The Procurement Bill – plus ça change?
No doubt readers may have seen a range of material on this topic since the Bill was published earlier in the year.
Despite what may have been said elsewhere, in our view the Bill represents more of a ‘facelifted Mondeo’ than a ‘shiny new supercar’ as many of the interesting suggestions from the extensive consultation process appear to have been discarded along the way.
The Procurement Bill (the “Bill”) was introduced to Parliament on 11 May 2022 and has recently gone through its fifth sitting at Committee Stage at the House of Lords. It aims to “substantially overhaul and reform” the UK’s public procurement regime, giving effect to policies and proposals that were set out in the government’s:
- Green Paper consultation, Transforming Public Procurement, published in December 2020; and
- the response to the consultation published in December 2021.
Secondary legislation will be required to bring some elements of the Bill into effect. The government has indicated that it intends to develop the required secondary legislation (along with supporting guidance) in parallel with the Bill’s passage through Parliament.
The Bill will introduce a new public procurement regime with one single framework to replace the:
- Public Contracts Regulations 2015,
- Concession Contracts Regulations 2016,
- Utilities Contracts Regulations 2016, and
- Defence and Security Public Contracts Regulations 2011.
The stated aim of the government in making these changes was: “to speed up and simplify our procurement processes, place value for money at their heart, generate social value and unleash opportunities for small businesses, charities and social enterprises to innovate in public service delivery.”
The Bill applies to all contracting authorities in England, Wales and Northern Ireland. The Scottish government has opted not to join in and will retain their own procurement regulations.
While the Bill introduces important changes to the current regime (see below for further details), many features of the new regime are substantially the same as the current regime. In particular, the following have been maintained:
- the concept of contracting authority;
- the types of contracts that must be advertised and competitively tendered; and
- the rules on financial thresholds.
The Bill overview and changes
A link to the Bill to ease your review of the below guidance can be found here.
Part 1 of the Bill sets out the authorities and contracts to which the Bill applies. It covers contracts such as public, mixed procurement contracts and special regime contracts etc. This also includes contracts awarded by utilities companies operating in the water, energy and transport sectors, and concession contracts as well as defence and security contracts.
The Bill also makes provision to carve out those procurements regulated by the health procurement rules, to ensure clarity about which regime applies.
Principles and objectives:
Part 2 of the Bill focuses on the principles and objectives that must underpin the awarding of a public contract.
Previously, procurement law was based upon general principles derived from the EU treaties: transparency, equal treatment, non-discrimination and proportionality. The government has chosen to maintain the principles of transparency, equal treatment and non-discrimination in the new regime. However, contracting authorities must also have regard to:
- delivering value for money;
- maximising public benefit;
- sharing information for the purpose of allowing suppliers and others to understand the authority’s procurement policies and decisions; and
- acting, and being seen to act, with integrity.
(Details can be found in clause 11 of the Bill)
To support this, Part 2 of the Bill also makes provision for a new National Procurement Policy Statement and a Wales Procurement Policy Statement to set out the government’s strategic priorities in relation to procurement.
Undertaking a procurement
The current regime provides contracting authorities undertaking a procurement with a choice of five procedures to carry out competitive procurement exercises (open procedure, restricted, competitive negotiation/dialogue and innovation partnership).
Part 3, however, introduces a new procedure for running a competitive tender process and provides for just two processes:
- a single-stage tendering procedure without any restriction on who may participate (an ‘open procedure’); or
- such other competitive tendering procedure as the contracting authority considers appropriate for the purpose of awarding the public contract (i.e., a bespoke approach).
This will ensure that contracting authorities can design a competition to best suit the particular needs of their contract and market.
(Details can be found in clause 19 of the bill)
The new procedure moves away from the recognised award criteria of most ‘economically advantageous tender’ to the new ‘most advantageous tender’ (to reflect the new principles and objectives indicated above).
The ‘Light Touch’ regime will be retained (and referred to as ‘Light Touch Contracts’) but modified slightly by secondary legislation (not yet drafted).
The Light Touch Contracts regime is for contracts wholly or mainly for the supply of services of a specified kind, and there are fewer rules regulating how a procurement is conducted for these contracts. Detailed lists of the categories of contracts that may benefit from the Light Touch Contracts Regime can be found in the Common Procurement Vocabulary codes and are described as administrative social, educational, healthcare, and cultural services.
The Bill has retained the existing grounds permitting contracting authorities to award contracts without first running a competitive procurement procedure. However, there are a few changes as follows.
- the procuring authority must determine whether the supplier is an excluded supplier (see below) before making a direct award. A direct award may only be made to an excluded supplier where there is an overriding public interest to award the contract to that suppler;
- the Bill also introduces the ability to make a direct award to protect life and public order (including human, animal or plant life and health), even where the circumstances leading to that situation were foreseeable; and
- contracting authorities must observe a standstill period after making a direct award (unless urgent or for the protection of life) which is triggered through the publication of a contract award notice (see below).
(Details can be found in clause 40 of the Bill)
Part 4 of the Bill sets out steps that must be taken to manage a contract. This includes the strengthening of rules ensuring that suppliers are paid on time (including implied payment terms and implied rights to terminate) and new requirements to assess and publish information about how suppliers are performing.
