Public Procurement is currently going through its largest shake up in its recent history. Public procurement rules dictate the way in which public bodies acquire goods and services, making the area imperative to the functioning of society. A combination of factors, including the United Kingdom’s exit from the European Union and the technological advancement of the goods and services required by public bodies, mean that this area has required modernisation for some time. The Public Procurement Act 2023 represents an attempt to do just that.
After receiving Royal Assent on 26 October 2023 and after some cumbersome delays the key provisions of the Procurement Act 2023 (“Procurement Act”) will come into effect on 24 February 2025 (“Commencement Date”). The intention of the new Procurement Act is to create a simplified and more flexible public procurement regime, but what changes have been made from the existing regime?
This article will highlight the key changes that have been brought in by comparing it to the old system and will seek to identify potential effects this may have. For further information, please see our upcoming articles on ‘The Procurement Act 2023 – Challenges and Opportunities for Suppliers’ and ‘The Procurement Act 2023 – New Mechanisms Introduced’.
A Single Piece of Legislation
The first (and most obvious) change is the structure of the procurement legislation. The regulations pre-Commencement Date find their source in EU directives, these had been implemented into national law using the Regulations listed below:
- the Public Contracts Regulations 2015;
- the Utilities Contracts Regulations 2016;
- the Concessions Contracts Regulations 2016; and
- the Defence and Security Public Contracts Regulations 2011,
referred to below as the “Previous Regulations”.
After the United Kingdom’s exit from the European Union, the Previous Regulations remained in force, but were amended for domestic law purposes.
The Procurement Act will now encompass the subject matter of each of the Previous Regulations and brings them under the single piece of legislation. The intention of which is to become a single source of information for any regulations for the public procurement. Whilst this was the intention, the Procurement Act will itself rely on secondary legislation to add further guidance to its approach. At the time of writing, the Procurement Regulations 2024 have been enacted and provided further detail on the Procurement Act. The final delay to the legislation to 24 February 2025 was to allow for the drafting and publication of the National Procurement Policy Statement (“NPPS”).
Fewer sources of information should provide for a simpler regime with less barriers to entry and, even if this falls short of the single source intended, it remains simpler than the number of instruments required to get a full picture under the previous Regulations.
Changing Objectives for a Longer Lifecycle
One of the more nuanced changes introduced by the Procurement Act is the broader definition of procurement itself. The Procurement Act contains the following definition:
“Procurement means the award, entry into and management of a contract.”
The inclusion of the ‘management’ of a contract represents the changing focus towards the entire lifecycle of the contract, not just the procurement process to signature of the agreement. This, coupled with other new mechanisms within the Procurement Act, will mean that greater focus will need to be given to the management of the contract whilst delivery is ongoing.
The Procurement Act also introduces the following set of new objectives that authorities must consider when conducting a Procurement.
“(a) delivering value for money;
(b) maximising public benefit;
(c) sharing information for the purpose of allowing suppliers and others to understand the authority’s procurement policies and decisions;
(d) acting, and being seen to act, with integrity”,
referred to below as the “New Objectives”.
The New Objectives must be considered in addition to treating suppliers the same (unless a difference between the suppliers justifies different treatment) and considering whether small and medium-sized enterprises (SMEs) may face particular barriers to participation.
When taken together, the New Objectives and the wider definition of Procurement could create a significant shift in the approach that needs to be taken by potential suppliers. Authorities will need to be more involved throughout the life of contracts and will need to consistently evaluate performance against the New Objectives. For further detail on this point, please see our next Procurement article – ‘The Procurement Act 2023 – Challenges and Opportunities for Suppliers’. In that article we consider some of the wider effects of these changes along with the challenges posed by other new aspects of the Procurement Act.
Flexibility in the procurement process
A consistent complaint that frames both the political debate and the practitioner criticisms of public procurement is the prescriptive nature of the procurement processes. As a solution to this issue, and to give authorities a greater level of autonomy in their procurement, the Procurement Act will reduce the number of procurement processes from six prescriptive forms to two flexible approaches. This will mean that an authority will be able to amend the process dependent on their needs and the type of agreement.
Pre-Commencement Date, contracting authorities were able carry out one of the following procurement processes:
- Open Procedure;
- Restricted Procedure;
- Competitive Procedure with Negotiations;
- Competitive Dialogue;
- Innovation Partnership; and
- Competitive Procedure without Prior Publication.
The Procurement Act introduces the option for contracting authorities to use one of the following two processes:
- A Single Stage Procedure; or
- A Competitive Flexible Procedure (at the discretion of the authority).
The simplified and non-prescriptive nature of these processes will allow the authorities to create a procedure that best suits their needs. Guidance has been provided on what this flexible procedure may look like both in the explanatory notes for the Procurement Act and Cabinet Office’s guidance to the competitive tendering process. In practice, it will take some time to see what form these new flexible procedures will take, but it is likely they will resemble the multi-stage processes of the old regime in the short-term.
In addition to the new changes to the procurement procedures, the Procurement Act will also introduce a new form of open framework agreement. The new framework agreement will allow for suppliers to be added to frameworks after the initial award. This system will mean that authorities will have more control over their suppliers and suppliers will have more opportunities to bid for new work.
For further detail on the instruction of new mechanisms under the Procurement Act and their effects, please see our third article in this series – ‘The Procurement Act 2023 – New Mechanisms Introduced’. In that article we explore the mechanisms introduced above in more depth along with other mechanisms introduced by the Procurement Act.
Please note that the above does not constitute legal advice. If you have any questions, please contact our Corporate & Commercial team team.
