Albert Sanchez-Graells

This country report provides an update on developments over the first 18 months of application of the Procurement Act 2023.

Procurement is the gateway for public sector AI adoption, as well as an area of active experimentation with AI. Both 'AI procurement' and 'AI in procurement' are giving rise to emerging regulatory and governance strategies and practices that shed light on the challenges and constraints of current approaches to 'digital transformation'. This contribution explores emerging trends and identifies areas for future research, with a specific focus on the promotion of responsible and trustworthy AI adoption. In relation to AI procurement, it discusses 'contractbased' and 'standard-based' approaches to its governance, as well as the emerging pivot towards prescriptive AI procurement legislation. In relation to AI in procurement, it explores the emergence of safe harbours and persistent challenges for AI use by public buyers, and maps some of the challenges arising from bidders' (improper) AI use. It concludes by bringing together themes from the two related issues of procuring AI and using AI in procurement.

Artificial intelligence (AI) has two primary interactions with public procurement. First, procurement is the gateway for the still largely unregulated process of public sector AI adoption. Second, AI is being deployed to ‘streamline’ procurement itself. This contribution explores the competition implications of these interactions between AI and procurement, as well as the knock-on effects that AI-supported procurement can have on upstream markets. In particular, it considers competition implications of new procurement approaches concerning: the setting of technical and governance requirements; reliance on third party capabilities; unregulated AI audit and assurance mechanisms; unregulated practices such as the free embedding of AI solutions into contracted cloud or software solutions (or ‘AI creep’); as well as the risks of new forms of data bias, organisational conflicts of interest and centralisation forces arising from the deployment of AI solutions in procurement management (including ‘AI agents’). The contribution highlights emerging issues and trends, and identifies areas for future research.

The cornerstone of EU public procurement law – what actually constitutes a ‘public contract’ – is unclear, despite decades of Court of Justice of the European Union case law. This undermines the coherence and effectiveness of EU internal market law. This chapter focuses on the scope of application of Directive 2014/24/EU to highlight some aspects of the interaction between EU public procurement law and other instruments of EU internal market law, including new and proposed tools seeking to (further) leverage public procurement as a policy delivery instrument. After a review of recent trends in the interpretation (and narrowing) of the scope of application of Directive 2014/24/EU, the chapter sketches an alternative functional approach that would provide conceptual consolidation, realign EU public procurement law with its internal market logic and potentially improve its fit as a policy delivery instrument.

In this paper, I explore the notion of public interest embedded in the Procurement Act 2023. I use this new piece of post-Brexit legislation as a contemporary example of the difficulty in designing a ‘public interest centred’ system of public procurement regulation. I show how a mix of partly overlapping explicit, referential, and implicit public interest goals results in a situation where there are multiple sources of objectives contracting authorities need to consider in their decision-making, but there is no prioritisation of sources or objectives. I also show that, despite this kaleidoscopic proliferation of sources and objectives, and due to the unavailability of effective means of judicial challenge or administrative oversight, contracting authorities retain almost unlimited discretion to shape the public interest and ‘what it looks like’ in relation to the award of each public contract. This challenges the centralised approach to procurement policy taken by recent and current UK Governments and, in particular, raises significant questions on the likely effectiveness of ‘mission-driven’ procurement. I close with a call to reconsider how public procurement can foster the public interest, in light of its limitations as a regulatory tool.

In this case comment, I reflect on the position taken by the Court of Justice of the European Union in CROSS Zlín that, for the purposes of suspending the effectiveness of contract award decisions and preventing the conclusion of public contracts, it is irrelevant whether a procurement review body is judicial in character or not. I reiterate the call for a review of the Remedies Directive.

As part of its ‘pro-innovation’ approach to artificial intelligence (AI), the UK has left public sector AI procurement and deployment to ‘regulation by contract’ based on thin guidance. Borrowing from the description of AI ‘hallucinations’ as plausible but incorrect answers given with high confidence by AI systems, I argue that this is a ‘regulatory hallucination’: an incorrect answer to the challenge of regulating the procurement and use of AI by the public sector. The pretence that public buyers can ‘confidently and responsibly procure AI technologies’ can generate individual harms and broader negative social effects as the public sector ramps up AI adoption and accumulates a potentially significant stock of AI deployments across all areas of public sector activity. I sketch an alternative strategy to boost the effectiveness of the goals of AI regulation and the protection of individual rights and collective interests through the creation of an independent authority.

Public sector digitalisation is transforming public governance at an accelerating rate. Digitalisation is outpacing the evolution of the legal framework. Despite several strands of international efforts to adjust good administration guarantees to new modes of digital public governance, progress has so far been slow and tepid. The increasing automation of decision-making processes puts significant pressure on traditional good administration guarantees, jeopardises individual due process rights, and risks eroding public trust. Automated decision-making has, so far, attracted the bulk of scholarly attention, especially in the European context. However, most analyses seek to reconcile existing duties towards individuals under the right to good administration with the challenges arising from digitalisation. Taking a critical and technology-centred doctrinal approach to developments under the law of the European Union and the Council of Europe, this paper goes beyond current debates to challenge the sufficiency of existing good administration duties. By stressing the mass effects that can derive from automated decision-making by the public sector, the paper advances the need to adapt good administration guarantees to a collective dimension through an extension and a broadening of the public sector’s good administration duties: that is, through an extended ex ante control of organisational risk-taking, and a broader ex post duty of automated redress. These legal modifications should be urgently implemented.