The law relating to the way public sector organisations procure services is going to profoundly change due to the Procurement Bill currently passing through Westminster1.
The Bill was introduced to Parliament in May 2022 and should receive Royal Assent this autumn, with the new regime anticipated to go live in October 2024, following a 6 month preparation period. The technical consultations on secondary legislation required to implement the new regime have been recently released2. It is expected that by the end of this year all secondary legislation will be at least published in draft form. All legislation is expected to be enacted by April 2024 to allow for a 6 month notice period before the Act comes into force.
The rationale behind the new Bill was to support the key themes of transparency, delivering value for money, maximising public benefit, and acting with integrity.
The Bill is set to reform UK public procurement law post-Brexit, with the stated aim of creating a new, simpler and more transparent regime. Competition remains at the heart of the regime.
The Bill covers contracts awarded by central government departments, local government and health authorities and even utility companies in the energy, water and transport sectors.
Sourcing Playbook
The recently issued Sourcing Playbook3 can be seen as a precursor to the new bill by updating guidance for central Government Department and ALB’s. However, the playbook does state that in addition to Government Departments:
“the policies and principles [in this guidance] are relevant to and should be considered by all public sector contracting authorities, who will need to apply judgment in adopting the Playbook based on the scale, scope, complexity, novelty and risk attached to their procurements”.
In all probability, therefore, the guidance in the playbook will have relevance for most involved with procuring goods and services across the wider public sector. This sourcing play book is worth a read to better understand how the regulations in the Bill should be practically managed.
Main changes in the Bill
Transparency:
Changes include:
- Greater visibility of procurement opportunities – publication of pipelines
- Publication of contracts over £2 million in value (to be published within 90 days of being entered into).
- Publication of key performance indicators and how suppliers perform against them (performance reports at least every 12 months).
- More visibility around the award process with focus on evaluation to ensure complete transparency of process. In a previous update Gallagher highlighted the potential issue regarding the publication of commercially sensitive information. Guidance will be required to ensure Contracting Authorities do not inadvertently release sensitive supplier data.
Award Procedures:
Changes include:
- Seven award procedures will be reduced to three. Simplification will retain the Open procedure but will introduce a new procedure (section 20 (2) (b) of the Bill), “the Competitive Flexible procedure” described in the bill as :-
“such other competitive tendering procedure as the contracting authority considers appropriate for the purpose of awarding the public contract”
Gallagher see this as an opportunity to design a procurement strategy and tender which genuinely meets the need of the market.
- A renewed focus on opening up procurement markets, particularly improving participation for SME’s. Whilst there are no SME insurers there are SME brokers/advisors. Contracting authorities will need to draft specifications carefully to ensure all of the service they anticipate being required are requested during the tender process. Some of the more complex requirements may not be available from SME brokers/advisors
Change from Most Economically Advantage Tender (MEAT) to Most Advantageous Tender (MAT).
Changes include:
- Greater scope to compete on matters other than just price. The Sourcing Playbook3 makes it clear that focus on purely price is no longer best practice
“While cost will always be an important evaluation criterion, the expectation is that it will be secondary to quality in a complex outsourcing, recognising the importance of delivering quality public services“ - A far greater focus economic, social and environmental value. PNN 6/204 provided guidance on social value and PNN 6/215 dealt with Net zero and Carbon reduction plans. Whilst both are aimed at Central Government organisations the guidance in the Sourcing Playbook makes a clear recommendation that the wider public sector should now consider how their procurements could implement these key Governmental objectives.
- Focusing on value for money in the broadest sense. Price focused awards may be outside best practice and would not comply with the MAT approach required.
Exclusion and Debarment regime.
Changes include:
- A centrally managed debarment register will form part of the exclusion framework that suppliers must pass before bidding for a contract. Where a supplier is excluded an investigation may be launched to determine whether the supplier should be on the debarment register.
- Exclusion from bidding for poor performance. Guidance will be needed to ensure a consistent approach is applied. Poor performance may simply be lack of clarity regarding expectation rather than truly poor performance. Without a clear management of this litigation is highly probable from an excluded supplier particularly on larger contracts.
It is clear that implementation of the Bill is going to require careful consideration from Contracting Authorities to maximise the benefits of the more commercial approach it encourages.
At present the market for the Public risk, whilst highly competitive, is small. Unless time is taken to design procurement which enable suppliers to respond, at best Contracting Authorities may not achieve the value they desired, at worst they may inadvertently reduce the appetite some have for bidding.
Gallagher will continue to monitor developments and are working with external legal advisors to ensure we are ready to support clients appropriately when the Bill become law.
