New Procurement Act 2023 - Initial Thoughts

I’d like to thank PASS Procurement , supported by the Cabinet Office, Yorkshire Purchasing Organisation, NEPO and the Social Value Portal for a very informative day today in Manchester.

Anyway, a very interesting day today, learning about the shiney new Procurement Act 2023, governing how the public sector will engage with the market to procure goods, services and all the things that make the public sector run. Whilst the Act is now live, the new rules won’t likely come into effect for another year, as it is introduced to both the public sector and supplier community.

The headlines from the Act are:

• Simplified Procedures: The Procurement Act 2023 aims to simplify procurement procedures for public sector organisations. It introduces streamlined processes to make it easier for both buyers and suppliers to navigate the procurement system.
• Value for Money: The Act places a strong emphasis on achieving value for money in public procurement. It requires public sector entities to consider the lifetime costs of contracts, including maintenance and operational expenses, rather than just the upfront cost.
• Sustainability and Social Value: The Act places a greater focus on sustainability and social value. Public sector buyers are now encouraged to consider environmental and social factors when awarding contracts, promoting responsible and ethical procurement practices.
• Innovation and SMEs: The Act seeks to promote innovation and support small and medium-sized enterprises (SMEs) by making it easier for them to participate in public procurement processes. This includes simplified documentation requirements and greater access to opportunities.
• Transparency and Accountability: Transparency in procurement processes is enhanced under the Procurement Act 2023. Public sector organisations are required to provide more information about their procurement activities, ensuring accountability and fairness.
• Digitalisation: The Act promotes the use of digital tools and technology in procurement processes, making it more efficient and reducing administrative burdens.
• Thresholds and Rules: The Act may introduce changes to procurement thresholds and rules, adjusting them to reflect current economic conditions and market dynamics.
• Remedies and Dispute Resolution: The Act may include provisions for effective remedies and dispute resolution mechanisms to address grievances and ensure fair treatment for suppliers.

What this all means in reality is where, in my most humble opinion, the key challenges lie.

Simplified Procedures

There will now be three primary forms of procurement process, namely:

Competitive and Flexible: This new procedure allows contracting authorities to tailor the competitive tendering process to best meet the specific needs of their contract and market. It offers greater flexibility in designing competitions that are appropriate for the contract's unique requirements

What this could mean in reality, is that buying organisations just continue with the processes that are comfortable to them, and thus do not consider more streamlined or better avenues that can increase competition. It will be worth seeing what guidance, or secondary legislation comes out that relates to adapting the procurement roadmap for individual tenders, and how adaptable procurement departments are to change.

Direct Award: This procedure is used in specific circumstances where a full competitive process may not be applicable or feasible. Limited Tendering allows for the direct award of contracts under certain conditions, streamlining the procurement process in situations that require a more direct approach, such as urgency or the absence of suitable alternatives

I would like to see more clarity on what determines and emergency, who can call such an event and what scrutiny will be applied during direct awards, as opposed to post-award. We need trust throughout the system, and with recent news in relation to PPE among others, there should rightly be more transparency and governance over any direct award.

Open Procedure: The Open Procedure is a familiar approach in public procurement. It allows contracting authorities to shape their procurements in a more proportionate manner, considering the nature, complexity, and cost of each contract opportunity. This procedure provides a standardised and transparent approach to procurement, ensuring that all interested parties have an equal opportunity to bid.

I couldn’t see any change to the way Open Procedures work today, so will be interesting to see whether or not this develops over the course of the next 12 months or so.

Value for Money

The new Procurement Act 2023 introduces the concept of the Most Advantageous Tender (MAT), moving away from the previous standard of the Most Economically Advantageous Tender (MEAT). The primary difference between MAT and MEAT lies in their focus and evaluation criteria. MEAT emphasises best value for money, typically considering both cost and quality aspects. MAT, however, shifts the focus, allowing contracting authorities to give more weight to broader award criteria such as social value. This change aims to incorporate factors beyond just economic advantage, such as social and environmental impacts. However, all award criteria under MAT should continue to be proportionate and related to the subject matter of the contract.

