On 26 October 2023 the Procurement Act 2023 (the Act) received Royal Assent, concluding the nearly three year journey from the initial consultation, and paving the way for the legislative reform of the post-Brexit public procurement regime.
There are some notable changes that the Act will bring forward into the legislative landscape and, whilst there is no replacement for reading the Act to understand the full extent of these changes, we have set out below a number of key changes that housing associations should have in mind:
Greater flexibility
The Act removes the numerous different procedures set out in the Public Contracts Regulations 2015, and leaves behind the Open Procedure, Direct Awards (in certain prescribed circumstances) and introduces the Competitive Flexible Procedure (the CFP).
Under the CFP, a contracting authority will have the freedom to design their own procurement procedures (as long as they comply with the general objectives set out in section 12 of the Act, various minimum time limits set out in section 54, and as long as the procedures are proportionate means of awarding the contract by reference to the nature, complexity and cost of the contract). This includes the possibility of incorporating negotiations, dialogue, interviews and presentations into the procurement process, as well as the option to structure a procurement in successive rounds.
In addition to the CFP, the Act retains a light touch regime for light touch services, and retains specific rules for certain below threshold opportunities.
Enhanced transparency
With greater flexibility comes an enhanced transparency regime and contracting authorities will now be required to make available more detailed information about their procurements, as well as certain details around the management of their public contracts. Contracting authorities will need to be mindful of the various notices that are now applicable throughout the entire lifecycle of a public contract. This includes:
- Notices at the pre-procurement stage (including pipeline notices for contracting authorities with anticipated spend in excess of £100m in the coming financial year, and preliminary market engagement notices where pre-market engagement is undertaken);
- Notices during the procurement process (including tender notices, procurement termination notices where a procurement is abandoned, contract award notices and contract details notices when a public contract is awarded); and
- Notices during the term of the contract (including contract change notices where a public contract is modified, and contract termination notices which will be required whenever a public contract comes to an end, including through expiry, settlement or termination).
Access for SMEs
The Government has identified the Act as an opportunity to facilitate access to public contracts by SMEs, and has published guidance on the benefits for prospective suppliers to the public sector. Of note, SMEs should now find it easier to identify potential opportunities given the imminent publication of commercial pipelines, and the enhanced transparency regime which will help to understand when opportunities are due to be tendered / are expected for renewal. The Act also introduces a duty for all contracting authorities to have regard to the particular barriers that SMEs might face in respect of a covered procurement, and to consider how these may be removed or reduced.
Exclusion grounds
The Act provides a discretionary exclusion ground where a bidder has demonstrated poor prior performance under a previous public contract, and this exclusion ground has been relaxed compared to its counterpart under the Public Contracts Regulations 2015.
Under the Act, a bidder may be excluded where they have breached an earlier public contract, and the breach was sufficiently serious. Whether a breach is sufficiently serious includes the current approach regarding termination and/or damages, but also explicitly brings in scope contracts which have been ended pursuant to a settlement agreement. A further new limb is introduced whereby suppliers may be excluded when they have not performed a contract to a contracting authority's satisfaction, where they have been given the opportunity by the contracting authority to improve performance, and where they have failed to do so.
Notwithstanding the extension of this particular exclusion ground, contracting authorities should remember that key to an effective procurement process is the need to have bidders in the room. With that in mind, the benefits of excluding a contractor who may not have delivered a contract to your satisfaction in the past should be balanced against the need to ensure robust competition in the new procurement, and contracting authorities may want to consider what procedures and policies a bidder may now have in place to avoid a repeat of past performance.
Next Steps
There is much to be getting to grips with ahead of the new rules coming into force. Whilst the Act is not expected to be fully "live" until October 2024, housing associations should act now to make sure they are ready to hit the ground running. Key to that preparation will be the Cabinet Office Learning & Development programme, which was kickstarted earlier this month by the launch of the Cabinet Office's Knowledge Drops. This is the first stage of the full L&D offer and will set the scene for the further detail which will follow in due course.
