All change for public contracts

Spending over £290BN each year, the procurement of works, services and supplies by the public sector makes up over a third of all public expenditure in the UK. Post Brexit, major legislative reforms are proposed to manage public procurement by central and local government, and other bodies which use public funds.

In what is called a Procurement Policy Note (PPN) published in June 2021, in anticipation of the introduction of the proposed new law the Government is requiring that contracting authorities as they are called should direct their procurement policies to achieving:

• The creation of new businesses, jobs and skills – helping businesses grow, increasing employment opportunities including in disadvantaged areas.
• Tackling climate change and reducing waste – contributing to the UK’s commitment to reduce greenhouse gas emissions to net zero by 2050.
• Improving supplier diversity, innovation and resilience – supporting small and medium sized business, use of new technologies and new methods of delivery.

In line with an earlier Government Green Paper on Transforming Public Procurement which trails a path for the proposed new legal regime, the PPN calls on contracting authorities to review procurement and contract management across their organisation. They are asked to benchmark themselves annually against commercial and procurement operating standards. The aim is that authorities can in these ways inform themselves as to whether they have the appropriate procurement skills and capabilities to deliver value for money and to be ready for the proposed reforms to the existing public procurement regulations which derive from the UK’s previous membership of the European Union.

Depending upon the authority’s scale of expenditure on procurement, authorities are being tasked under the PPN to ensure that their procurement and commercial teams have the appropriate capabilities and capacity. Public procurement activity will continue to require, transparency in engagement with the supplier market, the proper scrutiny of procurement decisions and to demonstrate good custodianship of public money. In addition, consideration is to be given to opportunities for collaboration with other authorities to deliver procurement needs, and whether each has sufficient capability to ensure tax payers money is spent effectively and efficiently.

For now, while the PPN requires the public sector to prepare itself for changes to come in regard to procurement, the existing Public Contracts Regulations 2015 continue to apply. These Regulations are a set of laws governing public procurement which are derived from EU Directives and which have been transitioned into the immediate post Brexit UK law. In addition, from 1 January 2021 the UK joined the World Trade Organisation’s Agreement on Government Procurement as an independent member in order to ensure continued access to the £1.3 trillion of oversees public procurement which UK exporters will want to have the opportunity to tender for. As such the intended new public procurement regime will need to be established in line with the international framework which the UK has signed up to, although the Green Paper has set out ambitions to develop beyond the constraints of the previous EU based procurement structure.

For contractors, construction professionals and other suppliers to the public sector and who look for public sector opportunities, the promised changes will be of great importance. We will continue to report on the reforms as they are brought forward.