Introduction
With bus franchising still in its infancy, Combined Authorities and, perhaps, also in the future other Authorities with transport functions require clarity around the procurement processes adopted. Likewise, operators will want to understand how to effectively engage with franchising authorities within the parameters set by procurement law.
The expansion of bus franchising initiatives across England and other parts of the UK arises to a backdrop of an important outcome of Brexit – the ability on the part of the UK to craft and then implement a public procurement regime that is fit for purpose - meeting UK international obligations but also addressing the importance of encouraging innovation and high-quality procurement outcomes.
The Public Procurement Act 2023 is now the guiding rule book for procurement notices. The Act provides some valuable new ways of working for authorities undertaking procurements but also provides some new complexities.
As procurements that began with a tender notice published before 24th February will be taken forward under the previous procurement rules it is notable that Liverpool City Region published its notice just a few days before the new regime was adopted.
The commentary we provide does not constitute formal legal advice but is intended to help participants involved in bus franchising initiatives to appreciate the role that procurement law plays and how the law has changed through implementation of the Procurement Act.
We hope this and further publications we intend to provide on aspects of procurement law and bus franchising will be a helpful contribution to all preparing to become involved in future procurement exercises.
Preliminary market engagement
The Procurement Act 2023 creates a single regime for public procurement in England, Wales and Northern Ireland, and looks to simplify the existing structure of public procurement.
The Procurement Act will apply to procurements under bus franchise initiatives where the tender notice is placed on or after 24th February 2025.
The Act and various regulations made under it is a substitution for the Procurement Regulations of 2015 – these being the UK’s implementation of an EU procurement directive. In general terms the new legislation continues provision for many of the working practices that can be considered part and parcel of public procurement in the UK. Engaging with the market of suppliers of goods and services that are to form the subject of a procurement is far from a new tool to be applied as part of the preparation for procurement.
This briefing focusses on the legal requirements for compliant engagement with the market in the context of bus franchising. Since the rules only take effect from 24th February 2025 market engagement activities prior to that date are to be regarded as regulated by the 2025 regulations. We include with this briefing a compare and contrast of the 2015 regulations and the equivalent provisions of the Procurement Act.
Overall, the objectives of the Procurement Act are: delivering value for money, maximising public benefit, sharing information for the purposes of allowing suppliers of services and others to understand the contracting authority’s procurement policies and decisions; and acting, and being seen to act, with integrity.
The purpose of PMEs
Under the Procurement Act, PMEs are the process under which a contracting authority can (prior to publication of a tender or transparency notice) engage with the market for the purposes of:
- Developing the authority’s requirements and approach to the procurement
- Designing a procedure, conditions of participation or award criteria
- Preparing the tender notice and associated tender documents
- Identifying suppliers that may be able to supply the goods, services or works required
- Identifying likely contractual terms; and
- Building capacity among suppliers in relation to the contract being awarded
In relation to undertaking a PME, contracting authorities should as a general rule publish a PME Notice (defined and discussed in more detail below), the purpose of the PME Notice is to invite suppliers to participate in the PME, as well as notifying the market that a PME has or is taking place.
By publishing a PME Notice, the whole market is made aware of a proposed procurement, and all will in most cases have an opportunity to express interest in the initiative and potentially, engage and contribute. Furthermore, through notice being given, and input from any market participants being encouraged, it is likely that a greater number of entities (including SME’s) will be attracted to entering and tendering for upcoming contracts. This is because, by engaging with the market (and more specifically SME’s) and assisting them in understanding the bidding process and what the contracting authority is looking for, there are fewer barriers to involvement and ultimately tendering for future contracts.
Carrying out a PME can also assist contracting authorities, as the process affords new features of flexibility that enables a contracting authority to tailor and design any proposed procurement procedure to meet the needs of the market that will likely be tendering for the proposed procurement.
What form will PMEs take?
