It is now just over six months since the Procurement Act 2023 received Royal Assent. Last month, the UK Government announced that it will come into effect on 28 October this year.
The new legislation represents one of the most significant departures from EU law post-Brexit. The new rules are intended to be less bureaucratic and more flexible than the pre-October 2024 legislative landscape, as public procurement regulations had, until now, derived from European directives, derived into UK law across multiple pieces of legislation, including (amongst others) the Public Procurement Regulations 2015 and the Defence and Security Public Contract Regulations 2011 . The objectives of the new rules are intended to simplify the range of procedures available to buyers and allow for greater flexibility, while adhering to, in broad terms, the same high-level aims of ensuring value for money, maximising public benefit, transparency and fairness. It is also claimed that the new rules should create more scope for participation by SME’s (according to the UK Government’s website, part of the ‘Transforming Public Procurement programme’ is to open the procurement system to “new entrants such as small businesses and social enterprises so that they can compete for and win more public contracts”).
Time will tell as to how radical these changes will be but, on the face of it, they are extensive. Under section 20 of the new Procurement Act 2023, the multiple procedures under the old rules are replaced with two competitive tendering procedures:
- an “open procedure” – a single stage process which is without restriction as to who may submit tenders; and
- a “competitive flexible procedure” – a new process within which there is some flexibility for a buying authority to design a competitive tendering process that appropriately meets the needs of a particular project or reflects specific market conditions. There will be scope to limit the number of participating suppliers, and to revise and alter assessment criteria at stages of this process, subject to the limitations set out within the Act, particularly within section 24.
Another significant change is the replacement of “most economically advantageous tender” as the key award criteria with “most advantageous tender” which is specifically defined in section 19 of the Procurement Act 2023 as the tender that the authority considers (i) most meets its requirements; and (ii) best satisfies the award criteria (using the methodology set out in accordance with Section 23 of the Act). The latter is not definitive – the awarding party is enabled to give more importance to elements of the award criteria (where more than one criterion exists), provided that this must have been set out by the contracting authority. This new approach allows flexibility in placing a higher priority on elements of the award criteria other than best value for money.
Importantly, for suppliers and contracting authorities in Scotland, the new Act will be of limited applicability. It applies to public procurement in the UK and will include Scotland in respect of UK government procurements and procurements by Scottish public authorities whose functions are wholly reserved – i.e. under the ambit of the UK Government at Westminster rather than the Scottish Government at Holyrood, as set out in the Scotland Act 1998. It will not apply to Scottish public authorities whose functions are either wholly or partially devolved (which the new Act refers to as a ‘devolved Scottish Authority’). Buyers such as universities, local authorities, the Scottish Government and non-governmental organisations operating in Scotland in devolved areas will remain subject to the existing, EU-derived rules, including the Public Contracts (Scotland) Regulations 2015. The Scottish Government has given no indication that it plans to change this position.
The fact that different rules apply in Scotland is, itself, unremarkable: Scotland has had separate laws in a variety of areas and the purpose of devolution is to enable divergence in a range of circumstances. However, as the regulations in Scotland and the rest of the UK have been the same until recently, and have now diverged, this is likely in time to have an effect on the willingness of suppliers outside Scotland to bid on Scottish procurement opportunities if their bid management processes are aligned and structured around the new UK requirements. It is likely to make it significantly more difficult for Scottish buyers to avail themselves of UK-wide framework agreements where the contracts have been awarded under the new Act and may therefore be non-compliant in Scotland. For Scottish suppliers to public bodies throughout the UK, there may be a need to familiarise themselves and operate under both systems.
If you are a contracting authority or supplier who may be impacted by the new UK Procurement system or wish to clarify any matters relating to current Procurement legislation, Thorntons can assist you in navigating this. Please do not hesitate to contact us on 03330 430350 to discuss your needs further.
