The Procurement Act 2023, which came
into force on 24 February 2025, replaced:
- The Public Contracts Regulations 2015.
- The Utilities Contracts Regulations 2016.
- The Concessions Contracts Regulations 2016.
- The Defence and Security Public Contracts Regulations
2011.
The Major Objectives of the Procurement
Act 2023:
The original principles of the UK’s
procurement legislation were based on the foundational principles of:
- Transparency.
- Equal treatment.
- Non-discrimination.
- Proportionality.
These principles, derived from the
retained EC Treaty, were established through Regulation 18 of the Public
Contracts Regulations 2015, which forms the basis of the existing procurement
framework. They are essential for ensuring fairness and accountability in
procurement processes.
The Procurement Act 2023 introduces a
shift in terminology, replacing the principles above with specific procurement
objectives outlined in section 12. Contracting authorities are now required to
focus on:
- Delivering value for money.
- Maximising public benefit.
- Facilitating information sharing to
enhance understanding of procurement decisions.
- Maintaining integrity in their actions.
This rephrasing emphasises a more
outcome-oriented approach while upholding the procurement process's core
values. The Procurement Act reinforces the concept of equal treatment under a
new framework, stipulating that contracting authorities must treat suppliers
equitably unless justified differences exist.
In evaluating whether such differences
warrant varied treatment, authorities must take reasonable measures to prevent
any supplier from gaining an unfair advantage or facing undue disadvantage.
Additionally, the Act mandates that contracting authorities actively consider
and address potential obstacles small and medium-sized enterprises face in
the procurement process, ensuring these barriers are minimised or eliminated.
Key Changes in the Procurement Act 2023:
- Award Criteria - The Procurement Act 2023
allows contracting authorities to select the "Most Advantageous
Tender," moving beyond the sole cost consideration. This allows for
evaluating a broader array of factors in addition to price, akin to the
weighted point system previously employed under the Public Contracts
Regulations 2015. However, in contrast to the Public Contracts Regulations
2015, price is no longer the primary determinant. In certain
instances, contracts may be awarded based on non-financial considerations
such as quality, innovation, or environmental sustainability. Furthermore,
the Act provides authorities with increased flexibility for direct awards
in particular circumstances, which can be utilised to safeguard public
health (as seen during the COVID-19 pandemic), ensure safety, or respond
to urgent requirements.
- Supporting Local Businesses - The UK Procurement Act 2023
aims to support UK businesses, focusing on small and medium-sized
enterprises (SMEs) and social enterprises. Public authorities are
permitted to set aside specific contracts for these entities and are
required to give them greater consideration during the procurement
process.
- Sustainability and Social Value - A key aspect of the
Procurement Act 2023 is the contracting authorities' need to evaluate how
their procurement activities can support 'national priority outcomes' as
outlined in PPN 05/21. This encompasses various objectives, including job
creation, skill development, addressing climate change, and minimising
waste, all of which are integral to social value. Public sector
purchasers will now be mandated to award contracts based on the Most
Advantageous Tender (MAT) instead of the Most Economically Advantageous
Tender (MEAT). The MEAT framework promotes the consideration of broader
community benefits, such as fostering local employment, lowering carbon
emissions, and engaging local suppliers, all of which enhance social
value.
- New Rules For Transparency And KPIs - The Procurement Act
introduces a notable shift aimed at enhancing the value of taxpayer funds.
Public authorities must now disclose at least three key performance
indicators (KPIs) for contracts valued over £5 million. These KPIs will
serve as a means to monitor supplier performance during the contract's
duration. This initiative promotes stronger oversight and greater
effectiveness. However, it is essential to note that specific contracts,
such as those granted through framework agreements, are not included in
this requirement.
- Central Digital Platform: A key feature of the Procurement
Act 2023 is establishing a centralised digital platform intended to
function as a central hub for suppliers. This platform will allow
suppliers to register, maintain their information, and quickly access all
pertinent opportunities in a single location. The primary goal is to
streamline the bidding process, reduce redundancy, and minimise errors,
promoting a more efficient and accessible procurement landscape.