- Face to face presentations or webinars (hosting digital webinars or recording sessions can help make the engagement more accessible to SME’s or entities that may not otherwise engage in processes)
- Workshops
- Site visits
- One to one meetings
- Simple invitation to prospective suppliers to get in touch
A key point of emphasis is that a PME embarked upon should be planned taking into account the subject and purpose of the exercise – not the form that the exercise takes meaning that contracting authorities have considerable flexibility as to how to organise engagement. It is also to be noted that, under the 2023 Act, steps must be taken by the contracting authority to ensure that any suppliers participating in the preliminary market engagement (in any of the above forms) are not put at an unfair advantage, and competition in relation to the award of the public contract is not otherwise distorted. This is a proactive duty imposed on contracting authorities and is discussed in greater detail below in the context of forthcoming bus franchising procurements.
PME notices
Contracting authorities that are conducting PMEs should publish a ‘preliminary market engagement notice’ (“PME Notice”). Where a contracting authority does not publish a PME Notice, they are required to justify their reason(s) for not doing so in the subsequent Tender Notice.
Any PME Notice should be given with sufficient time to allow those suppliers who may want to take part to prepare, although what is considered a ‘sufficient’ timeframe will likely vary depending on the PME to be undertaken.
- The name of the contracting authority
- The name of the procurement
- The subject matter of the contract
- An estimated date for publication of the tender notice
- The estimated date for the contract award
- That a PME is planned, or has already taken place
- The date that the PME will close, or when it closed
- A description of the PME undertaken (including the format of the planned PME) or to be undertaken
- Additional upcoming engagement opportunities
- Engagement outputs (which can ensure a wider audience is kept informed about the contracting authority’s emerging thinking)
- Details of the process by which PME is to be undertaken (or has been undertaken)
Implications for bus franchising
Specific changes noted in relation to public procurement and bus franchising
In light of the above, we have reviewed the Procurement Act, the regulations and guidance through the lens of public procurement as it relates to bus franchising and the realities of involving current providers of bus services in Preliminary Market Engagements.The potential role played by others in PME exercises (such as vehicle manufacturers and technology providers who (most likely) will have existing relationships in the sector including with operators) will also be a principal factor in the contracting authority’s preparations for the procurement process.
We provide this note as a commentary on a number of - in many cases subtle - changes to the legislation that will apply to procurements that commence through the issue of a contract notice on or after 24th February 2025 – the commencement date for most provisions of the Procurement Act and its regulations. That reference date applies to the placing of any Tender Notice on or after that date. There is no provision for the relevant part of the 2023 Act applying prior to February 24th.
Comparison – the 2015 Regulations vs the Procurement Act 2023
To read our detailed comparison of the two regimes, please refer to the table in the downloadable PDF. The table (see pages 7 - 10) presents a compare and contrast of the two regimes – both having the same objective (to facilitate the opportunity a contracting authority should have to develop the framework and scope the requirements it that it will place out to tender in the form of a specification with potential bidders and others who are willing to participate in the exercise).
Download a PDF version of the information on this page →
Conclusion
The introduction of a reformed public procurement regime at this time is perhaps not the best development for authorities that already have many novel issues to appreciate and take into account as they take bus franchising procurements forward.
The Cabinet Office recognises that training and other induction activities (together with the provision of guidance documents) are essential to the smooth introduction of the new regime. Delaying implementation represented a further means to assist the public sector to prepare adequately although the Cabinet Office's reason to delay was to allow the relatively new labour government give more consideration to the detail of its National Procurement Policy Statement.
There are a number of other aspects of the procurement reforms that we have identified as truly relevant to bus franchising procurements and subsequent briefings will address these.
Stay ahead with our upcoming guides
We hope you’ve found this guide to Preliminary Market Engagement and Bus Franchising insightful.
As part of our commitment to supporting the development of bus franchising in the UK, we’re producing a series of guides exploring key aspects of the procurement process. See across for the next few issues.
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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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