Procurement Act 2023... it's time to get prepared!

On 12 September 2024, the Cabinet Office announced that the 'go-live' date of the Procurement Act was delayed until 24 February 2025. The delay has been welcomed by many, given that the late (and still ongoing) release of the statutory guidance and template documents meant that many contracting authorities were not as prepared as they would have liked. The Procurement Act is set to bring in a number of changes which will change contracting authorities' procurement processes, contract management systems, contractual requirements as well increase the administrative burden associated with procurement.

As we start 2025, contracting authorities should use the next few weeks ahead of 'go live' wisely to prepare themselves for changes the Procurement Act will bring.

What should contracting authorities do to prepare? 

The Procurement Act will affect a wide range of teams and functions, and there is no doubt that adjustments will be required in order to adapt to the new regime. Contracting authorities can take steps to streamline their procurement processes and make them simpler for procurement and contract management teams ahead of the Act's implementation. This article sets out a checklist of suggested preparation steps for contracting authorities to consider in order to prepare themselves for the Act coming into force. This is not an exhaustive list and each contracting authority should undertake its own assessment of its needs.

Documents

As part of their procurement process, contracting authorities generally use template procurement documents and contracts, which reflect the current Regulations. These documents will need to be updated to ensure that they are compliant with the new provisions.

Procurement documents 

Procurement documentation should be amended to reflect the language and new requirements of the Act, for example standstill letters will become 'assessment summaries' and they no longer need to include the relative advantages of the preferred bidder. Preparing and updating these templates will increase efficiency and consistency within procurement teams. The following documents should be updated:

• Template Procurement Documents, for example instructions to accompany the selection questionnaire (now called the specific questionnaire), Invitation to Tender and Assessment Summaries
• Template Conflicts Assessment to record the procedure carried out in assessing conflicts of interest
• Template Conflict of Interest Declarations
• Procurement Policy / Contract Standing Orders to align with the new regime, including evidencing that the new section 12 objectives have been considered
• Internal forms / approvals required by the contracting authority's governance procedure.

Some templates have been made available by the government Commercial Function on the Procurement Pathway tool here but these will require input from contracting authorities in order to make them suitable for their organisation and each specific procurement.

Contracts 

The Act includes a number of implied terms for public contracts as well as other matters, for example, the requirement to publish a copy of the contract and include a minimum of three KPIs if a contract is valued over £5 million. These are matters which should be considered and addressed in contract drafting. Some of the issues that contracting authorities should review and update in their contracts are:

• Ensure that the implied terms imposed by the Act (and associated consequences) are expressly included in any contracts (in particular any templates or standard contracts)
• Confirm that finance processes reflect the implied terms on payment and termination within the Act
• Ensure the contracting authority is entitled to:
  • publish a copy of their contracts (where the value exceeds £5 million) – also see 'Wider Legal Considerations' below
  • collect data on contract performance and that there is a requirement for the supplier to report on performance where required
• Any reportable KPIs included in the contract align with the publishable ratings imposed by the Act and Procurement Regulations 2024
• The practical implications of procedures/decision-making processes and whether these align with the practical implications of the requirements of the Act. For example, the requirement to publish a Contract Change Notice before a contract is modified.

Training

Training should be arranged for procurement teams as well as all other employees affected by the new regime. Central government training is available to contracting authorities free of charge here. Additionally, contracting authorities should consider providing additional training for the following personnel:

• Procurement teams - consider arranging training specific to their day to day operations and sector, including a deeper dive into how the Act will affect their organisation specifically
• Evaluation teams – consider updated training on the new procurement principles and current best practice on providing reasons for scores. The moderated scores and rationales will need to be included in the assessment summary and evaluation and moderation are likely to continue to be the focus areas for any procurement challenge
• Contract management teams – these teams will likely require training on the Act, as many of the changes relate to the contract management phase of the contract lifecycle. It may also be beneficial to arrange training/upskilling on KPIs given the new KPI performance notice requirements (discussed below).

If you are interested in training to assist your teams, please contact our expert procurement team who can provide bespoke training to suit your needs.

Internal procedures

Contracting authorities will have their own internal procedures to manage the procurement process. As there will be some significant changes brought in by the Act, contracting authorities should update their internal procedures to reflect the new regime.

Procurement procedures 

Procurement teams should consider creating a standard procedure to check the debarment list for excluded and excludable organisations, and include a robust decision-making process for excluding a supplier on the basis of a mandatory or discretionary exclusion ground. It is important that there is a robust audit trail to support any such decision.

