On Monday, 22nd April 2024, the Government announced the “go live” date for the Procurement Act 2023. This act will become law on 28th October 2024. The Procurement Act 2023 will bring significant changes to the regulations governing UK public procurement.
The Background
Following the UK’s exit from the EU, the UK government embarked on a comprehensive overhaul of public procurement policies and practices, with a view to creating an updated and streamlined framework around the whole process. The aim is to improve efficiency and effectiveness while ensuring compliance with international obligations.
As a result, the UK’s new Procurement Act 2023 received Royal Assent on 26 October 2023, consolidating current procurement regimes under one Act.
What does this mean?
This means that the UK is no longer subject to EU regulations, or the rules outlined by the Official Journal of the European Union portal (OJEU). UK domestic legislation is now what governs procurement and tenders are now published on the e-tendering portal Find a Tender Service (FTS). As the UK is now a member of the World Trade Organisation’s (WTO) Government Procurement Agreement (GPA), we have equal tender rights when bidding on public sector contracts published by both the members of the EU and the GPA, and vice versa.
Important Notes on FTS and The Governments Procurement Policy Notes (PPN)
As well introducing the FTS, the PPN also states that where a contract is below the WTO GPA threshold, it may be reserved for bidders who are based in the county where the contract is offered. In the event that contract spend is over the current WTO GPA threshold, tenders legally need to be posted on Find a Tender (FTS).
New Procurement Principles
The new WTO procurement principles focus on value for money, public good, and efficiency, while also considering environmental, economic, and social factors. Also upheld are the previous EU principles of integrity, non-discrimination and fair treatment of suppliers. The goal is to encourage contracting authorities to widen their view and not just focus on the lowest bid, which in turn will motivate SME’s (small to medium sized enterprises) and other organizations to enter the bidding process, where they may not have done in the past. Where there may have previously been a perception of an unfair advantage enjoyed by certain types of organization, there is now a much more level playing field in the award of contracts.
Intended Effects of the Act
The act is intended to simplify and increase the flexibility of the commercial system, helping it to better align with the country’s needs. It will also encourage participation from new entrants, such as small businesses and social enterprises, by making it easier for them to compete for and win public contracts. The act will take stricter measures against underperforming suppliers and exclude those posing unacceptable risks, (contracting authorities will be empowered to exclude bidders for negative past performance), while transparency will be embedded throughout the commercial lifecycle, enabling proper scrutiny of public spending.
The Act has the potential to positively impact the whole system in a significant way, and the committed engagement of all stakeholders is a crucial component to ensuring it’s success. One key aim is the introduction of a Dynamic Purchasing System (DPS) applicable across the range of procurement sectors.
What Is the Timescale?
The new legislation will go live on 28th October 2024, along with the rollout of a comprehensive learning and development program for procurement and commercial teams, with participants being strongly encouraged to embrace the transition as an organizational change program, to enable them to reap the intended benefits fully.
Recommended Actions
Senior leaders are urged to support the process proactively by assigning a coordinator, facilitating early engagement between policy and commercial teams, promoting the use of new flexibilities, and encouraging team members to participate enthusiastically in learning and development opportunities.
UK/EU Trading
A free trade deal has struck between the UK and the EU, making UK access to EU markets easier. and still widely available. However, EU rules will apply when bidding for OJEU contracts.
What is the Find a Tender Service, and how does it work?
The Find a Tender Service is free, and it is a legal requirement to utilize it for above threshold tenders. It works in a similar way to the OJEU/TED and can be used in conjunction with the likes of Contracts Finder and MOD systems, and with subsidiary portals such as Tender Pipeline. The tender portals for Scotland, Wales and Northern Ireland will also remain unchanged.
What are the Current Tender Thresholds?
Current procurement thresholds are in the table below.
| Supply, Service & Design Contracts (applicable to Clad) | Works Contracts | Social and other specific services | |
| Central Government | £122,976 | £4,733,252 | £663,540 |
| Other Contracting Authorities | £189,330 | £4,733,252 | £663,540 |
| Small Lots | £70,788 | £884,720 | N/A |
*The thresholds are not round figures (as in £4,500,000) because they are based on the historic exchange rate against the Euro.They are also excluding VAT.
A Note on Tender Thresholds
Below threshold contracts are not regulated by the GPA, and the UK government is solely in control of these. The Government’s PPN states that tenders/contracts below the WTO GPA threshold can be ‘reserved’ by bidders based in the county that the listed contract is based in. This is to open up more opportunities for SMEs. It can be seen from the above that a company wishing to spend up to just over £70,000 on PPE and safety wear, as an example, can effectively engage with any supplier of their choice without having to go out to tender via the FTS route. Other contracting authorities can spend up to around £189,000 and Central Government can spend circa £122,000. These are known as a “below-threshold tender notice”. If the contract offered is OVER these thresholds, the FTS must be utilized.
What’s Next?
There is just six months to make sure you and your team are able to transition smoothly over to adopting the new legislation. There is a whole host of supporting material and guides on the UK Government website, and elsewhere. Public sector buyers are advised to review their business, standard operating procedures, guidance, systems, and people, to prepare for the new regulations. The Government is heading up the Transforming Public Procurement (TPP) programme and has launched training products called Knowledge Drops for buyers and suppliers. A key step is to appoint a co-ordinator in your organization, who will work to facilitate team engagement with the new procedures, as early as possible, and guide and mentor team members as they embark on the necessary learning journey.
There are many advantageous outcomes to be achieved, with less prescriptive and more open competitive and flexible procedures. There is an emphasis on awarding the contract to the MAT or “most advantageous tender” as opposed to the EU’s MEAT or “most economically advantageous tender”. A subtle but important difference.
When awarding a contract, “open frameworks” can be introduced for a period of up to eight years, with the stipulation that they must be “opened” at least once during the first three years, and then at again least once during the remaining five-year period.
There should be greater focus on the contract lifecycle as a whole, including setting Key Performance Indicators and annually publishing an assessment of performance against such KPIs for certain contracts.
And with the freedom to exclude on discretionary grounds, participants from the tender process who have previously provided a less than satisfactory service, or poor performance the contract is far more likely to run smoothly, on time, and on budget once awarded.
Moving Forward
Opportunities abound through your procurement objective to make a significant difference not only to the bottom line, but to also affect and drive improvements at societal, environmental and inclusivity levels. Through the awarding of a tender to a company who pre-qualifies through the relevant Public Sector Framework, not only are you on the fast track to a great job being completed, but all due diligence work is handled by a procurement professional. The assessment methodology has been taken care of beforehand. The problems that have previously arisen in what can be a legislative minefield leading to procurement investigations are completely eliminated. The Procurement Process is made safe and simplified, facilitating the smooth submission of tenders, and rendering it easy and rewarding to work with this new legislation in todays dynamic markets.
If you require advice on all things tenders, such as procurement thresholds or framework agreement regulations, we are here to help you. For first class, friendly and impartial support and advice, please contact us on 01423 80399 or email [email protected].
