UPDATE: The date for application of the 2023 Procurement Act is uncertain and has yet to be clarified. It is now expected to be October 2024, but six months’ notice will be given by Government. Existing rules will continue to apply for contracts.
2023 Chapter 54 - https://www.legislation.gov.uk/ukpga/2023/54/enacted
This article provides an understanding of the Procurement Act 2023 (Act) which received Royal Assent on 26th October 2023. The Procurement Act 2023 is long and has thirteen Parts and eleven Schedules but appears to provide greater flexibility in procurement than the existing Public Contracts Regulations 2015. The 2015 Regulations applied EU Directive 2014/24/EU on public procurement.
‘Procurement’ under the Procurement Act 2023 means the award, entry into and management of a contract and it applies to ‘public authority’ contracts (‘covered procurement’) from 1st January 2024 above specified financial ‘threshold amount’. Current procurements will continue and should be completed under the existing Regulations. It is interesting to note that devolved Scottish authorities are excluded from the Act but it would be expected that the Scottish Government may introduce further legislation to the Procurement Reform (Scotland) Act 2014.
The Procurement Act 2023 does not apply to public contracts below the threshold amount and it does not apply to private sector contracts. It applies to persons providing a ‘public undertaking’ for a ‘public authority’ on a commercial basis, and to ‘private utility’ contracts. The Key Definitions of the Procurement Act 2023 are given in Part 1. The thresholds in Schedule 1 of the Act apply to the contracting authority’s ‘estimated value’ of the contract in accordance with Schedule 3. Schedule 1 gives threshold amounts for contracting authority’s which are from 1st January 2024 for Works contracts £5,372, 609; service and supply contracts £214,904, and £633,540 for social and other specific services through the light touch regime.
The Procurement Act 2023 applies to goods, services and works contracts for contracting authorities, framework contracts and concession contracts. Mixed procurements with a contract value above the threshold also apply. The Procurement Act 2023 applies to ‘utilities contracts’. The Procurement Act 2023 applies to “relevant sub-contract” meaning a contract substantially for the purpose of performing (or contributing to the performance of) all or any part of the exempted contract. The contracting authority may nominate sub-contractors.
Schedule 2 sets out contracts which are exempt from the Procurement Act 2023. Exempt contracts in Schedule 2 include the contracting authority having 80 per cent control of the activities (Local Authority Trading Company arrangements). The contracting authority can only award a contract if is a:
- Competitive award
- Direct award in special cases – only in extreme or unavailable urgency (Schedule 5)
- Direct award after switching procedures – the contracting authority my switch to a direct award if it has not received any suitable tenders and considers award through competitive tendering is not possible. Before making a direct award under special cases or switching procedure, the contracting authority must publish a ‘transparency notice’ setting out that it intends to award a contract directly and why
- Award under frameworks
The objectives for covered procurement as given in Part 2 should have regard to:
- delivering value for money
- maximising public benefit
- sharing information for the purpose of allowing suppliers and others to understand the authority’s procurement policies and decisions
- acting, and being seen to act, with integrity
In considering these objectives, a contracting authority must treat suppliers the same unless a difference between the suppliers justifies different treatment. If a contracting authority considers that different treatment is justified in a particular case, the authority must take all reasonable steps to ensure it does not put a supplier at an unfair advantage or disadvantage. A contracting authority must have regard to the fact that small and medium-sized enterprises may face particular barriers to participation, and consider whether such barriers can be removed or reduced.
The Procurement Act 2023 does not contain the procedure options of the Public Contracts Regulations 2015. It contains a single stage ‘open procedure’ as the Public Contracts Regulations 2015. However, the Restricted Procedure, Competitive Procedure with Negotiation, Competitive Dialogue procedure, Innovation Partnership and Negotiation procedure contained in the Regulations are replaced by the ‘competitive flexible procedure’. This provides the contracting authority with greater flexibility to design a competitive process which works for them and for the market, providing they comply with the basic principles of equal treatment and transparency. It is going to be interesting to see how this is applied to procurements from 1st January 2024. The Procurement Act 2023 requires contracting authorities to publish five notices during the procurement together with modification notices during the contract (planned procurement notice, market engagement notice, tender notices, contract award notice, contract details notice, payment compliance notices, and contract change notices)
The Procurement Act 2023 includes a requirement for contracting authorities to monitor the performance of contracts over £5m through three key performance indicators, unless the contracting authority considers key performance indicators are not appropriate. This does not apply to frameworks and light touch contracts. This requirement is more detailed than the existing 2015 Regulation 70 which states contracting authorities may lay down special conditions relating to the performance of a contract.
The Procurement Act applies to ‘light touch contracts’. An appropriate authority may by regulations specify services for a ‘light touch contract’, notably services which provide social value. An appropriate authority may specify services only if, having had regard to the nature of those services, the authority considers that it is appropriate for the award of public contracts for their supply to be exempted from the provisions of this Act.
The steps that should be followed in the procurement and award of a contracting authority contract are given in Part 3 Chapters 1 to 6. The contract should be advertised and there should be preliminary market engagement prior to the procurement. The award of public contracts following a competitive tendering procedure to the “most advantageous tender”. Any tender that offers a price that the contracting authority considers to be abnormally low for performance of the contract may be disregarded. ‘Award criteria’ must describe how the tenders are to be assessed including weighting each award criteria as representing a percentage of total importance.
Regarding procurement time limits, there is no minimum period for light touch contracts and a contract can be awarded in 10 days in a state of urgency. The minimum period is 25 days for tenders submitted electronically, with the tender notice and associated tender documents are all provided at the same time, extending to 30 days where the tender notice and tender documents are not provided at the same time.
Procurement and management of public contracts should be electronic, including invoicing and payment . Payment must be within 30 days of the receipt of the invoice unless later in accordance with the invoice, or the contracting authority considers the invoice is invalid or disputes the invoice. The contracting authority must publish a payment compliance notice within the 30 days about any payment of more than £30,000 made by the authority under a public contract.
The changes in the Procurement Act 2023 are significant in that established procedures no longer apply, but the competitive flexible procedure should offer an adaptive approach to public procurement. We look forward to seeing how procurements in the new year progress.
Bob Couth (PhD, FCIWM)
Cherie Whiteman (EngD, MCIWM)