Understanding the 2023 Procurement Act: what you need to know
The 2023 Procurement Act, which received Royal Assent on 26 October 2023, marks a significant shift in the UK’s public procurement landscape. Set to go live in October 2024, with a six-month notice period, the Act introduces substantial changes which aim to streamline processes, enhance transparency and foster fair competition. Whether you’re an experienced supplier or a newcomer eyeing public contracts, here’s what you need to know about the key aspects of the 2023 Procurement Act.
- Structural Overhaul and Objectives
Under the Procurement Act 2023 various procurement regimes, including those governing general public contracts, utility contracts, concession contracts and defence and security contracts, will be amalgamated. While different rules may still apply to contracts that previously fell under other regimes, the Act emphasises important objectives such as delivering value for money, maximising public benefit and ensuring integrity throughout procurement processes.
- Enhanced Flexibility
Flexibility is central to the new Act. It grants contracting authorities the autonomy to choose procurement procedures that are tailored to their specific needs, from open procedures to other competitive processes. Moreover, authorities can modify procurement terms mid-process, subject to predefined deadlines, which should foster adaptability and increase efficiency.
- Transparency and Notices
The Act introduces stringent requirements for publishing notices at various stages of the procurement lifecycle, thereby promoting transparency. From planned procurement notices to termination notices, authorities must adhere to new guidelines.
Examples include: planned procurement notices and preliminary market engagement notices (replacing PIN notices under the current regime); pipeline notices; transparency notices on the direct award of a contract; mandatory contract change notices; and termination notices on the termination of a public contract. While this enhances visibility it also potentially increases administrative burdens on busy procurement departments.
- Revised Procurement Procedures
Contracts will now be awarded based on the ‘most advantageous tender,’ shifting from the previous ‘most economically advantageous tender’ criterion. This change, coupled with the flexibility in selecting award criteria, aims to optimise value and encourage innovation.
- Exclusion Framework
The Act introduces stricter measures for excluding underperforming suppliers, including mandatory exclusion grounds and a central debarment list. Suppliers may face exclusion not only based on their performance but also on the status of associated suppliers and subcontractors.
- Key Performance Indicators
Contracting authorities must set and publish key performance indicators, facilitating supplier performance assessments. Regular evaluations against these indicators should ensure accountability and drive continuous improvement.
- Standstill Period
Under the existing system, a contracting authority is required to wait for 10 days after issuing a compliant award decision notice to all suppliers before entering into a contract. However, this waiting period extends to 15 days if the notice is not sent via email. The Procurement Act mandates that the standstill period be reduced to eight working days from the day the contract award notice is published. Certain exceptions to the standstill rule exist, such as instances of ‘extreme or unavoidable’ urgency prompting a direct award or when a contract is awarded in line with a framework.
- Remedies
While many remedies from the previous regime remain, the Act introduces changes in terminology and procedures. For instance, while declarations of ineffectiveness are no longer explicitly termed as such, the equivalent remedy persists under the title of “set aside” proceedings. Notably, interim orders now undergo a new test, ensuring swift resolution of procurement disputes.
- Contract Termination
The Act expands grounds for contract termination, empowering authorities to act in cases of material breaches or supplier exclusions. This provision safeguards integrity and accountability throughout contract lifecycles.
The grounds now include where: the contract was awarded or modified in material breach of the Act which could reasonably result in a successful legal challenge; a supplier has become an excluded or excludable supplier; and subject to certain pre-conditions, a sub-contractor of the supplier is an excluded or excludable supplier.
What’s Next?
As we await the Act’s implementation, organisations must prepare for the impending changes. Training programs, strategic reviews and stakeholder engagement will be crucial in navigating the transition smoothly.
Frequently Asked Questions
When will the Procurement Act 2023 come into effect?
The Act was scheduled to go live in October 2024, following a six-month notice period.
However, on 12 September 2024, Cabinet Office announced that the Procurement Act 2023 will now commence on 24 February 2025 – a delay of four months from the original go-live date of 28 October 2024 to allow time for a new National Procurement Policy Statement (NPPS) to be produced.
How will the Act impact procurement procedures?
The Act aims to streamline processes, enhance flexibility and promote transparency, benefiting both suppliers and contracting authorities.
Will existing contracts be affected by the new legislation?
Contracts initiated before the Act’s implementation will continue to adhere to the previous rules, ensuring continuity and stability.
What role do suppliers play in driving cultural and behavioural change?
Suppliers play a vital role in fostering a culture of transparency, innovation and accountability, contributing to the success of the new procurement regime.
How can organisations prepare for the transition to the new procurement framework?
Organisations should invest in training, strategic reviews and stakeholder engagement to adapt seamlessly to the forthcoming changes and maximise opportunities presented by the Act.
As the Procurement Act 2023 introduces important changes in public procurement, understanding its implications and preparing accordingly will be paramount for all stakeholders involved. Make sure you stay informed and remain proactive in your approach – and let us know if we can be of any help.
