Procurement Act 2023

[edit] Background

On October 26 2023, 18 months after the first reading of the Procurement BIll, the legislation received Royal Assent, meaning the Procurement Act will soon become law, overseeing public procurement from October 2024. The changes will apply to the procurement processing of devolved authorities in Wales and Northern Ireland, but Scotland, will maintain its own legal framework.

The Procurement Bill was written following two years of consultation and policy development following Brexit. The Procurement Act 2023 effectively represents a rewrite of public procurement rules, moving away from EU Directives and generally consolidating separate sets of regulations covering public sector contracts, such as utilities, defence and concessions.

[edit] Key elements of the new act

[edit] Beyond price

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 and other KPIs.

[edit] Flexible frameworks

The Act is less prescriptive in terms of the purchasing systems and frameworks to be used, introducing greater flexibility in the use of open and closed frameworks, as well as extending the potential period of use of the latter.

[edit] Exclusion of tenderers

Greater discretion is given to the procuring authority in terms of exclusions, and a debarment register will be introduced, listing companies that might be excluded from tenders for serious breaches of contract, poor performance or acting improperly. These exclusions may also apply to entities connected to the previous tender including sub-contractors for a specified period but suppliers may apply for their removal from the list following a material change in circumstances.

[edit] Direct awards

A Minister of the Crown has an increased ability to direct an award, if considered necessary to “protect human, animal or plant life or health, or protect public order or safety” for example in extreme circumstances such as a pandemic.

[edit] Contract change notices

There are routes to modifying awards during their terms, through safe harbours occurring on the basis of known risks, the protection of life, of new technology for example in defence contracts. Any such changes will be subject to the increased use of contract change notices and any contract changes will need to be published.

[edit] Payment terms

There is a requirement for invoices to be paid within 30 days.

[edit] KPI reporting

The Act goes beyond the governing of post award contract modifications, requiring key performance indicators within contracts and for these to be assessed, reported on and published annually.

[edit] ECA welcomes Cabinet office payment rules

Leading electrotechnical and engineering services body ECA has welcomed the new Procurement Bill which was granted Royal Assent. The Act provides for simpler procurement processes to support small businesses, and protect against national security risks in public contracts.

Rob Driscoll, ECA Director of Business Policy & Practice, who sits on the SME business advisory panel to the government, said:

“The new Act will be a huge help to construction sector SMEs, which includes the majority of ECA Members. It will simplify UK procurement and make it more efficient than ever. The Cabinet Office team are to be congratulated on their work.”

Key features of the Act noted by ECA include:

• Changing the criteria from ‘Most Economically Advantageous Tender’ to ‘Most Advantageous Tender’ in order to ensure value, and avoid a ‘race to the bottom’ approach
• Ensuring that 30-day payment terms are an implied term in every public sector contract.
• Ensuring that all public and private sector large organisations must report on their payment performance

Rob Driscoll has been invited to 10 Downing Street in December to continue working on improving Government payment rules and the wider business environment for SMEs and ECA Members.

[edit] Further comments on the new act

During the second reading the Minister for the Cabinet Office and Paymaster General (Jeremy Quin), said the Bill would fundamentally improve the UK’s public procurement regime, creating “a simpler, more flexible commercial system that better meets our country’s needs”. By delivering value for money, the Bill requires public sector contracting authorities to weight to bids that support wider public benefit such as enhancing skills, innovation, and environmental protection aswell as making it easier for small and medium-sized enterprises (SMEs) to become government suppliers.

Opposition parties welcomed the reforms but said the Bill fell short in various aspects, such as transparency, addressing potential conflict of interests and support for SMEs. The Labour Party said the reform was “an opportunity to make, buy and sell more in Britain”.

Parliamentary Secretary for the Cabinet Office Alex Burghart said:

"This Act is all about supporting British business using the opportunity of Brexit, as we change the way government works so it delivers better for people across the country. In particular, we draw on the new freedoms available to us by leaving the European Union to embrace and best support our small and medium sized businesses."

The Act will streamline the way that companies bid for public contracts, while also giving procurers more room for negotiating prices and innovative solutions with these companies. These reforms will deliver better value for money, slash red tape, drive innovation and make it easier for suppliers of all sizes to do business with the public sector"

Cabinet Office Minister Baroness Neville-Rolfe said:

"These new rules will help grow the economy and deliver better and simpler public sector procurement. I am particularly pleased to help small and medium sized businesses secure a greater share of nearly £300 billion worth of government contracts."

The Act draws on newfound Brexit freedoms to create a more transparent procurement system - with clearer and faster competition processes in emergency situations, such as during health pandemics, ensuring that contracting authorities can act quickly and transparently to buy vital goods.

This article is based on various government sources along with the press release "Small businesses to benefit from one of the largest shake ups to procurement regulations in UK history" dated October 26, 2023 and "ECA welcomes new Cabinet Office payment rules" from the ECA news and blog site dated November 1.

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