More often than not, when we run a tender, the issue of past supplier performance comes up. Contracting Authorities often want to avoid awarding to a supplier with which they have experienced problems in the past. However, as ever with the procurement regulations, the answer is both nuanced and fraught with danger.
You can exclude suppliers based on past performance – but only in certain circumstances.
The Regulations (PCR 2015) allow Contracting Authorities to reject economic operators that have shown poor performance or significant shortcomings in a previous public contract. However, this cannot solely be a matter of judgement for the Contracting Authority. They must be able to meet some very specific tests:
First, Regulation 57(8)(g) PCR 2015 states that the performance must have been significantly or persistently deficient.
Secondly, the Regulation states that poor performance must have led to early termination, damages or comparable sanctions.
Finally, Regulation 57(12) PCR 2015 states that you must consider how long ago the past performance occurred. Economic operators can only be excluded within three years of the relevant event.
Effective contract management is critical if poorly performing suppliers are to be excluded in future
The Regulations above clearly restrict a Contracting Authority’s ability to reject economic operators if action was not taken when performance was identified as deficient. To ensure you don’t find yourself in the position of being unable to exclude a poorly performing supplier, effective contract management is critical. If a supplier is performing poorly, it is essential to both document this (to the supplier) and ensure action is taken. Unless this results in early, termination, damages or other comparable sanctions, you may face having to award further contracts to the supplier in question.