With the introduction of the Procurement Act 2023, for contractors and suppliers who work for the public sector, or for their public sector clients (contracting authorities), the current regime for the procurement of contracts for works, services and supplies is about to change. The Act is now on the statute books and although its provisions will only become effective following a six month advance notification of its actual implementation date; currently forecast to be October 2024, now is the time to be aware of the new regime which will apply.
Until full implementation, the existing public procurement regime remains a hang-over from the UK’s membership of the EU. While the new Act follows similar principles; being themselves based on established international policies applying to tendering by the public sector, the Procurement Act 2023 has introduced some significant changes in the relevant law which need to be accounted for.
The changes made with the new Act include to consolidate what have become a number of different procurement regimes, such as that which applies between utilities and other forms of public body. There are also to be changed objectives set by the new Act, including achieving value for money, maximising public benefit and having regard to the UK national interests.
The Procurement Act 2023 will require contracting authorities to award contracts to the bidder who has submitted the ‘most advantageous’ tender, being the tender which best meets the award criteria in light of the assessment methodology. The new requirements will be to base awards 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 contracting authority considers appropriate (this is a procedure which can be designed by the authority).
A competitive procedure other than an open procedure is seen as giving scope for greater flexibility. While contracting authorities will have the 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. The two stage model of selection of suitable candidates in stage one and then a competition amongst that group for example is widely used at present.
The new Act permits increased abilities to directly award contracts in certain circumstances, including at the direction of the Government if considered necessary to “protect human, animal or plant life or health, or protect public order or safety”. This would allow for emergency procurement if we have another COVID-19 pandemic type event.
Beyond that, the new law introduces changes to the current procurement rules by combining the differing current regimes. So procurement rules governing the award of general public contracts, utilities contracts, concession contracts and defence and security contracts will all sit under the scope of the new Act.
However, some of the different rules will still exist. 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 new Act.
Procurement objectives have though now changed under the new Act. Previous criteria required contracting authorities to treat contractors and suppliers equally and without discrimination, and to act in a transparent and proportionate manner. Under the new 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.
The new Act intends to allow for greater flexibility. For example, rather than setting prescriptive procurement procedures a contracting authority will be able to decide whether to use an open procedure or some other form of competitive procedure.
Contracting authorities will also be able to make changes to the terms of a procurement after it has been started, but before certain key deadlines, such as prior to the date for submitting of tenders in an open procedure. There is to be 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 criteria 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.
The new Act introduces new duties in regard to the publication of notices throughout the procurement lifecycle. This is with a view to increasing transparency. Planned procurement notices and preliminary market engagement notices (replacing PIN notices under the current regime). Also, get used to 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.
The Act includes provisions on excluded suppliers and how they should be dealt with. The 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 new 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 under which the Government can enter the name of a supplier who is an excluded or excludable supplier. 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.
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.
Many of the remedies under the current procurement regime are replicated in the new 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.