Contracting authorities will be required to set and publish at least three key performance indicators (“KPIs”) before entering into any contract with a value exceeding £2 million. However, this obligation will not apply if the contracting authority considers that the supplier’s performance under the contract could not be appropriately assessed by reference to KPIs.
Where a contracting authority has set KPIs, it is required to:
- assess the supplier’s performance against those KPIs at least once a year during the life-cycle of the contract; and
- publish certain information about the supplier’s performance.
Running throughout the Bill are requirements to publish notices. These are the foundations for the new standards of transparency which will play a crucial role in the new regime.
Part 8 of the Bill provides for regulations which will require contracting authorities to publish these notices resulting in more transparency to make it easier to scrutinise procurement decisions.
There are 12 different notices identified in the Bill, in particular contracting authorities will be required to publish on a specified online system a:
- Planning and Pipeline Notice if they intend to spend >£100 million on certain types of procurement in any year;
- Tender Notice at the commencement of the procurement procedure,
- Contract Award Notice must be published before contract signature (effectively a notice of intent);
- Contract Detail Notice would need to be published within a prescribed period after the contract is entered into;
- copy of any public contract with a value exceeding £2 million within 90 days of it being entered into;
- Contract Change Notice in advance of implementing any amendments, and
- Contract Termination Notice is required to be published after termination.
An ‘assessment summary’ replaces the current requirement for a standstill letter – and requires much less information than is currently the case. This must be served on participating suppliers before a Contract Award Notice is published.
(Details can be found in clause 48 of the Bill)
Standstill periods will change to eight working days from the date the Contract Award Notice has been published and under the Bill, to claims made after the end of the Standstill period will not have the benefit of the automatic suspension.
Note that if a direct award is in contemplation, a Contract Award Notice would still be relevant, and a standstill period would still be required (but no assessment summary would be necessary).
Modifying public contracts
The Bill retains the existing rules that modifications may be made to an existing contract without triggering a requirement to conduct a new procurement exercise, with the following changes:
- the definition of a ‘substantial modification’ has been simplified. In particular, changes to the term of a contract will only be substantial where greater than 10%;
- a contract may be modified where its purpose could otherwise be achieved through a direct award;
- contracting authorities will generally be required to publish a Contract Change Notice before modifying a public contract; and,
- a requirement to observe a standstill period between the publication of a Contract Change Notice and implementing a modification.
The Future of Enforcement
Part 9 of the Bill details the available remedies for suppliers for a breach of the new regime by contracting authorities, where the breach has resulted in loss or damage.
The general time limits for starting enforcement proceedings remain the same as under the current regime (30 days beginning with the date when the supplier first knew or ought to have known that grounds for starting the proceedings or, in any event, within six months beginning with the day after the date on which the contract was entered into / modified).
In relation to automatic suspension, any claims made during an applicable standstill period (before entering into the contract) will result in an automatic suspension of the procurement. The mandatory standstill period will be eight working days, instead of the current ten. There are also some further changes to consider:
- automatic suspension will also apply to planned modifications to contracts and certain direct awards;
- automatic suspension will not apply if the contracting authority was only notified of the claim after the standstill period has expired (under the current regime, the automatic standstill is still available outside the standstill period if the authority has not entered into the contract); and
- the Court will apply a new test in deciding whether to lift automatic suspensions. The Court will consider:
- the public interest in:
- ensuring the contract is awarded in accordance with the law; and
- avoiding adverse consequences caused by delay in performing the contract in question,
- the interests of the winning bidder and the claimant, including whether damages are an adequate remedy for the claimant; and
- any other issues the Court may wish to consider
- the public interest in:
New set aside remedy:
The Court will set aside the contract (replacement for the ineffectiveness remedy) if the Court is satisfied that the claimant was denied a proper opportunity to seek pre-contractual remedies because:
- a required Contract Award Notice was not published;
- the contract was entered into or modified before the end of any applicable standstill period;
- the contract was entered into or modified during a period of automatic suspension or in breach of a Court order;
- the breach became apparent only on publication of a Contract Award Notice or a Contract Change Notice;
- the breach became apparent only after the contract was entered into or modified.
(Details can be found in clause 94 of the Bill)
Part 10 of the Bill gives an appropriate authority oversight over contracting authorities and the power to investigate their compliance with this new Procurement Act, as part of a new Procurement Review Unit (PRU).
The PRU will deliver the same service as the Public Procurement Review Service (PPRS) however, the PRU’s prime purpose will be to address systemic or institutional breaches of public procurement law and make recommendations for future compliance. It will not have power to intervene in any specific procurement decisions.
Investigations may also lead to Ministers publishing guidance to contracting authorities in the form of ‘lessons learnt’.
The government is implementing a learning and development programme across the public sector to support those operating within the new regime, and this will be complemented by published guidance. The intention is to provide knowledge-drop webinars, self-guided e-learning and deep-dive webinars.
The new regime is unlikely to take effect until early to mid-2023 and the government will give a minimum of six months’ notice before the regime is to ‘go-live’. It’s also worth noting that procurements which were started before the change in the law will continue to be bound by the current rules, even once the Bill has come into force.
So, what do we think?
Overall, this legislation smacks of ‘old wine in new bottles’ in that it replicates much of the old regime with some limited simplification in terms of the choice of procedures and challenge procedures – but it feels that, somehow, they could have done so much more!
If you have any queries on the topics discussed get in touch with Nathan Holden.
The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.
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