The Procurement Act 2023 has four core objectives.
These are:
- creating a simpler and more flexible purchasing system
- opening up public procurement to new entrants, such as small businesses and social enterprises
- taking tougher action on underperforming suppliers
- ensuring greater transparency throughout the commercial life cycle.
Implementation delayed to allow for policy statement
The Act comes into effect on 24 February instead of the original date of last October, as announced by the Cabinet Office in September.
The Labour government opted to delay the effective date to give time for a new National Procurement Policy Statement (NPPS) to be produced.
This statutory statement allows the government to set and communicate wider policy objectives that public procurements should consider and will come into force with the Procurement Act in February.
The Cabinet Office said the new NPPS will create a 'mission-led procurement regime', building on the 2023 Act's powers and exploiting the full potential of public procurement to provide value for money, economic growth and social value.
This ambition aligns with the Act's objectives to increase transparency and simplicity, as well as representing a move from seeking the most economically advantageous tender to the most advantageous tender, so that the best value takes priority over the lowest cost.
In the meantime, work on the central digital procurement platform to host the information to support the transparency agenda and the Act's new reporting obligations will continue at pace.
Stakeholders should take time to prepare
We can expect processes to change as result of the new legislation and terminology, but it is unrealistic to expect everyone to be procuring perfectly straight away.
However, contracting authorities and suppliers should be ready to embrace the new regime and its objective to establish lasting behavioural change.
Contracting authorities should examine their upcoming procurement pipeline and consider whether to adjust timings or continue as planned using a compliant framework.
Although the new processes and ways of thinking will become clearer as they are implemented, there are several key changes with which new and established contractors should familiarise themselves.
Increased number of notices aim to improve transparency
Under the current regime, notices including the tender notice and contract award are only used during the procurement stages.
From 24 February, however, notices will be required throughout the contract life cycle beyond procurement, increasing the number required from four to 14.
This starts as early as the new mandatory pipeline notice for those applicable procurements, which sets out information about a contracting authority's public procurement pipeline where the anticipated spend is more than £100m over a defined reporting period.
The notice will set out information on each public contract that has an estimated value of more than £2m.
The new notices will encourage transparency throughout the procurement process, enabling greater scrutiny of decisions and contract performance to maintain high standards.
For suppliers, especially SMEs, it will mean more opportunities to take part in upcoming tenders, while tracking progress and performance.
It will also increase transparency about suppliers' performance, which in some circumstances may affect their ability to bid for future work.
Contracting authorities will need to invest time in their procurement and contract management resources or engage with established and compliant framework agreements to procure their requirements.
It is anticipated that the increased administrative burden will be offset by a simpler system that reduces duplication.
'From 24 February notices will be required throughout the contract life cycle beyond procurement, increasing the number as required from four to 14'
Engagement encouraged with streamlined procedures
The Act streamlines the number of procedures from seven under the current regime down to two, namely the existing open procedure and the introduction of a new competitive flexible procedure.
These mechanisms aim to offer maximum flexibility for procurement and reduce barriers to entry.
Suppliers will need to train bid teams to ensure they are aware of the changes and where to access information.
They are encouraged to engage with contracting authorities to contribute to pre-procurement consultations during the procurement planning stages.
Therefore, they should review published opportunities and request clarification with authorities if these documents are ambiguous.
Contracting authorities are meanwhile encouraged to use preliminary market engagement to determine the most appropriate procurement route, define the scope, and ensure their internal policies and procedures align with the new mechanisms.
Debarred contractors to be centrally registered
Discretionary and mandatory grounds for excluding suppliers will remain very similar, targeting non-compliance and poor performance, but their scope has been widened under the 2023 Act.
The legislation includes plans for a register of those debarred from participating on a central digital platform and, in addition, the mandatory issuing of a new notice detailing any unsatisfactory performance or breaches of contract.
Contracting authorities will be required to check applications against the live register and any such notices.
There is some nervousness among suppliers and contract authorities around this, but several robust measures will have to be completed before a contractor is placed on the register.
These include the contracting authority issuing a notice to the government recommending a contractor is placed on the register, a thorough impartial investigation, and an eight-working-day standstill period also applies to any debarment decision.
Suppliers are encouraged to ensure they have a full understanding of contractual commitments and in particular the performance commitments prior to entering into agreements.
They are also encouraged to review their supply chains to ensure no organisation poses a particular risk. Internal guidance, policies and procedures should also be reviewed to ensure the correct governance is in place.
Ultimately, the debarment list is there to promote accountability, ensure compliance and protect the investments of those procuring works, while providing an incentive for suppliers to get things right so they can keep bidding for work in the future.
'Ultimately, the debarment list is there to promote accountability, ensure compliance and protect the investments of those procuring works'
Performance assessment becomes more stringent
Procurement performance is a focus of the 2023 Act, which formalises and strengthens existing requirements such as:
- defining at least three mandated performance measures to be monitored at least once every twelve months before entering into contracts with an estimated value of more than £5m
- publishing payment compliance information and social value tender commitments, which will form a contractual commitment and key performance indicator.
The publication of new notices will enable greater transparency and access to data on public procurement spending decisions, covering the entire procurement life cycle from the performance of frameworks through to individual contracts.
Part of the contract performance monitoring will include assessing additional commitments a supplier made during their bid, such as social value.
Greater access to information may increase scrutiny and the number of challenges made by suppliers to contracting authorities. This will mean more competition among suppliers, but should benefit authorities and the public purse.
Reputational damage is a risk if performance is below the expected standard. But the Act encourages collaboration in the pre-procurement stages to ensure performance measures are suitable and support everyone involved in procurement.
Contracting authorities are also obliged to provide detailed feedback to all bidding organisations that have been assessed.
Assessment summaries provide a comprehensive evaluation to each relevant supplier to understand why its tender was either successful or unsuccessful. By digesting all feedback thoroughly, suppliers will see where they have room to improve.
Contracting authorities are not required to include a direct comparison between the successful supplier's tender and an unsuccessful supplier's tender.
The assessment summary provided to unsuccessful suppliers must include a copy of the information provided to the successful supplier (redacted for confidentiality where required) explaining how its tender scored against each of the criteria.
Guidance available to ensure smooth transition
The government continues to issue resources and guidance documents available online to help prepare for more successful and transparent procurement under the new regime. This material will be available up to and after the new commencement date.
More information on the 2023 Act is also available from Pagabo. Becoming familiar with the upcoming changes should lead to greater understanding and confidence in procurement teams once the Act comes into force.