Whilst not a new concept, record keeping and audit trails are crucial in demonstrating compliance with procurement law and can be the best shield in the face of a procurement challenge. This may be time consuming in the moment but being able to robustly defend a challenge rather than having to re-start or rewind a procurement process saves time overall. Record keeping can be made more efficient by ensuring decision-making procedures are put in place and template documents (e.g. detailed evaluation and moderation notes templates) are available to prompt robust record keeping.

Financial procedures

The Act includes financial reporting obligations which will be new for some contracting authorities, for example publishing notices of payments over £30,000. As this is a new requirement, contracting authorities will first need to determine who will be responsible for the publication requirement – the finance team, the contract management team or someone else?

Wider legal considerations 

There are some additional issues which may arise after the new regime comes into force, such as:

• An increase in Freedom of Information Act (FOIA) requests in relation to the procurement process. Legal teams should review their capacity to manage FOIA requests and consider whether their team requires additional training on FOIA
• The potential for disputes over commercially sensitive information. As there are increased transparency requirements relating to KPIs and publication of contracts, suppliers will likely want to protect their commercially sensitive information and are likely to argue for a broader interpretation of commercially sensitive information to avoid certain information being published. Legal teams may want to consider additional training on commercially sensitive information and redaction to prepare for these issues.

Contract management

Although contract management teams may not presently play a significant role in the procurement process, it is anticipated that the Act will change this. In particular, a number of new notices form part of the contract management phase of a contract's lifecycle so will likely be dealt with by contract managers, or will at least require their assistance. It is important to ensure it is clear who will be responsible for these notices and that any linked requirements or practical implications are reflected in the contract and procurement documents from the outset.

Some of the new contract management phase notices are:

• KPI Performance Notices: contracting authorities (excluding utilities) will need to monitor and report on KPIs during the term of the contract
• Contract Performance Notices: contracting authorities (excluding utilities and light touch contracts) will be required to publish notices relating to unsatisfactory performance and breach of contract, including details of any whole or partial termination of the contract, award of damages or settlement agreement
• Contract Payment Information: contracting authorities (excluding utilities, concession contracts, contracts awarded by schools and transferred Northern Ireland authorities) will be required to publish quarterly reports on any individual payments over £30,000 under a public contract
• Contract Change Notices: contracting authorities (excluding utilities, light touch contracts, defence and security contracts, transferred Northern Ireland authorities or where section 75(2) applies) will be required to publish a notice prior to the modification of a contract so contract variations and amendments will need to be closely monitored
• Contract Termination Notices: with the exception of direct awards, contracting authorities (excluding utilities) will be required to publish notices of contract termination. This includes the discharge, expiry, and recission of contracts.

Contract management process

Where contracting authorities have separate contract management and procurement functions, those teams will need to work closely together in order to satisfy the increased transparency and reporting requirements of the Act. Contract management teams should consider taking the following steps in order to prepare:

• Review their current contract management systems and ensure they reflect the performance reporting requirements under the Act. For example, how will the contracts register flag which regime a contract was procured under; the Act or the previous Regulations? Is there a reminder function to prompt annual KPI reporting?
• Consider practical changes to contract management. Given the increased focus on poor performance, contract management teams may need to consider implementing more frequent or in-person contract management meetings with suppliers.

Key takeaways

The Procurement Act 2023 will introduce a number of changes which will have an impact on contracting authorities' procurement processes, contract management processes and contractual requirements. If they have not already, contracting authorities should proactively prepare for these changes by:

1. Revising template procurement and contract documents: to reflect the new requirements of the Act and address the new implied terms for public contracts
2. Revising standard procedures: for example, by establishing processes to ensure a robust audit trail for decision making and determining responsibility for publication requirements
3. Considering bespoke training that is consistent with the new regime, for example, offering training which assists evaluation teams, or training on KPIs and FOIA requests.

The changes and increased administrative burden could put a strain on contracting authorities. It is therefore important for contracting authorities to consider whether they will need to obtain additional resource in order to successfully deal with that burden.

Finally, contracting authorities should consider upcoming projects and whether it may be best to launch before or after the go-live date of the Act. For those projects where it is not possible to launch before the go-live date, procurement teams should ensure they prepare on the basis of the requirements of the Act.

If you require assistance in preparing for implementation of the Act or require assistance with your procurement matters generally, please contact our specialist procurement team who are available to help.