Firstly, Regulation 57(8)(g) of the Public Contracts Regulations 2015 provides that contracting authorities may exclude candidates from a procurement procedure where the candidate concerned 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", however this must have resulted in “early termination of that prior contract, damages or other comparable sanctions”. Therefore, it would not simply be enough to argue that exclusion is permissible under Regulation 57(8)(g), if the customer authority is simply unhappy with the candidate’s performance; the authority would need to evidence that the poor performance resulted in early termination, the payment of damages or ‘other comparable sanctions’. The Regulations do not define ‘other comparable sanctions’, however our view is that this is envisaged as similar, serious, consequences of a failure to perform such as the payment of a significant amount of liquidated damages or similar.
Even where the grounds for exclusion on the basis of Regulation 57(8)(g) appear to be met, the candidate concerned is able to propose evidence of ‘self-cleaning’ (see Regulation 57(13), ie, evidence that measures have been adopted by the candidate to demonstrate its reliability despite the existence of a relevant ground for exclusion. However, if the authority considers those measures to be insufficient, the authority may exclude the candidate, but must provide a statement of the reasons for that decision.
Ultimately, in order to rely on previous poor performance, our view is that the authority would need to ensure effective contract management, for example, instigating the dispute resolution procedure and other mechanisms to provide clear evidence of non-performance.
We have set out some further thoughts on this topic in response to the question below about being unable to exclude an incumbent from a re-procurement..