Every year new changes bring new challenges and opportunities for private organisations and private suppliers operating in the public procurement system. This year is set to be no different, with the Procurement Act 2023 set to be introduced in October 2024.
Following more than a year and a half in the making, the government has stepped up to the plate to introduce a new procurement regime that has been built around domestic needs and demands but continues to align with the government’s international obligations.
With the Act attaining Royal Assent on October 26, 2023, and with the government planning to “go live” with the Act by October, there are a lot of new rules and regulations that will need to be covered for business leaders and suppliers who are currently doing businesses, or planning to do business with the public sector, including central government and local councils.
An Act That Marks The Beginning Of A New Era
The current procurement regime, better known as the Procurement Act 2015 carries out the function of providing private enterprises with the opportunity of conducting business with the government. This includes those businesses operating in the supply chain as suppliers but remains limited to specific sectors and industries.
While this procurement regime continues to remain in force until new regulations have been applied, the Procurement Act 2015 (PCR 2015) follows a combination of EU-based laws and UK regulatory considerations.
However, since Brexit, the government has decided to introduce a new regime that will consider the importance of the British people, and the country’s economy, and further promote flexible and transparent opportunities for small, start-up or scale-up businesses.
Several new changes in the Act will reshape the country’s procurement regime, aiding in helping to create a more transparent and flexible relationship between private suppliers and public contracting authorities.
An All In One Single-Act
A notable change will be that all existing contracting regulations will be morphed into one single act. This would mean that under the new regime, the Procurement Act will repeal the Public Contracts Regulations 2015, Utilities Contracts Regulations 2016, Concessions Contracts Regulations 2016, including the Defence and Security Contracts Regulations 2011. Instead of having separate obligations, the new Act will be consolidated as the primary legislation.
The single regime for public procurement will apply to businesses and suppliers in England, Wales and Northern Ireland. Scottish authorities have been excluded from the Act’s application, as the Scottish Government has decided to retain its procurement regulation for devolved Scottish authorities.
Objectives of the Procurement Act 2023
The Act will provide key changes to contracting authorities awarding new contracts to suppliers as covered by the procurement guidelines.
Under the new Act, key objectives will include:
Delivering value for money
New changes will help ensure that contracting authorities consider companies and suppliers that can present the most compelling proposal based on value for money.
Increasing public benefit
Transparency will play an integral part in the Act, as contracting authorities will be required to publicly release any relevant information and notices regarding a specific contract. This will ensure that the public remains informed about spending allowances granted for contracts, and considers their best interest to help promote social value in the long-term.
Transparent procurement policies
Contracting authorities will be required to provide and share information regarding tenders to ensure all competing authorities, such as businesses and suppliers understand the authorities’ procurement policies and their decisions.
Acting, and being seen to act, with integrity
The final key objective helps to highlight the potential barriers some suppliers may encounter within the current procurement framework. The new Act promotes the fair and equal treatment of suppliers unless a specific difference between the suppliers can justify the treatment.
Following on top of this, specific guidance has been provided in section 12 (3)(4 a and b) which outlines:
(3)If a contracting authority considers that different treatment is justified in a particular case, the authority must take all reasonable steps to ensure it does not put a supplier at an unfair advantage or disadvantage.
(4)In carrying out a covered procurement, a contracting authority must—
(a)have regard to the fact that small and medium-sized enterprises may face particular barriers to participation, and
(b)consider whether such barriers can be removed or reduced.
This would imply that basic conditions will be created for small to medium enterprises, including start-ups and scale-ups, which could help remove or reduce potential barriers, such as limited resources and services they may encounter while seeking to conduct business with contracting authorities.
MEAT vs MAT
While the Act covers most contracts for goods, services and work awarded by the public sector, new guidelines will cover contracts awarded in the utilities sector, including water, energy, transportation, defence and security sectors.
Furthermore, the current PCR 2015 highlights the importance of contracting authorities awarding new contracts and tenders to suppliers that can present the Most Economically Advantageous Tender (MEAT). However, the new Act will help create a more flexible approach, that will have emphasis on the Most Advantageous Tender (MAT) and will be based on specific contract requirements and evaluation criteria referenced in the assessment.
Using the MAT approach would further encourage small-to-medium enterprises to apply for relevant contracts, and be awarded should they meet the requirements and criteria specified by the contracting authority.
Additionally, this would further broaden the scope of applicable contractors from which a contract authority can choose, and allow them to make the most advantageous decision based on tender criteria and requirements.
Procurement procedures
In light of the above-mentioned information, contracting authorities will be allowed to award contracts and tenders based on a new assessment methodology.
This new methodology will help to create a more competitive, and transparent procurement regime for all suppliers that meets the relevant contract criteria and requirements.
Before choosing a bidder, contracting authorities will enable a competitive tendering procedure:
- Open Procedure: A single-stage tendering procedure with no restriction on who can submit tenders
- Competitive Flexible Procedure: A tendering procedure formulated by the contracting authority, and considered appropriate for the purpose of awarding the public contract.
A new assessment methodology would enable contracting authorities to design a tendering procedure that meets the relevant needs of the contract and the market.
Provision of Transparency
Another compelling change that the Act will introduce is new requirements for publishing relevant and up-to-date notices throughout the procurement lifecycle. This will include several phases, from planning, introduction, and awarding until contract expiry.
While some argue that this will place an increasing administrative burden on the contracting authority, the new requirements would allow both suppliers and public constituents to have a more transparent understanding regarding the intended need for the contract; and relevant progress and provide more clarity regarding Key Performance Indicators (KPIs) of the contract during the life cycle.
New transparency requirements will include:
- Planned procurement notices;
- Preliminary market engagement notices (replacing PIN notices);
- Notices on the direct award of a contract;
- Mandatory contract change notices and;
- Termination notices.
Streamlining Opportunities
While the Act is set to go live within the next several months, many are wondering whether a new regime will help to provide new SME opportunities and allow SME tenders to have a more advantageous approach within the framework.
Although several suggestions outline clearly how a new procurement regime will be focused on promoting SME collaboration with public entities, there is however a strong focus on providing more social value and helping to draw the focus back onto the needs of the British people and economy.
The regime shake-up will help to bolster new economic activity for small and medium enterprises, enabling them a fair and equal opportunity to provide contracting authorities with more advantageous options and help to minimise barriers and obstacles many SMEs tend to face with public sector contracts UK.