Procurement Act on the way

The Procurement Act 2023 (PA23) received royal assent in October 2023 following an arduous 18-month journey through parliamentary scrutiny. It is a substantial overhaul of the UK’s outdated public procurement rules, hailed by the government as ‘one of the largest shake-ups to procurement rules in this country’s history’.

PA23 will govern how around £300bn annually is spent by public contracting authorities – including central government, local authorities, police and fire authorities – in England, Wales and Northern Ireland.

Scotland is going down a separate road to reform. Until then, the current provisions contained in The Public Contracts (Scotland) Regulations 2015 will continue to apply; PA23 will apply only to Scottish contracting authorities carrying out reserved functions.

Simpler system

The objective of the legislation is to create a simpler and more transparent procurement system. Its stated aims are to deliver value for money, offer innovative solutions, comply with international treaty obligations and deliver better public services for citizens, while improving the way contracting authorities conduct the procurement process and contract management lifecycle.

The government says that by removing 350 bureaucratic rules from the legacy European Union (EU) procurement regime, SMEs and social enterprises will be able to secure a larger proportion of the annual procurement spend. This in turn should help to stimulate local economies and support wider government initiatives. (Contracting authorities will in future have to comply with the published and updated statutory National Procurement Policy Statement.)

New tools

There is still some way to go before the new regime comes fully into force. Secondary legislation and statutory guidance is being laid before parliament imminently, and PA23 is expected to come into effect from October 2024 at the earliest.

In addition, new tools are expected, including a central digital platform on which suppliers will be able to register and store their details. This will ensure suppliers only have to submit their credentials once (subject to periodic updates) to be considered for future tender opportunities.

The use of ‘unique identifiers’ for suppliers and contracting authorities should enable better tracking, while ‘linking together all records associated with each procurement’. After 2025, when the platform will be fully operational, interested parties will be able to find out which contracts have been procured by a contracting authority, and which suppliers have been awarded those contracts, as well as to monitor performance, at the press of a few keys.

Headline changes

Some of the notable changes are as follows:

• PA23 will consolidate and repeal the current sets of regulations that transpose EU law into UK law, to create one rulebook to be used by everyone.
• The procurement principles will remain subject to certain variations but have been enhanced with new objectives, requiring contracting authorities to ensure that they have addressed value for money, acted in the public interest, shared information and acted with integrity. They will also need to address any barriers facing SMEs.
• The current eight competitive procurement procedures in The Public Contracts Regulations 2015 will be replaced with just two: the open procedure (slight upgrade to the current procedure); and the competitive flexible procedure (allowing contracting authorities to design a competition that is appropriate to each contract opportunity and market).
• The burden on contracting authorities to publish several notices throughout the procurement and contract lifecycle is increased, including a pipeline and mandatory contract-change notice.
• There is an acknowledgement that there might be special situations where it may be necessary to award contracts directly, and it will be possible to switch to a direct award procedure if no suitable requests or tenders have been received.
• In deciding which tender best satisfies the award criteria, there is a shift from evaluating the ‘most economically advantageous tender’ to the ‘most advantageous tender’ when assessing the authorities’ requirements.
• The award criteria can be changed after the tender notice has been issued, subject to certain obligations.
• ‘Light touch contracts’ have been retained, despite suggestions in the Green Paper that they would be removed.
• The list of mandatory and discretionary exclusion grounds has been updated – in particular, the discretionary ground for exclusion due to poor performance. This could allow exclusion where a supplier breaches a contract and the breach is ‘sufficiently serious’.
• Contracting authorities will be able to access a centrally held debarment list to check suppliers that could be barred from applying for public contracts for a specified period unless they apply for removal.
• Contracting authorities will have to set and publish at least three key performance indicators for contracts with an estimated value in excess of £5m.
• A new concept of an ‘open framework agreement’ will require contracting authorities to allow new suppliers an opportunity to join the framework at least once in the first three years and again in the subsequent five years.

Next steps

If PA23 delivers on its promises, it will help transform the procurement landscape into a more transparent, competitive and innovation-driven environment.

While the effective date is a few months away, the demanding list of changes requires immediate action from contracting authorities and suppliers.

Successful implementation will require multi-disciplinary efforts in every organisation. Structural and system changes might be needed, as well as governance, reporting lines and documentary updates. Leave it too late, and you may find yourself stalling when the race to deliver starts in October.