The Procurement Act 2023 is a highly significant development in UK procurement law, with its implementation date of February 24, 2025 just around the corner.
This legislation aims to simplify and modernise public sector procurement practices, providing greater transparency and accessibility for all parties and suppliers involved, including small businesses, start-ups, and organisations new to government contracting. It is also relevant for clients in the defence and security industries who need to understand how these changes will affect their procurement processes. Suppliers to public and utility sectors, including government departments, NHS, local authorities, and more, should note these changes.
In this comprehensive guide, we will explore the key features of the Procurement Act 2023 and discuss how professionals can prepare for its implementation for the success in future procurements.
Overview of the Procurement Act 2023
The Procurement Act 2023 was introduced to replace the UK’s EU-based procurement system post-Brexit, addressing criticisms of complexity and restrictions. It aims to establish a simpler, more transparent, and UK-specific system that aligns with national priorities, revoking previous regulations such as the Public Contracts Regulations 2015.
What is the Procurement Act 2023?
Each year, the public sector spends roughly £300 billion on procurement. This includes everything from office supplies and hospital beds to major infrastructure projects like roads and schools, as well as services such as adult social care and technology.
The Procurement Act 2023 represents a significant overhaul of the public sector procurement framework in England, Wales, and Northern Ireland. It consolidates various regulations into a single framework that governs the procurement of goods, services, and works by public authorities.
The Act is designed to promote agile and accessible procurement, benefitting small businesses by fostering innovation and competition.
While some provisions related to defence and enabling secondary legislation took effect in early 2024, the full implementation date has been postponed from October 28, 2024, to February 24, 2025.
This delay allows time for a revised National Procurement Policy Statement. Procurements initiated on or after this new date must adhere to the new regime, while those started earlier will continue under the existing rules.
What are the main differences between the old and new procurement rules?
The Procurement Act 2023 (PA 2023) introduces several significant changes compared to the existing procurement regime.
Here are the main differences:
- Consolidation of Rules: The PA 2023 consolidates four separate sets of regulations into a single Act, covering ordinary contracts, utilities, concessions, and defence contracts, simplifying the procurement process and lessen administrative burdens on contracting authorities and suppliers.
- Simplified Procedures: The PA 2023 reduces the number of procurement procedures, offering three main options:
- Direct award
- Competitive tendering (open or competitive flexible procedure)
- Award under existing framework
- Compliant with International Obligations: The Act is designed to create a simpler, more flexible, and effective procurement system that better meets the country’s needs while remaining compliant with international obligations.
- Greater Transparency: The Act requires contracting authorities to publish more information on a central digital platform. This transparency aims to boost accountability and give suppliers easier access to procurement opportunities with simple registration. The Act will create a platform for suppliers to register and store details, simplifying the bidding process for multiple contracts.
- Accessibility for Small Businesses: The Act includes provisions to improve accessibility for small and medium-sized enterprises (SMEs). Contracting authorities must consider barriers to SME participation and align with broader procurement objectives that promote fair competition.
- Transparency in Taxpayer Spending: It aims to embed transparency throughout the commercial lifecycle, allowing for better scrutiny of taxpayer money spending.
- Language and Terminology: The Act moves away from EU directive language, introducing new terminology that may require interpretation by UK courts.
- Lifecycle Approach: The new regime focuses on the full procurement lifecycle, including pre-market engagement and contract management, not just the award process.
- Exclusion and Debarment: A central debarment list is introduced, and there are wider grounds for excluding suppliers but tougher action against underperforming suppliers and those posing unacceptable risks.
- Modified Standstill Period: The standstill period is a mandatory waiting period between the decision to award a contract and the actual signing of the contract. Under the Procurement Act 2023, this period has been reduced to eight days, down from the previous duration under the existing procurement regime.
- Territorial Application: While the PA 2023 applies to England, Wales, and Northern Ireland, it has limited application in Scotland.
- MEAT to MAT: The Act replaces the Most Economically Advantageous Tender (MEAT) with “Most Advantageous Tender” (MAT), broadening the focus beyond price to include wider benefits, such as social value and sustainability.
These changes aim to create a more flexible, transparent, and efficient procurement system, moving away from the EU-based regime while retaining many familiar concepts.
How will the new Procurement Act 2023 impact small businesses and start-ups?
The Procurement Act 2023 introduces several changes that could significantly impact small businesses and startups in their engagement with public procurement:
Increased Opportunities
- Broader Procurement Objectives: The Act requires contracting authorities to have regard to new procurement objectives, including considering barriers for SME participation. This focus could lead to more opportunities for small businesses and startups to compete for public contracts.
- Simplified Procedures: The reduction from four procurement procedures to three options (direct award, competitive tendering, and framework awards) may simplify the process for smaller entities. The competitive flexible procedure, in particular, allows contracting authorities to design processes that could be more accommodating to SMEs.
Enhanced Transparency
- Expanded Notice Regime: The Act mandates significantly more notices and information to be published on a central digital platform. This increased transparency could help small businesses and start-ups better understand and prepare for procurement opportunities.
- Central Register: The Act introduces a central register for suppliers to store their details, creating a streamlined system for bidding on multiple contracts. This platform could help small businesses and start-ups save time and resources in the bidding process.
Fair Competition
- Exclusion of Poor Performers: The new regime allows for tougher action against suppliers who underperform or pose unacceptable risks. This change aims to promote fair competition and create a level playing field for all businesses, including small ones.
Potential Challenges
- New Terminology: The Act introduces new language and terminology, moving away from EU directive phrasing. Small businesses and start-ups may need to invest time in understanding these changes to ensure compliance and effective participation.
