The Procurement Act 2023, which is now expected to “go-live” on 24 February 2025, will replace:
- The Public Contracts Regulations 2015.
- The Utilities Contracts Regulations 2016.
- The Concessions Contracts Regulations 2016.
- The Defence and Security Public Contracts Regulations 2011.
The Major Objectives of the Procurement Act 2023:
The original
principles of the UK’s procurement legislation were based on the foundational
principles of:
- Transparency.
- Equal treatment.
- Non-discrimination.
- Proportionality.
These principles, derived from the retained EC Treaty, were established through Regulation 18 of the Public Contracts Regulations 2015, which forms the basis of the existing procurement framework. They are essential for ensuring fairness and accountability in procurement processes.
The Procurement Act 2023 introduces a shift in terminology, replacing the principles above with specific procurement objectives outlined in section 12. Contracting authorities are now required to focus on:
- Delivering value for money.
- Maximising public benefit.
- Facilitating information sharing to enhance understanding of procurement decisions.
- Maintaining integrity in their actions.
This rephrasing emphasises a more outcome-oriented approach while upholding the procurement process's core values. The Procurement Act reinforces the concept of equal treatment under a new framework, stipulating that contracting authorities must treat suppliers equitably unless justified differences exist.
In evaluating whether such differences warrant varied treatment, authorities must take reasonable measures to prevent any supplier from gaining an unfair advantage or facing undue disadvantage. Additionally, the Act mandates that contracting authorities actively consider and address potential obstacles small and medium-sized enterprises face in the procurement process, ensuring these barriers are minimised or eliminated.
Key
Changes in the Procurement Act 2023:
- Award Criteria - The Procurement Act 2023 allows contracting authorities to select the "Most Advantageous Tender," moving beyond the sole cost consideration. This allows for evaluating a broader array of factors in addition to price, akin to the weighted point system previously employed under the Public Contracts Regulations 2015 regulations. However, in contrast to Public Contracts Regulations 2015, price is no longer the primary determinant. In certain instances, contracts may be awarded based on non-financial considerations such as quality, innovation, or environmental sustainability. Furthermore, the Act provides authorities with increased flexibility for direct awards in particular circumstances, which can be utilised to safeguard public health (as seen during the COVID-19 pandemic), ensure safety, or respond to urgent requirements.
- Supporting Local Businesses - The UK Procurement Act 2023 aims to support UK businesses, focusing on small and medium-sized enterprises (SMEs) and social enterprises. Public authorities are permitted to set aside specific contracts for these entities and are required to give them greater consideration during the procurement process.
- Sustainability and Social Value - A key aspect of the Procurement Act 2023 is the contracting authorities' need to evaluate how their procurement activities can support 'national priority outcomes' as outlined in PPN 05/21. This encompasses various objectives, including job creation, skill development, addressing climate change, and minimising waste, all of which are integral to social value. Public sector purchasers will now be mandated to award contracts based on the Most Advantageous Tender (MAT) instead of the Most Economically Advantageous Tender (MEAT). The MEAT framework promotes the consideration of broader community benefits, such as fostering local employment, lowering carbon emissions, and engaging local suppliers, all of which enhance social value.
- New Rules For Transparency And KPIs - The Procurement Act introduces a notable shift aimed at enhancing the value of taxpayer funds. Public authorities must now disclose at least three key performance indicators (KPIs) for contracts valued over £5 million. These KPIs will serve as a means to monitor supplier performance during the contract's duration. This initiative promotes stronger oversight and greater effectiveness. However, it is essential to note that specific contracts, such as those granted through framework agreements, are not included in this requirement.
- Central Digital Platform: A key feature of the Procurement Act 2023 is establishing a centralised digital platform intended to function as a central hub for suppliers. This platform will allow suppliers to register, maintain their information, and quickly access all pertinent opportunities in a single location. The primary goal is to streamline the bidding process, reduce redundancy, and minimise errors, promoting a more efficient and accessible procurement landscape.
- Procurement and Tender Procedures: Procurement and tendering processes will be streamlined to include only two methods: the current Open Procedure and the newly introduced Competitive Flexible Procedure. This innovative multi-stage approach enables authorities to design customised procurement processes that meet their specific requirements and goals. The Competitive Flexible Procedure encourages suppliers' active participation during the process, promoting a collaborative and innovative environment. By utilising strategies such as negotiation and dialogue, contracting authorities can leverage supplier expertise, leading to tailored solutions that provide optimal value.
- Transparency and Accountability: Transparency and accountability are essential to the proposed changes, which mandate that buyers disclose procurement plans, market activities, tender announcements, and contract information on a digital platform. This initiative aims to improve data analysis, strengthen feedback processes, and foster a more accountable and transparent procurement system. Contracting Authorities with substantial annual expenditures must publish their future procurement pipelines at the beginning of each financial year.
- Early Market Engagement: Engaging with suppliers early in the market process is not merely suggested; it is strongly advocated by The Procurement Act 2023. Contracting authorities can obtain crucial insights into market trends, investigate innovative solutions, and improve their procurement strategies by starting discussions. This collaborative method not only boosts the efficiency of the procurement process but also creates a favourable atmosphere for fair competition and optimal value.
- Small and Medium Suppliers: The Procurement Act 2023 emphasises the importance of inclusivity and competition by actively promoting the involvement of small and medium-sized enterprises (SMEs), start-ups, and social enterprises. It aims to eliminate obstacles and streamline requirements, particularly concerning financial and insurance criteria. Additionally, specific contracts will be designated for particular categories of suppliers, including supported employment providers and public service mutuals.
- Strengthening Penalties: The Procurement Act 2023 aims to enhance the enforcement of procurement regulations by introducing stricter penalties and new mechanisms for compliance. A significant feature of the Act is the creation of a Procurement Ombudsman tasked with managing complaints and resolving disputes, which reflects a dedication to ensuring fair and efficient resolution processes. Furthermore, the Act seeks to accelerate payment processes within public supply chains, guaranteeing prompt compensation for participating businesses. It also grants contracting authorities the authority to exclude suppliers, highlighting misconduct by the suppliers and individuals connected to them.
The Procurement Regulations 2024
The Procurement Regulations 2024 mark a significant advancement in promoting transparency, equity, and efficiency within public sector procurement procedures. These regulations are intended to enhance the framework established by the Procurement Act 2023, which provides explicit guidelines for the procurement activities of public sector authorities. The primary aim of these Regulations is to refine and standardise the procurement process further, thereby minimising the risks of corruption, favouritism, and inefficiency.
A notable feature of the Regulations is the mandate for public sector central and local authorities to implement electronic procurement systems. This initiative will facilitate the automation and streamlining of the procurement process, making it more straightforward for suppliers to submit their bids, for public sector officials to assess those bids, and for contracts to be awarded promptly. By adopting electronic systems, the government will improve its ability to track, trace, and monitor procurement activities, enhancing accountability and transparency.
A significant element of the Regulations is the focus on ethical procurement practices. Public sector officials are now required to follow a stringent code of conduct that forbids the acceptance of gifts or favours from suppliers and mandates disclosing potential conflicts of interest. This measure aims to mitigate corruption and ensure that contracts are awarded based on merit rather than personal relationships or financial inducements.
The anticipated effects of the Regulations are likely to be beneficial, as they are designed to diminish the risks of fraud and corruption within public sector procurement processes. By enhancing transparency and accountability, the Regulations will foster trust and confidence in the government's capacity to judiciously and effectively use public funds. Consequently, this will improve public sector programs and services, resulting in more favourable outcomes for the public and local communities.
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