The wait for the new Procurement Act is nearly over. In about eight months, the public procurement sector will begin the switch from the complex procurement laws that are a remnant of pre-Brexit regulations to the far simpler processes specific to the UK market.
We’re going to look at how the Act changes public procurement for suppliers, as well as how suppliers can optimise the innate benefits the Act provides.
But first …
A Short Background on the Act
The Government intends for the Procurement Act 2023 to remove much of the discouraging bureaucracy tied to public procurement and encourage more businesses, especially small and medium-sized businesses, to enter the public sector.
A brief timeline
To this end, the Government published its proposals for procurement transformation in a green paper in December 2020. This was followed by public consultation and the Government’s response to the consultation in December 2021.
The Procurement Bill was announced in the Queen’s speech in May 2022, after which it was introduced to the House of Lords. It went to the House of Commons on 14 December 2022.
The House of Commons passed the Bill, with amendments, on 13 June 2023, but then it was batted between the House of Commons and the House of Lords until they finally agreed and passed the final Bill on 25 October 2023. On 26 October 2023, the Bill received Royal Assent and achieved Procurement Act status.
October 2024 is the official launch period. The Act will be accompanied by secondary legislation that’s necessary to implement some of the provisions in the new procurement processes.
Why Repeal EU Procurement Directives
EU procurement processes were complex with convoluted red tape that made participating in public procurement prohibitive to most small businesses that lacked the resources to make creating a procurement strategy worth the time and expense.
The Procurement Act 2023 simplifies and clarifies public sector procurement across all public sector organisations, including central government departments, their arms-length bodies, the wider public sector (local government and health), and utilities companies (water, energy, transport).
Now, contracting authorities must consider SMEs when developing contracts, especially low-value (below threshold) contracts, to ensure there are no barriers to participation in public sector procurement.
Public bodies must also consider whether SMEs can provide value and cost savings that larger business enterprises can’t.
Primary considerations must align with the national strategic priorities in the National Procurement Policy Statement (NPPS). These include job creation, environmentally friendly business practices and supply chain operations, supplier diversity, and innovation.
Takeaways for Suppliers
There are several takeaways for suppliers to take advantage of the new national legislation of procurement rules.
1) Objectives
Suppliers can prove their suitability by meeting new objectives that are UK-centric. New UK-centric procurement objectives include the following:
- Deliver value for money: When it comes to low-value contracts, suppliers know the local landscape and can leverage this knowledge to provide extra value, including social value, to local authorities and reduce overall procurement spending.
- Maximise public benefit: Local knowledge enables suppliers to incorporate social value initiatives that have the greatest positive impact on their local communities.
- Information sharing: Public sector buyers must provide the information necessary for suppliers to understand the relevant procurement practices. This enables suppliers to design a procurement strategy that is well within the contract’s parameters.
- Act with integrity: Suppliers must act with integrity throughout the procurement process and that includes equal treatment and non-discrimination in the workforce and ensuring their supply chain also acts ethically.
2) Flexible supplier selection
According to the new public procurement processes, contracting authorities have the power of choice. They can decide which competitive procedure they want to use; open procedures or competitive bidding process, restricted procedures, or an alternative procedure that meets their own procurement needs.
Public authorities can now change the terms of the contract while bidding is in progress. This benefits SMEs because they tend to be more flexible than larger enterprises and can adapt their strategy to suit the new public procurement criteria.
There are a few ways in which suppliers can increase their chances of attracting decision-makers and government stakeholders. They can leverage their new-found visibility to get them through the selection stage and on the path to procurement success.
They can also strive to create comprehensive proposals that only need a few tweaks here and there to meet the new procurement terms.
3) New publishing notices
Public sector procurers must publish a host of new notices throughout the procurement cycle. This increases the transparency of contracts for suppliers and even the general public can see what government procurement involves.
- Planned procurement notices and preliminary market engagement notices: These are alerts for contracts that are coming up. Interested parties can then prepare their pre-proposal documentation (RFP, RFQ, etc.) before the public contracts are published.
- Pipeline notices: These present a timeline of upcoming contracts from a specific contracting authority. Suppliers can plan ahead, choosing the contracts they want to bid on so they can work on their proposal documentation ASAP.
- Transparency notices: These inform suppliers of the type of contract (direct, indirect, or concession contracts) published. They can then refine their procurement strategy accordingly.
- Mandatory contract change notices: These inform suppliers of changes to the procurement process that may require adjustments to keep their proposals in the running.
- Contract award notice: Public authorities publish the contract award notice before officially entering a public contract.
