This is the second in the series of updates we have produced to assist you in preparing for the Procurement Act 2023 (the Act) which is still pencilled in to come into force in October 2024. This update is concerned with the three procurement procedures that the Act introduces.
Simplicity and flexibility – an introduction to the new procurement procedures
The procurement procedures originally established by the Public Contract Regulations 2015 (PCR) are simplified quite considerably by the Act, which removes the prescriptive rules on how procurement should be conducted and simply replaces them with three broad approaches, namely:
- An open procedure, where there is a single stage procedure without restriction on the number of tenderers
- The ‘Competitive Flexible’ procedure, where a contracting authority is now permitted to design a form of procedure that works best for its objectives in line with the procurement principles; and
- Direct award, which is available in a number of permitted instances
Open Procedure (s20)
The open procedure is the only ‘legislative procedure’ ie it is the only one with a prescribed form; this single stage procedure bears the greatest resemblance to the open procedure we are familiar with under PCR..
Competitive Flexible Procedure (s20)
In contrast, the competitive flexible procedure is perhaps the most notable shift away from the previous position. Designed to allow contracting authorities to design processes which best suit their needs, the procedure is evidence of the policy desire to shift away from standardised procedures which may not always best achieve a contracting authority’s aims. It’s important to bear in mind that this bears a lot of the hallmarks of the ‘light touch regime’ procedure under PCR. However, the trade off with this kind of flexibility is that it places a burden on contracting authorities to ensure that whatever they do design, they are complying with the objectives of procurement (see s12 of the Act). Notably this includes ensuring that procedures are designed in such a way that it they are proportional, and that it consistent with the contracting authority’s duties to act with integrity and in a way which treats suppliers the same (unless a difference in treatment is justified).
Additionally, there is no getting away from the increased transparency requirements of the new regime, so contracting authorities should ensure that they comply with these ‘procedural’ requirements in any event and remember that its decision making will still be subject to robust scrutiny, notwithstanding the greater flexibilities reserved to it.
One danger we foresee with this flexibility is that to gain the most benefit from this new freedom, contracting authorities and procurement practitioners will need to move away from procedures and processes with which they will no doubt have grown familiar. Confidence to develop new ways of working will be needed to ensure that contracting authorities are not tempted to simply replicate the procedures under the old PCR rules, which will be especially tempting in competitive markets where there is a significant risk of challenge.
Direct Award (s41 and Schedule 5)
Direct awards are also available and in a similar guise to that of the old rules. To make a direct award, either a ‘direct award justification’ (schedule 5) must apply to circumvent the need to run a competitive tendering procedure, or a contracting authority must have concluded that there are no suitable tenders following a competitive tendering procedure.
There are two notable additions to the grounds for direct award, which otherwise largely mirror those set out in PCR. These are where the contract award is “deemed necessary by regulations to protect life, health or public safety” (no doubt reflecting the post pandemic landscape) or when the contract is for the “supply of user choice services as designated by regulations, and supplied for the benefit of the individual.”
Once a contracting authority has established that a direct award justification applies a transparency notice must be published to notify the market of the authority’s intention to make a direct award.
What do you need to know?
Whilst there are comparatively fewer procedures available for contracting authorities to choose from, the position in the Act is intended to be more flexible and less prescriptive than before. This flexibility is derived from the introduction of the new ‘competitive flexible’ procedure. Whilst the pros of flexibility are undeniable, contracting authorities should consider that a flip-side could be a lack of clarity, and a need for more work to go into forming and documenting the proposed process.
These are big changes and contracting authorities would be well advised to consider their implementation prior to the go-live date of the Act which currently remains set for October 2024. Steps that can and should be taken now include:
- Review of the procurement pipeline and early planning for new procedures;
- Consider updating procurement documentation to support the use of these procedures, and any pro-forma documents used for record keeping of decision making;
- Analyse any steps that are prescribed by the legislation – especially transparency and notice requirements; and
- Ensure all procurement staff are familiar and up to date with all of the changes.
This article was authored by Ruby Melling.
For further information, please contact:
Ruby Melling, Hill Dickinson
ruby.melling@hilldickinson.com
