Procurement in the UK is multi-billion pound industry. Public sector bodies invest considerable time and resources in running lengthy procurements to facilitate the outsourcing of major contracts to private or third sector organisations.
In the previous financial year (2024/25) gross spending on public sector procurement amounted to £434 billion across the UK, accounting for roughly one third of public sector spending. Published budgets and current forecasts suggest procurement spending will increase by around 13% in 2025/26.
These contracts, which are funded by the public purse, are often high in value and, in many cases, politically charged. Would-be suppliers have bid teams whose entire job is winning public sector contracts and need to justify why they didn't win. This means that procurement processes can be subject to intense scrutiny by bidders and the wider public alike.
Somewhat inevitably, procurement exercises do not always run seamlessly, and can be derailed by a range of unforeseen factors, both before and after an award is made. When things go wrong, the contracting authority is faced with the question of how to resolve the issue: press on, rewind or start again?
As the number of challenges to procurement processes continues to rise, this article considers the circumstances in which a contracting authority might contemplate abandoning a procurement process both before and after an award to a bidder, including crucially whether and when it is appropriate to abandon in the face of a legal challenge.
Under both the Public Contracts Regulations 2015 (PCR) and Procurement Act 2023, authorities do not have an absolute, explicit right to abandon a procurement. However, both pieces of legislation imply a power to abandon, through provisions that require an authority to notify bidders of any decision to not proceed with an award (Regulation 55 of the PRC and Section 55 of the Procurement Act). Courts have generally upheld a contracting authority’s decision to abandon, although it must be noted that the legitimacy of these decisions are always circumstance specific. In other words, a contracting authority does not have an unfettered ability to abandon, and must exercise its discretion in accordance with sound reasoning.
Above all, any decision to abandon a procurement must align with general principles of transparency, equal treatment, and proportionality (regulation 18(1) of the PCR and Section 12 of the Procurement Act).
A decision to abandon a procurement process should not be taken lightly by a contracting authority, and should always be measured against other, less drastic, alternatives. The risks of getting it wrong – i.e. abandoning a procurement when another course of action would have been more appropriate – can carry significant practical and financial risk. From a purely practical perspective, the longer a procurement process runs, the riskier and more expensive it is for a contracting authority to abandon. The contracting authority should consider whether it is more sensible to rewind an element of the procurement. For example, if there are obvious errors in the evaluation, it may be possible to correct them or to re-run the entire evaluation. If one question was ambiguous, it may be appropriate to invite all bidders to re-submit a response based on a revised question that properly reflects what the contracting authority was seeking in the first place.
The right answer will depend on a wide range of considerations. Changes to process are never risk-free; but abandoning a procurement does not necessarily escape risk either – even if many authorities instinctively feel this is the least risky option. The contracting authority will need to consider to what extent rewinding the procurement would cause prejudice to any of the bidders, (particularly if assessment summaries have been issued) or whether the changes being made to the process and added clarity could have affected third parties’ decision whether or not to bid.
That said, there can be situations where abandoning a procurement is, in fact, the least damaging solution and therefore may be validly pursued. Whilst not an exhaustive list, the below circumstances may give rise to a valid decision to abandon a procurement:
1. Errors or ambiguities in the procurement documentation are identified that mean bids were not prepared on the same basis. A classic example is where the reasonably well informed and normally diligent bidder could legitimately interpret the contracting authority’s requirements or evaluation criteria in different ways, meaning that bids are not prepared and cannot be evaluated on a like for like basis.
Examples might be ambiguities in the scope wording such that bidders apply different interpretations to the contracting authority’s requirement as seen in the Federal Security Services Ltd v Northern Ireland Court Service case, or perhaps a glitch in the scoring system which exposes the procurement process to ‘gaming’ by bidders. In one example, the London Borough of Hammersmith and Fulham abandoned a £75 million contract for fire safety and remedial works, on the basis that unclear pricing tables meant that bidders could not be assessed on a level playing field.
2. Continuation of the procurement becomes uneconomical. Public procurements often rely on ring-fenced or grant funding – where this is no longer available or a contracting authority cannot afford to deliver the scope of the contract, abandonment may be a lawful decision. Similarly, it may be that bids were far more expensive than the contracting authority had expected.
3. No suitable or compliant bids are received. In such circumstances a contracting authority may simply want to start again to ensure that future tenderers are able to meet the contracting authority’s requirements. Perhaps the specification was too complex or prescriptive, or the procedure needed to allow for negotiation or dialogue so that both the contracting authority and bidders could refine their approach.
4. A contracting authority’s strategic priorities or service requirements evolve to the extent that the scope of the procurement becomes redundant. In some cases, courts have taken a line generous to the contracting authority which has abandoned the procurement.
