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Legal changes

The Procurement Bill: a new UK public procurement landscape

In this article Vincent King takes a look at the new Procurement Bill, including some of the key changes ahead for the public sector.

The Queen’s Speech introduced the new Procurement Bill to Parliament on 10 May 2022. Once enacted, it will revoke and replace the Public Contract Regulations 2015, the Concession Contract Regulations 2016, and the Utilities Contract Regulations 2016 to create a simplified regime. Prior to this, the Bill will have to pass through several stages of the parliamentary process, so there is scope for amendments to be made. Some key elements of the reform will also follow as secondary legislation and will be required to bring some elements of the Bill into effect once it is enacted.

At 122 pages, with 116 provisions and 11 schedules, the Bill places the objectives of public procurement on a statutory basis, including delivering value for money, maximising public benefit, fair treatment of suppliers and acting with integrity. Contracting authorities will also notice that the language and style of the Bill is different as the UK is no longer an EU member state, and it includes some key defined terms such as “contracting authorities” and “public contracts”.

Key observations

One of the most notable observations includes scrapping most of the current procurement procedures and the introduction of new procurement routes for awarding public contracts. This includes a competitive tendering procedure and an open procedure, as well as the ability to directly award contracts in certain circumstances. The competitive tendering procedure is broad and covers such competitive tendering procedure “that a contracting authority considers appropriate”, which will offer contracting authorities significant flexibility. So, if you wanted to run a procedure which is the same as or very similar to a current procedure (such as the restricted procedure, for example) then you would be able to do so.

The change in evaluation methodology from the most economically advantageous tender (MEAT) to the most advantageous tender (MAT) is also key. This shift will allow contracting authorities to consider other benefits aside from cost-effectiveness when evaluating bids, allowing greater emphasis on social value and environmental benefits.

Meanwhile, the current light-touch regime which benefits certain social, health, education and other services will be retained to an extent as the Bill distinguishes “light touch contracts”. We await further detail in the form of secondary legislation here as to what these will cover though. However, even above threshold light touch contracts will not be subject to any minimum time periods or mandatory standstill periods, and a contracting authority will be permitted to modify a light touch contract without any restrictions, providing another welcome flexibility.

Further duties are also included to advance the transparency ambitions of the procurement reforms, such as the general obligation to include and publish key performance indicators in contracts which have a value above £2 million, and a requirement to publish details of poor contractual performance, which becomes a discretionary exclusion ground for the award of new contracts.

Other key reforms include a requirement to ‘have regard to’ the National Procurement Policy Framework, and the introduction of open frameworks which can last for up to eight years.

A number of provisions within the existing regulations that we regularly advise on, including exemptions such as the Teckal or in-house exemption (now called vertical arrangements) and the public sector cooperation exemption (now called horizontal arrangements), direct award justifications and the permitted contract modification grounds remain largely unchanged, although in the case of modifications there is a new requirement to publish a contract change notice before the change is made, and a copy of the modified contract itself if it worth over £2 million, consistent with the transparency theme.

Next steps

The Bill is not expected to be implemented until 2023 at the earliest, but the Government has promised a six-month transition period to allow for an appropriate transition to the new regime.

Meanwhile, the key message to contracting authorities is to start planning for the changes sooner rather than later, as key commercial decisions will need to be made, especially for procurements which are set to be launched during the transition period.