After a lengthy consultation period which began well before the publication of the Green Paper – Transforming Public Procurement on 15th December 2020, we have finally seen a draft of the Procurement Bill. The legislative process, to determine how a large part of the UK’s public sector procurement will be required to be undertaken, was commenced early in May 2022.
This ambitious programme was understood to be required to simplify a raft of what were felt to be complex public procurement regulations (including the Public Contracts Regulations 2015, the Concession Contracts Regulations 2016, the Utilities Contracts Regulations 2016 and the Defence and Security Public Contracts Regulations 2011). The draft Bill will sweep the existing sets of Regulations away and replace them with a single set of rules which will apply across the board, save for various instances where secondary legislation will be required to be brought into force in due course dealing with specific sectoral requirements.
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’. One key feature driving change in this highly regulated area though, let’s not forget, was the very close link they represented to our former membership of the EU – as you will recall, all of the existing Regulations dealing with public procurement stem from Regulations which were developed over many years through our membership of the EU and were required to be implemented and enforced across all Member States, There was, therefore, upon Brexit taking shape, a keen desire across the government to demonstrate a clear severance with the EU and to be seen to be stamping its own agenda on UK policy; notwithstanding the very obvious fact that, as many commentators have pointed out since, the UK’s membership of any international Treaty (including its membership of the World Trade Organisation in its own right) necessarily comes with strings attached –one being the regulation of public procurement.
Will the Bill deliver the government’s stated aims? Whilst clearly there are attempts to create a simpler working framework than currently exists, the language used in many instances is very familiar to procurement professionals albeit subtle tweaks and changes have been made which will require careful consideration during the various legislative processes which will unfold over the next few months. The potential worry is that by using slightly looser (more permissive?) language in any piece of legislation, you inadvertently create room for legal argument as to its interpretation in practice, thereby potentially opening the door for legal challenges to be used as the interpretative means to gain clarity – remember, one driver for change was also a desire to smother opportunities for legal challenges being used as a means to delay procedures reaching ‘unpopular’ awards by providers who didn’t like the result. Could we unwittingly be steering ourselves into a position where we create more uncertainty and, therefore, more legal challenges being routinely used to undermine procedures? Time will tell of course.
One other important point to pick up on at this stage is the interaction of the Procurement Bill with the Health and Care Bill 2022 which presaged the introduction of the Provider Selection Regime which deals specifically with the commissioning of health and social care services (remembering that they remain Schedule 3 services under the Public Contracts Regulations 2015, until amended). As things currently stand we understand that the Provider Selection Regime is unlikely to come into effect until December 2022 (much later than originally planned) which means that health and social care commissioning will continue to be required to be undertaken under the light touch regime of the Public Contracts Regulations 2015. Given the mismatch in timings, it is anticipated, but not fully explained as yet, that the Public Contracts Regulations 2015 will require to be amended to remove health and social care services from its remit before they are replaced by the Procurement Bill. Another instance of having to keep a watching brief to see how this plays out in practice.
Next Steps
The Bill will now proceed through its readings and committee stages through Parliament (having already had its first two readings in the House of Lords). We have been promised a period of at least 6 months’ notice before the legislation will take effect, after the legislative procedures have been concluded – this is likely to take the effective date of the Bill well into 2023 at the earliest (assuming nothing derails the timetable in the meantime).
Bear in mind that, while the current iteration of the Bill remains largely faithful to the principles set out to be achieved in the Green Paper, the next stages of its journey through Parliament are likely to undergo changes to context and wording, so the devil really is going to be in the detail (and bear in mind also that the structure of the Bill involves a requirement to produce various secondary Regulations to allow key sections to work as planned) and a watching brief will be required to understand how the final text of the Bill will read before it receives Royal Assent. With this in mind, we have set out a number of highlights from the Bill which are currently set out within it which we think are of interest – but these could change over time and before the Bill makes it onto the statute books.
Some notable highlights in the Bill to be aware of:
- The definition of a ‘contracting authority’ introduces the concept of ‘contracting authority oversight’ which could be construed to be narrower than is currently understood but does use familiar language regarding control and funding (s1).
