Earlier this year, we wrote a series of articles setting out our thoughts on the UK Government's bold plans for the reform of public procurement regulation set out in its Green Paper "Transforming Public Procurement". Stephenson Harwood was one of the 600 respondents to the Green Paper, dealing in detail with over 40 questions posed across the full range of policy and procedural issues. Since we submitted our response in March, we understand that behind the scenes work to reform the public procurement regulations has continued to move at pace.
In its latest update on progress, the Cabinet Office's Transformation Programme has given a brief insight into its direction of travel, as well as an update on the timetable for change:
A tool for delivering Government priorities
As we set out in a previous article, one of the most notable features of the Green Paper was the extent to which it signalled the Government's view of the public procurement regime as a tool for delivering Government priorities. It proposed that a number of key principles such as "the public good" should be enshrined in the new legislation. Public procurement should be leveraged to support "strategic national priorities" for the public good, to be set out in a National Procurement Policy Statement. Commercial teams would be required to have regard to these when conducting their procurements so that public procurement is leveraged to achieve social and environmental value beyond the primary benefit of the specific goods, services and capital works being procured.
It is clear from the Cabinet Office's latest update that they are still very much continuing on this path. It states "we now have the opportunity to leverage public procurement spend to deliver national and local Government priorities to a greater extent than has previously been possible. Government’s policy priorities include driving economic growth and recovery from COVID-19, levelling up and tackling climate change. We will do this by better enabling the award of contracts based on their full value to society not just on lowest price or from the sole perspective of the organisation letting the contract." It will be very interesting to see the full detail of the proposed legislation on this point, to understand both the impact for how procurements are planned and scoped, and how tenders are evaluated.
Cutting the "red tape"
It was clear from the Green Paper that the Government viewed the reform programme as a way of freeing Britain from red tape in a post Brexit world. From the update, it sounds as this sentiment is still very much to the fore. It states "we will make it easier for firms to bid for government work, and get on with providing excellent value goods and services. We will introduce one of the most transparent procurement regimes in the world, joining up procurement systems for the first time so that suppliers only have to tell government once about their core credentials and ensuring government opportunities are more visible. We will reduce the overall burden and complexity of the regime, cutting drastically the 350+ regulations into a single, uniform framework covering all sectors with only a very limited number of necessary sector-specific exemptions."
It seems from this then that the Government plans to press ahead with its proposal to consolidate into one rule book the Public Contracts Regulations 2015, Utilities Contracts Regulations 2016, Concession Contracts Regulations 2016 and possibly also the Defence and Security Public Contracts Regulations 2011. It also looks like some or all of the "tell us once" elements of the proposals will make it through to the new legislation, such as the register of suppliers to hold evidence similar to that provided in the current Standard Selection Questionnaire.
A new competitive flexible procedure
Perhaps the biggest change in the Green Paper was the replacement of the current procurement procedures available to purchasers with three new routes – a competitive flexible procedure, an open procedure and a limited tendering procedure to be used in specific circumstances such as crisis or extreme emergency. According to the update, the reforms will press ahead with the new competitive flexible procedure which it sees as enabling public sector procurers "to utilise their commercial skills to the full, to deliver the best possible outcome for the taxpayer". The update states that this will permit more dialogue with suppliers to ensure they gain a better understanding of requirements and "the creation of tailored selection and evaluation processes to suit need will make it easier to procure innovative solutions - covering the whole process from research and development through to buying the finished product, permitting the evaluation of product demos for example".
Under the Green Paper, the restricted procedure would no longer be available to purchasers. We questioned whether this would hinder the achievement of speedier and more cost effective procurements where specifications are fairly standardised and market commercial terms pretty settled. A competitive flexible procedure will be great for more complex contracts, but for more straightforward purchases, if the only alternative is an open procedure, where there is a wide market, the purchase may be faced with a significant number of offers to evaluate.
Dealing with poor performance
The update also notes that under the new regulations, it will also be easier to exclude from public procurement processes firms with a poor performance record. The Green Paper envisages extending the grounds under which a candidate can be excluded for poor performance under the discretionary exclusion ground so that it applies even though the poor performance had not led to contract termination, damages or comparable sanctions. No further clues are given in the update itself so we will have to wait to see the draft legislation.
A new approach to legal challenges
We gave our detailed thoughts earlier this year on the Green Paper's plans for reform to the way in which public procurement decisions are challenged, and the remedies available. Unfortunately, the Cabinet Office's update doesn't give us any clues as to the likely direction of travel in this area, simply stating that "reform of the Remedies regime will reduce the burden and risk of legal uncertainty giving procurers more confidence in their decisions." Watch this space!
The Cabinet Office has now worked through the very detailed feedback received from well over 600 respondents to the Green Paper and we understand from the recent update that proposed measures were broadly welcomed. There was support for the key reforms including the proposed new principles for public procurement and the consolidation of the existing regulations and procedures. Contracting authorities were supportive of a more flexible approach and recognised the benefits to be gained. The update notes that there are several areas where the Government's thinking has moved on as a result of feedback received and there are plans to publish, in the coming weeks, a summary of responses received and details of what the Government intends to do, in light of the consultation exercise.
The Cabinet Office's current focus is now on preparing legislation for Parliament - detailed work to turn the policy intentions into a Bill. The Ministry of Defence is apparently leading on the aspects of the reforms relevant to defence and security procurement, and Cabinet Office is working closely with health colleagues on the procurement aspects of the Health and Social Care Bill, and with local government on those elements of reform which particularly impact that sector. The Cabinet Office is also working with officials in the Devolved Administrations – we understand that Wales has now confirmed they will join the Bill, Northern Ireland are closely involved and the Cabinet Office is working with the Scottish Government to support alignment with their regime.
Timetable for change
While acknowledging that those involved in purchasing and bidding alike are keen to know when the rules will change, the Cabinet Office won't be drawn on a firm date of when this will be. It notes that the Procurement Bill will be introduced when Parliamentary time allows and it will take several months to complete its passage through Parliament. Following that, there will need to be secondary legislation (regulations) made. In any event, the Cabinet Office commits to giving plenty of notice, in order to allow people time to prepare, and notes that the earliest the regime will come into force is 2023.
So it seems that, until 2023 at least, we will be continuing to work under the current regime, as amended by the post Brexit legislation. For further details please see our article here.