- Procurement and Tender Procedures: Procurement and tendering
processes will be streamlined to include only two methods: the current
Open Procedure and the newly introduced Competitive Flexible Procedure.
This innovative multi-stage approach enables authorities to design
customised procurement processes that meet their specific requirements and
goals. The Competitive Flexible Procedure encourages suppliers' active
participation during the process, promoting a collaborative and innovative
environment. By utilising strategies such as negotiation and dialogue,
contracting authorities can leverage supplier expertise, leading to
tailored solutions that provide optimal value.
- Transparency and Accountability: Transparency and accountability
are essential to the proposed changes, which mandate that buyers disclose
procurement plans, market activities, tender announcements, and contract
information on a digital platform. This initiative aims to improve data analysis,
strengthen feedback processes, and foster a more accountable and
transparent procurement system. Contracting Authorities with substantial
annual expenditures must publish their future procurement pipelines at the
beginning of each financial year.
- Early Market Engagement: Engaging with suppliers early in
the market process is not merely suggested; it is strongly advocated by
The Procurement Act 2023. By starting discussions, contracting authorities
can obtain crucial insights into market trends, investigate innovative
solutions, and improve their procurement strategies. This collaborative
method not only boosts the efficiency of the procurement process but also
creates a favourable atmosphere for fair competition and optimal value.
- Small and Medium Suppliers: The Procurement Act 2023
emphasises the importance of inclusivity and competition by actively
promoting the involvement of small and medium-sized enterprises (SMEs),
start-ups, and social enterprises. It aims to eliminate obstacles and
streamline requirements, particularly concerning financial and insurance
criteria. Additionally, specific contracts will be designated for
particular categories of suppliers, including supported employment
providers and public service mutuals.
- Strengthening Penalties: The Procurement Act 2023 aims to
enhance the enforcement of procurement regulations by introducing stricter
penalties and new mechanisms for compliance. A significant feature of the
Act is the creation of a Procurement Ombudsman tasked with managing complaints
and resolving disputes, which reflects a dedication to ensuring fair and
efficient resolution processes. Furthermore, the Act seeks to accelerate
payment processes within public supply chains, guaranteeing prompt
compensation for participating businesses. It also grants contracting
authorities the authority to exclude suppliers, highlighting misconduct by
the suppliers and individuals connected to them.
The Procurement Regulations 2024
The Procurement Regulations 2024 mark a
significant advancement in promoting transparency, equity, and efficiency
within public sector procurement procedures. These regulations are intended to
enhance the framework established by the Procurement Act 2023, which provides
explicit guidelines for the procurement activities of public sector
authorities. The primary aim of these Regulations is to refine and standardise
the procurement process further, thereby minimising the risks of corruption,
favouritism, and inefficiency.
A notable feature of the Regulations is
the mandate for public sector central and local authorities to implement
electronic procurement systems. This initiative will facilitate the automation
and streamlining of the procurement process, making it more straightforward for
suppliers to submit their bids, for public sector officials to assess them, and
for contracts to be awarded promptly. By adopting electronic systems, the
government will improve its ability to track, trace, and monitor procurement
activities, enhancing accountability and transparency.
A significant element of the Regulations
is the focus on ethical procurement practices. Public sector officials are now
required to follow a stringent code of conduct that forbids the acceptance of
gifts or favours from suppliers and mandates disclosing potential conflicts of
interest. This measure aims to mitigate corruption and ensure that contracts
are awarded based on merit rather than personal relationships or financial
inducements.
The anticipated effects of the
Regulations are likely to be beneficial, as they are designed to diminish the
risks of fraud and corruption within public sector procurement processes. By
enhancing transparency and accountability, the Regulations will foster trust
and confidence in the government's capacity to judiciously and effectively use
public funds. Consequently, this will improve public sector programs and
services, resulting in more favourable outcomes for the public and local
communities.
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