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30 Oct 2023

Procurement Act 2023: key changes to the public procurement regime

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After a year and a half in the making, the Procurement Act 2023 (the "Act"), overturning the current public procurement regime in the UK, attained Royal Assent on 26 October 2023.

The government has indicated that the Act will go live from October 2024, with a six month notice period in advance of the final date.

In this first in a series of articles, we focus on some of the key public procurement changes with specific topics to be discussed in subsequent articles.

1. Structure and objectives of the Act

The Act signifies fundamental structural changes to our current procurement landscape, by combining the overarching regimes which currently regulate procurement. Contracts awarded under the separate procurement regimes governing the award of general public contracts, utilities contracts, concession contracts and defence and security contracts will all sit under the umbrella of the new Act.

However, it should be noted that different rules will still exist for contracts which previously fell under the different regimes. For example, the maximum duration of a framework agreement under the Public Contracts Regulations 2015 is currently 4 years, whereas this is 8 years under the Utilities Contracts Regulations 2016. This distinction will be retained under the Act.

Procurement objectives have also changed under the Act. Previous drivers required contracting authorities to treat economic operators equally and without discrimination, and to act in a transparent and proportionate manner: requirements flown down from European Directives.

Under the Act, key considerations and objectives for contracting authorities will include delivering value for money, maximising public benefit and acting and being seen to act with integrity. Certain contracting authorities will also be required to have regard to national procurement policy statements reflecting the UK centric nature of the Act. In terms of treatment, contracting authorities must treat suppliers the same unless a difference between the suppliers justifies different treatment that does not put a supplier at an unfair advantage or disadvantage. This subtle change reflects one of the motivations behind the Act and a theme which runs throughout: that is, achieving greater flexibility in the procurement process.

2. Flexibility

The Act allows greater flexibility to contracting authorities. For example, rather than setting prescriptive procurement procedures, it is up to the contracting authority to decide whether to use an open procedure or another kind of competitive procedure of their choice (please see point 4 below for further detail).

Similarly, contracting authorities will be able to make changes to the terms of a procurement even after it has been started but before certain key deadlines, such as prior to the deadline for submitting tenders in an open procedure, provided timelines are flexed to account for the changes.

There is even flexibility in selecting award criteria (which itself will change with contracts being awarded based on the new "most advantageous tender" rather than the "most economically advantageous tender"). Contracting authorities will be entitled to refine award criterion during a competitive procedure provided they have catered for that in the tender notice or tender documents and the refinement would not have allowed previously excluded suppliers to progress in the procurement.

3. Transparency and Notices

The Act introduces several new requirements for publishing notices throughout the procurement lifecycle from planning through to contract expiry. This is with a view to increasing transparency, but this may make aspects of the overall process more administratively burdensome particularly during the life of a contract. Examples include:

  • planned procurement notices and preliminary market engagement notices (replacing PIN notices under the current regime);
  • pipeline notices;
  • transparency notices on the direct award of a contract;
  • mandatory contract change notices; and
  • termination notices on the termination of a public contract.

4. Procurement procedures

Contracting authorities may award contracts to the bidder who submitted the 'most advantageous' tender, being the tender which best meets the award criteria in light of the assessment methodology. This is awarded based on a competitive tendering procedure, which is either:

  • a single-stage procedure without a restriction on who can submit tenders (like the current open procedure); or
  • such other competitive procedure that the authority considers appropriate (this is a procedure which can be designed by the contracting authority).

A competitive procedure other than an open procedure gives scope for greater flexibility. While contracting authorities will have greater flexibility to design their own procedures, it will be interesting in the short term to see whether they continue to conduct procurements following similar procedures to the current regime for expediency.

There are increased abilities to directly award contracts in certain circumstances including at the direction of a Minister of the Crown if considered necessary to “protect human, animal or plant life or health, or protect public order or safety”, which appears to have arisen following lessons learned during the COVID-19 pandemic.

5. Excluding suppliers

The Act contains provisions on excluded and excludable suppliers and how they should be dealt with by contracting authorities. The list of grounds for mandatory exclusion of suppliers is broadly similar to the current regime, with the addition of new offences such as theft, corporate manslaughter and competition law infringement. In relation to discretionary exclusion grounds, the current regime provides that prior poor performance should be considered where there has been a breach of contract which resulted in a serious repercussion such as termination or damages. This is extended in the Act to cover poor performance and where the supplier has not improved their performance despite being given the opportunity to do so.

Another point of difference is that suppliers can be excluded by reference to the status of their associated suppliers and subcontractors, not just their own performance.

The Act also introduces a central debarment list on which a Minister of the Crown may enter the name of a supplier who is an excluded or excludable supplier; which, as above, may be based on previous poor performance. Suppliers on the list will be debarred from applying for public contracts for a specified period but may apply for their removal from the list if there has been a material change in circumstances.

6. Key performance indicators

There is a new requirement to publish key performance indicators where a contracting authority must set and publish at least three key performance indicators (unless the authority considers that the supplier's performance could not appropriately be assessed by reference to key performance indicators). There is a value threshold to this requirement and there are some other exceptions, including for framework agreements. Where key performance indicators are published, at least once every twelve months, the contracting authority then has obligations to assess the supplier's performance against these key performance indicators, and to publish information relating to that assessment.

7. Standstill period

Under the current regime, a contracting authority may not enter into a contract until 10 days after the issue of a compliant award decision notice to all suppliers (although this is 15 days where the notice was not sent by email). The Act provides that the standstill period should be 8 working days from the day on which a contract award notice is published. The standstill does not apply in certain cases, for example where there has been a direct award because of 'extreme or unavoidable' urgency, or where a contract is awarded in accordance with a framework.

8. Remedies

Many of the remedies under the current procurement regime are replicated in the Act, however, changes have been made including to the language used. For example, declarations of ineffectiveness are no longer referred to as such although the equivalent remedy remains as "set aside" proceedings. Another example is the introduction of a new test for consideration when making interim orders such as to lift automatic suspensions in relation to the entry into or modification of contracts.

9. Termination of contracts

The Act extends the implied rights that contracting authorities have to terminate public contracts. The grounds now include where:

  • the contract was awarded or modified in material breach of the Act which could reasonably result in a successful legal challenge;
  • a supplier has become an excluded or excludable supplier; and
  • subject to certain pre-conditions, a sub-contractor of the supplier is an excluded or excludable supplier.

What's next?

Having summarised the main changes, we will delve deeper into them in subsequent articles. In the meantime, the current regulations will continue to apply in the same way as before. It's also worth noting that procurements which were started before the change in the law will continue to be bound by the current rules even once the Act has come into force.

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