With the “go live” date for the Procurement Act 2023 (the Act) just around the corner, contracting authorities have rightly turned their minds to what this means for procurement practice, policy and procedure.
With the “go live” date for the Procurement Act 2023 (the Act) just around the corner, contracting authorities have rightly turned their minds to what this means for procurement practice, policy and procedure.
The Act marks a departure from the current approach to public procurement, and in addition to changes to the procurement lifecycle, also introduces new concepts that impact the commercial lifecycle of public contracts.
With that in mind, what should contracting authorities be thinking about now in relation to their contracts?
Key Performance Indicators
A key change under the Act is the requirement for contracting authorities to set, publish, monitor and report on a minimum of three KPIs for their public contracts with a value of more than £5 million (inclusive of VAT).
The Procurement Regulations 2024 (the Regulations) set out more detail about what that reporting regime looks like, including the reporting matrix which KPIs need to be reported against (set out below):
|
Rating |
Description |
|
Good |
Performance is meeting or exceeding the key performance indicators |
|
Approaching target |
Performance is close to meeting the key performance indicators |
|
Requires improvement |
Performance is below the key performance indicators |
|
Inadequate |
Performance is significantly below the key performance indicators |
|
Other |
Performance cannot be described as good, approaching target, requires improvement or inadequate |
Whilst KPIs can still be measured against different criteria, it will be necessary for contract performance notices to set out an assessment against the scores set out above.
That leaves a gap between actual practice and the legislative reporting requirements, and contracting authorities should be thinking now about how they will address this in their contracts (as well as in their procurement documents moving forward).
Payment provisions
As with the Public Contracts Regulations 2015 (the PCR), there is an implied term into every public contract under the Act for prompt payment (within 30 days).
Contracting authorities should think now about their current payment provisions (including in respect of payments flowing down supply chains) and ensure that these are all up to date and reflect the requirements of the Act. Shorter payments are acceptable under the Act (as long as they can be met!), but longer payment periods will not comply with the prompt payment obligations (which will be implied into the contract in any event, and override anything to the contrary). In the interest of certainty in your contracts, payment provisions should be considered and aligned to the requirements of the Act.
Transparency obligations
Contracting authorities will no doubt be aware of the enhanced transparency obligations that are introduced in the Act (via the new noticing regime and requirements).
It is worth thinking now about the information that will need to be provided in these notices, and ensuring that your contracts give you the right tools to obtain that information (for example, reporting on KPIs in a contract performance notice) and the ability to publish the relevant information without falling foul of any confidentiality or transparency obligations in the contract.
Implied contract terms
Similar to the PCR, there are a number of implied terms into all public contracts, including implied termination rights.
Whilst these terms will be implied into all public contracts in any event, it remains good practice to ensure that these issues are addressed in your terms and conditions (particularly so as to govern the consequences of any such term being triggered).
This is particularly important in the context of termination, and contracting authorities should consider how they would seek to manage an orderly exit from a contract in the event of termination and codify that approach in their terms and conditions. This will likely require some project specific tweaks on a case by case basis, but time spent now thinking about the principles to be applied in the event of triggering such a termination right will pay dividends in the long run.
The above is by no means an exhaustive list, and contracting authorities should spend some time now thinking about how best to address the additional requirements under the Act in their future contracts.
Perhaps a nice job for that “quiet” period between Christmas and the New Year!
Please do get in touch with one of the procurement team who will be happy to discuss this (and all things Procurement Act related!) further.
