UK: Transforming Public Procurement - Draft Procurement Bill Published

Last year, the UK Government published its green paper and consultation on Transforming Public Procurement. The government response to the consultation was published in December 2021 and on 11 May the draft Procurement Bill (the "Bill") was published. You can download a copy of the Bill here.

The Bill is one of the pieces of legislation which was referenced in the Queen's Speech and is one of the government's flagship bills following the UK's exit from the European Union. Historically, UK procurement legislation closely followed the text of the European Procurement Directives; however, following Brexit the UK has the chance to rethink and amend the way public procurement works in the UK. It also allows government to align the legislation with its National Procurement Policy Statement and focus on elements like value for money.

It is worth noting at the outset that the Scottish Government has not yet indicated whether it will amend the Scottish procurement legislation in line with the new legislation from central government. This could therefore give rise to a different approach for devolved authorities in Scotland, meaning UK contractors and service providers would need to follow separate procurement regimes in Scotland and the rest of the UK.

We have set out some initial comments on the Bill below.

• Streamlining the current legislation: the new legislation aims to create a single unified set of procurement rules and will replace the various different regimes that existed under the Public Contracts Regulations 2015, the Utilities Contracts Regulations 2016, the Concession Contracts Regulations 2016 and the Defence and Security Public Contractors Regulations 2011. This is likely to be welcome by most entities; however, the Utilities and Defence procurement regimes previously incorporated more flexibility than the equivalent public sector regime and so the entities using those regulations at present will be keen to understand how the new rules affect them. In relation to utilities, for example, many of the sections of Bill currently contain a provision which notes they do not apply to private utilities. Private utilities are stated to be persons that, other than a public authority or a public undertaking, carry out a utilities activity pursuant to special or exclusive rights. Under the Bill a "public undertaking" is stated to be an undertaking that is not a public authority but is either funded wholly or mainly from public funds or is subject to contracting authority oversight.
• New procurement processes: the Bill requires contracting authorities to follow a "competitive tendering procedure" which is stated to be either a single stage procedure with no restrictions on who can submit a tender (the "open procedure") or such other competitive tendering procedure as the Contracting Authority considers appropriate for the purpose of awarding the contract. The competitive tendering procedure therefore allows much more flexibility for contracting authorities to design their own processes, and is less prescriptive than the current procurement legislation. This may be welcomed by some contracting authorities but it will mean that procurements can vary significantly, which may not be so helpful from the perspective of bidders. It will also mean more planning at the outset of a procurement.
• Open Frameworks: the Bill provides for an ability to have Open Frameworks, which are effectively a series of successive frameworks on substantially the same terms.
• Award Criteria: the reference to "most economically advantageous tender" (MEAT) has been replaced with "most advantageous tender", which is stated to be the tender which the Contracting Authority considers best satisfies the award criteria when assessed against the assessment methodology in section 22(3)(a) of the Bill and the relative importance of the criteria under section 22(3)(b) of the Bill. This therefore appears to be more flexible than the previous MEAT requirements.
• Modifying procurements: the Bill contains provisions around modifying procurements as well as modifying contracts themselves. This is likely to be seen as positive from the perspective of Contracting Authorities.
• Direct Award: the Bill contains provisions allowing Direct Award in certain circumstances, which are included within a Schedule to the Bill. These include various grounds, some of which are similar to the grounds under the existing regulations for use of the negotiated procedure without prior publication of a notice, such as extreme urgency and the protection of exclusive rights.
• Exclusions: the Bill sets out a clear set of mandatory and discretionary exclusion grounds. This will be of interest to both Contracting Authorities and the private sector. Of particular interest is the discretionary ground for exclusion due to past poor performance. This now allows exclusion where a supplier breached a contract and the breach was "sufficiently serious". A breach is deemed to be sufficiently serious where it results in termination, damages or a settlement agreement. It will be interesting to see how this is used in practice as in certain areas, such a construction, there are often claims that result in settlement agreements.
• The Debarment List: the Bill envisages that a centrally held Debarment List will be created and maintained. Contracting Authorities will be able to access this and it will clearly set out entities that must be excluded. This is likely to be very helpful for Contracting Authorities and is likely to be significant for the private sector also.
• Award Notices, Assessment Summaries and Standstill Periods: the Bill envisages that rather than bidders receiving a notice setting out the characteristics and advantages of the winning contractor, they will instead receive an assessment summary before the Contracting Authority publishes the Award Notice. This is likely to be helpful for bidders and could lead to more robust evaluations where a detailed assessment summary must now be provided. The mandatory standstill period is now stated to be eight working days from the date of publication of the Contract Award Notice.
• Publishing Contracts: the Bill requires Contracting Authorities (but not private utilities) to publish all contracts with a value of more than £2 million within 90 days of entering into the contract.
• Key Performance Indicators: Contracting Authorities (but not private utilities) will have to set and publish at least three KPIs for contracts with an estimated value in excess of £2 million.
• Implied payment terms: the Bill contains implied payment terms; parties will need to consider these in terms of their contracts, and they will need to be factored in against other requirements, for example construction act compliant payment provisions.
• Remedies: the remedies available pre and post contract are set out in the Bill and are similar to the existing regime (with ineffectiveness orders replaced with set aside orders).

Although the Bill contains many refinements to procurement legislation, there are some elements which could have been further clarified, such as whether the Bill will apply to Development Agreements, a matter which has attracted a substantial body of case law. The Bill contains an exclusion for the acquisition of land, buildings, or any other complete work (which is stated to be a functioning structure that results from the carrying out of works) and so there is still likely to be focus on some of the provisions and definitions in the Bill.

The Bill represents a significant change to procurement legislation in the UK and it will be interesting to see how it develops as it moves through the legislative process. It is still at a very early stage and we will post further articles as the Bill progresses; however, please get in touch if you have any questions on the Bill in the meantime.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.