Ultra Electronics: DPAs and Procurement Act debarment

A deferred prosecution agreement is an accord reached between corporations which have been charged with criminal wrongdoing and the prosecution.  The purpose is to avoid a criminal prosecution, typically in return for admissions of misconduct, cooperation with investigators and the payment of financial penalties.  Because any DPA must be concluded in the public interest, it must be ratified by the court before it can come into effect.

S 7 of the Bribery Act 2010 (“BA 2010”) created an offence for corporations of failure-to-prevent bribery, effectively imposing an obligation on companies to assume their “associated persons” (e.g. employees, agents and joint venture partners) did not commit acts of bribery on their behalf or for their benefit.

A failure-to-prevent-bribery DPA is not an automatic bar to public contracts: section 7 of the Bribery Act 2010 is not a mandatory exclusion ground under the Procurement Act 2023 (“PA 2023”), so any debarment is discretionary. A DPA can still give contracting authorities material to assess under the discretionary professional-misconduct ground, so the risk does not simply disappear. The answer is self-cleaning, and the same remediation record that supports a DPA is the record that defeats discretionary exclusion, so suppliers and acquirers should build it early.

Introduction to Ultra case

Most coverage of the Ultra Electronics deferred prosecution agreement (DPA), approved on 1 May ([2026] EWCR 4), reads it as a corporate-crime story: the £10m penalty, the 45% cooperation discount, the “different company after Advent” reasoning. For anyone who bids for public contracts, though, the more important question is one the judgment raises but leaves open: what does a failure-to-prevent-bribery outcome mean for debarment under the PA 2023?

The judgment gives the starting point. At paragraph 50, the court records the SFO’s own observation that section 7 of the BA 2010 is not on the Schedule 6 list of offences carrying automatic mandatory exclusion. Any debarment would therefore be discretionary. For a defence contractor with Five Eyes (Australia, Canada, New Zealand, United Kingdom and the US) work and around 1,500 UK and US staff, that distinction matters, and it was treated as material to whether a DPA was in the interests of justice. There is an echo of the Rolls-Royce (SFO v Rolls Royce, 17 January 2017) reasoning on innocent employees and wider public consequences, but Ultra gives that familiar analysis a new Procurement Act setting.  Before deciding whether to reject a DPA, the court needs to give serious consideration to the innocent third parties (e.g. employees and supply chain members) who would stand to be harmed by the consequences of prosecution of the company (including loss of government contracts).

“Discretionary, not mandatory” is where the analysis starts, not where it ends.

How Schedule 7 (discretionary grounds of exclusion) can bite

As we have written elsewhere, the PA 23 increases mandatory (Schedule 6, PA 23) and discretionary (Schedule 7, PA 23) grounds of exclusion from public tendering.  In a nutshell, mandatory grounds are more likely to result in one-off or more permanent exclusion from government tender processes.

The relevant discretionary ground is professional misconduct, in Schedule 7, paragraph 11. The route matters. A DPA is not a conviction: the judgment repeatedly emphasises that the court made no findings of fact against any individual, and that no individual admitted the conduct. But that does not make a DPA irrelevant for procurement. Cabinet Office guidance treats a DPA as potentially sufficient evidence of professional misconduct, depending on the underlying conduct. The point is not that a DPA automatically creates an exclusion ground, nor that it cannot. It is that it hands contracting authorities material they may have to assess.

That assessment is not confined to the offence label. An authority may look at the agreed Statement of Facts, the admitted failure to have adequate anti-bribery procedures, the accepted inferences about corrupt payments and the seriousness of the compliance failures. Professional misconduct includes serious breaches of ethical or professional standards, whether mandatory or not. A DPA may therefore leave a discretionary exclusion question open even as it avoids prosecution.

Exclusion is not the only risk.  The PA 2023 also lays down implied rights for public bodies to terminate ongoing contracts where a supplier becomes subject to a ground of exclusion.  The risk is more real than imagined.

Self-cleaning is the answer, and it is already written

An exclusion ground is not enough on its own. Under the Act, the authority must also ask whether the circumstances are continuing or likely to recur, and in doing so it may weigh the supplier’s self-cleaning: whether the matter has been taken seriously, whether management and procedures have changed, whether training and monitoring are in place, and how much time has passed.

Read the Ultra judgment with that test in mind. New ownership and a wholly replaced board. The relevant individuals gone. A new Chief Compliance Officer reporting to the board. Legacy joint ventures terminated, intermediaries reduced, an independent compliance review acted upon, and three years of SFO-monitored reporting. That is not only the reasoning that supported the DPA. It is the kind of record a supplier needs to answer a contracting authority asking whether the risk remains.

One set of facts does double duty: the same remediation that persuades a prosecutor to defer may also answer the procurement question whether a supplier is still an integrity risk. Timing reinforces the point: for discretionary grounds the five-year question turns on when the authority knew, or would have known, of the event, so the 2026 DPA may itself be when that material becomes available.

Prevention is better than cure: adequate procedures matter

It is a defence to any offence under s 7 BA 2010 to demonstrate that the corporate had in place “adequate procedures” to prevent bribery.  These would need to include training, top-level commitment and monitoring processes.  These would demonstrate that although bribery had been committed to benefit the corporate entity, it had done everything it reasonably could to prevent it happening in the first place.

The Ultra case is a reminder of the importance of having such procedures in place if your organisation is active in the pursuit of public contracts.

Failure to prevent fraud: similar considerations

From 1 September 2025, the Failure to Prevent Fraud Offence was enacted as part of the Economic Crime and Corporate Transparency Act 2023 (ECCTA).  The offence shares structural similarities to S 7 of the BA 2010, making in-scope bodies corporate liable for certain fraud offences committed on their behalf by associated persons.  As with S 7 BA 2010, there is a defence where a company can show that it had adequate procedures in place to prevent the wrongdoing.  As with s 7 BA 2010, the new offence is not listed expressly as a ground of exclusion in the PA 2023.  However, it is almost certain to be capable of constituting professional misconduct under Schedule 7, paragraph 11.

AI: Increasing detection risk

There is one further consideration to bear in mind.  Prosecuting authorities and antitrust regulators are increasingly turning to advanced artificial intelligence solutions in order to detect suspicious patterns and red flags for bribery, anti-competitive and fraudulent conduct.  These can reasonably be expected to increase the number of cases opened and investigations commenced.  Investing in compliance processes is the best way to avoid this fate, particularly if an organisation needs to preserve its eligibility for government contracting (or participation in supply chains of government contractors).

What it means for you

After the Procurement Act, the procurement consequences of misconduct are no longer a binary that turns on the offence label. They turn on conduct, integrity and, above all, on whether remediation is real and evidenced. For bidders, acquirers conducting due diligence, and contracting authorities making exclusion decisions, the lesson is the same: build and document the self-cleaning record early, because it is the same record that does the work across criminal resolution and debarment.

We advise bidders, contracting authorities and acquirers on exclusion and debarment under the Procurement Act 2023, and on the procurement consequences of bribery and other enforcement outcomes. If your organisation faces any of these questions, please get in touch with the authors.