As anyone who has ever worked in, or been involved in public sector procurement will attest, the current public procurement regime has its issues and can certainly not be described as user friendly for either contracting authorities or suppliers. It is complicated, inefficient, too focused on value for money objectives over quality, and excludes many potential suppliers due to inflexible procedures and processes.
The UK’s exit from the EU has created an opportunity to develop and implement a new procurement regime, with the aim of creating a simpler and more transparent system that will deliver better value for money and reduce costs for business and the public sector. Something like one in every three pounds of public money, around £300 billion a year, is spent on public procurement. Without question, by improving the way public procurement is regulated and operated, the government can save money and drive benefits across the country.
It was with this in mind that the previous government introduced The Procurement Act 2023 and in March 2024 the Procurement Regulations 2024 were laid before Parliament. The ‘go-live’ date for the new regime will be 28th October 2024.
The Act will apply to contracts awarded in England, Wales and Northern Ireland, by:
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most central government departments and related bodies
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the wider public sector including local government and health authorities and
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utilities companies operating in the water, energy and transport sectors.
The new Labour Government have wasted no time in placing accelerated economic growth, housing and infrastructure delivery, the reform of the planning system, and devolution of powers to regions, at front and centre of its growth agenda. Consultation on the revised National Planning Policy Framework and new Standard Method for setting local housing need quickly followed in July.
With the planning and development industry at the centre of the Government’s policy ambitions for significantly boosting growth, there are several serious issues that the government will need to address in relation to resourcing especially at a local authority level. This is something that Lichfields have previously discussed in a blog published in January this year entitled
‘Backlogs and Bullets: Building Capacity in Local Planning Authorities’.With resourcing constraints set to become a potential barrier to the government’s plans for growth, the new procurement regime looks to be arriving at just the right time, when the public sector is likely to increasingly need to call upon the expertise, capacity and resourcing of the private sector to assist in delivery.
New Procurement Objectives and Key Benefits
So, what are the main objectives of the new regime?
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Delivering value for money – Contracting authorities must place value for money at the forefront of procurement activities by balancing quality and price over the whole life of contracts, along with wider socio-economic and environmental benefits and impacts. This is known as the ‘Most Advantageous Tender’ or MAT as opposed to the previous approach, ‘Most Economically Advantageous Tender’ or MEAT.
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Maximising public benefit – Weight should be given through procurement to creating resilient businesses and opportunities for providing quality employment and skills development, improving innovation and supply chain resilience and tackling climate change, and providing other environment benefits such as waste reduction.
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Sharing information - For the purpose of allowing suppliers and others to better understand the contracting authority’s procurement policies and decisions.
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Opportunities for Small and Medium-sized Enterprises (‘SMEs’) – There is a new duty on contracting authorities to consider SME’s and the barriers that they may face to participation, and contracting authorities are required to consider whether such barriers can be removed or reduced.
But what are the big changes that will benefit contracting authorities and suppliers? We’ve highlighted four of the most important below.
Central Digital Platform
The Central Digital Platform acts as a central register for all frameworks, dynamic markets and tender opportunities. Suppliers can register, store their details and upload key tender documents. Customised searches and alerts can also be set up by suppliers.
For SME’s and those without dedicated bid teams, this has multiple advantages and makes participation a lot easier, by reducing administration time and resources signing up to, monitoring and searching for appropriate new opportunities on numerous tender portals, and reducing duplication by requiring certain core information to be uploaded once and used for every tender submitted. Importantly, it is also free to access.
Early Supplier Engagement and Preliminary Market Engagement
Contracting authorities are strongly encouraged to regularly review their pipelines and publish notices of their future procurement requirements. Preliminary market engagement will form a central part of the new procurement process, as it will help to inform and shape competitive procedures, timescales and award criteria by ensuring that suppliers have sufficient resources and time to respond to future bids. This is a major improvement.
The ‘Competitive Flexible Procedure’
The new Act introduces a ‘competitive flexible procedure’, which is a new multistage procedure allowing contracting authorities to design their own procurement processes. The contracting authority may choose to incorporate numerous processes into the procedure, such as negotiation, dialogue or a demonstration stage, and supplier and market engagement is a key element of this new procedure. The Sourcing Playbook helpfully provides information on how to conduct dialogue and negotiations during a procurement procedure.
This is a particularly positive step for SME’s who may well be better placed to provide more bespoke and specialised advice and present more innovative solutions to meeting specific requirements of contracting authorities and the challenges of individual projects/contracts. This also allows contracting authorities to more effectively assess and test the best quality supplier for specific projects in line with the new procurement objectives.
Open Frameworks and Dynamic Markets
The Act introduces new open frameworks and dynamic markets. Dynamic markets are similar to dynamic purchasing systems under the current system and comprise a list of qualified suppliers. It is possible to apply to join at any time and is simpler and quicker for suppliers and generally provides increased opportunities through a more flexible and agile route.
Unlike conventional frameworks, the new open frameworks provide greater flexibility to appoint new suppliers, will have a maximum term of 8 years, will re-open at least once in the first 3 years and should not be closed for more than 5 years.
This is a big step forward as prospective suppliers won’t be shut out of frameworks and associated opportunities for long periods of time, and this also has the advantage of providing contracting authorities a greater choice and flexibility to appoint different suppliers to address changing priorities and objectives over the life of a framework.
What's next?
As indicated, the ‘go-live’ date for the new regime is currently 28th October 2024.
The existing rules will continue to apply for contracts that are already in progress, so the changes won’t happen overnight. It will take some time to embed these changes and there will be a period of transition.
There is clearly a real commitment at government level to drive these changes forward. The Cabinet Office are leading on the Transforming Public Procurement programme and there is a growing amount of information and number of resources available on the dedicated gov.uk web pages, including a series of excellent knowledge drops, and further e-learning modules and advanced courses are also available.
The Act sets the framework, but the onus is now on both contracting authorities and suppliers to take the necessary steps to ensure successful implementation of the new regime. Contracting authorities in particular need to review their approach and ensure that their teams fully understand the changes and support upskilling and training of staff in the new regime. This will need to focus on earlier supplier engagement, publication of pipelines, creation of more bespoke and innovative bidding processes and procedures and the greater use of flexible open frameworks and dynamic purchasing systems/markets.
Returning to the government’s proposals to speed up housing and infrastructure delivery, it is clear that resource pressures will only increase on the public sector when these changes are implemented. Gearing up needs to start now. At Lichfields, we are able to support colleagues in the public sector to meet the increased demands that will be placed on delivery of planning and development services.
We offer a wide range of planning, development and economic services and have a growing number of public sector clients across central and local government so we are well placed to assist the public sector not only in relation to technical advice, but also at a more strategic advisory level. We are also able to provide advice as to the best way to procure our services under the new procurement regime.
The new Procurement Act might not be the most exciting subject matter, but it has the potential to revolutionise the way the public and private sector work together to deliver on key policy priorities. In the past procurement processes have often been seen as a drag on taking projects forward. If used effectively, the opportunities and freedoms provided by the new Act will change this perception. It is important now that the development industry as a whole embraces these changes to ensure that the significant opportunities and benefits provided by the new Act can be fully realised.
