Procurement Act 2023

Section 57

SCHEDULE 6 Mandatory exclusion grounds

PART 1 Offences

1 A mandatory exclusion ground applies to a supplier if the supplier or a connected person has been convicted of an offence referred to in this Part of this Schedule.

Corporate manslaughter or corporate homicide

2 An offence under section 1 of the Corporate Manslaughter and Corporate Homicide Act 2007 (corporate manslaughter or corporate homicide).

Terrorism

3 An offence listed in section 41 or 42 of the Counter-Terrorism Act 2008 (terrorism offences, and offences having a terrorist connection, in respect of which the notification requirements under Part 4 of that Act apply), other than an offence under section 54 of that Act.

Theft, fraud, bribery etc

4 An offence at common law in Scotland of theft, fraud, extortion, robbery, theft by housebreaking, housebreaking with intent to steal, uttering, embezzlement, or reset.

5 An offence at common law of conspiracy to defraud.

6 An offence under any of the following sections of the Theft Act 1968—

(a) sections 1 to 13 (theft, robbery, burglary, etc);

(b) sections 17 to 21 (fraud and blackmail);

(c) sections 22 and 23 (offences relating to stolen goods);

(d) section 24A (dishonestly retaining a wrongful credit);

(e) section 25 (going equipped for stealing etc).

7 An offence under any of the following sections of the Theft Act (Northern Ireland) 1969 (c. 16 (N.I.))—

(a) sections 1 to 13 (theft, robbery, burglary, etc);

(b) sections 17 to 20 (fraud and blackmail);

(c) sections 21 and 22 (offences relating to stolen goods);

(d) section 23A (dishonestly retaining a wrongful credit);

(e) section 24 (going equipped for stealing etc).

8 An offence under section 3 of the Theft Act 1978 (making off without payment).

9 An offence under section 5 of the Theft (Northern Ireland) Order 1978 (S.I. 1978/1407 (N.I. 23)) (making off without payment).

10 An offence under Article 172 or 172A of the Road Traffic (Northern Ireland) Order 1981 (S.I. 1981/154 (N.I. 1)) (taking vehicle without authority etc).

11 An offence under section 58 of the Civic Government (Scotland) Act 1982 (convicted thief in possession).

12 An offence under section 113 of the Representation of the People Act 1983 (bribery of electors).

13 An offence under section 178 of the Road Traffic Act 1988 (taking motor vehicle without authority etc).

14 An offence under section 327, 328 or 329 of the Proceeds of Crime Act 2002 (money laundering offences).

15 An offence under section 2, 3, 4, 6 or 7 of the Fraud Act 2006 (fraud offences).

16 An offence under section 993 of the Companies Act 2006 (fraudulent trading).

17 An offence under section 1, 2 or 6 of the Bribery Act 2010 (bribery offences).

18 An offence under section 49 of the Criminal Justice and Licensing (Scotland) Act 2010 (asp 13) (offences relating to articles for use in fraud).

Labour market, slavery and human trafficking offences

19 An offence under the Employment Agencies Act 1973 (offences relating to employment agencies) other than an offence under section 9(4)(b) of that Act.

20 An offence under the Employment (Miscellaneous Provisions) (Northern Ireland) Order 1981 (S.I. 1981/839) (N.I. 20)) (offences relating to employment agencies) other than an offence under Article 7B(11) of that Order.

21 An offence under section 31(1) of the National Minimum Wage Act 1998 (refusal or wilful neglect to pay the national minimum wage).

22 An offence under the Gangmasters (Licensing) Act 2004 (offences relating to gangmasters).

23 An offence under section 1, 2, 4 or 30 of the Modern Slavery Act 2015 (slavery and human trafficking offences).

24 An offence under section 1, 4 or 32 of the Human Trafficking and Exploitation (Scotland) Act 2015 (asp 12) (slavery and human trafficking offences).

25 An offence under section 1, 2 or 4 of the Human Trafficking and Exploitation (Criminal Justice and Support for Victims) Act (Northern Ireland) 2015 (c. 2) (N.I.)), or paragraph 16 of Schedule 3 to that Act (slavery and human trafficking offences).

26 An offence under section 27 of the Immigration Act 2016 (failure to comply with labour market enforcement order).

Organised crime

27 An offence under section 28 of the Criminal Justice and Licensing (Scotland) Act 2010 (agreeing to become involved in serious organised crime).

