£300 billion of public procurement accounts for around a third of all public expenditure every year and is the largest area of public spending. For this reason, there has been a lot of focus on the opportunity to simplify the regulations now that we are no longer in the EU. Changes to how we procure in the public sector will be happening and it is vital that we get the rules and processes right.
This blog takes you through the far-reaching changes in the pipeline (potentially coming into force in early 2023) and provides guidance on what you need to do and where you can find more information.
Where Are We Now?
From 11pm on 31st December 2020 we were no longer subject to EU procurement law. However, we are still subject to the World Trade Organisation’s Government Procurement Agreement (GPA). This does mean that most contracts covered by EU Directives are open to the EU and other trading partners and must have transparent award procedures and remedies.
We have always been subject to the Public Contracts Regulations 2015 and we still are. There have been slight tweaks to the Regulations via the Public Procurement (Amendment etc (EU Exit) Regulations 2020 which means that some references to OJEU and the EU can be removed.
This legislation will continue to apply until it has been repealed and replaced, thus avoiding disruption until we have long term reforms in place to change this.
Current thresholds are:
Supply, Services and Design Contracts – £213,477
Works – £5,336,937
Social and other specific “Light Touch Regime” – £663,540 which includes areas such as legal services, some educational services but, for our purposes, it’s mainly school catering.
There are two things to note:
- The Supply, Services and Design Contracts and the Works thresholds have increased but that is because they now INCLUDE VAT so you must consider whether VAT is payable when calculating your contract values. However, the figure inserted in the Contract Notice and Contract Award Notice should EXCLUDE VAT
- Secondly the thresholds apply to the whole life of the contract and not just the annual value.
The thresholds last changed in January this year and we were hoping for nice round numbers, that would be easy to remember, but instead we have these “strange numbers”. The reason for this is because the WTO quote in Euros and the figures have then been converted to Sterling.
LONG TERM REFORMS HAVE NOW STARTED IN EARNEST via the “Transforming Public Procurement” Green Paper which came out last year
What Has Changed So Far?
What changed immediately was the obligation to publish tenders on the Find a Tender Service rather than OJEU for any procedures launched after 11pm on 31 December 2020.
The Regulations refer to the Find Tender Service as the “UK-e-notification service”. You can find more information on this on Public Procurement Notice 08/20. There is also a website https://www.find-tender.service.gov.uk/Search.
If you had already started your process via OJEU, then you can continue via OJEU. However, any process started after 11pm on 31st December 2020 would have to go through the Find a Tender Service.
On the plus side, it is a very easy service to use and once you have input your details it is published immediately. In addition, for maintained schools and academies, tenders do not need to be published on Contract Finder.
The Cabinet Office has now taken over the role of the European Commission and in is charge of the process.
Proposed Far-Reaching changes to Public Procurement Law
Consultation on The Green Paper about Transforming Public Procurement Law closed on 10th March 2021. There was wide consultation. Engagement with over 500 stakeholders including central and local government, education and health sectors, small, medium and large business, charities and social enterprises, academics and procurement lawyers.
With the new Laws potentially coming into force early 2023, the emphasis is on simplification and flexibility by introducing a single, uniform regime of rules for all sectors. The purpose is to try and streamline the process so that if you are moving between different public sector organisations it makes it easier for people to do business.
The government is looking to remove red tape which will make it easier for more companies, particularly SMEs to enter the market and bid for public sector work. They will enable tougher action to be taken on underperforming suppliers. It is currently difficult to exit early or terminate a contract where a supplier is underperforming so any action that can be taken is positive.
The changes aim to create an open and transparent system by having one central portal where bidders can put their details just once. This portal can then be accessed by everyone without them having to provide the same information time and again.
The changes will also look at an Effective crisis procurement given that the process was found lacking during the pandemic and this will address the shortcomings
SIMPLIFICATION of Procedures
Currently there are 5 Procedures
- Open procedure
- Restricted procedure
- Competitive procedure with negotiation
- Innovation partnership
- Competitive dialogue
The Government is proposing to replace the five procedures with three GPA compliant ones. The following information is subject to change but details current thinking around the different procedures being planned.
Open procedure, which quite simply mirrors the existing open procedure.
Competitive flexible procedure. This encompasses all the existing two stage competitive procedures other than the open procedure and it takes the best bits of the procedures we have and will allow a degree of negotiation.
