The Procurement Act: A new roadmap to public sector procurement, efficiency and a broader more competitive supply chain?

It is not possible to fully report a piece of legislation in a few hundred words. What is offered here are some salient observations which hopefully capture the essence of the Act in conjunction with a cautionary reflection.

The new Procurement Act was scheduled to ‘go live’ on the 28^th October this year but has been delayed by four months and will now become law on the 24^th February 2025. It is anticipated that the Act will transform the procurement environment. A dual focus and dual drivers frame the rationale for the Act. A focus on public sector performance, in conjunction with an eye on progressive resource constraints with the aspiration that better value for money, cost savings and facilitating the identification of waste and inefficiency can be achieved. A mirror focus on the supply chain aims to simultaneously reduce prescriptive procedures and encourage SME entry into the supply chain in conjunction with promoting more competition, innovation and supplier diversity. All of the above will be enveloped in a new transparency which it is also envisaged will support a more meaningfully competitive and robust supply chain. “The most important change is the streamlining of the procedure.” – Shakespeare Martineau 

Three Pathways

The Act specifies three procurement pathways: open procedure, direct award and competitive flexible procedure.

Open procedure: – this is a single stage tendering process which allows any organisation to submit a bid. There is no ‘selection stage’ prior to the final choice of supplier. Tenders are evaluated on the basis of a published criteria and methodology which is specified within the invitation to tender documentation. The key here is that a need to be on a list of approved suppliers does not exist. The aspiration is to reduce bureaucracy, increase transparency, simplify and speed up the process.

Direct award: – this is where a contract with a public body is awarded without a competitive tendering process. The contracting authority simply selects the supplier of choice. The rationale here is that if a known and trusted supplier exists, the ‘unnecessary’ bureaucratic process of requesting a tender, shortlisting, criteria, published methodology etc. can effectively be ‘short circuited’ reducing expended resource and increasing speed. This might be especially beneficial in urgent or emergency situations.

Competitive flexible procedure: – historically under Public Contract Regulations (PCRs) the submitting tenders have a ‘one shot’ opportunity to win a contract. This occurs “without negotiation and with very limited scope to amend any contract documents.” The new procedure enables a range of approaches from a ‘one shot’ tender, ’two stage’ and an iterative process which is similar to what is known as a “competitive dialogue” where discussion during the process facilitates suppliers better understanding of specific requirements.

Benefits for potential suppliers

Pipeline transparency

The Procurement Act requires large public contracting authorities to “publish a pipeline notice forward look for 18 months for opportunities over £2m”. This will enable suppliers to prepare either as primary contractors or liaise with other companies to form a consortia or construct a supplier chain of sub-contractors.

A central information source will enable firms to search on specific business activities which will be mapped by region. Hence a technology company in the West Midlands will be able to identify germane upcoming opportunities in that area.

Removal of barriers

The Act prohibits contracting authorities from making the provision of audited accounts a mandatory requirement. This excludes SMEs and start-ups who are not legally required to produce audited accounts because of their size or age.

In a similar vein, the new registration system for suppliers only requires ONE registration. Previously, for example an IT provider; would need to register with the NHS, different local authorities, housing associations and Higher Education Institutions’ separately. Historically this benefited larger companies that had the resource to do this whilst mitigating against smaller firms.

Continuing this theme, going forward public contracting authorities will not be permitted to require suppliers to have appropriate insurance in place prior to being awarded a contract.

MEAT to MAT

The legislation includes a shift from MEAT to MAT as the basis for awarding a contract. Traditionally, criteria such as price, technical merit and quality have been known as the Most Economically Advantageous Tender (MEAT) and this has determined the award of a contract. The new emphasis of the Most Advantageous Tender (MAT) which is not limited to price and technical merit constitutes a significant departure from precedent. To avoid any misunderstanding the MEAT means awarding a contract on the basis of price, performance and technical merit while MAT changes the basis of awarding to other things. These include social factors, the environment and the concept of sustainability is introduced. Here ‘social value’ or how a contract award positively impacts identified communities can become more important than ‘economic’ issues.

Opinion

There is much in this Act which carries the potential to improve the flexibility and efficiency of public sector procurement while offering the possibility for public bodies to have a focused impact on development in particular areas. The move from MEAT to MAT introduces real opportunities for public authorities to consider issues wider than the simply economic / financial benefits of a particular contract. This could be an exciting positive divergence from established approaches to choosing a supplier. A local company which contributes to the local economy and employs people from the region can now be favoured over an organisation based in a different country. For example it is easy to understand the attraction of this approach. However, the concept of ‘social value’ is elastic. By way of illustration, it is not beyond imagination that it might be deemed ‘socially valuable’ to award contracts to companies owned or managed by individuals with specified ‘protected characteristics’. Herein lies a labyrinth of complexity where there may not be a ‘settled view’ of what constitutes ‘social value’. Depending on how the term social value is interpreted and how cavalier decision makers choose to draw upon the MAT approach, this could be the creation of fertile ground for controversy, conflict and division.

In the 2007 motion picture ‘Charlie Wilson’s War’ Tom Hanks played the character of Charlie Wilson, who was a member of the House of Representatives. At the end of the film a CIA agent offers cautionary advice regarding how situations appear to be and how quickly they can change to the character played by Tom Hanks, who at the beginning of this conversation is ebullient. The CIA agent says:

There is a little boy on his 14^th birthday. He gets a horse and everybody in the village says “how wonderful, the boy got a horse”.

The Zen Master says: “We’ll see”.

Two years later the boy falls off the horse, breaks his leg and everybody in the village says: “How terrible”.

The Zen Master says: “We’ll see”.

A war breaks out and all the young men have to go off and fight except the young boy can’t because his leg’s all messed up and everybody in the village says “How wonderful”.

The Zen Master says: “We’ll see”.

Conclusion

We’ll see.

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