28 An offence under section 45 of the Serious Crime Act 2015 (participating in activities of organised crime group).

Tax offences

29 An offence at common law of cheating the public revenue.

30 (1) An offence under the law of any part of the United Kingdom consisting of being knowingly concerned in, or in taking steps with a view to, the fraudulent evasion of a tax.

(2) In this paragraph, “tax” means a tax imposed under the law of any part of the United Kingdom, including national insurance contributions under—

(a) Part 1 of the Social Security Contributions and Benefits Act 1992, or

(b) Part 1 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992.

31 An offence under section 45 or 46 of the Criminal Finances Act 2017 (failure to prevent facilitation of tax evasion).

Cartel offence

32 An offence under section 188 of the Enterprise Act 2002 (cartel offence).

Ancillary offences

33 In relation to an offence otherwise referred to in this Part, any of the following offences—

(a) aiding, abetting, counselling or procuring the commission of the offence;

(b) in Scotland, being art and part in the commission of the offence;

(c) an offence under Part 2 of the Serious Crime Act 2007 (encouraging or assisting crime) in relation to the offence;

(d) inciting a person to commit the offence;

(e) attempting or conspiring to commit the offence.

Offences committed outside the United Kingdom

34 (1) An offence under the law of a country or territory outside the United Kingdom which would be an offence otherwise referred to in this Part of this Schedule if the conduct constituting that offence was carried out in any part of the United Kingdom.

(2) For the purposes of this paragraph, an act punishable under the law of a country or territory outside the United Kingdom constitutes an offence under that law, however it is described in that law.

PART 2 Other mandatory exclusion grounds

National security

35 (1) A mandatory exclusion ground applies to a supplier in relation to contracts of a particular description if an appropriate authority determines that the supplier or a connected person—

(a) poses a threat to the national security of the United Kingdom, and

(b) would pose such a threat in relation to public contracts of that description.

(2) In sub-paragraph (1)—

(a) the reference to an appropriate authority is a reference to the appropriate authority that is considering whether the exclusion ground applies;

(b) the reference to a particular description includes, for example, a description by reference to—

(i) the goods, services or works being supplied;

(ii) the location of the supply;

(iii) the contracting authority concerned.

(3) Sub-paragraph (1) applies only for the purpose of an appropriate authority’s functions under sections 59 to 66 (debarment), and cannot otherwise be relied on by a contracting authority when considering whether a supplier is an excluded supplier under section 57(1)(a).

Misconduct in relation to tax

36 (1) A mandatory exclusion ground applies to a supplier if the supplier or a connected person has been liable to a penalty under—

(a) section 69C of the Value Added Tax Act 1994 (transactions connected with VAT fraud) except where the penalty is reduced under section 70 of that Act, or

(b) section 25 of the Finance Act 2003 (evasion of tax or duty).

(2) The supplier or connected person is not to be treated as having been liable to such a penalty unless HMRC has assessed the amount of the penalty and the time for any appeal or further appeal relating to the penalty has expired or, if later, any appeal or final appeal relating to it has been finally determined.

37 (1) A mandatory exclusion ground applies to a supplier if a penalty has been payable by the supplier or a connected person under—

(a) Schedule 24 to the Finance Act 2007 (errors in tax documentation), or

(b) Schedule 41 to the Finance Act 2008 (failure to notify and certain VAT and excise wrongdoing),

but only where the conduct giving rise to that penalty was deliberate.

(2) Such a penalty is not to be treated as having been payable unless—

(a) if the penalty has been assessed, the time for any appeal or further appeal relating to the penalty has expired or, if later, any appeal or final appeal relating to it has been finally determined, or

(b) a contract has been made between HMRC and the supplier or connected person, under which HMRC undertook not to assess the penalty or (if it was assessed) not to take proceedings to recover it.

38 (1) A mandatory exclusion ground applies to a supplier if—

(a) the supplier or a connected person has entered into or carried out tax arrangements that are abusive (within the meaning given in section 207 of the Finance Act 2013), and

(b) adjustments have accordingly been made under section 209 of that Act (countering tax advantages), including as it applies under section 10 of the National Insurance Contributions Act 2014.

(2) Adjustments are not to be treated as having been made until they can no longer be challenged, whether on appeal or otherwise.

39 (1) A mandatory exclusion ground applies to a supplier if the supplier or a connected person has been found by HMRC, in exercise of its powers in respect of VAT, to have engaged in an abusive practice.

