Transforming public procurement — change is on the way
In this article, Steve Johns discusses the latest Green Paper that has been published and the transformation on public sector procurement
From 1 January 2021, the UK will no longer be bound by EU public procurement rules. Instead, we will have to comply with the much less prescriptive regime set out in the WTO’s Government Procurement Agreement (GPA). Seeking to capitalise on this change, on 15 December the Cabinet Office published a Green Paper containing proposals for reform of public procurement in the UK. The Government’s stated aim is to provide the UK with a modern, fit-for-purpose set of rules, which will minimise the bureaucratic burden for both contracting authorities and businesses, facilitate innovation and the participation of SMEs in public contracting, and improve the process of challenging decisions in the courts. The Government is consulting on the changes covered by the Green Paper, and interested parties have until 10 March 2021 to submit responses.
This briefing note provides a summary of the key proposals in the Green Paper, and some initial thoughts from Weightmans’ team of procurement law experts.
The Green Paper proposes changes to just about every aspect of the procurement regime. It envisages the repeal of the Public Contract Regulations 2015 (PCR) and related regulations covering concession contracts and the utilities and defence sectors — all derived from EU law. These will be replaced with a single framework applicable to all contracts — though the possibility of having additional provisions for specific sectors is retained.
Government advocates the adoption of six interdependent principles to underpin the new regime. Some are familiar from the existing rules: transparency, fair treatment and non-discrimination. Others are novel: value for money, integrity and public good. This last principle reflects a theme that is present throughout the Green Paper; the idea that public procurement should be a vehicle for the achievement of social and environmental goals beyond the immediate benefit of the specific goods/services/works being purchased. To support this philosophy, an additional proposal is the development of a National Procurement Policy Statement which will set out the Government’s strategic priorities for public procurement, and to which contracting authorities will be obliged to have regard.
Simplification of award procedures
The proposed regime would have three contract award procedures, as compared to the seven that exist under the current regime:
- The Open Procedure would remain available for straightforward procurement exercises.
- A “Competitive Flexible Procedure” would be introduced for more complex procurements.
- A “Limited Tendering Procedure” — akin to the existing “negotiated procedure without prior publication – would be available in certain limited circumstances where a competition is not practical.
It is the new Competitive Flexible Procedure that will generate most interest. Government considers that it will free authorities from the “bureaucratic, process-driven” approach of the PCR, permit commercial teams to tailor the procedure to best meet the needs of the specific procurement exercise, and allow bidders space to innovate. The procedure would be subject to minimal rules, similar to the existing “Light Touch Regime” (which would itself be abolished).
Additional selection criteria — debarment list and past poor performance
The Green Paper puts forward a number of possible changes to the selection process:
- Creating a digital platform for supplier registration that would mean suppliers only have to submit selection data once to qualify for any public sector procurement.
- Establishing a central list of suppliers who are barred from bidding for public contracts as a result of falling within the scope of the mandatory exclusion grounds.
- Broadening of the range of circumstances in which authorities are permitted to take past performance into account, and establishing central databases to record the performance of suppliers against certain metrics.
These innovations would have a number of benefits, but the Cabinet Office acknowledges that delivering some of the proposals – notably the debarment list and performance database - would be time-consuming and potentially problematic. In particular, ensuring the quality of the data they contain would be a significant challenge. If they are poorly implemented, disgruntled suppliers will be legion.
Award criteria — Most Advantageous Tender
Under the new regime, the winning bid would be that assessed as the “Most Advantageous Tender” (MAT), rather than "Most Economically Advantageous Tender" (MEAT) as is currently the case. The Green Paper acknowledges that this change is more style than substance, but it is intended to reinforce the message that purchasers can take a wider range of factors into account as part of the evaluation exercise — including social value. In certain limited circumstances, authorities would also be able take account of factors not directly linked to the contract being let, though guidance on this would need to be developed.
Dynamic Purchasing Systems/Frameworks
The Green Paper includes proposals for both Dynamic Purchasing Systems (DPS) and framework agreements to make them more flexible:
- The current DPS procedure will be replaced by a new commercial tool called DPS+ with no maximum duration, and which can be used for all types of procurements.
- The rules relating to frameworks will be relaxed. In particular, frameworks will be able to operate for up to eight years, provided that new suppliers are entitled to join at certain pre-determined points.
Government considers that significant benefits could be gained from embedding transparency throughout the procurement process. Specific proposals include requiring authorities to publish more information about bid evaluation before making an award decision and to publish procurement and contracting data in a format compatible with the Open Contracting Data Standard. The challenge here will be balancing the benefits of greater transparency against the additional administrative burden the proposals would impose on contracting authorities.
A different approach to challenges
The Green Paper characterises the current process through which procurement decisions can be challenged as cumbersome and expensive. It proposes a number of potential changes to the court process, including the development of new Civil Procedure Rules to deliver a tailored, expedited process. It also postulates the establishment of a separate tribunal system to hear certain categories of challenge.
A key objective of these reforms is to speed up procurement challenges. If this can be achieved, the Green Paper notes that remedies could more often take effect before the relevant contract is signed, giving complainants the opportunity to continue bidding for the contract rather than seeking damages after the event. And where damages are awarded, Government proposes that, as a matter of public policy, they should be capped in most instances to legal fees and 1.5x bid costs. This will offer scant comfort to a supplier who has missed out on a lucrative contract due to a public body’s errors during the procurement process.
The Green Paper opens the door to the most significant reform of public procurement rules in the UK for a generation. The ambition is laudable, but the Government must take care in replacing a system that is currently well-understood and largely effective — if overly cumbersome. The proposals will give contracting authorities greater flexibility in managing procurements, but with that freedom comes greater responsibility. If the reforms are implemented, they will need to be accompanied by a framework of clear guidance to support authorities through the transition to new ways of working. The proposals will undoubtedly generate a great deal of interest. We will provide further updates over the coming months.