The road to reform - Procurement Act 2023

The long-awaited Procurement Act 2023 (“the Act”) has finally received Royal Assent on 26 October 2023.

This will see the UK adopt its own bespoke set of rules to govern public procurement from October 2024.

The new regime will not only move away from the universal language of the EU Directives but will also consolidate the currently separate sets of regulations governing public sector contracts more generally and those specific to utilities, defence and concessions.

Those following the Procurement Bill will no doubt recall its first reading in Parliament almost 18 months ago, following two years of consultation and policy development post-Brexit.

The Bill has since been hotly debated during its passage through both the House of Lords and House of Commons and has faced a substantial number of amendments during that process. However, we are now finally able to see where many of the key reforms have landed.

Key reforms

It is fair to say the Act is essentially a complete re-write of the current UK procurement rules and practitioners will no doubt welcome the six-month transition period to fully familiarise themselves with the changes.

The main changes have however remained relatively consistent throughout the Bill’s passage. Some of those appearing in our key reforms list are:

• The introduction of the competitive flexible procedure, alongside the familiar open procedure, which gives contracting authorities much more flexibility to shape their procurements in a more proportionate manner to reflect the nature, complexity and cost of each contract opportunity.
• A move from evaluating the “most economically advantageous tender” to the “most advantageous tender” when assessing the “best tender”, implying that contracting authorities should, as a matter of course, look beyond pricing to secure solutions which meet the UK’s wider sustainability agenda.
• Greater flexibilities built into the application and use of both dynamic purchasing systems and framework arrangements, with the former no longer being limited to “off the shelf” procurements and the latter potentially including both open and closed frameworks. Open frameworks will be permissible for a period of up to eight years provided they are reopened for competition periodically (at three and five years). Closed frameworks may exceed the current four-year duration if a longer term is required given the nature of the works, services or supplies to be procured.
• Newly refreshed mandatory and discretionary grounds for exclusion, together with the introduction of a debarment register to list companies excluded for serious breaches. Of particular interest to suppliers may be the additional discretionary grounds which permit potential exclusion for “breach of contract”, “poor performance” or for “acting improperly in procurement”, plus the ability to apply many of those grounds to “connected” entities such as sub-contractors, or those under the suppliers’ “control”.
• Greater controls on suppliers at post award stage. Where the current rules essentially only govern post award contract modifications, additional duties have been included to require the inclusion of KPIs in contracts, (with performance assessed and information published against those on an annual basis), payment of invoices within 30 days, and the mandatory publication of contract change notices.
• An increased ability to direct award, including at the direction of a Minister of the Crown if considered necessary to “protect human, animal or plant life or health, or protect public order or safety”. This should assist in extreme circumstances such as the pandemic where application of Regulation 32(2)(c) was not always a straightforward task, although there may still be some debate going forward as to when such direct awards have become “necessary”.
• The introduction of additional “safe-harbours” justifying the modification of awarded contracts during their term. We will see the introduction of new limbs for urgency of the protection of life, to deal with the “materialisation of a known risk” or to secure any developments in technology in defence contracts, alongside those which broadly correspond with the current permitted grounds under Regulation 72. Arguably of more significance will be the need to publicise the majority of changes prior to implementation through the increased use of contract change notices.

Next steps

The Government Commercial Function has indicated that the new regime is to take effect in October 2024 with six months’ notice before that of the “go-live” date. In the meantime, the response to two consultations on the secondary legislation is awaited.

Once made, the regulations, which are expected to be laid early in 2024, will bring some elements of the Act and the wider regime into effect.

The Public Procurement team at TLT will keep you abreast of any changes through regular updates, insights and webinars as the secondary legislation progresses and as guidance covering the transition emerges through to full implementation of the new regime by Autumn 2024.

In the meantime, we’d be happy to answer any initial questions you might have or if you’d like to discuss any key aspects of the Act. Please get in touch.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at October 2023. Specific advice should be sought for specific cases. For more information see our terms & conditions.