On 26 October 2023 the Procurement Bill received Royal Assent and became the Procurement Act 2023 (the "Act") – a significant milestone in the UK Government's post-Brexit revision of the law of public procurement.
On the same day, the Public Procurement (Agreement on Government Procurement) (Thresholds) Regulations 2023 and Public Procurement (Agreement on Government Procurement) (Thresholds) (Miscellaneous Amendments) (Scotland) Regulations 2023 were published, updating the financial thresholds in respect of the current UK and Scottish public procurement regimes from 1 January 2024.
On 13 November the Cabinet Office then published its guidance on "Transforming Public Procurement – our innovation ambition", setting out (if in outline terms) how it hopes the new legislation will allow contracting authorities to behave differently from before.
The UK Government first set out its detailed proposals for procurement reform in a green paper in December 2020 – which we blogged about here – and published its response to the consultation that followed in December 2021 – our analysis of which can be found here. While many details of the new regime remain to be determined by future regulations, the substantive reform is now definitively outlined and bidders and contracting authorities subject to the Act can see how the new public procurement regime will operate.
The regime is anticipated to come into force in October 2024 and the Government has committed to giving a minimum of six months' notice before 'going live', suggesting that these details are likely to be finalised in spring next year.
Key Reforms
As a reminder the current UK public procurement legal regime consists of a series of regulations which implemented the rules set out in EU directives:
- The Defence and Security Public Contracts Regulations 2011,
- The Public Contracts Regulations 2015,
- The Concessions Contracts Regulations 2016, and
- The Utilities Contracts Regulations 2016.
The Act will replace these with a single unitary framework for all procurement by relevant contracting authorities. A separate but near-identical set of regulations govern public procurement in Scotland and are not being replaced.
One of the most symbolic reforms in the Act is the move to require evaluation criteria to identify the "most advantageous tender" rather than the "most economically advantageous tender". This change is designed to encourage public sector buyers to take a broader view and consider strategic priorities such as the creation of new local jobs, tackling climate change, and fostering innovation when evaluating tender responses, although contracting authorities should not read too much into the change as other requirements (for example for criteria to relate to the subject matter of the contract) are still present in the Act.
The Act replaces the current set of procedures with just two: the "open procedure" and the new "competitive flexible procedure" which is designed to give contracting authorities more freedom to set their own approach to a competitive tendering exercise according to the nature, cost, and complexity of each opportunity.
The Act introduces the concept of "open frameworks", another new procedure which allows one framework to be replaced multiple times by another on "substantially the same terms" up to a maximum of eight years from the first award.
In light of the challenges of complying with procurement regulations during the Covid-19 pandemic, the Act also includes specific new arrangements for emergencies. Ministers are given power to make provision in regulations allowing direct award of specific types of contract (in circumstances where the Act does not otherwise already permit a direct award) when making that provision is "necessary" to protect human, animal, or plant life or health, or protect public order or safety.
Regulations to be made under the Act will require all contracting authorities to use a single digital platform for supplier registration, ensuring suppliers will only have to submit their credentials once to be considered for public sector procurements.
The Act will make it easier for buyers to take account of poor supplier performance. Refreshed discretionary grounds for excluding suppliers from a given procurement include breach of contract and poor performance, a notable lowering of the threshold for exclusion (currently it is necessary for a breach of contract to have resulted in termination or other comparable remedies). It also provides for the setting up of a central list by the Government of all suppliers who have been 'debarred' from competing for public contracts.
As we previously noted in our blog on the Procurement Bill, one key change for tenderers looking to challenge a contract award is that the automatic suspension will now only kick in if a challenge is brought during the standstill period set in the contract notice – it will no longer be possible to agree standstill extensions with the contracting authority while potential disputes are aired and potentially resolved between the parties. That is likely to lead both to more litigation and to missed deadlines.
Scotland
While the Act applies across the UK, 'devolved Scottish authorities' are excluded from its scope. Authorities whose functions are exercisable only "in or as regards Scotland" – unless their functions relate solely to reserved matters under the Scotland Act 1998 – will continue to operate under the equivalent EU-derived Scottish regulations. The Scottish Government has given no indication that it intends similar reform to those regulations. Many bidders operating in Scotland will therefore have to operate under both regimes, either where they tender both in Scotland and elsewhere in the UK, or where they tender only in Scotland but for both devolved and reserved contracting authorities.
Draft regulations
As noted above, the Act leaves much of the fine detail to be determined by secondary legislation, and the Government is currently analysing responses to consultations on two sets of draft regulations to fill these gaps.
At present, the draft Procurement Act 2023 (Miscellaneous Provisions) Regulations 2024 contain the list of 'light touch services' which can be procured according to different set of rules under the Act, and methods of calculating whether an entity is a 'utility' for the purposes of the Act, or whether a horizontal or vertical exemption (the Act's new name for the "Teckal" and "Hamburg Waste" exemptions) applies to a certain arrangement.
The draft Procurement (Transparency) Regulationsmake provision for a new online system for the publication of notices and documents that the Act requires buyers to publish, and the content of these.
New thresholds
The Public Procurement (Agreement on Government Procurement) Regulations 2023 and Public Procurement (Agreement on Government Procurement) (Thresholds) (Miscellaneous Amendments) (Scotland) Regulations 2023 update the new procurement thresholds which determine whether a public contract falls within the scope of the current public procurement regime, and can be found in the table below. The new thresholds will take effect from 1 January 2024 and are inclusive of VAT.
Type of contract | Current threshold | Threshold from 1 January 2024 |
Public works contracts | £5,336,937 | £5,372,609 |
Public supply contracts and public services contract (central government) | £138,760 | £139,688 |
Public supply contracts and public services contracts (all other contracting authorities) | £213,477 | £214,904 |
Public service contracts for social and other specific services under the Light Touch Regime | £663,540 | Unchanged. |
Interestingly, the new Act refers to the existing thresholds which will only be in effect until 31 December 2023, meaning the Act will require amendment to take account of the changes to the thresholds (which are set under international agreements to which the UK is still a party), or risk being out of date from the moment it comes into force.
Risk and Reward
While the Act introduces a number of changes, there is a significant degree of (apparent) continuity with the existing procurement regime. Whether new statutory provisions will be interpreted by the courts in the same way as similar provisions in the EU-derived regulations will remain to be seen – as with the subsidy control regime, significant change could come about from ostensibly small changes to terminology.
For some, adapting old methods will be an attractive way of minimising the risk of overstepping unclear boundaries, at least until the courts (and the experience of others) clarifies what has really changed. For those willing to seize it, however, this is an opportunity to do things differently.
If you are interested in how these changes affect your organisation or would like to discuss them further, please contact Jamie Dunne, Charles Livingstone or your usual Brodies contact.
