How the Procurement Act 2023 will change public procurement in the UK

The Procurement Act 2023 (the Act) will overhaul the public procurement regime in the UK. The Act received Royal Assent on 26 October 2023 but is not expected to come into force until October 2024 and further implementing regulations are still awaited.

The Act will replace the existing regulations that implement the EU procurement directives, which have been in place since 2015, including:

• Public Contracts Regulations 2015;
• Utilities Contracts Regulations 2016;
• Concession Contracts Regulations 2016; and
• Defence and Security Public Contracts Regulations 2011.

The Act aims to make public procurement “more flexible, transparent, efficient and competitive, while delivering value for money and public benefit”. The Act regulates procurements throughout the contract lifecycle, from initial market testing to expiry of the contract. Here are some of the key changes that the Act will introduce:

• A single legal framework: The Act will consolidate the rules for the procurement of public contracts, utilities contracts, concession contracts and defence and security contracts under one Act. However, different rules will still apply to different types of contracts, depending on their nature and value.
• New procurement objectives: The Act will require contracting authorities to have regard to the following objectives when carrying out their procurements:
  • delivering value for money,
  • maximising public benefit,
  • sharing information and
  • acting with integrity.

The Act will also oblige certain contracting authorities to follow the National Procurement Policy Statement, which sets out the government's priorities and expectations for public procurement.

• More flexibility in choosing procedures: The Act will give contracting authorities more freedom to choose the most suitable procedure for their procurements, as long as they comply with the principles of transparency, equal treatment and competition. The Act will retain the open procedure, which allows any interested supplier to submit a tender, and the direct award, which allows contracting authorities to award a contract without competition in certain circumstances, which are more explicitly defined.

The Act will also introduce a new “competitive flexible procedure”, which will allow contracting authorities to design their own procurement process, subject to some minimum requirements.

• A change in the estimation method: The Act will change the way contracting authorities calculate the value of their contracts for the purpose of applying the procurement thresholds. The Act will require contracting authorities to include VAT in their estimation, rather than excluding it as before. This means that some contracts that were previously below the thresholds may now be above them.
• A shift from MEAT to MAT: The Act will change the criterion for awarding contracts from the most economically advantageous tender (MEAT) to the most advantageous tender (MAT). The aim of this change is to enable contracting authorities to give more weight to non-price factors, such as social value, environmental impact and innovation, when evaluating tenders. However, all award criteria must still be proportionate and related to the subject matter of the contract.
• More transparency and feedback: The Act will enhance the transparency and accountability of public procurement by requiring contracting authorities to publish more information on the Find a Tender Service (FTS), which is the UK's official e-notification platform for public procurement. The Act will also require contracting authorities to provide more detailed feedback to unsuccessful suppliers, including the scores and reasons for their rejection.
• A new remedies regime: The Act will reform the remedies regime for challenging procurement decisions, by introducing a new Procurement Division within the High Court, which will have exclusive jurisdiction over procurement disputes. The Act will also introduce new remedies, such as the power to impose financial penalties on contracting authorities that breach the procurement rules, and the power to order the suspension or termination of contracts that have been awarded unlawfully.

The Procurement Act 2023 will bring  changes to the public procurement regime in the UK, which will affect both contracting authorities and suppliers. The Act will provide more opportunities for suppliers to participate in public procurement, but also more challenges to comply with the new rules and procedures. Contracting authorities and suppliers should familiarise themselves with the Act and prepare for its implementation, which is expected in October 2024.

Procurement Procedures – Key Changes

Table of key changes in the Procurement Act 2023 in relation to procurement procedures compared to the Public Contracts Regulations 2015:

