The new Procurement Act 2023: An unwanted Christmas gift, or a New Year’s resolution?

Tom Dyer, Director – Strategic Procurement & Contract Advisory, Aqua Consultants

In December 2020, during a time when the UK, and the rest of the globe, was gripped by the COVID-19 pandemic, the UK Government promised to transform public procurement for the better. Now, nearly 3 years on, we have the Procurement Act 2023 (the Act) which finally received Royal Assent on 26^th October 2023.

The Act contains 128 sections, 11 schedules and at (a rather measly) 125 pages in length, it appears the Government may have delivered on its promise to remove the “red tape” and consolidate the plethora of regulations into one easy-to-use regime. But, in the (wintry) cold light of day, will life be any simpler for contracting authorities and suppliers going into the New Year?

The Key Changes

The Public Contracts Regulations 2015, Concessions Contracts Regulations 2016, Utilities Contracts Regulations 2016 and Defence and Security Public Contracts Regulations 2011 will be repealed and replaced by the Act.

By consolidating the current (somewhat complicated and burdensome) regulations, the Government hopes to a ‘create simpler, more flexible and effective procurement’ regime which delivers value for money and maximises public benefit.

Consequently, the procurement procedures enshrined in the current regulations will also be replaced. Going forward, there will now be just two:

a ‘single stage open procedure’ – similar to the current open procedure, and
a ‘competitive flexible procedure’ – whereby contracting authorities can devise their own procedure(s) to suit (provided it stays within the rules of the game).

But, if contracting authorities will be afforded more flexibility to shape their procurement procedure(s), this will come at the administrative expense of having to navigate and manage no less than 14 types of notice requirements. These include:

Planned Procurement Notice (non-mandatory) – Section 15
Preliminary Market Engagement Notice – Section 17
Tender Notice – Section 21
Dynamic Market Notice – Section 39
Transparency Notice – Section 44
Contract Award Notice – Section 50
Contract Details Notice – Section 53
Procurement Termination Notice – Section 55
Payments Compliance Notice – Section 69
Contract Performance Notice – Section 71
Contract Change Notice – Section 75
Contract Termination Notice – Section 80
Below-Threshold Tender Notice – Section 87
Pipeline Notice – Section 93

Contracting authorities will need to adequately consider, set and publicly report on key performance indicators in relation to large contracts (£5m+). Suppliers may also be disbarred if mandatory or discretionary exclusion criteria are triggered. This is not just in relation with the supplier’s own performance but also in relation to the status of their associated suppliers and subcontractors too.

The standstill period will also change. Under the current regime the standstill period is set at ten calendar days, ending on a working day. The Act now mandates a standstill period of 8 working days beginning with the day on which the contract award notice is published. Where light touch contracts and framework call-offs are used, no standstill period will be required.

For Suppliers who are SMEs, they will be glad to hear that the Act imposes specific obligations on the contracting authority to not only consider the “lotting” structure, but also look at reducing barriers to entry for SMEs participating in a procurement. This will include, amongst other things, removing the requirement to provide accounts and insurances during the bidding process. This might help SMEs save time, effort and most importantly money, from not having to carry specific insurance requirements throughout the entire bidding process.

Contracting authorities will also be afforded the opportunity to directly negotiate prices with SMEs via smaller, tailored contract lots. Suppliers (particularly SMEs) will also benefit from a centralised digital platform which will store their details and track opportunities all under one roof. The overall effect of course is to streamline the tender process and make it easier for SMEs to bid for the public purse.

Oh and let’s not forget…there will be lots of new references and terminology to get used to. For example, ‘Most Economically Advantageous Tender’ (MEAT) will now be ‘Most Advantageous Tender’ (MAT) and ‘Selection Criteria’ will be ‘Conditions of Participation’.

Next Steps

We can still expect a significant number of additions in the form of legislation, policy statements and guidance, in order to get this Act off the ground and a part of everyday life. There will be secondary legislation in the first part of 2024, a new National Procurement Policy Statement towards the end of next year (October 2024) and plenty of guidance and training materials to digest along the way.

Over the course of the next ten months, contracting authorities and suppliers will therefore need to navigate their way through a myriad of information, upskilling themselves, their systems, and their procedures to account for the brave new world that awaits.

To help with this upheaval, the Government has confirmed that there will be a minimum six month “transition period” affording some time to get ready for the “go-live” date expected in October 2024. During this period the Government will deliver a comprehensive learning and development programme which includes:

‘Knowledge Drops’ – on-demand video resource of changes (November 2023),
‘E-Learning’ – self-guided learning product comprising ten x one-hour modules (March 2024),
‘Deep-Dives’ – advanced three-day virtual course (May 2024)
‘Communities of Practice’ – collective inquiry and reflection on changes (May 2024)

This will undoubtedly help the contracting authorities understand the new processes and procedures and hopefully allow them to make step-changes in their approach - not simply “cookie-cut” old methods to fit the new. But, sadly, the learning and development programme is only aimed at supporting the contracting authorities, helping the “Clients” to get ready, not the “Suppliers”. This inevitably creates disparity in the marketplace and those wanting to bid the public purse will need to obtain their own advice pretty quickly.

In any event, both contracting authorities and suppliers will need to make significant changes to how they procure in terms of their culture and behaviours but also their documents, processes, and systems.

Recommendations

Time is now of the essence. With approximately ten months until the ‘go live’ date:

Contracting authorities should…

Identify who needs to undertake the relevant training to support the successful transition to the new rules.
Audit their existing strategies, policies and procedures and identify what changes need to be made to align with the Act.
Update their suite of tender documents to align with the language, references and requirements of the Act and ensure these dovetail with their systems.
Map out their procurement requirements for the forthcoming year (and beyond) and implement a strategy to straddle the old and new regimes.
Arrange engagement sessions with their supply chain to disseminate transition information i.e. what changes you will implement, why and by when.

Suppliers should…

Audit their strategies, systems, and processes in order to identify any gaps and opportunities with the new regime.
Update their suite of bid documents to align with the requirements of the new regime.
Engage with their clients and key accounts as soon as possible to understand their timescales and transition plan.

There’s much to do and public sector resources will inevitably be strained when having to deal with business-as-usual alongside the transition requirements associated with the Act. Both contracting authorities and suppliers should therefore reach out for specialist support (whilst there’s still time) and ensure the changes are implemented on time and in accordance with the Act and the accompanying policy notes and guidance yet to come.

Conclusion

At first glance, the Government seems to have done a good job at simplifying the procurement landscape. But with a busy ten months ahead, success will depend on how contracting authorities and suppliers translate legislation into operation. The proof might not necessarily be in the (Christmas) pudding but contracting authorities and suppliers will certainly need help in getting to grips with all the changes, when the New Year arrives.