On 26 October last year, the Procurement Act 2023 reached the final stage of its legislative journey, introducing the most changes to public sector procurement in a generation. Following two rounds of consultation with various stakeholders and 18 months in the House of Commons and House of Lords, the Act received royal assent on 26 October, and will govern how public sector bodies are allowed to spend roughly £300 billion in public funding for works, goods and services across the UK.
Christian Rowe, Managing Director of bid and tender writing consultancy Executive Compass, examines what is changing within the public sector tender process, and how this will impact bidders and buyers alike going forward.
Principles and objectives of the Act
Ultimately, the Procurement Act 2023 aims to simplify and streamline all processes for public sector procurement. As all public sector contracts above a certain threshold are subject to a competitive tender exercise, the Act will serve as a framework for all of these contract awards. Section 12 outlines the principles and objectives of the tender process, including:
- Delivering value for money when procuring suppliers to complete works or services for public projects
- Maximising public benefit through contract award, including through the continued inclusion of social value and community benefits
- Sharing information to allow suppliers and other stakeholders to understand decisions, enhancing oversight of the award process
- Acting with integrity throughout the tender exercise, ensuring there is no implicit or explicit competitive advantage for certain suppliers.
Lastly, Section 12(4) requires all buyers to ‘have regard [that] small- and medium-sized enterprises may face particular barriers to participation’, and whether these barriers can be eliminated. The clause reflects a common theme within public procurement over the last decade.
Central and local government bodies have made concerted efforts to get SMEs to integrate within the public sector supply chain, with mixed success to date. The Procurement Act 2023 represents a fresh start in ensuring £1 of every £3 of procurement spend goes to small- and medium-sized business, which has been a formal target since 2015.
Changes to public sector tendering
The scope and breadth of the Act also means that fundamental changes to the tender process have been introduced, with new considerations and obligations for buyers and bidders alike.
Changes to awarding the contract
Per Section 19(2), the award of a public contract is given to the supplier who submits the ‘most advantageous tender’, amended from the previous ‘most economically advantageous tender’ designation – commonly known by the acronym MEAT.
The change in phrasing suggests a more holistic and comprehensive evaluation approach, which considers how a contract award will maximise public benefit and deliver value for money rather than going for the cheapest option.
Reducing the number of tender procedures
Under previous procurement law, including the Public Contracts Regulations 2015, there were eight possible tender procedures authorities could choose to employ – updated guidance from the Act has reduced this to two. The first is the ‘single-stage’ procedure, which is similar to the current open procedure where the PQQ/SQ and ITT are submitted together. The second, the new ‘competitive flexible’ procedure, which is allows authorities to structure tender procedures as they see fit for the procurement opportunity.
Greater engagement prior to the tender going live
Contracting authorities have also incurred additional duties during the preparation of tender exercises, as per Sections 16–18 of the Act. This includes:
- Planned procurement notices published at least 40 days prior to the tender notice being released – replacing prior information notices or PINs
- Preliminary market engagement notices, allowing suppliers to have greater input and involvement prior to the tender notice being issued
- A duty to consider lots or separate contracts if there are significantly different works or services within the scope of requirements.
In addition to giving wider scope and involvement to bidder organisations, the introduction of notices before the tender is issued will allow suppliers more time to prepare for tender submissions.
Stronger measures for excluding unsatisfactory suppliers
To encourage strong performance and accountability within government supply chains, all contracts with a value exceeding £5 million will require the contracting authority to publish KPI performance of suppliers in a publicly accessible location, per Section 71(2). This will aid in increasing oversight of performance, underscoring the importance of confirming your ability to effectively resource the contract as part of a ‘bid/no-bid’ decision.
The Act will also introduce a new public sector supplier debarment list, as per Section 62. Suppliers can be added to the debarment list if they fail to pass mandatory or discretionary exclusion criteria, or have consistently underperformed on previous public sector contracts. As with the KPI publication, the debarment list will be publicly accessible, meaning that there will be greater scrutiny on suppliers within the public sector.
Lastly, it is interesting to note that the Act made no explicit mention of ‘social value’ throughout the legislation’s text. However, this does not suggest buyers will abandon social value as part of the procurement process, particularly as Procurement Policy Note 06/20 mandates that a minimum 10% weighting must be applied to all tenders where a central government department is acting as the buyer.
How bidder organisations can prepare
Many elements of the Procurement Act 2023 will require bidders and buyer organisations alike to adapt to new guidance and obligations. To ensure adequate preparation, the various changes and updates introduced by the Act will not come into force until October 2024.
To support these aims, the Cabinet Office is offering a suite of free training and learning packages tailored to bidders and contracting authorities. Learning and development includes on-demand video resources known as ‘knowledge drops’, bespoke e-learning courses for skilled practitioners, and three-day ‘deep dive’ courses led by an instructor via webinars.
In advance of the Act coming into force, bidders should also conduct due diligence on current performance of public sector contracts, with immediate actions for any levels of unacceptable performance. This will avoid early placement on the new supplier debarment list.
The Procurement Act 2023 will usher in much-needed changes and efficiencies to public sector tendering. By equipping yourself with knowledge on what will apply and new obligations in advance, you will be well positioned to begin (or continue) doing business with the government, thereby increasing revenue, expanding your client base and winning valuable, prestigious contracts.