The landscape of public procurement in the United Kingdom is primed for a significant shift in 2024 following the introduction of the Procurement Act 2023, which received Royal Assent earlier in 2023. The act, which comes into force in October 2024 and replaces the Public Contracts Regulations 2015 and Concessions Contracts Regulations 2016, is set to revolutionize how the UK government engages with suppliers, with a view toward ensuring a more transparent, competitive, and inclusive procurement process.
For current and prospective suppliers of goods, services, or works to public and utility sectors in the UK, the act marks a pivotal moment, offering both opportunities—especially for startups, scale-ups, and small businesses—and challenges in equal measure.
Transparency and Fairness
One of the key pillars of the act is its emphasis on transparency and fairness in the procurement process. The legislation mandates a more open and accessible bidding process, ensuring that all qualified suppliers, regardless of size or status, have a fair chance to identify and compete for contracts. For suppliers, this translates into a more level playing field, particularly for smaller businesses and those new to the market.
Compliance and Standards
The act places a strong emphasis on compliance with industry standards and regulations, which is consistent with the UK government’s approach to procurement in recent years. Suppliers will need to align with specific criteria, certifications, and quality benchmarks to participate in bidding processes. The intention of this pillar is to foster a culture of excellence and accountability within the applicable industry; however, it must be acknowledged that this could cause challenges for some suppliers in meeting the more stringent requirements.
Excluded Suppliers
The act designates and addresses the treatment of excluded and excludable suppliers by contracting authorities, maintaining a list of grounds for mandatory exclusions. While largely consistent with the current regime, the list introduces new offenses such as theft, corporate manslaughter, and competition law infringement. Notably, discretionary exclusion grounds are expanded to consider prior poor performance, covering cases where the supplier has not improved despite being given the opportunity to do so.
A significant change is the ability to exclude suppliers based on the status of their associated suppliers and subcontractors, and not solely on their own performance. The act also introduces a central debarment list, allowing a Minister of the Crown to enter a name of an excluded or excludable supplier, leading to debarment from applying for public sector contracts for a specific period. Suppliers on the list are only able to request removal if there is a material change in circumstances.
Opportunities for Innovation and Collaboration
Implementing cultural, incentive, and procedural changes within the public sector is expected to create numerous opportunities for innovative suppliers. Evidence suggests that procurement of innovation by the public sector through programs such as the Small Business Research Initiative has already led to significant benefits for the participating companies, with annual revenue growth rates exceeding 30%.
The act aims to streamline and enhance the attractiveness of doing business with the public sector through an updated process, with clearer rules that facilitate a better understanding of opportunities and processes for suppliers entering public procurement markets.
Additionally, the act introduces a duty on contracting authorities to consider and address specific barriers facing small- and medium-sized enterprises (SMEs), fostering inclusivity and support for a diverse client base. This also includes the option to divide larger contracts between multiple suppliers and collaborate to develop innovative solutions.
Procurers are mandated to consider national strategic priorities, with large contracting authorities required to publish pipeline notices for contracts exceeding £2 million (approximately $2.5 million). The act encourages preliminary market engagement to better understand market capabilities and identify innovation opportunities.
The introduction of a Competitive Flexible Procedure will allow authorities flexibility in designing processes, integrating phases for collaboration, and refining award criteria as understanding evolves. The end goal is to remove barriers and enable contracting authorities to achieve the best fit for the specific procurement.
Next Steps
The Procurement Act 2023 heralds a new era for suppliers, reshaping the procurement landscape into a more transparent, competitive, and innovation-driven environment. The act offers unprecedented opportunities for suppliers to showcase their capabilities, foster innovation, and compete on a fair and equal footing. Success in this evolving landscape hinges on the ability of suppliers to adapt, innovate, and align with the act’s requirements while leveraging their strengths to stand out in a dynamic marketplace.
While the act is a big step in transforming public procurement in the UK, much more needs to be done to assist its implementation and comprehend how it will function in practice. Adapting to new compliance standards, upgrading systems to meet technological demands, and navigating increased competition might pose hurdles, particularly for smaller or less technologically advanced suppliers.
Trainee Solicitor Lucrezia Noiret contributed to this blog post.