The Government has identified the Procurement Act 2023 (“Procurement Act”) as “one of the largest shakeups of procurement rules in this country’s history”.
The Procurement Act received Royal ascent in October 2023 with most of the provisions coming into force on 24 February 2025 (originally due to be implemented on 28 October 2024). The Procurement Act will revoke the Public Contracts Regulations 2015, the Utilities Contracts Regulations 2016, the Concession Contracts Regulations 2016, and the Defence and Security Public Contracts Regulations 2011. In so doing, it will establish a new public procurement regime regulating procurement in England, Wales and Northern Ireland.
The Government is publishing guidance on the new requirements. The purpose of this note is to provide an overview of some of the key changes. The Government is also delivering training.
It has been confirmed that registered providers of social housing (RPs) will remain subject to the rules.
What is staying the same?
- A number of concepts and requirements will be familiar to RPs. For example, the Procurement Act retains a list of “exempt contracts”, and the range of remedies available for disappointed suppliers remains broadly similar.
What is changing?
- Greater Flexibility. There are fewer procurement procedures available, however they are less prescriptive than under the present regime. RPs can choose from “direct award”, “competitive tendering procedure” and to “award under an existing framework”. Competitive tendering can either be an “open procedure” or “competitive flexible procedure” (“CFP”). The CFP allows for the design of a process to suit the RP’s requirements as long as they comply with the general objectives set out in section 12 of the Procurement Act, various minimum time limits set out in section 54, and the procedures are a proportionate means of awarding the contract by reference to the nature, complexity and cost of the contract. A light touch regime for light touch services is retained and rules will apply to specific ‘below threshold’ opportunities. The greater flexibility allows RPs to take a more commercial approach.
- Wider scope – The scope for assessing tender submissions has changed from the ‘most economically advantageous tender’ to the ‘most advantageous tender’, enabling RPs to factor in other considerations into the decision-making process. This will enable RPs to better align the tender process with their other objectives, such as their charitable objects. Government guidance has emphasised that the change in wording is to clarify that contracting authorities need not award on the basis of the lowest price.
- KPIs – RPs must set and publish at least three key performance indicators (KPIs) before entering into a public contract for more than £5 million, unless the RP is awarding a framework, concession contract or light touch contract, or the RP considers that KPIs are not appropriate to assess the supplier’s performance. The RP is under an obligation to report on KPI performance annually.
- The mandatory standstill period is reduced from 10 to 8 days.
- Procurement lifecycle & enhanced transparency. The regime covers the full lifecycle of the procurement, from pre-market engagement to contract termination. Contracting authorities will need to publish various notices at the pre-procurement phase, during the procurement, and during the term of the contract. There are new obligations to report on contract performance and termination, and to have regard to procurement objectives when making contract management decisions. Contracting authorities will need to publish additional information on a central digital platform as part of the Government’s heightened transparency agenda. This marks a significant shift towards greater accountability from RPs both in administrative and reporting obligations, but also in managing contracts, demanding more resources from RPs.
- Procurement principles. The themes of non-discrimination and proportionality still feature within individual obligations, although they are not explicitly identified as overarching principles. The principle of equal treatment remains, with a modified formulation.
- Change in terminology. There is a significant change in language and terminology in the Procurement Act, which has raised questions as to how historic case law may be applied.
- Contracting authorities must have regard to new procurement objectives and barriers for SME participation in respect of above threshold procurements and consider how these may be removed or reduced.
- National Procurement Policy Statement. Contracting authorities must have regard to any National Procurement Policy Statement, which will set strategic priorities for public procurement.
- Wider exclusion grounds & Debarment. There are slightly wider discretionary grounds to exclude suppliers than under the present regime as a result of a supplier’s poor contract performance or as a result of their relationship with associated suppliers and sub-contractors. Contracting authorities must notify Ministers when they exclude a supplier. Ministers may investigate and add the supplier to a central debarment list, which potentially prevents that supplier from bidding on a public procurement for a specified period of time.
How should RP’s prepare for the upcoming changes
RPs will need to comply with their requirements under the Procurement Act in respect of processes commenced after 25 February 2025. However, they should have regard to the new regime in advance so that it can be factored into procurement planning.
The Procurement Act introduces a more pragmatic and flexible regime which should allow RPs to be more commercial and align the tender process with their wider objectives.
The shift in focus onto the whole contract life cycle, good contract management, monitoring and notices will increase the administrative and management burden on RPs. RPs should consider reviewing their internal processes and procedures to ensure that they will be adequate to comply with the new rules and should ensure they are resourced appropriately.
The new regime sees an increased focus on accountability and transparency, allowing for greater scrutiny over how public money is spent. The increased public scrutiny should be borne in mind by RPs when complying with the changes order to protect their reputation.
It may be worthwhile for RPs to inform their suppliers of the upcoming changes to the tender process ahead of the October go-live date.
If you have any questions about the Procurement Act or need help updating your procurement policies and procedures, or support with training for your procurement team, please contact the Stephens Scown commercial team at corporate@stephens-scown.co.uk