- Debarment List: The introduction of a central debarment list could pose risks for small businesses if they face exclusion, as it may prevent them from winning public contracts for up to five years. Therefore, it is crucial for small businesses and start-ups to follow procurement rules closely to avoid falling on this list.
Strategic Considerations
- Focus on Contract Management: The Act’s emphasis on the full procurement lifecycle, including contract management, may require small businesses to demonstrate stronger capabilities in long-term contract delivery and performance reporting.
- Shift from MEAT to MAT: The move from Most Economically Advantageous Tenders (MEAT) to Most Advantageous Tender (MAT) could benefit innovative startups by allowing for consideration beyond just cost. However, it also means that small businesses will have to focus on demonstrating added value in their bids beyond price.
- Possible delays during transition: The implementation of the Procurement Act 2023 may cause some initial disruptions and delays as contracting authorities adjust to the new regime. Small businesses and startups should be prepared for potential changes in procurement processes and timelines during this transition period.
The Procurement Act 2023 offers small businesses and start-ups new opportunities through simplified procedures and increased transparency in public procurement. However, it also introduces complexities that may require additional resources.
Smaller entities should familiarise themselves with the new rules and seek guidance from procurement lawyers to succeed.
While the Act promises more fairness and opportunities, its practical impact on smaller entities is yet to be determined.
How will the shift from MEAT to MAT affect the procurement process?
The shift from the Most Economically Advantageous Tender (MEAT) to the Most Advantageous Tender (MAT) in the Procurement Act 2023 introduces several key changes to the procurement process:
Broader Evaluation Criteria
- Quality Over Cost: The MAT approach emphasises evaluating tenders based on a broader set of criteria beyond just cost. This allows contracting authorities to consider factors such as quality, innovation, and social value, potentially leading to more sustainable and innovative procurement outcomes.
- Encouragement of Innovation: By focusing on the most advantageous tender rather than the cheapest, the new approach encourages suppliers to offer innovative solutions that provide greater overall value, which can be particularly beneficial in rapidly evolving sectors like technology.
Flexibility in Decision-Making
- Tailored Criteria: Contracting authorities have more flexibility to define criteria that align with their strategic objectives. This could lead to procurement decisions that better reflect organisational priorities and public policy goals.
- Adaptability to Specific Needs: The MAT approach allows for a more nuanced assessment of tenders, enabling authorities to adapt their evaluation criteria to the specific needs of each procurement exercise.
Potential Challenges
- Complexity in Evaluation: While offering greater flexibility, the MAT approach may introduce complexity into the evaluation process. Authorities will need to carefully design their assessment frameworks to ensure fairness and transparency.
- Training and Guidance Needs: Procurement officials may require additional training and guidance to effectively implement and evaluate tenders under the MAT framework, ensuring consistency and compliance with the new rules.
The shift from MEAT to MAT under the Procurement Act 2023 aims to enhance procurement outcomes by focusing on overall value rather than just cost. This change is expected to foster innovation and quality but requires careful implementation to manage potential complexities in evaluation processes.
What steps should companies take to prepare for the new procurement rules?
To prepare for the new procurement rules under the Procurement Act 2023, companies should take several strategic steps to ensure compliance and maximise opportunities:
- Familiarise with the Act: Companies should thoroughly review the Procurement Act 2023 and associated secondary legislation to understand the new requirements, objectives, and procedures.
- Terminology and Language: Get acquainted with the new terminology and language used in the Act, as it departs from EU directive-based phrasing. This understanding is crucial for aligning documentation and communication with contracting authorities.
- Evaluate Current Contracts: Assess existing contracts to determine which will continue under old rules and which need adjustments to comply with the new regime.
- Align with Procurement Objectives: Understand and align business strategies with the broader procurement objectives outlined in the Act, such as considering SME participation barriers and adhering to national procurement policy statements.
- Training and Capacity Building: Invest in training procurement teams to understand and implement the new procedures effectively. This includes familiarising them with the competitive flexible procedure and other available options.
- Enhance Transparency Practices: Prepare for increased transparency requirements by developing systems to publish necessary notices and information on a central digital platform.
- Review Exclusion Grounds: Understand the grounds for exclusion and debarment under the new rules to mitigate risks of being excluded from public contracts.
- Contract Management Focus: Shift focus towards managing contracts throughout their lifecycle, including performance reporting and termination considerations, as emphasised by the new regime.
- Consult with Legal Experts: Engage legal experts in procurement law or consultants specialising in public procurement to ensure compliance and strategic alignment with the new rules.
- Participate in Industry Forums: Join industry forums or workshops related to public procurement to stay updated on best practices and regulatory changes.
- Collaborate with SMEs: Consider partnering with SMEs to increase chances of successful bids and promote inclusive procurement practices aligned with the Act’s objectives.
Conclusion
Preparing for a Fairer and More Competitive Procurement Landscape
While the shift from MEAT to MAT may pose initial challenges for companies and contracting authorities, it ultimately aims to improve procurement outcomes by promoting innovation, quality, and value.
By proactively familiarising themselves with the new rules and strategically preparing for their implementation, companies can embrace this change and maximise their chances of success in public procurement.
Additionally, seeking guidance from procurement law experts like Proelium Law and participating in industry forums can also aid companies in adapting to the new framework effectively.
As we move towards a more modernised procurement process, it is crucial that all parties involved including public sector procurement approach this change with an open mind and a willingness to learn and adapt. By doing so, we can collectively realise the potential benefits of the new procurement rules and drive positive impact in the public sector.
