Change on the horizon for businesses supplying the public sector

If your business supplies goods, services or works to the public sector, you will be familiar with the public procurement regime, which governs the way in which public sector organisations must manage its procurements and the remedies available to bidders where this process is not followed.

However, the current regime (set out in the Public Contracts Regulations 2015) is due to be replaced in October 2024 by a new piece of legislation, the Procurement Act, which has been progressing through parliament and has now almost reached approval stage.

The Procurement Act, once in force, will introduce a number of changes to the current procurement procedure. In this article, we set out the key changes which suppliers to the public sector should be aware of and prepare for.

New process for awarding public contracts

The Procurement Act will replace the current tendering procedures with two new procedures. The open procedure (a single stage process with no restriction on who can bid) will remain, but all other procedures will be replaced with one new “competitive flexible procedure”.

This is much more flexible than the restricted, competitive with negotiation, competitive dialogue and innovation partnership procedures that we are familiar with. Instead, this will be a procedure which the contracting authority considers to be appropriate and proportionate in relation to the particular opportunity, having regard to its nature, complexity and cost. Like some of the current procedures, the competitive flexible procedure may limit the number of participating suppliers and may allow the award criteria to be refined.

The intention behind the introduction of the competitive flexible procedure is to give contracting authorities the ability to design a competition to best suit its requirements in respect of that contract. However, from a supplier’s perspective, this change means that each tendering process could be different, with a different number of stages and differing timescales for submitting bids. This will mean that public sector suppliers will need to carefully check the requirements of each tendering opportunity as soon as the procurement is launched in order to ensure that these can be met.

Changes to frameworks

Whilst it remains the case that most frameworks will still be limited to a four-year term, the Procurement Act will allow the term of a framework to be longer if the contracting authority considers the nature of the contract requires it. This means that, where a framework is let for longer than four years, it will be ever more critical to put forward a proposal which puts you in the best position to be appointed, whilst ensuring that the pricing proposal to which you will be committed is sustainable throughout the contract term.

The Procurement Act also introduces the new concept of “open frameworks”. These are successive arrangements, over a maximum period of eight years, which allow re-opening and tweaking of the framework. Where a supplier is appointed at the outset of an open framework, the contracting authority will be able to decide whether appointment to a successive framework will be on the basis of the supplier’s initial bid or an updated bid. This means that a supplier could be bound by a proposal for a period of eight years so, again, it will be critical to ensure that you can commit to the price which you put forward for an open framework over potentially an eight-year term.

Revised terminology and new notices

Finally, the Procurement Act replaces familiar terminology with, and introduces, new terms, and also changes the meaning of certain terms.  For example:

• a “contract notice” will be known as a “tender notice”
• “selection criteria” will become “conditions of participation”
• what we know as a “contract award notice” will be called a “contract details notice” and a new “contract award notice” must be published before entering into the contract
• a “contract change notice” must be published before a public contract is modified

It would be wise for anyone involved in bidding for public contracts to become familiar with these new terms to avoid any confusion once involved in a tendering process.

Rejection of bids

The Procurement Act includes a new right for a contracting authority to “disregard any tender which breaches a procedural requirement set out in the tender notice or associated tender documents”. Although contracting authorities generally include this right in their procurement documents, we expect this new statutory right to give contracting authorities more confidence in rejecting non-compliant bids. This means that it will be ever more important for suppliers to ensure that their bid meets all of the requirements, both procedural and technical, as set out in the procurement documents in order to minimise the risk of being disregarded on a technicality.

Notice of the outcome of a procurement exercise

The Procurement Act requires contracting authorities to provide an “assessment summary” to each bidder. This information about the contracting authority’s assessment of the bidder’s tender and (if the bidder is not the winning bidder) the most advantageous (i.e. winning) tender. The Act does not go into any further detail, and specifically does not require the assessment summary to include the information required at present in a standstill letter. It is our hope that further guidance will clarify the requirements of assessment summaries and that a similar level of detail will be required, in order to give disappointed bidders the information they require in order to decide whether or not there are grounds to bring a procurement challenge.

Timescale for bringing a procurement challenge

At present, provided that a disappointed bidder brings a challenge within 10 days from the date on which the standstill notice is issued, the contracting authority will be automatically prohibited from entering into the contract until the challenge is resolved. The Procurement Act changes this time period from 10 days to eight working days, which will run from the date on which the contracting authority publishes a “contract award notice”, which is a notice that the contracting authority intends to enter into the contract. Depending on when in the week the contract award notice is issued, this could result in a slightly longer period for bringing a challenge, which will be in suppliers’ favour.

What do our lawyers say?

Jenny Wade, an associate solicitor in our commercial team, has been advising on public procurement matters for 14 years.

“The Procurement Act will be the biggest shake-up of procurement law this century and makes a number of significant changes to the regime as we know it”, said Jenny.

“It is imperative that businesses which supply the public sector begin to familiarise themselves with the changes now so that they can be ready and responsive to new bidding processes, terminology and rules when the Act comes into force next year.”

For advice on public procurement matters, contact partner and Head of Commercial, Antony Hall on ahall@mincoffs.co.uk.