New legislation governing public sector procurement is going to affect their supply chain. Organisations need to prepare.
Every year, the UK public sector invests £300 billion to procure goods and services – a figure that amounts to £1 in every £3 of public money spent. Now the legislation that governs this spending is about to change, with huge implications for public sector organisations and private sector businesses alike.
During a session on the new regulations at the Chartered Institute of Procurement and Supply (CIPS) 2023 annual conference, one of the panellists told the audience that the legislation is a major event in their careers. It won’t just affect the public sector, they continued, but the private sector and taxpayers, who will be able to see what the public organisations are spending public money on. It will also affect the technology used in procurement, they added.
Here we’ll explore the likely effects of The Procurement Bill, when it will come into force and what businesses wanting to secure public contracts can do to prepare. First, why is the law changing?
The Procurement Bill, currently going through the final stages of the parliamentary process, is part of a raft of statutory changes introduced in the wake of the UK’s departure from the European Union (EU).
Current legislation was created by the EU, explained another panellist at the CIPS conference session, and civil servants had been working on the new regulations since Brexit. One of the goals is to simplify the legal landscape. “The UK’s public procurement legislation currently consists of more than 350 regulations spread across different areas relating to public contracts, defence contracts, utilities contracts and concessions contracts,” reports CIPS.
“Under the new Procurement Bill these will be consolidated into a single regime.” But the bill’s measures do more than amalgamate current regulations. As one of the CIPS panellists noted, the need to update the laws offered a huge opportunity for more widespread changes to public procurement. It was the perfect chance to introduce a transformational programme of reform.
In a summary of the bill’s provisions, the government clearly states what it believes these reforms will achieve. “They will shake up our outdated procurement system, so that every pound goes further for our communities and public services,” reads the introduction.
“They will place value for money, public benefit, transparency and integrity at the heart of our procurement system; they will modernise and unify our systems and processes; and they will get tough on the poor performers and fraudsters.”
Simpler, especially for SMEs
What difference will The Procurement Bill make to organisations? “On balance the proposals are expected to be a net positive for businesses,” states the government’s impact assessment – but how?
For a start, the bill aims to make the tendering process simpler and easier, said a CIPS panellist, by trying to address some of the biggest barriers that procurement professionals and suppliers face when working with existing processes.
Companies will, for example, only need to enter their core credentials once using a new digital platform rather than each time they bid for opportunity. Contracting authorities such as local councils, government departments and other public bodies will also be obliged to publish procurement pipelines, making it easier for businesses to identify potential opportunities and plan for them.
In its own outline of how business will benefit from the new legislation, the government emphasises the positive impact on Small and Medium Enterprises (SMEs) and Voluntary, Community and Social Enterprises (VCSEs), “both of which have historically faced barriers in working with central government and the wider public sector.”
Are the requirements they’re asking for proportionate to the contract? Contracting authorities will, for instance, have a duty to reflect upon barriers facing SMEs in terms of procurement and ways to tackle these. “This applies throughout the procurement lifecycle,” says the Benefits for Prospective Suppliers to the Public Sector guidance, meaning they will have to consider:
• Whether the requirements they are asking for are proportionate to the contract
• Whether the bidding times are realistic, including for businesses that do not have dedicated bidding teams
• Whether there is a diverse representation of businesses in pre-market engagement to make sure a contracting authority is reaching a wide range of suppliers
The legislation also aims to increase transparency within public procurement. The Cabinet Office have, for instance, issued a policy paper discussing “our transparency agenda” and frames the bill as part of this, stating “While there is already a high level of transparency of UK public procurement, our existing rules and systems have room for improvement.”
The purpose of greater transparency? To facilitate closer scrutiny of how public money is being spent. However, transparency-related measures such as a duty to follow objective criteria in decision-making bring potential benefits for businesses in terms of greater competitiveness, access to insights and opportunities for learning – if they wish to analyse the information that will be shared.
As the impact analysis of the bill puts it, “Extended transparency requirements and a single digital platform on which procurement data will be published will mean that decisions and processes can be monitored by anybody that wishes to do so.”
Emphasis on ESG
The government claims that existing provisions within the bill mean suppliers who have “previously underperformed” can be disqualified from future contracts, as can those found guilty of tax avoidance. “Misconduct in relation to tax” is one of the mandatory grounds for exclusion included in the legislation, while the discretionary grounds for exclusion include “breach of contract and poor performance” and “acting improperly.” The latter incorporates suppliers who put themselves “at an unfair advantage in relation to the award of a public contract.”
These examples highlight the place of ESG (environmental, social and corporate governance) provisions within The Procurement Bill. Grounds for exclusion from public contracts cover other aspects of corporate governance too, with insolvency, bankruptcy, potential competition infringement, professional misconduct and more explicitly mentioned. Suppliers convicted of labour market, slavery and human trafficking offences are to be excluded from public contracts.
Suppliers who aren’t already taking the environmental and social aspects of their ESG responsibilities seriously will certainly need to do so once the legislation comes into effect. The bill mandates that suppliers convicted of labour market, slavery and human trafficking offences are to be excluded from public contracts. Furthermore, contracting authorities will have discretion to exclude companies involved in misconduct in these areas as well. The same applies to environmental offences and environmental misconduct, whether in the UK or elsewhere.
Timeline for change
When can we expect the new regulations to come into force?
The Transforming Public Procurement page reassures that “We will give a minimum of 6 months’ notice before ‘go-live’; this will not be until early 2024 at the earliest.” CIPS, however, has recently forecast that the legislation is “unlikely to be implemented until Autumn 2024.”
In the meantime, you can follow the bill’s passage on its dedicated parliamentary webpage.
Preparing for reforms
While much of the current guidance about how to prepare for the changes, including the learning and development offered by the government, targets contracting authorities, some of it applies to industry too.
“Prepare for the digital changes and familiarise yourself with the bill’s ambitions on transparency,” says CIPS to public bodies who will be issuing tenders. Procurement professionals could do the same. Stay informed by visiting the dedicated CIPS hub.
At a corporate level, create a procurement reform team. “Identify who in the organisation are going to be your ‘go-to-people’ to monitor developments, collate information as it is released, and manage effective implementation of the change,” advises CIPS in other recommendations to contracting authorities. “Give them the responsibility to be the central point of coordination, planning and distribution of information.”
Finally, now is the time to be curious. This is what the third panellist at the CIPS conference session on The Procurement Bill said to the audience. If you’re in conversation with the procurement team at a contracting authority already, ask questions and start having conversations about the forthcoming changes, they counselled. Don’t wait for the legislation to be rolled out but start being proactive now.
As a team, get used to asking questions, they continued. Nurture an environment where it’s safe to ask questions and nothing is considered a stupid comment. Prepare yourself and your team for the new provisions before they come into force.
To get the latest news on The Procurement Bill and its introduction into law, subscribe to updates via the official gov.uk policy page.