The Public Procurement Act 2023: Here's what you need to know By Sarah Chatfield

2024 is poised to be a pivotal year for public procurement with the implementation of what has been described as “the most significant changes to the way Contracting Authorities buy goods and services for a generation”.

With ‘one in every three pounds of public money, some £300 billion a year’ being spent on public procurement– that’s a third of all public expenditure and equates to roughly 13% of the UK’s GDP in 2023 (£2.274 trillion), so we’re not exactly talking pocket change here.

Having achieved Royal Assent on 26th October 2023, the stated purpose of the Public Procurement Act 2023 “is to reform the United Kingdom’s public procurement regime following its exit from the European Union (EU), creating a simpler and more transparent system not based on transposed EU Directives” . The planned intention is that this will open up public procurement to new entrants, such as small businesses and social enterprises, allowing so them to compete for, and win, more public contracts. Additionally it means we’re remaining compliant with our international obligations to maintain access to overseas markets for UK.

The recent powerful dramatization of the Post Office Horizon scandal by ITV, Mr Bates vs The Post Office, has inadvertently highlighted the need for greater transparency around public procurement spending in a timely manner for these legislative changes. As MPs seek to understand the extent of public spending with the Horizon system provider Fujitsu – you would have thought this would have been relatively easy to do already, but this seems to not be the case.

The Public Procurement Act 2023 will supersede existing legislation governing public procurement, including the Public Contracts Regulations 2015 (PCR 2015), Utilities Contracts Regulations 2016 (UCR 2016), Defence and Security Public Contracts Regulations 2011 (DSPCR 2011), and Concessions Contracts Regulations 2016 (CCR 2016). While the Act represents a significant overhaul, it is important to note that Procurement Policy Notes (PPNs), while not legislative, may require adjustments or updates to align with the new framework.

All facets of public procurement will undergo transformation, with tailored guidance for utilities contracts, and defence and security contracts. Exceptions within the legislation will apply to procurement by NHS in England and private utilities under exceptional circumstances, arguably reflecting on the need for flexibility in public procurement activities in emergencies such as what we witnessed during the Covid-19 pandemic.

The key provisions of the new legislation include:

  • Updated procurement objectives that emphasise delivering value for money, maximising public benefit, transparent information sharing, acting with integrity, fair treatment of suppliers, and a duty to consider Small and Medium Enterprises (SMEs) and Voluntary Community and Social Enterprises (VCSEs).
  • Updated procedures aimed at simplifying and enhancing flexibility, including the introduction of Open Frameworks and Dynamic Markets to facilitate supplier diversity and innovation.
  • Enhanced transparency through contract award notices and assessment summaries, promoting accountability and improving the quality of the supplier base.
  • Implied payment terms ensuring timely payments throughout the supply chain, bolstering cash flow and financial stability.

The introduction of a centralised digital platform will streamline procurement processes, reducing administrative burdens on suppliers, particularly SMEs. However, I would like to see further provisions being introduced into the digital platform to allow smaller businesses to state their interest in establishing joint ventures with other smaller businesses to compete for contracts. From the information currently available about this new digital platform this functionality appears to be lacking.

While the focus of the new legislation is primarily on designated Contracting Authorities within the public sector, its indirect impact extends to non-designated public sector organisations and private sector entities supplying goods and services to the public sector.

The phased implementation of the legislation introduces the potential for certain procurements to be delayed as Contracting Authorities could be seeking to leverage the enhanced flexibility and transparency afforded by the new legislation.

However, amidst the backdrop of an impending general election, a more pressing concern could be the urgency to finalise procurements before any prospective political shifts come into force, potentially side-lining existing strategic plans favour of new agendas arising from manifesto commitments.

While the effective date of the Public Procurement Act has yet to be confirmed, staying informed and prepared is crucial. Organisations can take proactive steps to navigate the transition:

  • Access the Transforming Public Procurement resources provided by the Government Commercial Function to understand the upcoming changes, including subscribing to their email notifications to receive updates on the implementation timeline.
  • Examine your governance and processes to understand the implications of these changes on your organisation and how you can implement some of the best practice initiatives included within the Act

As we anticipate the transformative impact of the Public Procurement Act 2023, proactive measures and comprehensive understanding will be essential for organisations to navigate this generational change in public procurement effectively.

If you’re looking support in your procurement activities, get in touch today.

For more information

Sarah Chatfield

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