In the recent case of Ryhurst v Whittington Health NHS Trust, the court upheld the Trust’s decision not to award the contract to its preferred bidder, a specialist provider of healthcare facilities, on the basis that in the two years since the start of the procurement process, its improved financial position had changed, it had strengthened ties with other partner organisations, and there was a lack of public support for the appointment of the first ranked bidder Ryhurst due to its connections with the Grenfell Tower disaster. The court considered that the Trust had exercised rational judgement and had not breached principles of transparency, equal treatment, and proportionality. Notwithstanding this favourable precedent, many authorities will wish to exercise caution when terminating a procurement late in the process due to “lack of public support” for a particular bidder. The Grenfell Tower context will have been particularly poignant; indeed we anticipate that some of the first suppliers to be added to the new debarment list are likely to be those involved with Grenfell Tower.
In many cases, a contracting authority only becomes aware of issues with the procurement during standstill, when they are raised by an unsuccessful bidder.
At that stage, the contracting authority will consider a range of options to resolve the complaint and one option often considered is abandonment. Whilst such a strategy may be appropriate in certain circumstances, it should not be the default option, or considered in isolation.
Amey v West Sussex is a case that challenged the received wisdom for many that if all else failed, authorities could just abandon their procurement and start again without much risk.
The case provides helpful guidance on when a contracting authority might consider abandoning a tender in the face of a legal challenge and the risks it faces.
By way of context, West Sussex awarded a highways contract, worth £28 million, to the winning bidder, Ringway, who had secured the tender by a tiny margin. Amey Highways (the bidder that had narrowly missed out) sued the council for damages. West Sussex secured consent to the lifting of the suspension and attempted to have Amey’s claim struck out, which ultimately was unsuccessful. West Sussex subsequently took stock and concluded that continuing the litigation with Amey was high risk and, as such, decided to abandon the procurement and re-tender. This led to a second claim by Amey, who argued that abandoning the procurement would not bring the litigation to an end, as they already had an accrued cause of action.
Ultimately, the court decided that the council had not acted manifestly erroneously in its decision to abandon. Rather, it was considered a rational exercise of its discretion when considered in the context of the need to maintain service continuity, and the financial hardship of entering into a contract with Ringway whilst embroiled in litigation with Amey.
Nevertheless, whilst the court found that Amey had not breached principles of equal treatment or transparency and was entitled to terminate the procurement, this did not extinguish any existing cause of action that Amey might have (e.g. arising from the initial decision to award to Ringway). If Amey could prove that it would have obtained the highest score but for West Sussex’s evaluation errors, then its claim for damages was likely to succeed.
The decision in Amey serves as a reminder to authorities that, whilst abandonment may well be an appropriate solution in the face of a legal challenge by an unsuccessful bidder, it is not without risk. If that bidder has an underlying cause of action that has already accrued (i.e. because a contracting authority has committed breach), the abandonment may not bring the claim to an end. This is particularly the case if the reason behind a contracting authority’s decision to abandon is because of the legal challenge.
Although in the Amey case, the claim had been brought before the contracting authority decided to abandon the procurement, in principle the same risk arises if there are errors in the evaluation and the contracting authority abandons before the claim is started – for example in response to a complaint during the standstill period.
Whilst abandonment is one option that a contracting authority might consider if challenged by an unsuccessful bidder, it is by no means the only course of action. A contracting authority should undertake a thorough review of their procurement process before determining how to proceed. If it is considered that the contracting authority has acted lawfully throughout the procurement process, it may decide to continue with the award; in doing so making an assumption that the claim will either fail or not be pursued further. Where issues have been identified at evaluation stage, a better approach might be to commit to a re-evaluation of the procurement, rather than abandon altogether. In some cases it may even be possible to rewind the process and ask bidders to re-submit parts of their bid in response to a more clearly expressed set of contracting authority requirements.
Ultimately, determining how to proceed when a procurement has been derailed, for whatever reason, is a process that will require careful analysis. Knee-jerk reactions should be avoided, and authorities may wish to consider taking external advice, potentially including detailed advice on merits, at an early stage to help navigate these issues.
Finally, under the Procurement Act 2023, authorities must as soon as reasonably practicable after making the decision, give notice of the abandonment.
As with all procurement decisions, the reasoning should be properly documented and normal governance should be followed. Bidders may well demand to see copies of the decision and any reports recommending abandonment and it is essential that this documentation is robust.
If officers are procuring on the basis of delegated contracting authority, they need to consider whether that delegation is broad enough to authorise them to abandon the process.
For more information please contact our public sector and government team.
