
- Use proportionate mitigation measures, such as information barriers, independent oversight and moderated evaluation processes, where conflicts can be managed.
- Keep conflict assessments under regular review and update them whenever circumstances change, including where responsibility for a contract transfers to a different team.
Looking ahead
The Guidance has removed much of the uncertainty around what effective conflict management looks like under the Act. Contracting authorities that treat conflicts of interest as an integral part of good procurement practice, rather than a mere compliance exercise, will be best placed to demonstrate transparency, fairness and integrity throughout the procurement process.
For more information on conflicts of interest under the Procurement Act 2023, please contact Rebecca Rees (rrees@trowers.com) or Louis Sebastian (lsebastian@trowers.com).