What this means in practice, is that suppliers might need to adapt to a broader range of evaluation criteria, which could include demonstrating commitment to social values, environmental sustainability, and other factors beyond cost-efficiency. This could require changes in bidding strategy, documentation, and possibly operational practices to align with these broader criteria.

Sustainability and Social Value

Although there is no real change that could be seen, when compared to todays regulations, one of the key discussion topics centred on locality. For example, is it fair to commit an SME to deliver social value in a different region? I think not. I do, however, believe that there is an opportunity here for suppliers to support the social value message of our customers, but the emphasis on customers should be to shift focus away from their locality, towards the supplier’s locality. That in my opinion will be much fairer to SME organisations, but requires a shift in focus for public sector organisations. I was pleased to see, however, that there will be more scrutiny of what social value is delivered within individual contracts, something that is not entirely present today. But, it goes back to the locality point. Is it realistic, or indeed, fair, to expect a supplier based in, say, Devon to deliver local social value to a community in the North East?

Innovation and SMEs

Ok, here is where it gets a little confusing. There will be a new portal that all suppliers will be registered to (more about that later), but the thresholds for publishing procurement notices seem to be at odds with the support given to SMEs to participate in the market. For instance, the services threshold is set at ￡177k. As SMEs tend to operate on contract values significantly lower than that threshold, how will they be made aware of procurement opportunities?

There is definitely a lot more clarity needed around how support for SMEs will work in reality. We didn’t get that detail today, but over the course of the next 12 months, will definitely like to see that.

Transparency and Accountability

Whilst the journey towards implementation is just beginning, this was perhaps the most interesting aspect of the new Act. The portal will be designed to deliver much greater transparency around contracts, in particular, contract performance. This can only be a good thing, providing there is equal balance in key performance indicators between buyer and supplier, and that KPIs are not just loaded onto the supplier. I look forward to seeing how this develops over the next 12 months.

Digitalisation

Ah, the new portal. From what I can gather, there will be a central portal, that will link to the various procurement portals, from which we, as suppliers basically only need to fill in the SQ information once (what a time saving!!!!). Lets hope the lessons of taking a perfectly good system for DOS 5 and creating a perfectly bad system for DOS 6 are carried forward. But, there will be much more capability and transparency within the new portal, however, we should all be prepared to do more admin, particularly around contract performance, as the portal moves along with its journey. I wouldn’t expect a perfect system in 12 months time, but at least I would expect a portal that actually works, is simple to use and easy to find information in relation to procurement notices. I would also like to see how this will work with the many frameworks out there vs open procedures (see comment on DOS 6).

Thresholds and Rules

Thresholds, I have already briefly touched on. Rules however, include a new disbarment element, to outlaw bad practices and such like. Not sure how this relates to the rank and file of UK suppliers, but am pleased to hear that there will be a full investigative process led by the Cabinet Office. We all want fair competition and I suspect that we all believe we operate ethically, but I will look for the detail of what this entails as we move forward, so that we don’t fall foul to any daft own goals.

Remedies and Dispute Resolution

I was pleased to hear the representative from the Cabinet Office state that there will be an avenue to file a complaint about a given procurement. We all know that sometimes, the scoring doesn’t seem fair, but the stresses and complications of a legal challenge in my view, hide these malpractices from public view. Having a unit inside the Cabinet Office who will investigate such situations, is welcome news indeed. Whilst we, as suppliers must hold ourselves to high standards of discipline and governance within the regulations, so to do our counterparts in the procurement teams. So long as the system isn’t abused, by complaining about every loss, then we should be all good. Two situations out of over 300 tender responses in the past few years spring to mind, that would have benefitted from this being in place today.

I think overall, the new Act should bring good benefits to both buyers and suppliers, I think we need to temper our expectations in light of the challenges that will be faced over the next 12 months in particular, and more likely for a few years after.