New UK Procurement Act procedures offer greater flexibility

The Procurement Act 2023 (178 pages/2 MB) consolidates the four existing sets of procurement regulations into a single, cohesive framework. This new regime is designed to be quicker, simpler, and more flexible, making it easier for small businesses and social enterprises to compete for public contracts. The Act seeks to increase transparency through a number of new notices, with a central digital platform for suppliers to register and access procurement opportunities, enhancing efficiency.

The Act received royal assent in October 2023 and is scheduled to come into force on 24 February 2025. This article looks at issues that arise in the pre-procurement stage.

Procurement procedure updates: the competitive flexible procedure

One of the major changes introduced by the Act is the new procurement procedures. While the act retains the “open” procedure from the Public Contracts Regulations 2015 (PCR 15), the other four PCR 15 procurement procedures are replaced by the CFP. The CFP is non-prescriptive, and no conditions need to be met in order to use it. At the same time, the contracting authority must ensure that the chosen procedure is a proportionate means of awarding a public contract, having regard to the nature, complexity and cost of the contract. For example, if there is an expectation that small and medium-sized enterprises (SMEs) could bid for a contract, then the process should not be unnecessarily complex.

There is no explicit requirement under the Act that the number of suppliers shortlisted to participate in the procedure should be sufficient to ensure genuine competition. However, contracting authorities should consider, amongst other things, the new section 12 objective of achieving value for money, which is usually more likely to be achieved with adequate competition.     

In a CFP, the contracting authority must provide, in most cases, for at least certain minimum periods, generally between 25 to 35 days if there is no urgency, but in setting these the contracting authority must have regard to certain factors such as the complexity of the contract, where relevant.

In contrast to the current rules, there is no explicit general requirement to make available all the “associated tender documents” – the new name for procurement documents – at the start of the process. However, if the tender notice and associated tender documents are not all provided at the same time, this will affect the minimum periods permissible.

A CFP provides flexibility for a contracting authority to limit the number of participating suppliers, both from the outset and following intermediate tendering rounds. A supplier cannot re-enter the procurement process if it did not submit a tender in the initial round or was excluded in a previous tender round.

The contracting authority may refine the award criteria during the process, before submission of tenders. This only applies if the right has been reserved and only of the refinement would not have allowed one of more suppliers that did not progress beyond an earlier tendering round to have done so had the refinement been made earlier. Where a refinement is made, the contracting authority is obliged to modify and republish the tender notice and any associated tender documents.

As is the case under PCR 15, the contracting authority may limit the number of lots for which suppliers may tender.

The contracting authority may exclude suppliers by reference to the conditions of participation or an intermediate assessment of tenders against the award criteria and assessment methodology. Suppliers who are not UK or treaty state suppliers – that is, suppliers that have the right to participate in regulated procurements under an international agreement specified in schedule 9 of the Act – or suppliers who intend to subcontract all or part of the contract to such entities, may also be excluded.

Preliminary market engagement

As is the case under the PCR 2015, conducting preliminary market engagement is optional. The Act provides that contracting authorities may engage with potential suppliers and “other persons”, for example, trade associations and consultants. If a contracting authority does choose to conduct preliminary market engagement, then the authority must take steps to ensure that participating suppliers are not put at an unfair advantage and that competition for the public contract is not otherwise distorted.

If a supplier gains an unfair advantage, then the supplier must be excluded from the procurement. This is a last resort only after possible mitigating measures have been considered.

Both contracting authorities and suppliers will want to ensure that appropriate steps have been taken to avoid any potential unfair advantage or distortion of competition arising before a supplier provides direct input into specifications, award criteria or other aspects of the procurement process.

The Act introduces a new preliminary market engagement notice. Where a contracting authority opts to undertake preliminary market engagement, the contracting authority must publish a preliminary market engagement notice or provide reasons, in the tender notice for the subsequent procurement process, why no preliminary market engagement notice was published.

The notice can be prospective – inviting the market to participate in an engagement – or retrospective – notifying the market of an engagement that has already completed.

The notice must include, amongst other things: the subject-matter of the contract; the date the engagement will close or did close; and a description of the process by which the contracting authority will conduct or did conduct the engagement. For example, this could include the location, date and time of events such as interviews, and any periods for the submission of expressions of interest and information by suppliers, which is often collected through an online questionnaire.

