Following the publication of the Green Paper on Transforming Public Procurement in December 2020, the Cabinet Office recently released the Government's response to its consultation with stakeholders (Government Response). The Government Response outlines various amendments to the initial proposals for new legislation as well as further detail on what we can expect to be included within the new regime.

Importantly, the Government Response sets out that the Cabinet Office intends to give six months' notice before any new procurement regime goes "live" and that the new regime is unlikely to come into force until 2023 at the earliest.

We will be releasing a series of four articles breaking down the anticipated changes set out in the Government response, as follows:

Article

Content

1. Overall Design

This first article will explain the proposed legal principles of public procurement, the Procurement Review Unit, the consolidation of the regulatory framework and open and transparent contracting.

2. Specific procedures

Chapters 3 and 5 of the government Response will be covered. This will include procurement procedures and the light touch regime, along with proposals on the best commercial purchasing tools (Dynamic Purchasing Systems and frameworks (open and closed)).

3. Evaluation of bids

Chapter 4 of the Government Response will be covered. This chapter covers contract award, selection of preferred bidders, exclusion grounds and central debarment, the change from MEAT to MAT and the central digital platform.

4. Challenges

Chapters 7 and 8 of the Government Response will be covered. These chapters deal with the proposals on capping damages and challenges generally, pre-contractual remedies, variations and extensions to contracts during their term, extension.

Procurement that better meets the UK's needs (Chapter 1)

Proposed legal principles

The Green Paper proposed to enshrine in law the following principles: the public good, value for money, transparency, integrity, fair treatment of suppliers and non-discrimination. On the whole these principles were largely uncontroversial with support from a clear majority of respondents. However, there were some concerns regarding the removal of proportionality (including in WBD's own response). It is now intended that proportionality will be introduced where required in the specific regulations.

The Government Response also sets out that the Green Paper principles will now be split into "principles" and statutory "objectives" in order to clarify the obligations on contracting authorities. The principles will be non-discrimination and fair treatment of suppliers (which will cover both equal treatment of suppliers and procedural fairness). The statutory objectives will be public good (broadened to include social value benefits), value for money and integrity. An additional objective of promoting the importance of open and fair competition will also be introduced. Transparency is proposed to be dealt with by way of procedural obligations at each stage of the procurement process. We have included more detail on this below (see commentary on Chapter 6).

The proposed legal regime will require the timescales of a procurement procedure to be proportionate to the cost, nature and complexity of the requirement, and that the conditions of participation in a procurement are a proportionate means of checking suppliers have the necessary capability to avoid unfair treatment of smaller suppliers.

New oversight unit

The Government Response confirms that the intention is still to implement a new central oversight body, to be known as the Procurement Review Unit (PRU). This will be formed of a small team of civil servants and will be able to deliver the same service as the current Public Procurement Review Service (PPRS) as well as a new broader role. The PRU will predominantly act on referrals from government departments or data from the new digital platform. The linchpin of the PRU will be to address systematic or institutional breaches of the procurement regulations. The PRU will be able to investigate the procurement functions of contracting authorities under limited legislative powers and will be able to make recommendations for the purposes of improving compliance under the new regime. Those recommendations will not target specific procurement decisions but will be focused on actions to ensure future compliance, for example, revisions to local operating procedures or completing additional training. The focus on future compliance rather than looking behind specific decisions is likely to be welcomed by contracting authorities. However, the success of ensuring future compliance (for example by way of undertaking additional training), is likely to rest on the availability of support, training and guidance issued by the Cabinet Office alongside the new regime. As yet, there has been no public information about the budget or any detailed plan set out for this support.

In respect of legislative powers, the Government Response proposes a repeal of the Minister for the Cabinet Office's powers to investigate a contracting authority of relevant functions relating to procurement under the Small Business, Enterprise and Employment Act 2015. This will be replaced by providing the Minister for the Cabinet Office with a general power to investigate procurement functions and the introduction of general duties on contracting authorities to cooperate with investigations and to do so within specified timescales.