(2) The supplier or connected person is not to be treated as having been found by HMRC to have engaged in those arrangements or practices until the finding can no longer be challenged, whether on appeal or otherwise.

40 (1) A mandatory exclusion ground applies to a supplier if the supplier or a connected person has incurred a defeat in respect of notifiable tax arrangements they have entered into.

(2) In this paragraph—

• “defeat” means that—

  (a)

  Condition A in paragraph 5 of Schedule 16 to the Finance (No. 2) Act 2017, or

  (b)

  Condition B in paragraph 6 of that Schedule,

  is met in respect of the arrangements (where “T” in those paragraphs is taken to mean the supplier or connected person entering into the arrangements);

• “notifiable tax arrangements” means tax arrangements in respect of which a reference number—

  (a)

  has been notified to the supplier or connected person under section 311A, 312 or 312ZA of the Finance Act 2004 (disclosure of tax avoidance schemes) or paragraph 22A, 23 or 23A of Schedule 17 to the Finance (No. 2) Act 2017 (disclosure of tax avoidance schemes: VAT and other indirect taxes), and

  (b)

  has not been withdrawn;

• “tax arrangements” has the meaning given in paragraph 3(1) of Schedule 16 to the Finance (No. 2) Act 2017.

Competition law infringements

41 (1) A mandatory exclusion ground applies to a supplier if the CMA has made a decision under the Competition Act 1998 that the Chapter I prohibition (within the meaning given by section 2 of that Act) has been infringed by an agreement or concerted practice—

(a) to which the supplier or a connected person was party, and

(b) which was a cartel (within the meaning given by paragraph 4(1) of Schedule 8A to that Act).

(2) Sub-paragraph (1) does not apply if the CMA did not impose a penalty on the supplier or connected person in respect of the infringement because the supplier or connected person was an immunity recipient (within the meaning given by paragraph 14 of Schedule 8A to the Competition Act 1998).

(3) In this paragraph, references to the CMA include references to a regulator referred to in section 54(1) of the Competition Act 1998 in circumstances where it exercises functions concurrently with the CMA in accordance with that Act.

Equivalents outside the United Kingdom

42 A mandatory exclusion ground applies to a supplier if the supplier or a connected person—

(a) has been subject to a penalty or a decision by a regulator, court or other authority outside the United Kingdom, where the conduct giving rise to that penalty or decision is conduct that would give rise to a penalty or decision referred to in any of paragraphs 36 to 41 if committed in the United Kingdom, in circumstances where the penalty or decision would be a mandatory exclusion ground, or

(b) has had a tax advantage counteracted outside the United Kingdom, in circumstances where the supplier or connected person would have incurred a defeat of the kind referred to in paragraph 40 had the tax advantage arisen in respect of tax payable in the United Kingdom.

Failure to cooperate with investigation

43 A mandatory exclusion ground applies to a supplier if—

(a) an appropriate authority has given the supplier or a connected person notice under section 60(6) (requests for documents or other assistance in connection with investigation),

(b) the supplier or connected person has failed to comply with the notice to the satisfaction of the authority before the end of the period specified in the notice, and

(c) a Minister of the Crown has made a determination that the failure to do so was sufficiently serious so as to warrant constituting a mandatory exclusion ground.

PART 3 General

Excluded matters

44 (1) In determining whether a mandatory exclusion ground applies to a supplier, the decision-maker must ignore any event that occurred before the five-year period ending with the date on which the determination is made.

This is subject to sub-paragraphs (2) to (4).

(2) In determining whether a mandatory exclusion ground listed in any of the following paragraphs applies to a supplier, sub-paragraph (1) applies whether the event occurred before or after the coming into force of this Schedule—

(a) paragraph 3 (terrorism offences);

(b) paragraph 12 or 17 (bribery);

(c) paragraph 14 (money laundering offences);

(d) paragraph 23, where the ground in that paragraph applies by virtue of an offence under section 1, 2 or 4 of the Modern Slavery Act 2015 (slavery and trafficking offences);

(e) paragraph 24, where the ground in that paragraph applies by virtue of an offence under section 1 or 4 of the Human Trafficking and Exploitation (Scotland) Act 2015 (slavery and trafficking offences);

(f) paragraph 25, where the ground in that paragraph applies by virtue of an offence under section 1, 2 or 4 of the Human Trafficking and Exploitation (Criminal Justice and Support for Victims) Act (Northern Ireland) 2015 (slavery and trafficking offences);

(g) paragraph 27 or 28 (organised crime);

(h) paragraph 33 or 34, so far as relating to any offence that constitutes a mandatory exclusion ground listed in any of the paragraphs within paragraph (a) to (g) above (inchoate offences and corresponding offences outside the United Kingdom).