- ‘Light Touch Contracts’ are introduced, thereby replacing the light touch regime, but retaining the distinction for a range of services which are, as yet, undefined (an example of how secondary Regulations are required to tell us which contracts this will include) (s8).
- Valuation of contracts – if one cannot estimate the value of a contract it is to be assumed that it exceeds the relevant threshold (s3).
- In carrying out any procurement the following new procurement objectives (s11) must 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
- Acting, and being seen to act, with integrity.
- Removes the prescribed procedures we are all familiar with and simply allows for (s18):
- An open procedure (simple single-stage procedure)
- A competitive tendering procedure of the authority’s making (within its discretion) or
- Direct awards in specific circumstances (s40) – this uses largely familiar language to Reg 32, but also, in s41 introduces the ability to make a direct award ‘to protect life’ which would go well beyond current practice (bearing in mind this could include protecting human, animal or plant life or health or to protect public order or safety) – the detail of what could be covered by this permission is subject to further Regulations (as yet unpublished).
- Moves away from the recognised award criteria of most economically advantageous tender, to the new ‘most advantageous tender’ (s18). Theoretically this could give public bodies greater latitude in its award-making decisions.
- Introduces the concept of ‘excluded supplier’ and ‘excludable supplier’ with the aim of trying to make decisions around exclusions simpler, but instead introduces similar obstacles/protections as currently exist but using different language (s26).
- Permits any relevant Minister to undertake an investigation as to whether a supplier is an ‘excluded’ or ‘excludable’ supplier and, on the back of such investigation, to maintain what is referred to as a ‘debarment list’ (s59) which authorities can then rely upon in making decisions whether to exclude a supplier during a procurement.
- Replaces dynamic purchasing systems (DPS) with the concept of ‘Dynamic Markets’ – essentially the same as DPS with unlimited access qualification criteria – how these might operate in practice will be interesting (ss34-39).
- Reframes how framework agreements would be permitted to operate moving forward allowing for 4-year terms unless authorities believe they should be longer but also introducing longer ‘open frameworks’ of up to 8 years (ss44-47).
- Transparency notices will be required at earlier stages as a means to keep the market aware of an authority’s intentions including publishing the following:
- A pipeline notice if they intend to spend >£100m in any year (this captures PPN 05/2021)
- A contract award notice must be published before contract signature (effectively a notice of intent) (s48(1)) (note that this would kick off the associated standstill period – see later) – bear in mind that this applies whether the contract is proposed to be entered into pursuant to a competitive tendering procedure OR through a justified direct award mechanism.
- A contract details notice would then need to be published within a prescribed period after the contract is entered into (s51(1))
- A contract termination notice is required to be published after termination (s53)
- An ‘assessment summary’ replaces the current requirement for a standstill letter – and requires much less information that is currently the case (s48(3)) This must be served on participating suppliers before a contract award notice is published (but the timing of this is not explained, though it is probably the case that these should be issued simultaneously with the contract award notice to ensure minimum exposure during the standstill period – see below).
- Standstill periods will change to 8 working days from the date the contract award notice has been published (s49) – bear in mind that if a direct award under s40 is being contemplated, a contract award notice would still be relevant and a standstill period would still be required (but no assessment summary would be necessary).
- If a contract is valued in excess of £2million the authority must set and publish at least 3 KPIs (unless the authority believes the supplier’s performance under a contract could not be appropriately assessed – what this might include is not explained as yet)
As we mentioned earlier in this article, whilst the first course has been duly served, the final menu for the banquet remains a movable feast in terms of the detail, and as we all know from bitter experience, the devil truly is in the detail.
We will be producing updates to our observations on the development of the detail as the Procurement Bill passes through its various legislative stages. In addition, once the language in the Bill starts to become more certain we will begin putting together and running a series of workshops and seminars to assist clients to understand how the new regime will impact upon their day-to-day operations.
The first and important point to make is not to panic – there is plenty of time to establish a good working knowledge of the detail as it unfolds and we will be there to assist each step of the way.
For further information, please contact:
Mark Fitzgibbon, Partner, Hill Dickinson
mark.fitzgibbon@hilldickinson.com
