Five things to know about the UK Procurement Bill

09 June 2023

One in every three pounds of UK public money is spent on goods and services bought by the public sector. But the rules governing how that money is spent – some £300 billion a year – are changing.

The UK’s public procurement legislation currently consists of more than 350 regulations spread across different areas relating to public contracts, defence contracts, utilities contracts and concessions contracts. But under the new Procurement Bill these will be consolidated into a single regime which, according to the Government, will make it quicker, simpler, more transparent and will better meet the needs of the UK’s citizens.

It is the single biggest change to UK procurement regulations in a generation. According to Deloitte it’s the biggest change to how public procurements are managed since enactment of the European Communities Act in 1972.

Here are a few things you should know about the new Procurement Bill…

Greater transparency - The Government has promised that the Bill will deliver a step-change in transparency and openness.

While there is no express principle of transparency in the Bill the Government wants to create a system whereby everyone from ministers to members of the public will be able to see, search and understand what the public sector is buying, how much it is spending, and with whom.

The Bill will create a single, digital platform which will include information on everything from planning through to contract termination. The Government hopes it will open up opportunities to new entrants, create greater value, increase innovation and enable contracting authorities to collaborate, saving costs and driving efficiencies.

It’s hoped the new regime will give suppliers more information about the procurement process allowing them to better assess their option. For contracting authorities, it’s hoped the release of upfront information will result in fewer challenges.

Simplified - Current procurement legislation, much of which is derived from EU laws, is covered by various frameworks: Public Contracts Regulations (2015), Concessions Contracts Regulations (2016), Utilities Contracts Regulations (2016) and the Defence and Security Public Contract Regulations (2011).

These four different regimes will be replaced by a single framework although, some of the differences that apply to each of these regulations will be maintained.

Awarding procedures will also be simplified. Currently, procuring authorities have a choice of five tendering exercises each with its own rules. These will be replaced with two competitive tender procedures allowing for single or multiple stages with restrictions on those submitting tenders, giving greater scope to procuring authorities to design the most suitable process.

Delivering value - Value is something of a tricky concept. On the one hand it can be interpreted simply as reduced cost or cost savings. On the other hand, value can be seen in the context of ensuring resilient operations over time, reducing risks or a long-term investment in innovation or tackling climate change and improving the environment.

It could also be delivering value for money by creating spin-offs like jobs in local communities.

While delivering “value for money” will remain at the heart of the Procurement Bill, it will also introduce a new system for supplier selection, asking public authorities to consider much wider benefits such as creating jobs, improving diversity, creating innovation and tackling sustainability when working with suppliers.

Encouraging new entrants - One area where public sector procurement has consistently failed to deliver, as promised, is the awarding of public contracts to smaller companies. A target was set, in 2015, to ensure a third of public sector procurement spending was awarded to SMEs within 5 years.

That target has never been met, according to the Federation of Small Businesses and according to the SME procurement tracker, produced by the British Chambers of Commerce and Tussell only 21% of public sector spending went to SMEs in 2021.

There are many reasons why SMEs fail to win or are put off bidding for government contracts – cost, complexity and difficulty meeting qualifying criteria are top of the list. Consequently, 1 in 10 SMEs have given up bidding for contracts while 1 in 5 say they’ve never bid.

The Procurement Bill aims to change this by relaxing criteria on supplier selection, improving visibility of upcoming tenders and giving more time for SMEs to prepare bids.

The Bill also wants to encourage more social enterprises to bid for contracts – organisations with binding commitments to environmental or social improvement and which typically reinvest in local communities. There are 130,000 social enterprises in the UK and 1 in 5 trade with the public sector as their main source of income.

Research from Social Enterprise UK estimates that the UK has potentially missed out on more than £700bn added economic, social and environment benefit in the last 10 years from missed opportunities in public procurement. It believes the Procurement Bill should oblige contracting authorities to specifically reference “maximising social value” in tenders.

When it happens - Legislation can take time. But, as contracting authorities are already looking at tenders that need to be renewed and suppliers wanting to know more about how rules will change, many are asking the question of when?

The Bill first entered the House of Lords in Spring 2022. It is now in the House of Commons being debated and amended by MPs. For as long as debate continues it is difficult to know precisely when Parliament will ratify the bill but, if everything goes to plan then it should be sometime before summer.

There will then be secondary legislation developed and a six-month plan to get contracting authorities up to speed, meaning that the Bill is unlikely to be implemented until Autumn 2024.

All of which begs the question, what should you be doing now to prepare? Firstly, review your processes around market engagement and supplier evaluation. Make sure these are robust. Prepare for the digital changes and familiarise yourself with the Bill’s ambitions on transparency. Think about training and who in your organisations needs to be across all the changes. And make sure you engage with your suppliers about the new regime.

You can find resources and guidance on the Public procurement page (link to follow). The CIPS Intelligence Hub  also offers practical advice and guidance on a range of topics.