The Procurement Act 2023 received Royal Assent on 26 October 2023. As part of the upcoming changes, the Procurement Act 2023 introduces a new set of contract award procedures. In this article, we look at the key changes and summarise the steps that authorities and bidders alike should take to prepare.
What is going to change?
The Procurement Act 2023 introduces two new general procedures, being "competitive award" (chapter two) and "direct award" (chapter three).
These replace the six procedures available under the Public Contracts Regulations 2015 (PCR 2015), being the open, restricted, competitive dialogue, competitive procedure with negotiation, innovation partnership, and negotiated procedure without prior publication.
The concept of so-called "light touch" procurement applicable to services listed at Schedule 3 of the PCR 2015 has been maintained, albeit with some changes. The Procurement Act 2023 does not set out a dedicated procedure for light touch contracts, but rather exempts those light touch contracts from certain requirements. For example, light touch contracts are not subject to a mandatory standstill period.
Competitive Award – the essentials
The two options for a competitive tendering procedure are:
- open procedure: a single stage tendering procedure without a restriction on who can submit tenders; or
- competitive flexible procedure: such other competitive tendering procedure as the contracting authority considers appropriate for the purpose of awarding the public contract.
The contracting authority is obliged to ensure that the procedure it selects is a proportionate means of awarding the contract, having regard to the nature, complexity, and cost of the contract.
The Competitive Award regime is underpinned by the new criterion for award, being the "most advantageous tender", rather than the "most economically advantageous tender" under the PCR 2015.
Before determining which tender is the most advantageous, a contracting authority must carry out a competitive tendering procedure in accordance with a tender notice and any associated tender documents. The "most advantageous tender" is that which the contracting authority considers:
- satisfies its requirements; and
- best satisfies the award criteria when assessed by reference to the assessment methodology and (where there is more than one criterion) the relative importance of the criteria.
The Procurement Act 2023 sets limited guidelines around the award criteria, such as that it must be clear, measurable and specific, and that where multiple criteria are used, the authority must set out the relative importance of each, e.g. by setting out their respective weightings. This will not be unfamiliar to contracting authorities already accustomed to devising award criteria and assessment methodologies. However, the description of the latter procedure as being 'flexible' is apt. It affords the contracting authority discretion to decide (amongst other things):
- the number of participating suppliers (generally or in specific rounds); and
- the conditions of participation (e.g. financial capacity).
Direct award
Chapter three of the Procurement Act 2023 sets out the direct award regime. In brief, this allows a contracting authority to award a contract directly to a supplier where a direct award justification applies, and there is an overriding public interest in awarding the contract to that supplier. A new provision has also been inserted allowing a Minister of the Crown to specify that such a contract award can be made where that Minister considers it necessary to protect life.
For further details on the direct award regime, please see our full suite of insights on the Procurement Act 2023.
What is the benefit of the new procedures?
The change from "most economically advantageous tender" to "most advantageous tender" reflects a shift towards placing a greater emphasis on obtaining non-commercial value from tenderers. For example, in the case of light touch contracts, section 23(6) allows a contracting authority to consider the views of the service recipient and the importance of proximity between the supplier and service recipients. This reflects the approach to social value taken in the current National Procurement Policy Statement.
The introduction of the competitive flexible procedure also signposts an intention to provide greater discretion to contracting authorities in the course of procuring works, goods and services.
What steps should you be taking in advance of the Procurement Act 2023?
For contracting authorities:
- Without doubt, the changes to the procedures will mean your procurement strategy and documents will need to be updated, but consider how you can improve them in the process.
- Consider how you might use the new flexibilities under the competitive flexible procedure. What procurement tools do you like using and are useful for your organisation and bidding community? Consider and consult on how these could be used to your benefit going forward.
- Ask your potential bidders what they require for a redesigned procurement process? What would make them provide better value/more competitive and innovative bids?
For suppliers:
- Obtain practical and accessible training for your bid teams and account managers: make sure it is sector relevant and has insight into potential routes your clients may be adopting.
- Engage with your clients now! Encourage them to update their strategies, policies and procedures (including their competitive flexible procedure and tools) in a way that is sensitive your needs, that takes advantage of the flexibilities but that also increases efficiency and value for money throughout your supply-chain.
