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Government to press ahead with procurement reforms but new regime unlikely to come into force until 2023 “at the earliest”

The Cabinet Office has published the Government’s much-anticipated response to its Transforming Public Procurement consultation, claiming that overall levels of support for its reforms were high.

Under ‘key themes’ the response, which can be viewed here, said amongst other things:

  • A clear majority of respondents agreed with the overarching legal principles of public procurement. Many respondents also recognised that the reforms would present a significant implementation challenge in order to realise the expected benefits.
  • Most respondents agreed with the proposals to simplify the current legislation as far as possible into a single, uniform regulatory framework and agreed this would make things easier for suppliers engaging with the public sector.
  • The Green Paper had proposed the removal of the Light Touch Regime but this will now be retained albeit albeit with some improvements made to its scope and application. This came after a number of respondents raised concerns about certain contracts (such as care provision or special education) which, coupled with the proposed lowering of contract value thresholds bringing more contracts within scope of the new regime, would remove necessary flexibility.
  • The Government intends to take forward most of the proposals aimed at strengthening the approach to the exclusion of suppliers from procurements for misconduct such as fraud, corruption or poor performance. However, the Cabinet Office said that in addition to these changes, “a wider refresh of the legal framework for exclusions is needed”. The response said that the Government, recognising concerns among contracting authorities, intends to introduce a new exclusions framework “which will be simpler, clearer and more focused on suppliers who pose an unacceptable risk to effective competition”.
  • The Cabinet Office intends to ensure transparency requirements are proportionate to the procurements being carried out and are simple to implement. Detailed guidance will also be published to support contracting authorities with implementing these requirements.
  • The Government will not take forward the Green Paper’s proposal for a cap on the level of damages available to bidders that successfully challenge a contract award decision. Instead it will consider other measures aimed at resolving disputes faster which would reduce the need to pay compensatory damages to losing bidders after contracts have been signed.
  • Many respondents had recognised the need for a level of monitoring of compliance with the new procurement regime. The Government intends to amend its proposal for a new unit overseeing the integrity of the public procurement system. It will build on existing powers of investigation by the Minister for the Cabinet Office and introduce a duty for contracting authorities to implement recommendations to address non-compliance of procurement law, where breaches have been identified.

The Cabinet Office noted that once the Bill becomes an Act, there would need to be secondary legislation (regulations) to implement specific aspects of the new regime.

“We plan to produce a detailed and comprehensive package of published resources (statutory and non-statutory guidance on the key elements of the regulatory framework, templates, model procedures and case studies). In addition, and subject to future funding decisions, we intend to roll out a programme of learning and development to meet the varying needs of stakeholders,” it said.

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The response added that the Government recognised that the scale of change to the procurement regime was significant, and organisations would need time to prepare themselves to function effectively under the new regime.

The response said: “Although it is not yet possible to confirm when the new regime will come into force, we intend to provide six months’ notice of ‘go-live’, once the legislation has been concluded, in order to support effective implementation. In any event, given the timescales around the legislative process, the new regime is unlikely to come into force until 2023 at the earliest.”

The Cabinet Office stressed that the new rules would give the government more discretion to exclude previously poorly performing suppliers, such as those who have not delivered previous projects on budget or on time. “Suppliers can also be banned if they have undertaken unethical practices, such as a lax approach to safety, or where there are national security or environmental concerns.”

Under the current rules, it argued, suppliers can only be excluded from winning new government contracts if there has been a significant breach of contract.

In its press release the Cabinet Office also suggested that:

  • The new measures on transparency would see procurement data being published in a standard, open format, accessible to anyone. There will also be increased efficiency from having a single registration platform for suppliers.
  • The plans would also make procurement more transparent and effective during times of crisis, where government needs to act quickly to ensure vital goods and services are bought. Competition will be introduced into emergency buying, "meaning that government doesn’t need to wholly rely on direct awards in times of crisis".
  • The changes would make it easier for small and medium size businesses to bid for and win government contracts, “by overhauling the current EU rules, which are bureaucratic and unnecessarily complicated”.
  • Under new rules, procurers would be able to give more weight to bids that create jobs for communities, build back better from the Covid-19 pandemic and support the transition to net zero carbon emissions. “The greater flexibility in the new rules will allow local leaders and communities to grow the private sector and raise living standards in their area, by being able to procure more locally and flexibly.”

Chancellor of the Duchy of Lancaster Steve Barclay said: “Leaving the EU gives us the perfect chance to make our own rules for how the government’s purchasing power can be used to promote strong values.

“While doing so we’re increasing transparency and ensuring that procurement remains fair and open. These simpler and more flexible rules will also make it easier for small businesses to win work – placing levelling up at its heart.”

Peter Ware, Partner at Browne Jacobson, commented: “Badged as one of the first opportunities to take advantage of the freedoms afforded by Brexit, the Government’s response to its consultation on Transforming Public Procurement is an interesting collection of change and keeping with the status quo.

“The promise to simplify is still on track with the consolidation of legislation into one regime. It also promises to deliver greater transparency over procurement decisions and more and clearer powers to exclude suppliers for misconduct such as fraud, corruption or poor performance.

“The response does however rail back on some of the more controversial proposals and in particular the proposals around the capping of damages and a new procurement monitoring unit have been dropped. However, even at this stage many of the ideas are still to be finalised and further work is ongoing to ensure that the new bill when launched, will tie in with changes happening in other sectors including importantly in the health and social care integration space.”

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