Upcoming changes to public procurement

With the UK government about to change public procurement procedures, Coodes’ Partner Abi Lutey looks at what this means in real terms.

Public procurement is the process by which our government purchases goods and services. For example, this includes the building of hospitals and roads.

The process costs around £300 billion of public money every year and is the largest area of public spending from the UK budget. At the moment, it is regulated by the Public Procurement Regulations 2015, which are made up of four different regimes and are firmly rooted in EU Law.

Now that we have left the EU, the UK government is changing the way public procurement is carried out.

In December 2020, the government published a Green Paper, ‘Transforming Public Procurement’, which set out the objectives of the new regime. The Bill was published in May 2022 and is due to receive royal assent sometime next year.

What’s changing?

The four existing sets of public regulations (the Public Contracts Regulations 2015, the Utilities Contracts Regulations 2016, the Concession Contracts Regulations 2016 and the Defence and Security Public Contracts Regulations 2011) are being replaced with a single new regulatory framework.

This aims to:

• Reduce the red tape associated with the current system
• Make way for a less complex and more commercial system
• Open up public procurement to new entrants, such as small businesses and social enterprises so that they can compete for and win more public contracts
• And encourage transparency so that the spending of taxpayers’ money and the buying process can be properly scrutinised.

What are the main differences?

Suppliers’ performance

New rules will be introduced scrutinising suppliers’ performance, with the launch of a ‘Debarment Register’.

This will be a published list of suppliers that have previously underperformed on a contract and will preclude them from tendering for subsequent contracts. The idea is to help develop and nurture innovation and competition.

What is not clear yet is how the Debarment Register will work in practice or, importantly, how businesses would approach challenging their placement on the register. It is hoped there will be some clarification on this in the coming months.

Levelling up

As part of the UK government’s ‘Levelling up Strategy’, the Bill brings greater impetus to keep public money in the UK.

The Bill will encourage buyers to look at a wider range of factors, other than just pure cost-effectiveness.

They will be asked to consider creating job opportunities in the community, as well as environmental impacts.

There will also be an opportunity for buyers to reserve certain, lower-value contracts for UK-only bidders. While this is not mandatory, it highlights the focus on boosting productivity on a domestic level.

Making things simple

The Bill is aimed at moving to more simple language and away from the legalese of its predecessor.

While simplified terminology may be welcomed by many, it may produce uncertainty and be more open to interpretation.

Crisis procurement: Direct awards and the standstill period

Direct award – A direct award is making an award directly to a supplier without advertising or competition. While direct awards are still allowed under the Bill, as they were before, restrictions have been imposed. Direct awards will only be allowed where they are necessary to ‘protect life’.

Before making an award, the buyer must consult the Debarment Register first, to validate the receiving supplier’s record, and the standstill period must still be observed. Notification of the beginning of the standstill period will be made by way of publication of an award notice.

Standstill period – What appears on the face of it rather insignificant, is the amendment to the standstill period. The standstill period is at least ten calendar days, during which the contract award process is suspended. The supplier then has 30 days to serve a claim form.

Under the new regime, the standstill letter will be replaced by the assessment summary. The period in which to challenge the decision is changed to eight working days. The change reflects the move towards transparency because it aims to discourage service of notices on a Friday, or before a bank holiday.

This is to minimise the amount of time which a supplier must review the decision and coordinate an objection. This may be a very minor change, however against a landscape of extremely tight timeframes, every little helps.

Automatic suspension

Under the current rules, a buyer is prevented from entering into a contract where it ‘becomes aware’ that a claim has been issued. This is known as automatic suspension.

The new regime maintains the premise of automatic suspension, but adds clarity, and duty, to the aggrieved party.

The new language states that the suspension is activated when the buyer ‘is notified’ of the claim, suggesting there will be greater impetus on transparency and express notification.

In practice, it remains to be seen whether this change will have any real impact.

Time will tell…

While the new rules, if implemented as they stand, with subsidiary secondary legislation, is likely to have a positive impact on public procurement in England, Wales and Northern Ireland, the changes’ impact on litigation is likely to be minimal.

Time remains of the essence and claims will still need to be brought as soon as possible after receiving the assessment summary.

However, the shift into the digital age and towards a more transparent system with key objectives in mind should make navigating through what is traditionally an extremely complex process, a little easier.