Procurement regime changes moving forward

In December 2020, the UK Government published a green paper entitled Transforming public procurement, setting out its proposed road map for procurement policy following the Brexit transition period and inviting responses to a public consultation (see our previous legal update). 

On 6 December 2021, the Government published its long-awaited Consultation Response, which summarises feedback received from over 600 respondents and sets out updates in relation to the proposals for reform.  In summary:

• the Government intends to push ahead with the majority of its proposals, with the intention of simplifying the existing regulatory framework;
• however, the Government accepts the need to alter and/or clarify some of its proposals; and
• the new regime is unlikely to come into force until 2023 "at the earliest".

We set out below are some of the key points arising from the Consultation Response.

1.  Consolidation of the regulatory framework

The Government is going ahead with the proposal to consolidate the existing patchwork of regulations into a single framework.  However, in response to feedback, the Government has confirmed that it will:

• retain a number of existing flexibilities specific to utilities procurements;
• maintain a number of exemptions to ensure the security considerations of defence and security procurements; and
• retain the "Light Touch Regime", which applies to procurements relating to certain social and health services, but some changes will be made to its scope and application.

2.  Refined approach to procurement principles and objectives

The Government proposed to redefine and expand the principles which procuring authorities would be required to have regard to during procurement exercises.  However, the Government has decided to refine its approach as follows: 

• by identifying a narrower list of principles comprising transparency, non-discrimination and fair treatment of suppliers;
• by identifying a broader list of concepts, which will be established as "statutory objectives" to influence decision-making, but will be subject to some limited exceptions;
• by introducing an additional objective of promoting the importance of open and fair competition;
• by clarifying that the concept of "public good" will be framed as an objective of maximising the "public benefit" to support wider consideration of social value benefits; and
• by indicating that it intends to maintain the concept of proportionality "where it is required in the specific regulations".

These reforms are ambitious and have the potential to add considerable complexity to the evaluation of tenders, rather than achieving the Government's stated goal of simplifying procurement processes.  Therefore, the development of additional guidance on achieving the statutory objectives will be vital.

As regards the broader proposals to increase transparency in public procurement, the Government has recognised the need to ensure that the new requirements are proportionate and simple to implement.  Therefore, the Government has indicated that it intends to issue detailed guidance to support procuring authorities with the implementation of the new requirements.

The Government has also confirmed that it intends to adopt its proposal for contracts to be awarded to the "most advantageous tender" rather than the "most economically advantageous tender".  This decision should facilitate the ability of procuring authorities to have regard to the new statutory objectives.

3.  Strengthening of framework for exclusion of suppliers

In the Green Paper, the Government proposed to make it easier for procuring authorities to exclude suppliers on the basis of misconduct such as fraud, corruption or prior poor performance.  However, in the light of stakeholder feedback, the Government has concluded that a wider refresh of the legal framework for the exclusion of suppliers is needed.  The Government has signalled that it intends to introduce a simpler and clearer framework, which will focus on excluding those suppliers who pose an unacceptable risk to effective competition for contracts, reliable delivery, and protection of the public, the environment, public funds, national security interests or the rights of employees. 

In addition to defining new grounds for exclusion, the Government has said that it will also make changes to the way exclusions are applied to streamline the regime.  This includes two proposals which could prove controversial: 

• first, a five year time limit will apply to both the mandatory and discretionary grounds – currently a three year time limit applies to the discretionary grounds, which reflects the less serious nature of the situations covered by the discretionary grounds; and
• second, the exclusions framework will be blind as to whether the misconduct happened in the UK or overseas.

4.  Damages will not be capped

The Government had proposed to cap damages by reference to a multiple of bid costs, subject to limited exceptions.  However, this proposal is not being taken forward.  The Government is instead considering other measures: 

• to improve access to the public procurement review system;
• to help resolve disputes more expediently; and
• to allow for more challenges to be resolved before new contracts are placed.

5.  Removal of automatic suspension for urgent contracting

The Government intends to remove the automatic suspension for challenges of award decisions in cases where "urgent contracting" is required.  The Government has noted that the terms for urgent contracting need to be clear, measured and proportionate, and there will still be certain requirements that need to be followed, including the publication of notices.  The remedy of ineffectiveness will, however, remain available. 

What's next?

The Government proposes to bring forward legislation to enact these changes "when Parliamentary time allows".  Recognising the extent of the changes and the need to support procuring authorities and contractors, it also intends to produce a detailed set of resources to accompany any legislation, and to provide six months' notice before the new regime comes into force.  The Consultation Response confirms that this is unlikely to be until 2023 at the earliest.

Authors: Edward McNeill (Counsel), Aaron Marchant (Solicitor)