Transforming UK public procurement – The Public Procurement Bill 2022 passes second reading in the House of Lords
Since Brexit and the ensuing pandemic when the direct award of PPE contracts was in the spotlight, the question of how public procurement will be regulated in the UK has been the subject of debate. In December 2020, the UK Government set out its direction in a Green Paper (see our previous articles on this and the resulting consultation articles on February 21 and December 21). This is now taking shape in legislation, with the Public Procurement Bill being announced in the Queen’s Speech and after its second reading on May 25.
The Bill will replace the Public Contracts Regulations 2015, the Concession Contracts Regulations 2016 and the Utilities Contracts Regulations 2016, marking the biggest change to UK public procurement regulations in years. And there’s no doubt that the bill encompasses many political touchpoints – and not just Brexit and the legacy of Covid. The Cabinet Office’s ‘Procurement Bill Fact Sheet’ highlights the potential of procurement reforms to help deliver the ‘race to the top’ agenda by requiring buyers in the sector public “take into account national strategic priorities such as the potential for job creation, improving the resilience of suppliers and the fight against climate change” while value for money will remain the top priority. It therefore seems that a lot of things are based on this bill!
Of course, the bill may be subject to amendments as it makes its way through Parliament, but we now look at some of the key differences between this new regime and the current approach and what this means for people involved in public procurement. or even bid for them.
A simpler and more flexible approach?
Much has been made of the government’s willingness to use these reforms as a means to deliver the ‘Brexit dividend’ by freeing us from what some see as an overly complex EU bureaucracy. When presenting the Bill for its second reading, Lord True noted that “1 in 3 of public money – some 300 billion a year – is spent on public procurement. Imagine the power of the most effective and most effective of that money every Imagine the extra small businesses we could help to hire more workers, expand their operations and contribute to the wealth of this nation”.
To this end, the new legislation will regulate public contracts from their inception until the time the contract expires or is terminated. It aims to create a “simpler and more flexible” procurement system that is open to small businesses and social enterprises and that preserves transparency. The draft law includes key principles (mainly non-discrimination and equal treatment) and objectives (namely value for money, maximization of public interest, transparency and integrity).
In truth, it is really too early to say whether this new regime will lead to a more efficient and effective use of public funds. To be sure, the draft law is written in much simpler language than the existing regulations which have been transposed from EU directives resulting from lengthy negotiations between EU member states. There are two schools of thought here, on the one hand the friendly language should make government procurement more accessible, and on the other hand it might just lead to more disputes over the meaning of words. Only time will tell.
As for the procedures themselves, as we explain below, they are a priori simpler and more flexible. For simple purchases, they could make life better for buyers and suppliers. For the more complex ones, however, the extent of flexibility could lead to a very wide range of interpretations and thus, over time, to a significant divergence of approaches. This would not lead to efficiency gains for public bodies or suppliers, quite the contrary.
There’s also a lot the bill doesn’t tell us about what the government is planning for the new regime. Some important areas, such as transparency, need secondary legislation, so we will have to wait and see what that brings. It also means that we won’t have a single set of rules to refer to.
Some things don’t change
Although we have been freed from the constraints of the EU, as an international trading nation we will never be able to do what we want in the area of public procurement. As such, the bill reflects the UK’s need to comply with international procurement regulations, including the World Trade Organization’s Government Procurement Agreement.
It should also be noted that elements of the new regime will be similar to the current one, for example, the grounds for direct award, the circumstances under which a contract can be modified and substantive remedies. There are clarifications and adjustments to the current regime in these areas, but they remain largely the same. However, there is no doubt that this is a fundamentally different regime, and some of the main points of departure from the current regulations are highlighted below.
Fewer procurement procedures (at first sight)
The green paper announced three new procurement procedures that would replace the seven prescribed by EU regulations. These should be:
- a new competitive flexible process that “gives buyers the freedom to negotiate and innovate to get the most out of the private, charitable and social enterprise sectors”
- an open procedure for simpler, “ready-to-use” competitions
- a restricted tendering procedure which can be used in certain circumstances such as extreme urgency.
The bill delivers on its promise to reduce the number of procedures with an open one-step procedure for simple (ready-to-use) public procurement. If this is not suitable, the bill leaves open the possibility of using “any other tendering procedure that the contracting authority considers appropriate for the purpose of awarding the public contract”. It doesn’t get more flexible than that! This is of course subject to the rest of the rules, including a proportionality requirement and minimum time limits. The bill gives this alternative to the open procedure the nickname of “competitive bidding procedure other than an open procedure” which will probably have to be simplified for ease of consultation, at least.
What is interesting about this alternative to the open procedure is that it seems at first glance to allow many different permutation procedures with or without a selection step, several top-down selections and no apparent restrictions on post-trade negotiations. call for tenders. So you could use it to run something like restricted procedure, competitive dialogue, competitive with negotiation or even the old negotiated procedure, for those who have enough time to remember it. Detailed guidance is awaited and we hope will provide context and structure, while retaining the flexibility that these reforms seek to achieve.
There is also still the possibility of directly awarding contracts in situations similar to those of the current regulation, with the addition of “direct award to protect human life”, which should avoid having to rely on urgency. in protracted public health emergencies, as was the case. during the pandemic.
Choose the right supplier
The bill establishes a new framework for excluding suppliers from contracts and contract awards, including making it easier to exclude suppliers who have underperformed on other contracts. A new ‘exclusion register’ will also be created, accessible to all public sector organisations, which will allow contracting authorities to see which suppliers have performed poorly, whether or not the poor performance led to the termination of the contract.
As noted in the green paper, the bill also aims to address the practical problem that buyers often encounter due to the limited availability of independent information on poor supplier performance. Before entering into a new public contract with an estimated value greater than 2,000,000, the bill provides that (subject to certain exceptions) a contracting authority is required to set and publish at least three key performance indicators relating to the market. This requirement can be avoided if the contracting authority considers that the supplier’s performance under the contract cannot be adequately assessed by reference to the KPIs.
Where KPIs have been defined, the contracting authority must, at least once every twelve month period during the life of the contract and at the end of the contract:
- assess performance against key performance indicators
- publish the information to be specified in the regulations in connection with this assessment.
It will be interesting to see how this plays out, especially for more complex joint venture or public-private partnership contracts, where the definition of meaningful KPIs that a supplier would be willing to have published in this way can be a challenge.
More transparency… and lots of reviews
The government has signaled that a single digital platform will be created for suppliers to register their details which can be used for all tenders, and a single central “transparency platform” will allow suppliers to see all opportunities online. one place. The Cabinet Office also sees this approach as a way “to embed transparency throughout the business life cycle so that the spending of taxpayers’ money can be properly monitored”. There are approximately 12 different notices identified in the bill, some of which go beyond the current requirements. The new ones include Planning and Pipeline Notice, Premarket Commitment Notice, Detailed Contract Notice, and Contract Termination Notice.
Further guidance will be issued in due course in this area, as the details of this platform and notification requirements were not specified in the bill.
And then ?
So now we’re keeping tabs on secondary legislation and promised legal guidance. The bill and related regulations are not expected to come into force until March 2023. Six months notice will be given before the new regime is implemented. In the meantime, the current regulations will continue to apply in the same way as before. It should also be noted that markets that started before the change in the law will continue to be bound by the current rules even after the entry into force of the bill.