The Procurement Bill – at a second glance

The now well documented Procurement Bill 2022 underwent its second reading in the House of Lords on Wednesday 25^th May leading to a healthy debate on the proposed reforms, highlighting both those areas generally welcomed by the House, together with those that may need further refinement.

The journey so far

The Procurement Bill underwent its first reading in Parliament on 11^th May, representing a culmination of nearly 2 years of policy development in line with the UK’s transition out of the EU at the end of December 2020. The Green Paper “Transforming Public Procurement” was published on 15^th December with the consultation closing in March 2021 and the Government publishing its summary of the 619 responses received nearly a year later, on 6^th December 2021.

It is fair to say there are some differences between the proposals set out within the Green Paper and those reflected within the draft Bill; however, the vision underpinning the Government’s post-Brexit reforms remains throughout, to secure quicker and more simplified public procurement focused on value for money, greater innovation and the creation of more opportunities for smaller businesses.

The Procurement Bill - at first glance

Firstly, the style and language of the Bill is noticeably different, moving away from the terminology reflected within the EU Directives to text which is arguably more familiar to the domestic market. Furthermore, much of the detail has been relegated to schedules which now supplement their related operative provisions – it remains to be seen whether this will achieve the aim of “simplification” of the rules. The Bill is now also designed to apply across the UK.

Secondly, there are some high-level changes (although this list is by no means exhaustive) which will clearly have an impact across the board:

• There had been a call, even before the implementation of the current suite of public procurement regulations back in 2015 and 2016, for their consolidation in order to “slash” unnecessary red tape. That call has now been heeded; the Bill now consolidates the current Public Contracts Regulations 2015, the Concession Contracts Regulations 2016, the Utilities Contracts Regulations 2016 and the Defence and Security Public Contracts Regulations 2011 (together the “Regulations”).
• The current raft of procurement procedures has been reduced to three: a “single-stage tendering” procedure (akin to the open procedure), a “competitive tendering procedure” (which may, in practice, reflect or adapt any of the other tendering procedures currently available to contracting authorities under the Regulations), and a direct award. This arguably gives contracting authorities much more flexibility, in principle, to mould their procurement processes to match their bespoke requirements, timescales and resources whilst continuing to ensure those processes are proportionate.
• The award criteria have been changed from “most economically advantageous tender” to “most advantageous tender” allowing contracting authorities more flexibility to consider factors beyond price such as social value, sustainable procurement or the achievement of net zero climate targets at ITT stage.
• There are also more flexibilities in the procurement of Dynamic Markets (which look to replace DPS’s albeit they will not be limited to “off-the-shelf” requirements) and Framework Agreements (introducing “open” in addition to the current “closed” arrangements). Open frameworks will be permissible for a period of up to 8 years provided they are reopened for competition at least once during the first 3 years and similarly, at least once in the subsequent 5 years. Closed frameworks may be for a period longer than the currently standard 4 years, should the nature of the works, services or supplies justify a longer term (i.e. not only in “exceptional” circumstances).
• The mandatory and discretionary grounds for exclusion have been refreshed and made “UK specific”, plus a debarment register has been introduced which will list companies who should be excluded for serious breaches. Most notably for suppliers, there are additional discretionary grounds which permit a contracting authority to exclude for breach of contract, or more notably, “poor performance”, for “acting improperly in procurement” or posing “a threat to the national security of the United Kingdom”, plus the ability to apply many of the grounds to “connected” entities such as sub-contractors or those under the suppliers’ “control”.
• There are greater controls on suppliers at post award stage; whereas the current rules essentially only govern post award contract modifications, additional duties have been included to require:
  • the inclusion of KPI’s in contracts valued above £2 million, with performance assessed and information published against those on an annual basis;
  • payment of all valid and undisputed invoices within 30 days, including those relating to supply chains; and
  • the mandatory publication of contract change notices.
• Finally, the Bill also includes requirements for the public sector “to have regard” for government strategic procurement priorities as set out within the National Procurement Policy Statement which we assume will, in practice, give contracting authorities a reasonable degree of flexibility to balance those against their own local strategic needs.

A second glance

The Bill is long, some 122 pages, and still has a long journey ahead of it, with a rite of passage through the House of Lords and then the House of Commons before it secures Royal Assent. Current estimates are that we will not see a new Act until 2023 at the earliest, following which the Government intends to allow a 6-month transition period to allow the market to prepare for implementation.

However, the second reading may well provide some insight into some key areas for further debate. Transparency, although a fundamental tenet of the Green Paper, has not made it into the explicit “procurement objectives” set out within the Bill (although the principle does currently appear in Regulation 18 of PCR 2015).  There is also a perception that the UK Government is “missing a trick” in not putting the environment, climate change, genocide and modern slavery at the forefront of issues to be expressly tackled under the Bill. Similarly social value is not referenced and there is a call to rectify this going forward.  Greater measures are requested to protect SME’s/the supply chain, such as more effective measures to ensure the enforcement of prompt payment initiatives. These are to name but a few areas – whether they are addressed within subsequent drafts remains yet to be seen.

The Public Procurement team at TLT will keep you abreast of any changes through regular updates, insights and webinars, as the Bill progresses through Parliament. However, in the meantime, do not hesitate to contact us if you have any initial questions or would like to discuss any key aspects of the Bill.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at May 2022. Specific advice should be sought for specific cases. For more information see our terms & conditions.