New procurement regulations will be introduced next February, cutting red tape, improving transparency and opening up competition. Richard Scott, client manager – public sector at Aon, outlines the key changes and how authorities can ensure they’re prepared.
Around £300 billion a year – equivalent to one in every three pounds of public money – is spent on public procurement, securing everything from school dinners and stationery to cyber security. To ensure every one of these pounds is spent as wisely as possible, the reforms laid out in the Procurement Act 2023 will come into effect on 24 February 2025.
Purpose of the Procurement Act 2023
There are several drivers behind the new regulations. As well as reflecting the UK’s exit from the EU, the new rules aim to modernise public sector procurement and address some of the challenges and controversies seen during the pandemic.
Alongside cutting red tape, the new regulations aim to improve transparency across the procurement process. More data will be publicly available on the procurement process but also around contract management and performance delivery.
The Act also seeks to create a more level playing field for suppliers, opening up competition to new entrants such as small businesses and social enterprises. It also enables a faster process for emergency buying, which along with greater transparency, should help to address the criticisms raised regarding procurement during the pandemic.
Key changes
Although the regulations must still comply with the World Trade Organization on government procurement, the Procurement Act 2023 introduces some significant changes to the way in which public sector organisations secure goods and services.
- A shift from MEAT to MAT
Although price is always a factor in procurement, the new requirements shift the focus from ‘most economically advantageous tender’ (MEAT) to ‘most advantageous tender’ (MAT).
This allows procuring authorities to prioritise other factors such as environmental impact or social and governance standards when awarding and evaluating contracts.
- Greater flexibility
The new regulations should provide contracting authorities with more freedom around how they design the procurement process. Under the new regulations, they will be able to choose between a single stage open procedure or a multi-stage competitive flexible procedure, depending on which is more appropriate for the contract they wish to award.
- More notice requirements
In line with the move to increased transparency, there will be requirements to publish notices throughout the procurement process. Organisations should start familiarising themselves with the notice requirements to ensure they have sufficient time to put together a tender. More transparency inevitably means more administration.
- Platform change
The government is replacing the Find a Tender service with a central digital platform where suppliers can search for tender notices and information. As well as creating more transparency, this should make it easier for suppliers to find and bid for contracts. While positive, the only note of caution is that this platform is still being tested and teething problems may be experienced when it does go live.
- More performance reporting
In keeping with the drive for greater transparency, authorities will be required to publish more data around performance and service-related matters every year. This is critical for larger infrastructure projects or where a contractor may be failing to meet KPIs, for example. An authority can choose which data to publish – and there may be issues around commercially sensitive information – but it could also prompt freedom of information requests.
Prepare for the new regulations
Given the extent of changes to procurement, it’s important to be prepared ahead of the February implementation date. Understanding the new requirements, especially around notices and when these will need to be issued and the new performance monitoring requirements, will be essential. We recommend working with your legal teams to ensure the correct processes are in place as this will help to reduce the risk of legal challenge.
We also recommend that authorities assess existing contracts and start planning for those that will expire around the introduction of the new regulations.
Further, although the new requirements come in next February, some of the existing procurement frameworks won’t be affected until their platform agreement expires. This means you could have longer to adjust if you use a platform, but it is still sensible to ensure the organisation is ready for change.
We’re also awaiting the new government’s national policy statement which is expected early next year. The change in government and the need for a new policy statement to accompany the regulations is the main reason for the delay in the implementation of the Act – originally scheduled for 28 October 2024. While the statement won’t affect the regulations, it will set out the government’s priorities and objectives around procurement and impact areas such as social value.
More information
To find out more about the new regulations, the changes required and how it might affect risk within your organisation, speak to your Aon account manager or contact Richard Scott ([email protected]).
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This article has been compiled using information available to us up to 21/10/2024.
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