Will new public procurement rules offer the best commercial results?

The government has issued a green paper on reforming procurement rules. Helen Randall and Rebecca Rees examine the proposals and argue they may not go far enough.

The Cabinet Office’s consultation paper for reforming public procurement law for post-Brexit Britain—including procurement for local government—outlines the most radical changes in a generation and builds on the UK’s accession to the World Trade Organisation’s Government Procurement Agreement (GPA).

The government proposes to repeal the Public Contracts Regulations, the separate Utilities, Concession and the Defence regulations and produce a single set of regulations covering all contracts. Healthcare service procurement rules will be developed separately in consultation with the Department of Health and Social Care.

For anyone with a strong professional interest in procurement, its worth diving in to what the new proposals contain. The new legislation will be underpinned by six core principles: public good, value for money (VfM), transparency, integrity, fair treatment of suppliers and non-discrimination.

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All contracting authorities must have regard to a new national procurement policy statement (likely to cover creating new businesses, jobs and skills); improving supplier diversity and innovation, tackling climate change and reducing waste. The government promises further guidance on supporting innovation and developing social value in procurement.

Procedures

The green paper proposes new procurement procedures:

• Advertisement of opportunities in the new Find a Tender service, procurement procedures run in accordance with the proposed principles, and observe minimum periods for receiving expressions of interest and tenders;
• Open procedure retained for simple “off the shelf” procurements.
• The competitive dialogue, innovation partnership and competitive negotiated procedure replaced by a new “competitive flexible procedure”;
• The current negotiated procedure without prior publication of a contract notice replaced by the “limited tendering procedure to be used in cases of ‘crisis’” or extreme urgency due to unforeseeable events;
• When using the limited tendering procedure, mandating publication of a notice before the authority enters into the directly awarded contract and observing a ten day standstill period (unless the procedure has been used for reasons of crisis or extreme urgency);

There has also been a simplification of the selection stage by allowing bidders to submit basic information via a central online database that contracting authorities may access.

The proposals come with new mandatory exclusion grounds for criminal convictions related to fraud: the non-disclosure of beneficial ownership or where a beneficial owner is guilty of an excludable offence; and new discretionary exclusion grounds for tax evasion; and where a deferred prosecution agreement has been entered into. All of this comes with a centrally managed “debarment list” of banned suppliers.

It’s also worth noting that bidders may be excluded for significant poor performance on previous contracts even where this did not lead to termination, damages or other sanctions. Government is considering a requirement for contracting authorities to publish key performance indicators for individual contracts on a central database. It will be interesting to see if these ideas can be resourced.

Tenders and systems

Tender evaluation award criteria must still be linked to the subject matter of the contract, but with specific exceptions in statutory guidance. But, the most advantageous tender (MAT), replaces “most economically advantageous tender” (MEAT). MAT is consistent with the GPA and the deletion of “economically” still allows evaluation of price. Wider benefit and impact on other contracting authorities may be taken into account. Further guidance is promised on this.

Dynamic Purchasing Systems (DPS) and framework agreements are used frequently in the current market. DPS+ will replace the DPS with no maximum duration, for all types of procurements, not just simple purchases. DPS+ will not be time limited. Contracts under a DPS+ will be awarded under the competitive flexible procedure. As with current DPS rules, a supplier could apply at any time, and all suppliers meeting the selection criteria will be admitted to the DPS+.

When it comes framework agreements, the rules have been relaxed, with two alternatives:

• A framework of up to four years’ closed to new suppliers, and;
• An open framework of up to eight years with an initial three-year closed period, after which new suppliers can be added to the framework at predetermined points over its remaining duration. If the numbers under an open framework are limited, then any subsequent additions will need to be made using a competitive process, with existing framework providers able to submit an updated bid. This avoids existing framework providers “blocking” access to new suppliers.

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Transparency

Contracting authorities must publish “basic disclosure information” before the contract can be awarded, including the identity of the bidders, evaluation reports and the basis of the award decision.

As a consequence of “embedding” transparency through the procurement process, contracting authorities will no longer have to provide individual feedback letters to bidders. Instead bidders are encouraged to obtain feedback from the information disclosed.

According to an open contracting data standard (OCDS) authorities must publish Information about procurement pipelines, market engagement notices, contract awards and notifications of significant contract variations to their contracts. Registers of complaints about procurements and legal challenges would also be published

All of this comes with an expedited trial process for procurement challenges, based on written pleadings only, plus a tribunal for low value procurement challenges. There will also be greater emphasis on pre-contractual remedies.

Ambitious

There is much more to asses. But the Green Paper offers change that does not go quite far enough.

The government says the reforms will deliver the best commercial outcomes with the least burden on businesses and the public sector. The devil will be in the detail, of course, but this objective will only be achieved if the more ambitious proposals (a central online platform for tender information, a central debarment register and expedited remedies processes) are delivered.

Otherwise, there will be limited opportunities available for authorities to offset the resource burdens of the increased transparency requirements and the training that will be required.

Helen Randall and Rebecca Rees are partners at law firm Trowers & Hamlins.

Photo by Marvin Meyer on Unsplash