Transforming public procurement: Some initial thoughts
The Green Paper on public procurement is a significant output from No 10's Rules Reform Project. It sets out the direction of travel the Government would like to take when shaping post-Brexit procurement law. There is plenty in the Green Paper for the sector to support, whilst there are some proposals that housing providers might want to challenge.
The reduction of the number of procurement procedures to three should be welcomed, particularly as one of those is a direct award process. The new "competitive flexible procedure" will provide housing providers with freedom to negotiate and adopt a much more nimble approach at the second stage of the process, which will be welcomed by clients and bidders alike.
The recognition that framework agreements and DPS arrangements need to be made more flexible, available to be adopted for a wider variety of works and services and streamlined to reduce costs.
The abolition of feedback letters, the drafting of which has become a mini-industry in itself, is likely to be welcomed by clients. However, the proposals are that client-provided feedback is replaced by the potentially more onerous task (for clients) of embedding transparency throughout the process, so that a disappointed bidder can "pick its own" feedback at the end. Are housing providers ready for that level of transparency and presenting the inner-workings of their procurement practices to bidders in that format? If they are: are their IT platforms?
The establishment of a single digital platform for supplier registration that ensures bidders only have to submit their data once to qualify for any public sector procurement, as well as a centrally managed and maintained debarment register would also speed up and simplify selection of bidders. The Green Paper also includes proposals that will assist clients in identifying and disqualifying bidders for past poor performance and for failure to pay their supply-chain promptly. All of this should reduce the burden of the administrative process and be seen as good news for housing providers.
The ability to require place-based outcomes (e.g. recruitment, training and skills initiatives for local residents) via below-threshold contracts (as well as the ability to reserve contracts solely to SMEs) will be welcome news for housing providers. As anchor organisations in the community, housing providers and local authorities often see procurement as a barrier to the achievement of local spend. New Procurement Policy Note 11/20 now allows housing providers to reserve contracts, on either a county-wide or UK-wide basis (nothing in between), and it is anticipated that this will be increasingly utilised by housing providers going forward. Nevertheless, the importance of underpinning the ability to reserve contracts with a comprehensive community impact plan and effective social value roadmap, so as not to overburden such contracts, cannot be overstated.
Omissions and proposals that housing providers may want to consider further:
As currently presented, the current Green Paper is very central-government orientated. There is reference to the new Construction Playbook (only applicable to central government departments) and a number of the assumptions made in the Green Paper fail to recognise the current procurement practice and challenges faced by housing providers and local authorities.
Further, the Green Paper does not recognise that simplicity and flexibility are uneasy bedfellows. By "lighting a bonfire of red-tape", the Green Paper risks creating vacuums in the regulatory framework. These gaps are likely to be filled either by gold-plating, with clients reverting back to what they know from the old rules, or the exploitation of such gaps as clients do as they please: creating divergent practice that is unlikely to be welcomed by or attractive to bidders.
The Green Paper lists other legislation that applies to contract award procedures but which the Government does not propose to abolish or include in the reforms. Section 20 of the Landlord and Tenant Act 1985 (as amended by Section 151 of the Commonhold and Leasehold Reform Act 2002) does not receive a mention but is a significant and related piece of legislation for housing procurement professionals. Co-ordination of a Section 20 leaseholder consultation with a public procurement process extends any procurement timetable by up to six months. The two procedures, whilst capable of combining, do not sit easily together and it would be a missed opportunity if any new procurement legislation did not seek to mitigate the difficulties for housing providers of running the two processes side by side.
A number of housing providers are at the forefront of addressing both the housing and climate crises through the adoption of MMC in its many different forms. Procurement regulation has never been kind to emerging technologies, and the benefit of adopting a market and value-led approach has never been highlighted as eagerly as in the housing sector at present. It could be that the new competitive flexible procedure can help in this regard, and the transparency requirements may help underpin a new information revolution that will help reassure housing providers seeking to adopt a life-cycle costing approach.
Finally, the issue of training and upskilling in the sector needs to be addressed and acknowledged. Public procurement is not just about "buying stuff". It will need a competent, skilled and steady hand to navigate the new public procurement legislation, in whatever form it takes.
Trowers & Hamlins, with input from clients and contacts, submitted its consultation response to the Green Paper ahead of the 10 March 2021 deadline. To see the response click here.