No sooner had the Subsidy Control Act 2022 received Royal Assent than the UK Government tabled the next major post-Brexit shake-up of the rules on how public bodies spend money: the Procurement Bill. This Bill will have a significant impact on how construction firms go about bidding for public works contracts, especially in England, Wales and Northern Ireland.

Background

In the Queen’s Speech in May 2022 it was announced that the UK public procurement regime would be reformed following Brexit.  The procurement of goods, services and works by public bodies and some utilities is currently governed by rules originally set out in EU Directives. The Bill will revoke the Regulations implementing those EU rules and create a new public procurement regime, aiming to build on greater flexibility outside the EU to make procurement quicker, simpler and more transparent.

The Bill extends across the UK but expressly excludes from its scope “devolved Scottish authorities”, so will not change the way that the majority of public bodies in Scotland do procurement. They will remain subject to, primarily, the Public Contracts (Scotland) Regulations 2015 and the equivalent Utilities and Concessions Regulations, which are unlikely to be subject to any similarly sweeping reform.

Key components of the Bill

The Bill embeds a number of key principles (non-discrimination and equal treatment) and objectives (value for money, maximising public benefit, transparency and integrity) in public procurement decisions. Some duties under the old rules have been replaced with less binding requirements to ‘have regard’ to particular considerations such as integrity.

We have written here about the key changes that are promised, but in particular the Bill:

• requires new evaluation criteria that will oblige authorities to “have regard to” delivering value for money and maximising the public benefit from the contract, which is likely to mean relatively more focus on ‘value add’ considerations and Environmental, Social and Governance requirements and less on purely economic factors;
• sets out new, more flexible procedures for awarding public contracts that give authorities more room to design processes how they wish (subject to other specific rules), increasing the flexibility for authorities and contractors to negotiate and for parameters to evolve during a procurement process;
• requires all authorities to use a single digital platform for supplier registration, so suppliers only have to submit their credentials once to be considered for public sector procurements (though contractors will have to be sure they keep their registration details up to date);
• aims to make it easier for authorities to take account of poor supplier performance, with clearer and broader grounds for excluding suppliers who pose unacceptable performance risks, as well as setting up a central ‘debarment’ list, so poor performance on previous public contracts (whether with the same authority or a different one, and whether or not the poor performance resulted in termination) will be more likely to lead to exclusion from future opportunities;
• limits (non-defence) frameworks to four years, subject to the new concept of “open frameworks”, where one framework can be replaced by another one on “substantially the same terms” and with the same suppliers re-appointed, up to a maximum total duration of eight years from the award of the first framework;
• replaces the standstill letter currently issued to bidders with an “assessment summary” followed by a contract award notice, with standstill then running for eight working days from the date of the award notice;
• provides that automatic suspension will only be triggered where proceedings commence before the end of the standstill period, not any time up until the award of the contract – this will apparently mean it will no longer be possible for challengers and authorities to agree a standstill extension while they clarify possible concerns– this will almost inevitably result in a lot more litigation by contractors who have no other way to protect their position.

Otherwise many key rules, including the grounds for a direct award, the circumstances in which a contract can be modified, and substantive remedies, remain very similar to the existing procurement regulations.

Looking forward

The UK Government has announced that there will be a minimum of six months’ notice before the new regime ‘goes live’, and that this will not be until 2023. In the meantime the existing legislation remains in force, and will also continue to apply to procurements started under the old rules even after the Bill takes effect.

One lesson from other post-Brexit changes is that sticking close to the “old” mechanisms might be attractive to some authorities as a way to minimise the risk of overstepping what the new more flexible regime allows, at least until other authorities have taken the plunge and courts have started issuing judgments on whether they have acted correctly. Guidance can be expected to encourage authorities to use the changes (such as the new Most Advantageous Tender test and exclusions based on past performance) to give greater weight to ESG criteria.

The Bill represents more of an evolution than a revolution, and the new regime is likely (both for contracting authorities and bidders) to ‘feel’ very similar to the current rules. That said, this is still the biggest change to public procurement rules since 2006, and in that change lies the opportunity for buyers and contractors to do things differently.