The UK's new Free Trade Agreements (FTAs) with Australia and New Zealand have prompted amendments to the UK's domestic Public Procurement Rules. Although the amendments arise from these particular FTAs with Australia and New Zealand, they apply to all procurements going forward, not just those involving Australian and New Zealand suppliers. The government has published a Procurement Policy Note (PPN 05/23) setting out the changes to the UK procurement rules under the amended regulations.
The amendments apply to all contracting authorities which come within the scope of the UK public procurement regulations, including Central Government Departments, their Executive Agencies and Non-Departmental Public Bodies, the wider public sector, local authorities and NHS bodies and utilities. This means all above threshold procurements within scope of the Public Contracts Regulations 2015 (the PCR), the Utilities Contracts Regulations 2016 (the UCR) and Concession Contracts Regulations 2016 (the CCR) will need to ensure they comply with the amendments to the relevant procurement rules.
PPN 05/23 summarises the amendments made to the PCR, UCR and CCR under the Public Procurement (International Trade Agreements) (Amendment) Regulations 2023 (the Amending Regulations), which came in to force on 25 May 2023 (the Effective Date). The amendments apply to all new above threshold procurements commenced on or after the Effective Date.
What has changed?
Unknown contract value
Under the old procurement regulations there were various methods for estimating the value of contracts in order to determine whether the relevant thresholds apply. Under the Amending Regulations, where the value of a procurement cannot be estimated then it must be treated as being equal to the relevant threshold detailed in the regulations (regulation 5 PCR, regulation 16 UCR and regulation 9 CCR). As such, where the value of a procurement cannot be estimated, it is deemed to be above threshold and subject to the full scope of the relevant procurement regime. This is consistent with the approach under the Procurement Bill which sets out (at Schedule 3, Paragraph 5) that where a contracting authority is unable to estimate the value of the contract, the authority is to be treated as having estimated the value of the contract as an amount of more than the relevant threshold for the type of contract.
Removal of the option of using a Prior Information Notice or Periodic Indicative Notice as a call for competition
Previously, sub-central contracting authorities and utilities could use a Prior Information Notice as a call for competition under the PCR (or a Periodic Indicative Notice in the UCR) instead of a contract notice. Under the Amending Regulations, Prior Information Notices and Periodic Indicative Notices are no longer able to be used as a call for competition. This amendment reflects the position under the Procurement Bill which (at clause 15) does not provide an ability for a Planned Procurement Notice to be used as a call for competition, but does retain the ability for contracting authorities to shorten timescales in certain circumstances.
Termination of contracts
The previous procurement regulations contained provisions which made sure procuring entities couldn't use options, cancel a procurement exercise, or modify awarded contracts in order to circumvent the procurement rules. The PPN sets out that the Amending Regulations introduce a new obligation which prevents contracting authorities from terminating awarded contracts to avoid international obligations (regulation 18 PCR, regulation 36 UCR and regulation 8 CCR).
Impact
Although, in practice, the most commonly used means of starting a procurement process is the publication of a Contract Notice, contracting authorities and utilities should note that they no longer have the option to use a PIN as a call for competition. A PIN can continue to be used for any other purpose permitted under the relevant regulations (for example, for shortening timescales, or commencing a pre-market engagement exercise).
Contracting authorities should ensure they review PPN 05/23 and the changes that have been made by the Amending Regulations to ensure that their procurement practices align with these changes in approach. In particular, it may be prudent to consider whether internal procurement policies or contract procedure rules need to be reviewed to reflect the changes in valuation and advertisement rules.
