Public procurement reform is one step closer

7th January 2022

Those who operate businesses reliant on public procurement may know that change is on the cards. What that change looks like is still uncertain but the government’s response to the Green Paper on Transforming Public Procurement has shed some light on what is ahead.  Inevitably there remains much work to be done, but it is plain even now that changes will be very significant.

The response shows that the appetite for simplification is strong across the board, but the need for flexibility and innovation is clearly recognised, particularly across the more specialist regimes such as utilities and defence.  Key takeaway points at this point are:

  • The Light Touch Regime will remain in some (reduced) form.
  • A competitive, flexible procurement procedure will be developed to encourage greater pre-market engagement more suited to driving innovation.
  • Contracting authorities will be able to operate “open” and “closed” frameworks (the latter of which be closed to new participants during the term) under which call off contracts can be awarded, with frameworks lasting as long as eight years in some instances.
  • In addition, in order to increase flexibility, fully electronic dynamic markets will be established, to which suppliers who meet qualification requirements can be admitted and via which contracts will be placed following a competition.
  • Terminology will change to more accurately reflect the fact that ‘economic’ advantage is merely one part of the overall picture a contracting authority must consider.
  • The key principles of transparency, non-discrimination and equal treatment will be codified into statutory objectives, along with other principles such as the promotion of open and fair competition and maximisation of the public benefit (the latter drawing on the existing concept of social value).
  • Grounds for exclusion of suppliers will be expanded and clarified.
  • Damages will not be capped, a step which some perceive would have reduced the appetite for speculative challenges to contract awards. However, the current process for dispute resolution via the courts will be streamlined, the aim being to enable many more disputes to be resolved prior to contract award, reducing the need for compensatory damages to be paid.
  • The current test to lift the automatic suspension of a contract award on issue of court proceedings is to be reviewed and is likely to be replaced by a single-limb test drawing in all factors, including impact on public service delivery.
  • The Public Procurement Review Service will be replaced by a new body, the Procurement Review Unit, which will hold more extensive powers. It will work with a panel of procurement/industry experts in appropriate cases to ensure that systemic breaches of procurement regulations are addressed.

Changes of this magnitude will take a long time to come about, and even then, both contracting authorities and suppliers will have to grapple with how the culture change, so desperately needed to breathe life into any new regulations, can be achieved.

Precise timescales therefore remain unclear, but primary and secondary legislation will be needed and will have to be supported by a programme of education, making roll-out before mid to late 2023 unlikely.