(3) In determining whether a mandatory exclusion ground listed in any of the following paragraphs applies to a supplier, the decision-maker must also ignore any event that occurred before the coming into force of this Schedule—

(a) paragraph 2 (corporate manslaughter or homicide);

(b) paragraph 4, 5, 6(a) or (c) to (e), 7(a) or (c) to (e), 8 to 11 or 13 (theft, robbery, burglary etc);

(c) paragraph 33 or 34, so far as relating to any offence that constitutes a mandatory exclusion ground listed in any of the paragraphs within paragraph (a) and (b) above (inchoate offences and corresponding offences outside the United Kingdom);

(d) paragraph 35 (threat to national security).

(4) In determining whether a mandatory exclusion ground listed in any of the following paragraphs applies to a supplier, the decision-maker must also ignore any event that occurred before the three-year period ending with the coming into force of this Schedule—

(a) paragraph 6(b) or 7(b) (blackmail);

(b) paragraph 15, 16 or 18 (fraud and fraudulent trading);

(c) paragraphs 19 to 22 (labour market offences);

(d) paragraph 23, where the ground in that paragraph applies by virtue of an offence under section 30 of the Modern Slavery Act 2015 (breach of orders under that Act);

(e) paragraph 24, where the ground in that paragraph applies by virtue of an offence under section 32 of the Human Trafficking and Exploitation (Scotland) Act 2015 (breach of orders under that Act);

(f) paragraph 25, where the ground in that paragraph applies by virtue of an offence under paragraph 16 of Schedule 3 to the Human Trafficking and Exploitation (Criminal Justice and Support for Victims) Act (Northern Ireland) 2015 (breach of orders under that Act);

(g) paragraph 26 (breach of labour market enforcement order);

(h) paragraphs 29 to 31 (tax offences);

(i) paragraph 32 (cartel offence);

(j) paragraph 33 or 34, so far as relating to any offence that constitutes a mandatory exclusion ground listed in any of the paragraphs within paragraphs (a) to (i) above;

(k) paragraphs 36 to 40 (tax misconduct);

(l) paragraph 41 (competition law infringements);

(m) paragraph 42 (equivalents to tax misconduct and competition law infringements outside the United Kingdom).

Definitions

45 In this Schedule—

• the “CMA” means the Competition and Markets Authority;

• “conduct” includes acts and omissions;

• “connected person”, in relation to a supplier, means any of the following—

  (a)

  a person with “significant control” over the supplier (within the meaning given by section 790C(2) of the Companies Act 2006 (“CA 2006”));

  (b)

  a director or shadow director of the supplier;

  (c)

  a parent undertaking or a subsidiary undertaking of the supplier;

  (d)

  a predecessor company;

  (e)

  any other person who it can reasonably be considered stands in an equivalent position in relation to the supplier as a person within paragraph (a) to (d);

  (f)

  any person with the right to exercise, or who actually exercises, significant influence or control over the supplier;

  (g)

  any person over which the supplier has the right to exercise, or actually exercises, significant influence or control;

• “court” includes a tribunal;

• “decision-maker”, in relation to a supplier, means a contracting authority or an appropriate authority that is considering whether a mandatory exclusion ground applies to the supplier;

• “director” has the meaning given in section 250 of CA 2006;

• “event” means a conviction, decision, ruling, failure or other event by virtue of which a mandatory exclusion ground would apply to a supplier;

• “HMRC” means His Majesty’s Revenue and Customs;

• “parent undertaking” and “subsidiary undertaking” have the meanings given in section 1162 of CA 2006;

• “predecessor company” means a company which—

  (a)

  became insolvent and ceased to trade,

  (b)

  before it ceased to trade, carried on the same or substantially the same business as the supplier,

  (c)

  has transferred all or substantially all of its assets to the supplier, and

  (d)

  had at least one director or shadow director who is or has been a director or shadow director of the supplier;

• “shadow director” has the meaning given in section 251 of CA 2006.