Bribery Act on its way ... what do contracting authorities need to know?

The Bribery Bill has recently had its second reading in the House of Lords and will be of interest to both contracting authorities and private sector suppliers alike. The Bill will shortly enter into the Report stage where it receives detailed parliamentary scrutiny. It is therefore possible that it may come into force in April 2010, though watch this space for further updates once the Report stage is completed.

There was seen to be a need for this reform of the law because the UK has never as yet successfully prosecuted a company for bribery, even though it signed up to the OECD?s bribery convention back in 1989.

What is the new law?

If enacted in its current form, the Bribery Bill will simplify the existing law on bribery and enable courts to deal with it more effectively. The Bill creates offences of, amongst others, bribing another person/company/public body or accepting a bribe in return for giving an advantage to the briber.

Of particular interest to contracting authorities is the offence under section 2 in which a person 'requests, agrees to receive or accepts' an advantage of some kind in return for improperly performing, or allowing the improper performance of, a 'function or activity' where that function/activity is either of a public nature or done in the course of a business.

The Bill makes it clear that if the bribery offence is committed with the consent/connivance of a senior officer of the company or public body, then that person is also guilty of an offence. This will potentially catch all those working at manager level and upwards.

Although it does not affect contracting authorities directly, the Bill also creates a new offence where a commercial organisation (i.e. not a public body) negligently fails to prevent bribery.

Penalties under the Bill include fines and/or imprisonment for up to ten years (for the more serious offences).

What are the implications for contracting authorities?

Contracting authorities could therefore be guilty of bribery if, for example, they agree to 'fix' a procurement evaluation process in the briber's favour in return for some advantage. It seems it would also be possible for a contracting authority to be guilty of bribing a supplier if it offers some sort of advantage to a supplier in return for the supplier agreeing to improperly perform an activity connected with the running of its business (e.g. bribing the supplier to submit a lower-priced bid than it would otherwise have done).

The OGC will no doubt be publishing updated boilerplate standard clauses on the prevention of corruption, which take into account the Bill?s provisions and which contracting authorities will need to ensure are included in public contracts. Contracting authorities may also like to address in public contracts the consequences of a supplier being found guilty of a Bribery Bill offence. For example, the prosecution of a major supplier for negligent failure to prevent bribery is likely to be embarrassing for a contracting authority, which may wish to have the option of immediately terminating the contract in these circumstances.

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