	Public Contracts Regulations 2015	Procurement Act 2023
Choice of procedures	Contracting authorities can choose from five main procedures: open, restricted, competitive with negotiation, competitive dialogue and innovation partnership	Contracting authorities can choose from three main procedures: open, restricted and competitive flexible. The competitive flexible procedure allows contracting authorities to design their own process, subject to some minimum requirements
Use of the negotiated procedure without prior publication (direct award)	Contracting authorities can use this procedure in exceptional circumstances, such as extreme urgency, absence of competition or additional works or services	Contracting authorities can use this procedure in similar circumstances, but also in some new cases, such as where a Minister of the Crown considers it necessary to protect life, health, public order or safety
Framework agreements	Contracting authorities can establish framework agreements with one or more suppliers for a maximum duration of four years, unless justified by the subject matter or the works or services	Contracting authorities can establish framework agreements with one or more suppliers for a maximum duration of 4 years for goods, services or works unless a longer term is required due to the nature of the goods, services or works. Contracting authorities can establish framework agreements with one or more suppliers for a maximum duration of eight years for defence or utilities contracts.
Open frameworks		The Act sets out provisions for an open framework which can be for a maximum duration of 8 years and allows the framework to be reopened in accordance with the provisions of the Act.
Dynamic purchasing systems	Contracting authorities can set up dynamic purchasing systems for commonly used purchases, which are entirely electronic and open to any supplier that meets the selection criteria	Contracting authorities can set up dynamic purchasing systems for any type of purchase, which are entirely electronic and open to any supplier that meets the selection criteria, which will be open to access at any time. Contracting authorities can also use sub-categories within a dynamic purchasing system
Electronic auctions	Contracting authorities can use electronic auctions to rank or re-rank tenders after an initial evaluation, based on price or other quantifiable factors	Contracting authorities can use electronic auctions to rank or re-rank tenders after an initial evaluation, based on price or other quantifiable factors. Contracting authorities can also use electronic auctions to award contracts under a framework agreement or a dynamic purchasing system
Award of contracts	Contracting authorities can award contracts based on selection criteria which are based on suitability, economic and financial standing and technical and professional ability.	Contracting authorities can use procedures which allow for negotiation with the suppliers.
Light Touch Contracts	Light touch contracts are allowed under the regulations but the requirements of these are not clear.	The Act specifically sets out what a light touch contract is and how this is determined. Reference to light touch contract includes a framework for the award of light touch contracts
Standstill period	The standstill period is 10 days from the award of a contract.	The standstill period is 8 working days from the award of a contract. For certain contracts that do not require a mandatory standstill, a voluntary standstill period can be entered into which must be no less than 8 working days.

 

Direct awards – Key Changes 

Table of key changes in the Procurement Act 2023 in relation to direct awards compared to the Public Contracts Regulations 2015:

 

	Public Contracts Regulations 2015	Procurement Act 2023
Grounds for direct awards	Direct awards are allowed in certain circumstances, such as extreme urgency, absence of competition, or additional deliveries from the original supplier	Direct awards are allowed in similar circumstances, but also in some new cases, such as where a Minister of the Crown considers it necessary to protect life, health, public order or safety
Transparency notices	Contracting authorities must publish a contract award notice within 30 days of the award	Contracting authorities must publish a transparency notice before the contract is awarded.
Switching to direct awards		The Act allows contracting authorities to switch from a competitive process to a direct award where it is permissible in the circumstances. A transparency notice must be published before the contract is awarded.

 

Modifications – Key Changes:

Table of key changes in the Procurement Act 2023 in relation to modifications compared to the Public Contracts Regulations 2015:

	Public Contracts Regulations 2015	Procurement Act 2023
Grounds for modifications	Modifications are allowed in certain circumstances, such as unforeseen events, additional works or services, or change of supplier	Modifications are allowed in similar circumstances, but also in some new cases, such as where a Minister of the Crown considers it necessary to protect life, health, public order or safety
Transparency notices	Contracting authorities must publish a contract modification notice within 30 days of the modification	Contracting authorities must publish a transparency notice within 10 days of the modification

 

Transparency Requirements – Key Changes 

Table of key changes in the Procurement Act 2023 in relation to transparency compared to the Public Contracts Regulations 2015:

	Public Contracts Regulations 2015	Procurement Act 2023
Legal requirements to publish	In-scope bodies must publish all advertised UK public sector procurement opportunities and contract awards above certain thresholds on Contracts Finder	The same requirement applies, but the thresholds are changed to include VAT
Central Government transparency and publication of contracts	Central Government buyers must publish all tender documents and contracts with a contract value of over £10,000 on Contracts Finder	The same requirement applies, but the contract value is calculated inclusive of VAT
Transparency principles	Central Government departments must proactively release information in line with the Transparency Principles	The same requirement applies, but the Transparency Principles are updated to reflect the new procurement objectives
Local Government transparency	Local Government buyers must follow the Local Government Transparency Code 2015, which includes recommended requirements for greater disclosure	The same requirement applies, but the Local Government Transparency Code 2015 is updated to align with the Procurement Act 2023
Notices		The Act requires contracting authorities to publish various notices for transparency, increasing the transparency and publication requirements under the PCRs.

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To discuss the 2023 Procurement Act, please contact a member of our Local Government team.

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