Contributors
On 13 May 2022 the Government published a draft procurement bill for its first reading in the House of Lords (Bill). This article sets out the crucial changes to the information that was set out in the Government response to the consultation of the procurement Green Paper (Transforming Public Procurement) (Government Response). This article can be read in conjunction with our recent articles on the Government Green Paper response on public procurement in respect of overall design and specific procedures. That series of articles has now been superseded by this series given that they were speculative whilst awaiting publication of the Bill.
The Cabinet Office maintains that they are aiming for the Bill to come into force in 2023 however, this may be subject to some delays depending on parliamentary progress.
The Bill is currently at second reading stage in the House of Lords where a substantial number of amendments has been introduced by the Government.
We will be releasing a series of articles analysing the crucial differences in the new draft bill to those which were outlined within the Government Response.
Overall Design
Principles and objectives (Part 2)
One of the clear initial differences between the Government Response and the Bill is that whilst Part 2 is titled as "Principles and Objectives", this has been set out as simply four procurement objectives which are as follows:
- Delivering value for money
- Maximising public benefit
- Sharing information for the purpose of allowing suppliers and others to understand the authority's procurement policies and decisions (or transparency as referred to in the Government Response)
- Acting, and being seen to act, with integrity.
In addition to this there must be equal treatment between suppliers and where a difference between suppliers justifies different treatment, the contracting authority must take all reasonable steps to ensure no unfair advantage or disadvantage (aligning with the principles of fair and equal treatment as specified in the Government Response).
It is notable however, that this section of the Bill does not set out the principle of non-discrimination. This principle was intended to remain to ensure that suppliers from trading partner countries are treated "no less favourably" than domestic suppliers. This now appears in Part 7 of the Bill.
Procurement oversight (Part 10)
The Cabinet Office appears to have moved away from enshrining the Procurement Review Unit (PRU) within the Bill itself. It may well be that the specifics of this body are implemented by way of a Statutory Instrument (and this seems to be the position taken in recent Cabinet Office webinars on the Bill). The PRU as set out in the Government Response was intended to sit within the Cabinet Office and was to investigate cases of poor policy and practice and make informal recommendations. The Bill now provides that an "appropriate authority may investigate a relevant contracting authority's compliance". Despite the fact that the Bill does not name an authority to exercise this power of review, the actual content of the drafting is largely the same as the Government Response. For example, contracting authorities must comply with a notice to provide documents or other assistance in connection with an investigation within 30 days (although the Bill also specifies that the "appropriate authority" may agree to a longer timeframe).
However, in addition to the provisions set out within the Government Response, where a recommendation so specifies, the relevant contracting authority must submit a progress report at the intervals expressed within the recommendation to the appropriate authority.
Single uniform framework
Unsurprisingly, the proposal to consolidate the current regulations into a single framework streamlining the Public Contracts Regulations 2015, Utilities Contracts Regulations 2016, Concession Contracts Regulations 2016 and Defence and Security Public Contracts Regulations 2011 has been included within the Bill.
There is further detail setting out the key specifics on utility activities, defence and security contracts and concession contracts.
The benefit of streamlining these regulations may not be as great as initially expected as it is now rather challenging to identify where exactly the additional provisions relating to Utilities and Defence and Security contracts appear within the Bill: they are certainly not all in one place.
The Bill appears to have upheld some of the additional flexibilities for utilities and the defence sector as set out in the Government Response. For example 'qualification systems' as set out in Regulation 77 of the UCR appear to now be called "utilities dynamic markets". This form of dynamic market will contain members who are suppliers to utilities only.
In addition, in accordance with the Government Response, the Bill has upheld the proposal to exclude specific contracts awarded to utilities for the purposes of resale and lease. Contracts between a utility and relevant joint venture will also be exempt where the joint venture was formed for the purpose of carrying out a utility activity for at least three years and the parties are committed by way of a written agreement to continue to be parties to the joint venture for three years.
The proposed additional flexibility of retaining the omission of a financial cap on contract modifications has also been upheld.
As mentioned in our first article in the Government Response series, there is some doubt as to the ease by which the exemptions are set out for utilities. It is now something of a challenge to identify the additional flexibilities for utilities since these provisions are placed throughout the main body of the Bill and within the schedules.
Light touch contracts have been retained, as promised in the Government Response. In order to classify a contract as a light touch contract, contracting authorities must consider whether non-domestic suppliers are likely to want to participate in the competition for the supply of services, the services must be supplied for the benefit of individuals (for example, health or social care services) or the community generally, and the proximity between supplier and the recipient is necessary for the effective and sufficient supply of services.
Suppliers and contracting authorities should also take note that concession contracts, defence and security contracts, light touch contracts and utilities are also covered by the term "special regime contract".
Ensuring open and transparent contracting
Since transparency is one of the newly embedded procurement objectives, there are several new requirements for the publishing of notices in addition the existing (albeit renamed) notices. Some key points to note are the following:
- Section 20(3) specifies that contracting authorities must provide any associated tender documents with a tender notice
- Contracting authorities must also publish a notice before establishing a dynamic market, modifying a dynamic market and as soon as reasonably practicable after the cessation of a dynamic market (although the latter does not apply to private utilities)
- There will be a requirement for contracting authorities to publish a contract details notice where the contract is light touch (a contract details notice must set out that the contracting authority has entered into a contract and any other details specific at section 86. This differs from a contract award notice which specifies that the contracting authority intends to enter a contract)
- Where a contracting authority enters into a contract with an estimated value of over £2 million, the authority must publish a copy of the contract within 90 days
- In the event that a supplier decides not to award a contract after they have published a tender or transparency notice, the authority must give notice to that effect (private utilities are exempt from this requirement)
- Unless the contracting authority is a private utility, a payments compliance notice must, within 30 days of each "reporting period" ending, be published if the contracting authority has made a payment under a public contract, or a sum owed by the authority under a public contract became payable (a "reporting period" being each period of six months ending on 31 March or 30 September)
- Prior to the modification of a contract, the contracting authority must publish a contract change notice unless the estimated value increase or decrease is less than 10% for goods or services and 15% for works, or the modification increases or decreases the term by 10% or less, or the contract is a light touch contract
- Unless the contracting authority is a private utility, a contract termination notice must be published 30 days prior to termination
- Unless the contracting authority is a private utility, a pipeline notice must be published where the authority foresees that they will pay more than £100 million for relevant contracts in the coming financial year.
It should be noted that section 110(3) of the Bill suggests that the Cabinet Office is still considering the transparency objective as well as the publication requirements for notices. It seems likely that secondary legislation will deal with the specifics of publishing notices.
Next steps
In our next article we will summarise the alterations to the new procurement procedures, light touch contracts, social value, dynamic markets and award under frameworks. Please keep an eye on our website and social media channels for our next instalment.
If our expert procurement lawyers can be of assistance in the meantime, please do not hesitate to get in touch.
