The New Procurement Act Principles

On 26 October, the Procurement Bill completed its passage through the UK parliament and became the Procurement Act 2023. This constitutes an important milestone in the transformation of the UK

The procurement law regime, which for the moment continues to be governed by rules that are based on EU legislation.

The Act, which is not expected to take effect until October 2024, introduces a number of changes which are intended to simplify the procurement regulatory framework and the conduct of procurement procedures. At the same time, a number of other changes, including the way in which key procurement law concepts and principles have been reformulated, are likely to render the new legal framework different but not necessarily less complex.

How has it changed?

Under the current Public Contracts Regulations, contracting authorities must treat economic operators equally, without discrimination and act in a transparent and proportionate manner. And it was expected that the government would retain these principles in the new Procurement Act.

Why?

Well, in the first place, they provide reasonably well-understood and judicially recognised principles against which to test compliance.

Secondly, the government indicated as much in its Green Paper in 2020 below

Instead, these principles have been replaced with “Principles and Objectives” set out in Section 12:

PART 2
PRINCIPLES AND OBJECTIVES

12 Covered procurement: objectives
(1) In carrying out a covered procurement, a contracting authority must have regard to the importance of—
(a) delivering value for money;
(b) maximising public benefit;
(c) sharing information for the purpose of allowing suppliers and others to understand the authority’s procurement policies and decisions;
(d) acting, and being seen to act, with integrity.
(2) In carrying out a covered procurement, a contracting authority must treat suppliers the same unless a difference between the suppliers justifies different treatment.

Having reviewed, there are three initial observations

Observation one

The first is that the term “Principles” now only appears in the sub-heading “Principles and Objectives”. While the term “Objectives” is used and refers to a number of considerations, the term “Principle” or “Principles” is not used or defined at all. Could it be inviting us to make our own joke about the current government’s approach to procurement and procurement law: “where are your Principles?”, they “have no Principles”, “have lost their Principles”, “had no Principles to begin with”.

Observation two

The second observation is that the fundamental principle of “transparency”, which underpins the EU-derived procurement law framework has disappeared. The principle of transparency might be interpreted within the “objective” of “sharing information”, but it is worth noting that this is limited to the purposes of understanding “policies” and “decisions”. This is now, no longer, a generally applicable principle across the whole range of procurement activity. As we will come to, while it is no longer an over-arching general principle it is embedded into the legislation in the range of procurement documents and notices that need to be published.

Observation three

The third initial observation is that we are now within the realms of very difficult new legal tests. In addition to the more usual grounds of challenge, we now have the following grounds of judicial scrutiny: “value for money”, “maximising public benefit” and “integrity”. Value for money, for instance, is usually a matter for the evaluation and consideration of the contracting authority, and not usually a justiciable concept – while courts have experience in assessing whether a decision is properly reasoned, or procedurally unfair, they are not really well-equipped to second guess whether a particular procurement choice is good “value for money”. This appears to create new and potentially fertile grounds for litigation.

Procurement Notices and New Transparency Obligations

The key change is the number and range of procurement notices that procurement practitioners will have to get used to. In summary, the new law provides a massive expansion in the number of notices that need to be published both about the procurement opportunity and over the lifetime of the contract.
These notices can be roughly divided into the following stages:

Planning Stage: The “Pipeline Notice” provides information on (potential) future procurements for potential suppliers to plan future work with the public sector, and the “Planned Procurement” and “Pre-market Engagement Notices” provide further information on upcoming procurements and pre-market engagement activity.

Tender Stage: “Tender Notices” are broadly familiar. These are the key notices which are published during the tender process. The “Tender Notice” replaces the “Contract Notice” and the “Transparency Notice” replaces the “Voluntary ex ante Transparency Notice” or “VEAT Notice” (award a contract directly without running a competitive tendering procedure).

Award Stage: The “Contract Award Notice” replaces the “Award Decision Notice or Standstill Notice”, and the “Assessment Summaries” replace the statement of “relevant characteristics and advantages”. A new form of notice is the “Procurement Termination Notice”. This provides a new form of public notice if a contracting authority decides to abandon a procurement procedure.

The “Contract Details Notice” is not a new form of notice, as it replaces the “Contract Award Notice”, but it provides for a lot more content than was previously required.

As well as the general information on the contracting authority, the contract opportunity and procurement process, and the winning supplier, the notice will need to provide additional details on the contract itself. This includes the key performance indicators against which performance can be tested (if the contract has an estimated value of more than £5 million, the contract must include at least three KPIs); and, more significantly, a copy of the contract itself. This change is potentially massive and will represent a real culture change to the idea of what is commercially confidential in the context of a procurement exercise.

Contract Lifespan: The biggest cultural shift for procurement professionals is that responsibility does not end when the contract has been agreed, signed and finalised. Procurement professionals typically support a business unit in procuring a supplier, agreeing and executing a contract, then leaving the performance and oversight of contract delivery to the contract manager.
The new rules fundamentally change this through the new Contract Performance, Contract Change and Contract Termination Notices. These notices provide for transparency – and this means a regulatory procurement obligation – during the performance of a contract.

The “Contract Performance Notice” is novel. It requires the authority at least once in every period of 12 months during the life of the contract and on termination to (a) assess performance against the KPIs, and (b) publish information on that performance in the form of a rating: