What does it mean for our industry?
Last month saw the biggest shake-up of procurement laws for over 30 years, coming into force on Monday 24 February.
The Procurement Act 2023 brings sweeping reforms to raise transparency around contract awards and contractor performance while also making it easier for SMEs to access public sector supply chains.
Key changes introduced that will impact businesses:
1. Simplification and Consolidation
The Act consolidates four existing procurement regulations into a single framework, simplifying the rules governing public procurement in England, Wales, and Northern Ireland.
2. Enhanced Transparency
Contracting authorities are now required to publish notices linked to various events throughout the procurement lifecycle, with framework notices now including a greater amount of information This increased obligation ensures greater transparency in the procurement process. Public clients are also now expected to publish quarterly reports on any individual payments over £30,000 under a public contract. They are also expected to publish contract detail notices and a copy of said contract for opportunities over £5m.
3. Focus on Social Value and Sustainability
Public sector contracting authorities can now base awards on Most Advantageous Tender (MAT) rather than Most Advantageous Economical Tender (MEAT). The Act places a new emphasis on social value and sustainability, encouraging suppliers to align their offerings with these priorities. Therefore, suppliers are to be viewed more favourably during review process, when bringing other factors/aspects into their bid.
4. Improved Payment Practices
The reform aims to improve payment practices, benefiting suppliers by ensuring timely payments from Public Sector authorities. It introduces mandatory 30-day payment terms throughout the public sector supply chain. Although previously most Public Secor bodies had terms of 30 days, there was not a legal obligation around this.
5. Enhanced Contractor Accountability
The Act introduces measures to enhance supplier accountability, including the publication of Key Performance Indicators (KPIs) and performance. If a contract is worth more than £5m, contracting authorities must set and publish at least three KPI’s by which to judge awards and future delivery performance. This ensures that suppliers are held to higher standards in delivering public contracts, with the data needing to be published every 12 months.
6. Streamlined Bidding Process
The procurement process has been streamlined to make it easier for suppliers, particularly SMEs to bid for public contracts. This includes reducing bureaucratic hurdles and simplifying tendering procedures. There will be an onus on encouraging SMEs to bid for work, for example by breaking large projects into smaller lots. This will allow specialist SMEs the opportunity to bid directly.
7. Introduction of a Debarment List
A debarment list has been established to exclude suppliers with a history of poor performance or misconduct from participating in public procurement opportunities. Contracting authorities will also have to publish public notices in cases of unsatisfactory performance or breach of contract, including details of any contract termination, award of damages or settlement agreement. This will be available to view on a centralised platform.
8. Frameworks
As part of the staggered implementation process, all existing frameworks and contracts awarded prior to the Act’s introduction will remain in force until they expire or until February 23, 2029. Commercial frameworks will be more open, with authorities having the opportunity to utilise ‘Open Frameworks’ which can run up to 8 years but can open for new applicants every 12 months. This means prospective suppliers are not shut out for long periods of time and have a better chance of getting onto key frameworks.
The way in which a contract is awarded via a framework does not change as part of the act. However, a direct award can only be given if the framework sets out the ‘core terms’ of the contract and an objective mechanism for supplier selection.
If you have any questions relating to the Procurement Act 2023, please contact Fran Swain or Keith Alger in our Bid & Marketing Team.