Whilst the notice is not mandatory, it is presented as a “comply or explain” obligation. This specific notice for preliminary market engagement should make it easier for suppliers to identify market engagement they wish to participate in and for contracting authorities to receive interest in the engagement. Under the PCR 2015, prior information notices (PINs) are often used for this purpose, and it is sometimes difficult for suppliers to easily identify the market engagement PINs from the upcoming procurement PINs.

Pipeline notice

The Act also introduces a new pipeline notice. This is required to be published by a contracting authority if the contracting authority anticipates spending more than £100 million on public contracts in the coming financial year. The notice must set out specified information about any public contract with an estimated value exceeding £2 million for which a tender or transparency notice is expected to be published in the period of 18 months beginning with the first day of the coming financial year

The pipeline notice must be published within 56 days of the beginning of the financial year and must include for each relevant contract, amongst other things: the nature of what is to be procured; when it is expected to be advertised; and when it is expected to be awarded. There is no obligation to include an estimated value for each contract, but the contracting authority may include this, and any other relevant information.

Pipeline notices should give suppliers more time to prepare for upcoming procurements to deliver an appropriate bid – whether as prime contractors, members of consortia or sub‑contractors in the supply chain. The notice is not required to be published by private utilities or transferred Northern Ireland authorities

Planned procurement notice

Another new notice brought in by the Act is the planned procurement notice. This is functionally equivalent to a PIN under the PCR 2015 in that it alerts the market to a specific upcoming competitive procurement process. It is an optional notice but, if published, it enables the contracting authority to reduce the minimum tendering period to 10 days, provided that it is published at least 40 days and no longer than one year before publication of the tender notice. In such circumstances it would be a “qualifying planned procurement notice”.

A planned procurement notice must contain, amongst other things: the subject-matter of the contract; the estimated date of publication of tender/transparency notice; and as much of the information that will be included in the tender notice as the contracting authority has available at the time. This is more detail than is required per contract than under a pipeline notice.

Central digital platform

The Act provides for a new “central digital platform”. This will be hosted on, and an extension of, the existing Find a Tender website. Suppliers must upload their “core supplier information” to the central digital platform to participate in a covered procurement. This core supplier information includes the supplier’s basic information, economic and financial standing information, connected person information, and exclusion grounds information.

Suppliers are required to send their core supplier information to contracting authorities from the central digital platform, meaning that suppliers will no longer have to complete their core information on each contracting authority’s online procurement portal. It is still possible for contracting authorities to request supplementary information, such as three examples of previous relevant contracts. This new system is effectively equivalent to the Single Procurement Document (SPD) but is now mandatory, whereas the SPD under the PCR 2015 is optional.

Dividing a contract into lots

The Act places a general obligation on contracting authorities to have regard to SMEs and to consider whether barriers to participation by SMEs can be removed or reduced in carrying out a procurement.

This obligation will be relevant when considering whether to divide a contract into lots. The Act requires contracting authorities, before publishing a tender notice, to consider whether the goods, services or works to be procured could reasonably be supplied under more than one contract, and whether such contracts could be appropriately awarded by lots. Where lots are considered appropriate, the contracting authority must arrange for the award of the contract by reference to lots or provide reasons for not doing so in the tender notice.

Open frameworks

Another new commercial tool introduced by the Act is the "open framework", which is a scheme of frameworks that provides for the award of successive frameworks on substantially the same terms. An open framework must be reopened to new suppliers at least once in the first three years and once every five years thereafter, but contracting authorities may reopen the framework more frequently if they wish.

Suppliers can be readmitted to successive frameworks under an open framework. If there is no limit on number of suppliers, suppliers can be readmitted by reference to the fact that the supplier has already been awarded a framework under the scheme, or by reference to an earlier or new tender. However, if there is a limit on suppliers, suppliers cannot be readmitted automatically and can only be appointed by reference to a new or earlier tender.

The maximum term of an open framework is eight years, unless it is a single supplier open framework, in which case it is four years. Frameworks under an open framework cannot be awarded via a direct award.

Dynamic markets

Finally, the Act brings in dynamic markets (DMs), which replace dynamic purchasing systems (DPS) from the PCR 2015. DMs are in fact significantly more flexible than DPSs and are much closer to a qualification system under the Utilities Contracts Regulations 2016.

There are no restrictions on the types of goods, works or services that can be procured under a DM – they do not need to be commonly used purchases which are generally available on the market as is the case with a DPS. The competitive flexible procedure may be used, which allows for the possibility of negotiations. Fees may be charged on the award of a contract, calculated as a fixed fee based on the estimated value of the awarded contract, again in contrast to a DPS.