It is now close to two years since the Government published its green paper to transform public procurement and the headline commitments to make procurement more flexible, streamlined and innovative have now been translated into the detail of the Procurement Bill 2022-23. As we move closer towards the Bill’s planned royal assent in 2023, we will be focusing our analysis on the practical implications that the Bill is likely to carry for contracting authorities and suppliers.
In this blog, we consider what four specific proposals in the Bill – the new, flexible competitive tendering procedure, changes to direct awards, framework agreements and dynamic markets – mean for planning and commencing procurements and the extent to which they may achieve the goal of a more flexible and simplified UK procurement regime.
We debated these issues at our recent webinar – Planning and Commencing a Procurement – which can be accessed here.
Our next webinar will be focused on sector specific procurement regimes – on Monday 5 December.
Competitive flexible procedure
The new competitive flexible procedure (essentially any procedure a contracting authority considers appropriate, other than the open procedure) offers one, flexible process in place of a handful under the Public Contracts Regulations 2015 – namely, the restricted procedure, competitive dialogue, negotiated procedure and innovation partnership. From this perspective, the new procedure suggests a rationalisation and simplification of current practices, albeit it includes special rules for “special regime contracts”, such as concession contracts, light-touch, and defence and utilities contracts. The current open procedure also remains relatively untouched in the Bill.
Whilst the prospect of one procedure may be attractive, a closer examination suggests that up to 17 steps will need to be completed from the initial planning for a procurement through to contract award, including the publication of a series of notices to the market (see our previous blog on the government’s transparency objectives). As such, the procedure does not appear – on paper at least – to slim down existing practices, although the emphasis on proportionality (which is linked to the nature, value and complexity of the award) may help to reduce time and costs in some circumstances.
Alongside proportionality, the Bill places an onus on contracting authorities taking steps to satisfy themselves that they have reached reasonable conclusions in the conduct of a procurement – for example, satisfying themselves that their award criteria are sufficiently clear, measurable and specific. This will create fewer occasions where a court, in any challenge, is required to assess the merits of a particular decision and, instead, more instances where the courts will review whether the contracting authority has acted unreasonably, or made a manifest error, in reaching that decision.
More widely, the new procedure will allow contracting authorities to use almost any process they wish to award contracts, so long as it is proportionate and complies with the overarching requirement of equal treatment, as set out in the Bill. Whether these freedoms will actually be taken up and/or whether the government will choose to take a more prescriptive approach and introduce further regulations to govern how the procedure will operate in practice will be something to watch closely.
Even without the current controversies around Regulation 32 direct awards during the Covid-19 pandemic, any amendments to direct award provisions would attract close scrutiny and we note that many of the grounds for a direct award remain the same in the Bill. There are some subtle differences, however, such as the deletion of the condition that contracting authorities must not artificially restrict the scope of a procurement when seeking to appoint a supplier on the basis of technical reasons as well as the new category of user choice contracts.
One notable change, reflecting the experience of procuring through a pandemic, is the ability for the Minister to issue regulations that permit direct awards to either protect human, animal and/or plant life or protect public order and safety. Such regulations could be applied to a class of contracts, suggesting a streamlined process that would avoid the need to consider each direct award of a contract on its individual merits.
In keeping with the wider objectives highlighted above and perhaps in recognition of experiences during the pandemic, many of the amendments appear to be designed to improve transparency and prevent abuse. For example, contract award notices will have to be published before a direct award is made, triggering a standstill period.
Framework agreements are already used extensively and appear to have become more popular over time as a means to aggregate demand and drive competition to deliver better prices and quality. The Bill puts forward some new flexibilities, which will continue to make frameworks attractive.
The closed framework system put forward in the Bill largely replicates the status quo. However, we note that, the longer term frameworks can be put in place “if a longer term is required” due to the nature of what is being procured. Quite what this will mean in practice remains to be seen. The Bill was also initially silent on the competition procedure for awarding call-off contracts however this has been added during the debate process.
A new development is the arrival of the open framework, which will operate as an overarching scheme under which a succession of frameworks may be awarded. An open framework can last for up to 8 years from the date of the award of the first framework.
Open frameworks could be attractive as they have to be reopened at set intervals during their lifespan, allowing authorities to retest with the market. Subject to how the open framework is designed, contracting authorities can allow existing suppliers to roll over their bid into the new framework (if there is no limit on the number of suppliers) or to submit updated bids (if places are limited).
A further change in the Bill is the move from dynamic purchasing systems to dynamic markets. Whilst DPS’s currently allow suppliers to join at any time, their popularity has perhaps been limited by the fact that they may only be used for commonly used purchases. This restriction has been lifted for dynamic markets and so may prompt more interest from contracting authorities.
The dynamic market regime will see a new unique procedure being introduced with contracting authorities setting the conditions of membership (the conditions must be proportionate, assess capacity and ability and not be modified during the term). As with DPS’s, applications must remain open, be considered within a reasonable period and accepted by the contracting authority as soon as reasonably practicable if the supplier meets the conditions and is not an excluded supplier.
When contracting authorities wish to procure from a dynamic market, they must then follow the new competitive tendering procedure, however they can limit the competition to members of an appropriate dynamic market (or part of it). Overall the changes do seem to introduce a number of further flexibilities compared to the existing mechanisms and it will be interesting to see how they develop in practice.
With the Procurement Bill still being debated and further detail to follow in secondary legislation, there remains uncertainty as to precisely what contracting authorities’ future procurement options will look like and how they will operate.
Nevertheless, we believe that there remains value in planning ahead, not least to understand the contours of the new, flexible competitive tendering procedure and open frameworks. Whilst the new procurement regime may not be as trim as originally billed, there will be new items on the menu and, in theory at least, some additional freedoms and flexibilities when it comes to commencing the procurement process itself.