Yesterday, the biggest shake-up in UK public sector procurement law for decades finally landed.
And, as if by magic, the new government policy behind procurement rules came into force at the same time.
As the dust clears, it looks like the changes in the procurement process offer particular opportunities to small and medium size enterprises, both in terms of the increased breadth of information available, improvements to the procurement process and – in particular – in the aims of the policy behind the new laws.
More information available
If you want to find out information about a public sector contract, life is made infinitely easier by the new Find a Tender service. This publishes details of all procurement tenders across the UK, whether above or below a financial threshold (with certain exceptions, including details of below threshold tenders in Scotland).
The site is easy to sign up to and use, and contains a much wider range of notices relating to the various iteration stages of a public contract tendered after 25 February 2025. Depending on award value, contract purpose and locations, buyers will have to issue notices including:
- Preliminary market engagement notices to explain how the buyer will engage with suppliers
- Planned procurement notices to give early information about a competitive procurement
- Tender notices to formally advertise competitive tendering processes
- Transparency notices, providing transparency information before making a direct award
- Contract award notice, published to notify an award, and to begin the standstill period (now at least 8 working days) to be completed before the contract can be signed
- Contract details notice, to be published within a fixed time after contract execution (and, in the case of contracts over £5 million, to include the executed contract)
- Contract change notice, published to record any material change in a contract's value or term
- Contract termination notices.
The site also publishes information about dynamic markets being established, including:
- Dynamic market intention notices, to tell suppliers that they can apply to join the market framework
- Dynamic market establishment notices, to tell potential buyers that they can use the market – and to let the buyers know which suppliers are part of it.
Dynamic markets are themselves part of the shake-up: they replace the various dynamic purchasing systems and qualifications of the old regime to broaden significantly the range of products and services which can be purchased. Where, previously, purchasing systems focussed on "commonly used purchases", government buyers can now procure any product through dynamic markets.
Changed process
The new laws reduce the complexities inherent to five different competitive award procedures, with the introduction of just two types of competitive tendering procedure – the open procedure (very similar to the previous single stage, simple Open Procedure), and the Competitive Flexible Procedure.
Buyers have much greater freedom under the new Competitive Flexible Procedure to design their contract's award and negotiating procedure: they can limit participant numbers across multiple stages, and introduce dialogue, negotiation and demonstration stages as required.
The new process changes award criteria from MEAT to MAT: buyers now consider the competitors on a Most Advantageous Tender basis, rather than a Most Economically Advantageous Tender. For buyers, the importance of this is that they can choose the criteria that offers the best chance of project success, beyond a simple value for money calculation. For suppliers, particularly SMEs who can't offer the volume discounts or purchasing power of their bigger competitors, this allows them greater chance to participate without being ruled out on pricing grounds.
The changes in process have also made it into the terms of the procurement contracts, with the industry-welcomed new requirement for buyers and providers, all the way down the public procurement's supply chain, to pay undisputed supplier invoices within 30 days.
Buyers get new rights to terminate a public contract, even if the right isn't expressly stated in the contract. Buyers can close down a contract if it decides that the contract was awarded or modified unlawfully – or if the supplier or one of its sub-contractors is an "excluded supplier".
And here's one of the biggest changes: the new law introduces a "name and shame" regime, with the creation of a list of suppliers who are barred from tendering for public contracts. The grounds for exclusion include, as you'd expect, a supplier's insolvency – but, for the first time ever, include exclusion because of poor performance on a previous contract. Another ground for exclusion, very much in step with current government legislative direction, is exclusion on the basis that the supplier is deemed a threat to national security.
Changed Policy
In the eyes of SMEs, one of the most significant changes will be the introduction of a legal duty on buyers to consider "lotting" – the splitting up of a contract's scope into smaller lots. Previously just something buyers had been encouraged to do, it's now a legal obligation.
This is a direct outcome of the Government's new National Procurement Policy Statement (which took effect the day before the new procurement legislation): the NPPS states as a priority for its "Driving economic growth" target that:
"Contracting authorities should drive economic growth
and strengthen supply chains by giving SMEs a fair chance at public
contracts."
"Small businesses and social enterprises are more likely
to generate diverse and thriving local economies, creating jobs and
economic growth. Increasing procurement spend with these suppliers
is a national priority to drive economic growth. This Government
wants to maximise every opportunity for these suppliers by opening
up competition in public contracts and removing the barriers to
participation they face."
The splitting of an IT procurement into different lots offers much
greater opportunities for participation by smaller, specialist
organisations who've had the organisational freedom (and
courage) to take their tech into newer areas – which ticks
another government policy box, by encouraging the introduction of
innovative tech into the public sector.
Sounds great. Will it work?
Some of the changes will obviously help SMEs – prompt
invoice payment increases cash-flow protection, and the centralised
and significantly expanded contract information system will allow
all sizes of buyers to plan and monitor deal opportunities, while
collecting information from other deals as lessons to learn.
The broadening of framework and market type arrangements by the
inclusion of the dynamic marketing system also gives SMEs a greater
chance to sit at the table.
These are the low-hanging fruit. However, the benefit of the deeper
procurement changes is equally valuable, if the SMEs are able and
prepared to invest management time in getting strategic:
- SMEs who previously were unable to fulfil all of the requirements of a major tech tender might now find themselves perfectly placed to deliver on smaller, "lotted", transactions. However, wise SMEs will spend time examining how their reduced lot ties into the neighbouring stages of the transaction, to identify important dependencies, IP licence structures and (crucially) how personal data flows in and out of the transaction;
- SMEs who provide commercial off-the-shelf software products, who've previously watched sadly at passing IT procurements structured around bespoke software creation, and buyer ownership of created IP, now get a much greater chance to explain the COTS nature of their products both in the dynamic markets, and also during the course of procurement contract negotiations;
- Framework contracts such as G-Cloud or R-Cloud famously allow little flexibility from the default position that created code either belongs to the buyer, or (more recently) should be released as open source: protecting the supplier's ownership of COTS code via the use of "special terms" quietly slipped into the contract has previously required nimble legal footwork at a painful cost to the SME supplier. Under the changed regime, SME suppliers should use the market and framework structures to market a COTS licensing basis as a positive advantage to the buyer – they're offering a tested, standard product at standard prices, without the design and build risks (and usual time lag) of bespoke product implementation periods;
- Ultimately, SMEs now have much broader access to public projects, and the strong support of government policy.
The proof of the new procurement pudding will be in the eating.
If SMEs take the time to position themselves for the right
opportunities, and learn how to work with, guide and generally make
life easier for their government clients, then the new legislation
gives them broad scope for success.
One tip: with the current drive for public sector to harness AI
whenever possible, just sit back and watch how the new procurement
flexibility stretches, and the Find a Tender database swells with
more and more notices, to track the gyrations of government buyers
wondering how to use AI in practice, and suppliers wondering how to
back-to-back the requirements of government contracts with the
incredibly limited contractual commitments given to the suppliers
by third party AIAAS providers.
But that'll be a story for another time...
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