The Procurement Act 2023: Key changes to be aware of

Three years following the publication of the Green Paper: Transforming public procurement, the Procurement Bill received Royal Assent on 26 October 2023, meaning the UK now has new a Procurement Act 2023 (“Act”).

While this is a significant milestone to “transforming public procurement” in the UK, there is still a lot of work to be done to support its implementation and to understand how it will operate in practice.

In recent communications, the Cabinet Office has stated that it is planning for the necessary secondary legislation to be laid early next year and anticipates the new regime will come into effect from October 2024. It will only be once we start to see more of the detail that we will get a better idea as to how the new regime is intended to work.

The transformational impact of the Act will be dependent on how the new regime is implemented in practice by procurement teams. Therefore, the Cabinet Office’s promised six-month preparation period is welcome, but vital to the Act’s success will be the need for already over-stretched procurement teams to have the resources to deliver on their “day job” whilst still being able to make the most of the Cabinet Office’s learning offerings. Making the most of these offerings is, in turn, crucial to understand the new regime and, from that, take full advantage of its perceived greater flexibilities. There is also a risk, given the flexibility in the new regime, that without sufficient resources to make the most of the six-month preparation period, procurement teams will fall back onto what is familiar; this may result in any envisioned transformational impact of the new regime being lost in practice.

What can be done now?

We encourage all stakeholders (including authorities and suppliers) to start familiarising themselves with the new regime and to prepare to update their policies, procedures, and materials/tools. We have been providing training to clients on this topic and would be happy to assist in this preparation. We also recommend keeping an eye out on the Cabinet Office’s learning offerings noted above, which we understand will be launching in December this year.

Has the Act achieved what it set out to do?

The Government’s policy objectives for the reforms were:

• “to speed up and simplify public procurement processes
• to place value for money at their heart
• to create greater opportunities for small businesses and social enterprises to innovate public service delivery”

(House of Lords Library Briefing, 20 May 2022)

Although it is too early to conclude whether the Act has achieved the Government’s stated policy objectives, it is difficult to see how some of the key changes (see below) support them. For example, a key change is the additional transparency requirements beyond those under the current regime. Despite greater transparency being a noble cause, enforcing more onerous transparency requirements as a prerequisite would not appear “to speed up and simplify public procurement processes”. We will be revisiting this question (of whether the Act has achieved what it set out to do) in later articles.

So, what are some of the key changes?

Over the next 12 months, we will be focussing on particular aspects of the Act and its implementing secondary legislation. However, in summary, we consider the below to be some of the key changes under the Act:

• Consolidation – the Act consolidates the current procurement regimes under one Act.
• Terminology – a move away from familiar EU Directive language and terms.
• Procurement Objectives – authorities must have regard to the importance of (a) delivering value for money; (b) maximising public benefit; (c) sharing information for the purpose of allowing suppliers and others to understand the authority’s procurement policies and decisions; and (d) acting, and being seen to act, with integrity. Authorities must also treat suppliers the same unless a difference between the suppliers justifies different treatment.
• Less prescriptive procedures – there will be (i) Open, (ii) Competitive Flexible Procedure, and (iii) Limited Tendering (i.e. direct award).
• Framework Agreements – introduction of the concept of an “open framework”. Open frameworks can be for a period of eight years but, amongst other things, must provide for the frameworks to be “opened” at least once during the first three years and then at least once during each five-year period.
• Direct Award – introduction of the ground to protect life where a Minister of the Crown considers it necessary and as such introduces regulations that a direct award is permitted.
• Debarment – introduction of a debarment list. If a supplier is listed on the debarment list they are considered an “excluded supplier”, and must be excluded.
• MAT – authorities are to award a contract to the “most advantageous tender” (a move away from the EU’s “most economically advantageous tender”/MEAT).
• Whole-lifecycle - more focus on the contract lifecycle as a whole compared to the current regime. e.g. for certain contracts the need to set KPIs and annually publish an assessment of performance against such KPIs.
• Modifications – introduction of new modification “gateways”/”safe-harbours” including (i) materialisation of a known risk, and (ii) specific defence contract safe-harbours e.g. to enable authorities to take advantage of developments in technology.
• Transparency – additional transparency requirements e.g. publishing “contract change notices” prior to modifying contracts, and “contract termination notices”.
• Standstill – the new regime will have an eight-working days standstill period and the automatic suspension will only be available if a claim is brought (and the contracting authority is notified) within those eight working days.

As stated above, there is still a lot of work to be done to support the implementation of the Act and to understand how it may operate in practice.

Will it be that much of a transformation in reality? Time will tell.

If you have questions or would like to know how we think it will work on the ground, then please do get in touch!