Procurement Act (2023) – is your organisation ready?

The implementation of the Procurement Act (2023) from 24th February 2025 is arguably the biggest change to public sector purchasing of goods and services in a generation. However, from recent discussions many organisations are unaware of the changes and how they could impact them – with a month to go there is little time prepare.

The government's overarching objective for the new Act is to improve value for money from the ~£300bn spent through in-scope public sector contracts by creating a simpler and more flexible commercial framework.

In particular the Act aims to:

·       Make procurement arrangements more flexible and encourage innovation

·       Improve transparency throughout the lifecycle of contracts

·       Take a broader approach to value for money

·       Simplify processes, particularly to facilitate access for SMEs

·       Deliver greater social, environmental and economic benefits at local and national level

This will be achieved through notable changes to the tendering process, and the way contracts are managed, including:

Broadening the Definition of ‘Better Value for Money’

The previous regulations required Contracting Authorities to award contracts on the basis of the Most Economically Advantageous Tender (MEAT), which has been revised to the Most Advantageous Tender (MAT) recognising the use of a broader range of criteria to evaluate tender, beyond lowest price, particularly the delivery of increased Social Value.

Encouraging early supplier engagement

Contracting Authorities will have to improve the visibility for suppliers of forthcoming procurement activities in order to increase participation, and encourage collaboration and innovation. This will be facilitated by new announcements and notifications including: publication of procurement pipelines by all authorities spending more than £100mn p.a.; the issue of Preliminary Market Engagement Notices.

Providing more flexible procurement procedures

The previous range of procurement procedures have been simplified to two primary routes: Open procedure – a simple single stage process; Competitive Flexible procedure – a multi-step process tailored by the Contracting Authority to their specific procurement requirements. Both procedures will have frequent notification steps to maintain transparency and keep all interested suppliers fully informed about the process.

Four main contracting tools will be used: Closed Frameworks, similar to those currently used primarily with 4 year duration; new Open Frameworks with 8 year duration which can be reopened during their life span for new suppliers to be added; Dynamic Markets which can be joined by suppliers at any time; Direct Award contracts which can be used in specific emergencies.

Creating a central digital platform

A single central online system will be used to fulfil key elements of the government’s Transparency Ambition through increased visibility, accessibility and accountability. The system will collate all information related to procurement activities in a single location to facilitate ease of access for both buyers and suppliers. This will include details of all contract activities and notices from initial procurement planning, through contract delivery, to expiry. A Supplier Registry will act as a repository for all relevant data of qualified suppliers to prevent duplicated data entry across multiple contracts.

Enhancing contract management practices

The new Act is intended to increase the focus and level of transparency of contract performance. For all contracts of more than £5mn Contracting Authorities must agree with suppliers 3 KPIs which will be published to demonstrate performance. Notices will be published in the event that there is a contractual breach, persistent poor performance, or other need for a contract change. For multi-year contracts, authorities must perform annual supplier performance reviews, the results of which will be published.

Introducing supplier risk review, exclusion and debarment lists

A further aim of the Act is to de-risk supply chains to drive further performance improvements. Authorities will be required to conduct a risk review of all suppliers prior to legal award, and maintain oversight throughout the life of the contract, covering a range of factors including: criminal convictions; commercial and operational misconduct; and other specified circumstances. Depending on the contravention, the supplier may face mandatory or discretionary exclusion from bidding and existing contracts may be terminated. A central Debarment List will be established to facilitate information transfer about high risk suppliers – to be removed from the list the suppliers will need to demonstrate that the risk factors have been mitigated. Significantly the Act extends the risk evaluation to all significant Connected Persons associated with suppliers (i.e., those with decision making powers, key shareholders etc.) as well as sub-contractors.

Both Contracting Authorities and suppliers need to take immediate action in order to take advantage of the opportunities offered by the Act, or to avoid falling foul of the new regulations.

Purchasers need to:

·       Understand which procurement procedure they will use for which future contracts

·       Ensure suppliers are aware of the changes and are ready to register on the Central Digital Platform when it goes live on 24thFebruary

·       Gain confidence that their suppliers will be able to meet delivery and Social Value obligations for future contracts

Conversely, suppliers will need to:

·       Understand specific implications of the Act for their markets and business

·       Register on the Central Digital Platform (once available)

·       Review future procurement pipelines to identify opportunities and potential collaboration areas

·       Ensure that they are not at risk of exclusion directly, via connected persons, or subcontractors

·       Verify inhouse and supplier delivery capabilities, particularly those reemphasised in the Act (e.g., delivery of Social Value obligations)

The Act creates significant opportunities for all parties to work together to deliver enhanced public services – if you are unsure of how it could impact your organisation, or need help to implement the necessary changes please get in touch