The new Procurement Act 2023 is set to shake up the way the public sector spends its money on goods, services and works, providing a slicker, more efficient process with a focus on removing barriers to participation in tender processes for SMEs.
And with the date of the new legislation coming into force being pushed back to 24 February 2025, there is no time like the present to prepare.
1. Transparency
One of the key changes coming in the Procurement Act is a focus on increased transparency throughout the life of a contract, not just in the procurement stages.
One of the most striking things about the Act is not only the increase in the number of notices and other documents that an authority will be required to publish, but also the level of detail that is required. Suppliers who are poorly performing their contracts will have their poor performance made public, which can in turn affect their ability to win future contracts with any part of the public sector. Suppliers will be able to see who is winning, and who is unsuccessful, in higher-value tender processes across the public sector, revealing bidding strategies and interest in various market sectors.
However, this is set to become something of a burden to the public sector if they are not adequately prepared. In total, we have counted upwards of 16 notices which need to be prepared and published by authorities spanning the planning, procurement and contract award stages for every public contract and given that public sector procurement resources are already stretched, processes and procedures will need to be put in place to mitigate the impact of these new requirements sooner rather than later.
2. Greater flexibility
It’s not all doom and gloom. The Act also introduces a competitive flexible procedure, giving the public sector the opportunity to tailor their procurement processes to meet their specific needs and circumstances. It’s hoped that this flexibility will encourage innovation and offer better value for money, especially since the Act makes provisions for engaging with SMEs, who are often more cost-effective and innovative.
3. Inclusivity when awarding contracts
The public sector will now be required to award contracts to the supplier offering the "most advantageous tender" (MAT), as opposed to the "most economically advantageous tender" (MEAT) that is currently in place.
Removing the word ‘economically’ doesn’t mean that price is no longer important; it will still be relevant when awarding contracts. But there’s now an emphasis on a broader range of factors which, taken as a whole, deliver value for money.
4. KPIs and reporting
It will be mandatory to include at least three Key Performance Indicators (KPIs) in all contracts valued at more than £5m. The contracting authority must then publish a Contract Performance Notice at least once every 12 months for each of those contracts, rating the supplier’s performance against the KPIs.
This requirement will place a burden on already stretched procurement teams to maintain their involvement in contracts throughout their lifetime and not simply at the initial procurement stages.
This will inevitably need more resources and will likely involve much more interaction between contract managers and procurement teams throughout a contract’s term.
If the KPIs are not drafted in a fair and balanced manner, then this could lead to pushback from bidders during the clarification stage of the procurement process. It could also lead to an increase in non-compliant bids if the acceptance of contract terms is a pass/ fail requirement.
Next steps
This new legislation offers far greater flexibility and a huge opportunity for better procurement, but the impact of the scale of the change should not be underestimated.