Juli Lau and Sophie Mcfie-Hyland outline their initial impressions from the first draft of the Procurement Bill.
The first draft of the long-awaited Procurement Bill (the ‘Bill’) was published on 12th May, the day after the Queen’s Speech. The Bill had its second reading in the House of Lords on 25th May, and we expect to see changes to the legislation as it makes its way through the parliamentary process. The Bill is substantial with 116 clauses, in 13 parts and 11 schedules.
Procurement practitioners will recognise the general structure and content of the Bill from the current Public Contracts Regulations 2015, however, there are some significant changes.
An obvious change is the inclusion of procurement rules relating to utilities, defence and security, and concession contracts in one piece of legislation, as proposed in the Government’s Transforming Public Procurement Green Paper. Readers familiar with the existing standalone regulations for these types of contracts will need to familiarise themselves with the sector-specific provisions in the Bill.
Another change can be found on the first page of the Bill. The definition of “contracting authority” is now by reference to “public authority” (the definition is wider for utilities contracts), namely an authority with “functions of a public nature that is wholly funded or mainly from public funds and is subject to contracting authority oversight”. An authority does not classify as a “public authority” if its funding from a contracting authority is “provided in consideration of particular goods, services or works”. These slight differences will need careful consideration moving forward.
Other key changes are the introduction of procurement objectives and a National Procurement Policy Statement, all of which contracting authorities are mandated to have regard to in running procurements.
The Bill has also reduced the number of procurement procedures. The simplicity and flexibility may be welcomed but will also require some getting used to, particularly while contracting authorities try out new approaches. The Bill details a single-stage “open procedure” and “such other competitive tendering procedure that a contracting authority considers is appropriate” for the public contract in question. The “other” procurement procedure allows for the exclusion of suppliers and a multi-stage approach. The Bill retains provisions for direct award in “special cases” and switching to direct award where a procurement has not resulted in any suitable tenders. There is also a special provision for direct award to protect life etc., the inclusion of which is an outcome of the Covid-19 pandemic.
Other areas of interest are the sections in the Bill relating to dynamic markets and open frameworks. There was much anticipation regarding open frameworks, and the Explanatory Notes explain that this is “a scheme under which new suppliers can be added to the scheme at set times during its lifetime”. The language of the Bill differs from the Green Paper and refers to open frameworks as a scheme of successive frameworks re-awarded on substantially the same terms. An open framework only needs to open at certain times and expires in 8 years, it will not be permanently open to new suppliers like a dynamic market, but will allow a degree of flexibility to authorities where it has not been provided under the existing framework provisions.
Other significant changes relate to transparency. An evident area where transparency has increased can be seen in the provisions relating to notices.
Contracting authorities must issue the following notices in the relevant circumstances:
- Planning and pipeline notice where contracting authorities consider they will spend more than £100 million under relevant contracts in the coming financial year;
- Tender Notice;
- Contract Award Notice;
- Contract Detail Notice;
- Contract Change Notice, when applicable;
- Dynamic Market Notice where a dynamic market is to be established;
- Transparency Notice where direct awarding in special cases and switching to direct award;
- Payment Compliance Notice; and
- Below Tender Threshold Notice, where applicable.
There are also a couple of voluntary notices namely, planned procurement and pre-market engagement notices. T Meanwhile, contracts themselves must be published where they are valued over £2 million. Although many of the notices will be familiar to contracting authorities, it will be important to gear up to meet these requirements, particularly for smaller contracting authority procurement teams.
Another area of transparency is the requirement to publish key performance indicators (“KPIs”) for contracts over £2 million. Contracting authorities must set and publish at least three KPIs. They will not apply if it is not appropriate to the subject of the contract to monitor performance, and the provisions do not apply to frameworks, concession contracts or light touch contracts.
The government has also taken the opportunity to disapply the duty on local authorities under s.17 of the Local Government Act 1988 in relation to the procurement rules. The disapplication will mean that local authorities will not be in breach of their obligations under s.17 where complying with their obligations under the Procurement Bill, recognising the non-commercial considerations within the legislation. This will be a welcome change, clearing up any inconsistency between legislation.
Finally, it should be noted that various provisions of the Bill are to be implemented by the Secretary of State, likely resulting in the need to navigate several pieces of secondary legislation as and when these come into force.
This article touched on some key points from the Bill, please look out for further updates as we continue to explore the implications of the Bill and any amendments.
We advise contracting authorities on all manner of issues relating to public procurement and our experts are on hand to guide authorities through the intricacies of the procurement reforms and to advise on any other procurement related issues.
Juli Lau is a Legal Director and Sophie Mcfie-Hyland is an Associate at Sharpe Pritchard LLP.
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