This means that you can follow the current procedures or you can conduct and manage your procedure with a much greater degree of flexibility and tailoring to your own requirements. It will enable you, for example, to talk about discounts and pricing. It will likely require a lot of upfront work in the pre tender stage to understand what the process will look like.
You can have pre and post tender discussions and at any point in the procedure you can apply selection criteria so the Technical and Professional Ability can be applied at the end or at the start.
Unlike current rules this allows an award phase which could involve discussions to outline a proposal before any qualification process. You can negotiate if you wish. You can conduct the procedure how you want. Under the competitive flexible procedure, it will be 30 days for Selection Questionnaire stage and 25 days for submission of tenders (ITT) which can be reduced to 10 days in the case of urgency.
There are potential risks as buyers and suppliers will not be familiar with the procedure so there could be familiarisation costs. More flexibility may result in fragmentation across buyers and Contracting Authorities, which may limit the level to which standard approaches are developed resulting in increased timescales and costs.
Negotiations could prolong procurement timescales and the option to negotiate later in the procedure may cause suppliers not to put their best proposals forward in initial tenders as opposed to the ‘best and final offer’ being put in immediately as there is no negotiation currently.
This is a new procedure so there could be a risk of legal challenges leading to difficulty in interpretation of court findings and ambiguity.
In the Public Sector we are told to follow the ‘standard route’ which does not involve any negotiation and so many people in Public Sector procurement probably are not skilled in negotiation. Suppliers are expert in it. So this could be a real skills gap and something for consideration as we move towards use of a procedure where negotiation is now going to be permitted.
As a result of the risks, people may not take advantage of the changes and make the most of what is on offer, preferring to stick to what they know.
Limited tendering is the third procedure and is to be used for rapid procurement in a crisis situation such as a pandemic or a terrorist attack, for example. The crisis has to be declared by the Cabinet Office. Unfortunately, you cannot decide if you are in a crisis situation and invoke this procedure unilaterally.
MEAT changes to MAT!
Currently we award tenders based on MEAT (Most Economically Advantageous Tender). This will change to MAT (Most Advantageous Tender). Sometimes MEAT is misunderstood and is used as a reason to award on the lower price. By removing “economically” this is an attempt at clarification to encourage people to award contracts to the BEST (Advantageous) and not LOW COST (Economically) service.
Enforcement (not covered in the webinar)
Currently suppliers need to bring actions against Contracting Authorities via the High Court which can be expensive and not accessible to SME’s. The reforms intend to introduce a more ‘tribunal’ type system which is what happens in EU countries. This will help to speed up the process of challenging procurement decisions and reducing costs
The Green paper suggests actually improving the court process but that over the longer term reform to add a tribunal system where things can be turned around in a month.
Open Contracting (not covered in the webinar)
There will be a systematic gathering and publication of all information/documents in a usable form on line by creating an electronic system that is open and useable by everyone. This will cover all phases – pre-planning, execution, contract management. The format will be compliant with the OCDS (Open Contracting Data Standard) and allows for analysis of SME access, collusion, better planning and drafting.
- Suggestion that the award notice is published before the standstill period and award of contract. This could be problematic.
- Government is planning to develop a central platform to provide public access to
Learning and Development
This is a massive change and there will be a lot of support available which will be rolled out across the public sector to meet the varying needs of stakeholders and will be complemented by traditional published and online guidance.
The aim of the support is to provide:
- knowledge drop webinars
- self-guided e-learning which will be certified
- deep dive webinars, although these are probably for people specialising in procurement
- communities of practice will be set up to support individuals by allowing them to reflect on, discuss and embed their learning on the regime change
These will cover the range of learning requirements from foundation level through to more detailed and specific learning on the new regime and finally intensive learning focused on the behavioural and cultural changes required.
As mentioned above, the formal learning and development will be supported by Communities of Practice where practitioners can support each other – sharing best practice, challenges and opportunities within the new regime.
While we are expecting the changes to be brought in in 2023 there will be at least 6 months’ notice before it comes in
Updates can be found at:
There are webinars planned by the Government team working on the project:
These changes will be one of the biggest reforms of procurement law for many years. It’s really important that we don’t bury our heads in the sand but try to prepare as much as we can for what’s to come.
Attending webinars, reviewing email updates and getting stuck into training will help you. And if you need any additional help and support from us please get in touch.