A simpler regulatory framework (Chapter 2)

The Green Paper proposed that all of the current procurement regulations (i.e. the Public Contracts Regulations 2015 (PCR), Utilities Contracts Regulations 2016 (UCR), Concession Contracts Regulations 2016 (CCR) and Defence and Security Public Contracts Regulations 2011(DSPCR)) are brought together into a single, uniform framework. The general consensus is that this will simplify procurement processes for both contracting authorities and suppliers alike. However, as WBD and other respondents raised, utilities rely heavily on qualification systems and the additional flexibilities within the current UCR.

The Government has taken the concerns raised into consideration and has decided to uphold the objective of a single, uniform framework but with the inclusion of some specific flexibilities as per the current UCR and DSCPR. In particular, in relation to qualifications systems and exemptions on national security grounds. The Government Response also sets out an intention to exclude specific contracts awarded to utilities (for example, those awarded for the purpose of resale or lease to third parties and those awarded to an affiliated undertaking/joint venture). It is also proposed that the ability to make contract modifications for additional goods, works or services by the original contractor without any financial cap shall be retained. The proposed retention of these various flexibilities is likely to be welcomed by affected contracting authorities and utilities but how well this can be set out in one uniform framework so as to avoid confusion and provide simplicity remains to be seen.

The Green Paper had also proposed the removal of the Light Touch Regime (LTR). Many respondents raised concerns with this, in particular in relation to certain contracts (such as care provision or special education). The removal of the LTR coupled with the now lower contract value thresholds (as from 1 January 2022), would bring more contracts within the scope of the new regime. This would therefore remove the flexibility offered by the current LTR. The Government has taken these concerns on board and has confirmed in the Government Response that the Light Touch Regime will be retained, though there will be some amendments, such as in relation to transparency requirements.

Ensuring open and transparent contracting (Chapter 6)

The Green Paper proposed that transparency should be embedded throughout the commercial lifecycle of a procurement including planning, award and execution. It initially set out that all contracting authorities would be required to implement the Open Contracting Data Standard, as well as the creation of a single digital platform for supplier registration.

The Open Contracting Data Standard will be introduced, along with the central digital platform for commercial data and this is intended to be free for all users. The rationale behind this was to allow for analysis and monitoring by the government and other stakeholders.

Publication of documents

As part of the consultation, concerns were raised about the burden on contracting authorities in preparing contract documents for publication. The Government Response therefore sets out that the publication requirement in respect of contract documents will only apply to contracts with a value of £2 million and above, though this threshold may be lowered in future. This change should reassure contracting authorities who had raised concerns about the proportionality of preparing such documents for low value procurements.

Concerns were also raised relating to the proposed publication of tenders and evaluation documents, particularly the protection of commercially sensitive and personal information. The Government Response now sets out that the requirement to disclose tenders will no longer be included in the new regime. The proposal is now that only certain redacted evaluation documents (in respect of the winning bid) and the unsuccessful bidder's own documents must be sent privately to the unsuccessful bidder. This should allow "losing bidders to compare the relative advantages of the winning bid against their own". The current requirement is for contracting authorities to produce and provide the comparative element of the feedback in respect of the relative advantages of the winning bid. On the one hand, the removal of this is likely to ease the burden on contracting authorities and is therefore likely to be a welcome change. On the other hand it is anticipated that guidance will be required to ensure consistency of approach.

Notices

The Government Response also sets out a new set of notices for publication at various stages of procurement processes in order to enable greater transparency. Of note is the proposal to introduce a new notice, the Contact Implementation Notice. This will be the mechanism by which contracting authorities update a Register of Contract Performance with the awarded contract's KPIs. The value threshold for this notice is yet to be confirmed.

Next up

In our next article we will examine and summarise the proposed procurement procedures, the LTR, social value, Dynamic Purchasing Systems and proposals relating to open and closed frameworks. Please keep an eye on our website and social media channels for our next instalment.