- Termination notices: Public contracting authorities must inform suppliers when contracts have been successfully delivered or terminated early.
- Early termination might present an opportunity to re-tender the contract. This means suppliers can go back to their procurement strategy and rework it according to feedback provided by the public authorities.
4) Procurement procedures
Tenders are awarded using either a single-stage (open) procedure or an alternative competitive bidding process determined by the contracting authority. An open procedure means that all interested parties with relevant services, goods, or works can bid on public contracts.
Alternative procurement processes can greatly benefit suppliers because the criteria are very nuanced. They know immediately if they meet the criteria and can determine if it’s worth their while to develop a procurement strategy.
There is also a provision for direct procurement, which is when contracting authorities can directly award contracts, should a Minister deem it appropriate. Appropriate circumstances include the protection of public order or safety.
5) Awarding contracts
The act is very clear about the conditions that must be met for public authorities to award contracts, especially when it comes to overall value.
Specifically, Section 19 (1) states that public contracts are awarded to the most advantageous tender (MAT). This removes the emphasis on price and instead favours suppliers that best satisfy the buyer’s requirements, from the most important criteria to the least without sacrificing the quality of their services.
MAT has been a priority since the Cabinet Office released its green paper in December 2020, which stated that MAT “should provide greater reassurance to contracting authorities that they can take a broader view of what can be included in the evaluation of tenders.”
MAT provides a level playing field that allows SMEs to compete fairly with larger businesses in the public sector. This is especially apparent when it comes to low-value local contracts, where SMEs are ideally situated to have the biggest impact on local communities.
6) Exclusion
One of the biggest changes in the Procurement Act 2023 is grounds for exclusion. There are mandatory and discretionary grounds for exclusion and they cover things like theft, competition law infringement, poor supplier performance, and breach of contract.
Suppliers must know and understand the grounds for exclusion and excludability in public procurement to ensure they stay well away from potential infringements and fully comply with the new procurement policies and regulations.
Note: Suppliers can do a sterling job avoiding exclusion, but if one of their suppliers or subcontractors is excluded, they can also be excluded by reference. This makes due diligence an essential component of supply chain management in the public sector.
Another new feature of public procurement legislation is the Central Debarment List. A Minister of the Crown can add excluded or excludable suppliers to a debarment list, which prevents them from applying for public contracts for a set time.
Suppliers can apply to be removed from the list, but only if they have made a material change to the circumstances that led to their exclusion and debarment from public procurement in the first place.
7) Key Performance Indicators (KPIs)
The Procurement Act 2023 requires contracting authorities to publish at least three KPIs essential to the public sector contract. Suppliers must demonstrate that they can achieve KPIs before they continue bidding on the government contract.
KPIs are also a key element in public sector contract management and supplier evaluation, as they ensure suppliers remain on track performance and objective-wise.
Suppliers must be absolutely certain they can realistically achieve the KPIs. Consistently overreaching can be detrimental to suppliers’ reputations. What’s more, consistent poor performance will land suppliers on the excluded or debarred list.
It’s essential for suppliers to be confident in their ability to perform well and deliver the services specified in the contract.
A note on transparency
Transparency in public sector procurement means that anyone in the UK (members of the public, ministers, local and central government bodies, and all interested parties) can access information related to public contracts.
This way they gain insight into public sector procurement and procurement policies, including what the public sector buys, who it buys from, and how much public money it spends.
Transparency is intended to:
- Increase the visibility of public procurement services.
- Create opportunities for small businesses in the public sector.
- Establish good working relationships based on trust.
- Increase innovation in the public sector.
- Drive economic growth on a local and national level.
- Encourage collaboration in strategic sourcing.
- Improve the efficiency of goods and services.
Find Your Feet: Outsource Your B2G Marketing
The Procurement Act 2023 delivers far-reaching changes to the public sector procurement process with knock-on effects for business-to-government (B2G) marketing strategies.
Suppliers in the new and improved public sector procurement market have their hands full coming to grips with all the new procurement rules and reforms.
Even with the education and training the government will provide (six months before the launch), becoming familiar with the new government procurement regulations and compliance requirements takes time.
As a result, many suppliers, especially SMEs, don’t have the time or resources to spend on both public sector marketing and training.
The solution is to outsource your B2G marketing to agencies that specialise in public sector procurement.
Cadence Marketing has the experience and expertise to keep your marketing on a sound footing while you ensure your strategies for the new procurement policies are geared to capitalise on all the opportunities the new Act presents.
Contact Cadence Marketing and book a free consultation to discover how our B2G marketing skills can help you in the new age of procurement.
