Nearly a month has passed since the government introduced the Procurement Bill 2022-23 to Parliament. The Bill has been heralded as an opportunity to take advantage of the newly found freedoms afforded by Brexit. And – with an annual UK spend of around £300 billion – the prize of making public procurement more streamlined, flexible and innovative is a significant one.
As we move into this next stage of the Bill’s passage towards the planned royal assent in early 2023, this blog sets out some early reflections. We will be discussing these further in a webinar at 1pm on Monday 27 June. Please register here to join us and lend your voice to the debate.
A clean break?
Following Brexit, the purpose of the Bill appeared to be to create a system which remained compliant with international obligations whilst not being based on EU Directives. One thing that is immediately apparent is how the Bill draws a line in the sand with the procurement terminology of old. The result is that practitioners and, crucially, the courts will have to come to terms with the new language of “open frameworks”, “excluded and excludable suppliers” and “assessment summaries”.
The intention of some of these changes may be primarily symbolic, but before too long it is highly probable that the courts will be asked to decide whether some new terms (such as “supplier”, rather than “economic operator”) have the same meaning as their predecessors – or something different. It will be interesting to see how this is approached in the context of moving away from EU principles.
It is open to question whether existing domestic and EU case law will be considered relevant and, in the absence of this, the process of breaking new ground may well be arduous. A similar process is likely to follow around what the four overarching procurement objectives (delivering value for money, maximising public benefit, sharing information and acting with integrity) actually mean in practice and how they are to be weighed against one another in the event that they conflict.
One regime to rule them all?
The Bill will revoke the Public Contracts Regulations 2015, the Concession Contracts Regulations 2016, the Utilities Contracts Regulations 2016 and the Defence and Security Public Contracts Regulations 2011 and will create a single, uniform framework for public procurement in their place (although with significant secondary legislation and statutory and non-statutory guidance to supplement the Bill, the new regime will not be contained in one single document).
The principle of seeking to harmonise rules is one that we (and no doubt many practitioners) applaud and some of the existing regulations certainly appeared ripe for consolidation. However, closer inspection reveals some of the practical difficulties this poses. The Bill expressly envisages a separate regime for NHS procurements and is silent on transport, although a subsequent government consultation on legislation to implement rail transformation suggests that specific reforms are in the pipeline. The Bill also establishes special regimes for utilities, concessions, light touch and defence and security, with the last having a noticeably extensive set of derogations and specific rules.
Further, whilst the Bill takes steps towards harmonisation, it does not apply in Scotland, creating a fracture that didn’t exist before and the prospect that suppliers operating across the UK will have to handle two separate and potentially divergent regimes.
Will it make the boat go faster?
A harmonised regime will be a key plank in delivering the promise of a more streamlined and effective public procurement regime. The Bill sets out five award procedures (if you include dynamic markets), including a new single-stage competitive tendering procedure, which will allow contracting authorities to adopt any procedure provided that it is proportionate, having regard to the nature, scale and complexity of the contract. The Bill also offers greater scope to take non-price factors into account as well some additional justifications for making direct awards.
Will contracting authorities (or “public authorities” as they will come to be known) experiment and make use of these new freedoms or will they prefer to revert to more familiar processes? Take-up is perhaps likely to be incremental and so it will be difficult to assess just how much flexibility has actually been introduced for some time.
In contrast, the new reporting requirements imposed upon contracting authorities will have a more immediate impact. These are not insignificant, with regulatory management now extending much further into the contract management stage and greater transparency being introduced in the form of reporting on KPIs, breaches, contract amendments and payments by public authorities. With new notification requirements also introduced in the Bill, the new freedoms and flexibilities will be counterbalanced by additional obligations.
Whatever happened to…?
The Bill is not a seamless continuation of the path set by the Green Paper in December 2020. As time has moved on some topics have taken on greater prominence, whilst others appear to have fallen away – a message that we shouldn’t be complacent about what will ultimately emerge at the end of the process.
It is notable that social value receives less coverage than may have been expected and, linked to this, explicit environmental targets are also missing. These may be addressed in the forthcoming National Procurement statement and we expect further debate to follow.
Proportionality and transparency have also been left behind as overarching principles. Instead, they are woven into specific provisions, with, for example, the new competitive tendering procedure requiring a proportionate approach and a whole range of procedural steps to follow on transparency. Meanwhile, the majority of the changes to the challenge system have not made the cut either (such as proposals to cap damages to 150% of bid costs and to introduce a tribunal system).
…and what happens next?
The Bill reflects over two years of intensive policy development and consultation and it is important to stress that this process is not yet at a close – readings in the House of Lords and future secondary legislation, statutory and non-statutory and guidance will shape the new regime and add more detail to what has already been published.
Whilst much remains in play, our sense is that the system that will emerge will show elements of both continuity and change, rather than being a wholesale revolution of public procurement. The extent of that change will inevitably lead to a level of uncertainty and so – if nothing else – expect more talking heads on procurement for some time to come.