The Procurement Act 2023 received Royal Assent on 26 October 2023. However, the Procurement Act is not expected to come into force until October 2024. The next step is for the necessary secondary legislation to be laid before Parliament which is expected in early 2024. Following this, Cabinet Office has indicated there will be a six month preparation period prior to "go-live". The current regulations (Public Contracts Regulations 2015, Utilities Contracts Regulations 2016, Concessions Contracts Regulations 2016 and Defence and Security Public Contracts Regulations 2011) are expected to continue to apply up until "go live" of the Procurement Act 2023.
The Procurement Act consolidates the current regulations into one single Act. The Act moves away from the terminology used in the EU Regulations and introduces some new concepts. The stated purpose of the changes was to increase flexibility for contracting authorities and increase transparency. We have summarised the changes at a high level below, with more detailed commentary to follow in due course.
Changes to available procedures
There are several key changes to the procedures available to contracting authorities. These are:
- Increased grounds to direct award. There is now a new ground for direct award whereby a Minister can, if considered necessary to: (a) protect human, animal or plant life or health; or (b) to protect public order or safety, make regulations to provide that specified public contracts may be directly awarded;
- A new competitive flexible procedure. The current restricted, negotiated, dialogue and innovation partnership procedures no longer feature. Instead, the new "competitive procedures" consist of the open procedure and the newly introduced competitive flexible procedure only. The competitive flexible procedure allows contracting authorities flexibility to design their own procedure provided it is appropriate and proportionate to reflect the nature, complexity and cost of each contract opportunity;
- Open and closed frameworks. The Procurement Act introduces the potential for both open and closed framework agreements. Open frameworks are permissible for up to eight years provided they are reopened for competition at periodic intervals of three years and five years. Closed frameworks (as per the current position) may exceed the current duration of four years if required due to the nature of the works, services or supplies being procured;
- Introduction of dynamic markets. Dynamic markets replace the current dynamic purchasing systems. The scope has been extended to cover all procurements as opposed to the current position where they may only be used for "commonly used purchases".
Changes to selection stage
The Procurement Act includes changes to both the mandatory and discretionary exclusion grounds. Alongside these changes is the introduction of a debarment register which will list companies excluded for serious breaches. Some of the new discretionary exclusion grounds may be useful to contracting authorities as they allow the opportunity to exclude suppliers in respect of previous performance. For example, some of the new grounds include "breach of contract", "poor performance" and "acting improperly in procurement". Further, some of these grounds may be able to be applied to "connected" entities e.g. sub-contractors.
Changes to evaluation
The Act shifts the focus of selecting the "most economically advantageous tender" to selecting the "most advantageous tender". This aims to move the primary focus away from price when selecting the preferred bidder and encourages contracting authorities to take a more holistic approach when determining what the "most advantageous tender" looks like i.e. having higher regard for quality and other factors, such as social value.
Changes to publication of notices
There is generally an increased burden on contracting authorities to publish notices under the Procurement Act. An example of this is the mandatory publication of contract change notices. Previously, this was only required in respect of modifications that were "provided for in the contract" and those which related to "unforeseeable circumstances". The Act now imposes this publication requirement on all contract modifications, except those which: (1) increase/decrease the term of the contract by 10% or less of the maximum term at award; or (2) increase/decrease the estimated value of the contract by 10% or less for goods or services and 15% for works (provided that modification is not a novation or assignment following corporate restructure).
Changes to contract modifications
The scope of the legislation on contract modification has been extended to include "convertible contracts". A convertible contract is a non-public contract which would become a public contract as a result of the proposed modification. The Act also introduces additional safe harbours. These are:
- Urgency of the protection of life
- To deal with the materialisation of a known risk
- To secure any developments in technology in defence contracts.
We will provide further updates on the Procurement Act in due course as well following the progress of the secondary legislation which will be key to understanding certain aspects of the Act.
If you require assistance in respect of the Procurement Act or procurement law generally, our specialist team is here to help.