UK Procurement Law – Reform or Revolution?

UK Procurement Law – Reform or Revolution?

In the Queen’s Speech on Tuesday, the Government announced a bill to reform Public Procurement in the UK. Some 350 regulations are to be abolished, the number of procedures will be reduce to three from seven, and, post-Brexit, there will be no further need to comply with the ‘OJEU‘.

A revolution? Not quite. But at least it should simplify the current systems.

Stephen Pearson, a partner at leading UK Public Sector specialist law firm Freeths, explains in more detail:

Unlike the State Aid / Subsidy Control Regime, there have been no immediate changes of note to the Public Procurement Regime, ie the Public Contracts Regulations 2015 following the UK’s release from the EU regimes as at 31st December, other than the creation of a new UK only procurement portal, known as “Find a Tender” rather than use of the previous “OJEU” regime and converting the value of procurement thresholds into sterling.

The Cabinet Office has, however, published a Green Paper setting out a wide range of government proposals for the reform of public procurement, subject to a consultation period that ended on 10 March 2021.

The new proposal incorporates 6 core principles that should govern public procurement – public good, value for money, transparency, integrity, fair treatment and non-discrimination.

“Public good” is meant to define wider social benefits and the idea is that there will be a New National Procurement Policy Statement to which Contracting Authorities must have regard. Some comments have been made that this will mean that procurement is directed more at a national level, getting away from the “lowest price wins” which is frequently, in effect the case at the moment concerning procurement exercises. There is to be a revised Treasury Green Book to make it clearer in the ways in which the value for money of schemes is to be assessed.

An additional proposal includes the creation of a new oversight body supported by independent experts that will be able to improve the ability of Contracting Authorities to run procurements better and get them to “up their game”. This panel may have the power to issue Improvement Notices, impose spending controls on Contracting Authorities and to intervene in local situations. This has been suggested to be very “statist” in its approach and there are questions over whether it will actually be practicable to introduce in practice.

Abolition of Light Touch Regime-At the moment, there is a less complex procurement process for contracts in health and social care areas with a higher value threshold. The indication is that there will in future be only one threshold across the board.

Reduction of Processes-In an attempt to simplify the complexities of current procurement procedures, it is suggested that the current 7 procedures will be replaced by only 3:

  1. The Open Procedure for simpler straightforward projects.
    1. A Competitive Flexible Procedure to allow the freedom to negotiate.
    1. The Limiting Tendering Procedure which will allow direct award without prior publication.

Additionally, comments are that there may be need for a fourth scenario allowing procurement without Prior Publication of a Notice in times of crisis – clearly influenced by the current Covid-19 situation and the controversy over such things as awards of PPE Contracts.

The concept of the “most economically advantageous” basis is replaced by the “most advantageous tender”.

It is intended that there will be wider rights to disqualify bidders, for example where there have been convicted of fraud and non-disclosure of corporate ownership – this may simplify the ability to get rid of “undesirable” bidders.

There is a proposal that it should be easier to remove tenderers from procurement procedures on the basis of “past poor performance”, potentially against historic failures to achieve Key Performance Indicators within other contracts – this is an area where further detail will need to be allowed for!

There is to be a revised approach on Frameworks and Dynamic Purchasing Systems to provide quick access to the market for Contracting Authorities. The idea is that there will be something called “The DPS +”. Authorities will be able to advertise an intention to establish a DPS + and the arrangement for this will not be time limited.

Similarly, in an attempt to simplify procurement, the current arrangements with regard to Frameworks being limited to 4 years in duration with all the entrants admitted at the outset will be changed to allow a New “Open Framework” with a duration of up to 8 years, under which suppliers will be allowed to apply for a place on the Framework at pre-determined points in the 8-year lifecycle.

Openness and Transparency

There is a proposal to require wider publication of information connected with a procurement going beyond what is currently required in the procurement report required (but not always produced) under Regulation 84 of the Public Contracts Regulations 2015. These should make challenging a procurement simpler as the available information should be broader and made publicly available. There is, however, of course an issue in terms of how the release of information is to be reconciled by such things as the need to protect commercial confidence and restrictions under the Freedom of Information Act 2000. It is also proposed that all information related to tenders should be published in a format which is open in compliance with the Open Contracting Data Standard.

Challenging a Procurement

The current system involves going to the High Court and is expensive, and many challenges for a number of reasons do not result in a hearing, partly because of the legal costs in taking a case that far. There is therefore a proposal that there should be a new expedited basis of action under a “fast track” system, to allow for some challenges to be dealt with purely on the papers reducing the need for Court hearings, to introduce new guidance on disclosure and to introduce new timescales for proceedings in order to speed matters up. Work with the Ministry of Justice / Technology & Construction Court will be undertaken to design new rules in a way which is practical and deliverable. There have been some hopes expressed that a new procurement tribunal at a lower level than the Court would have been introduced, and the government has indicated that it is looking at the potential of this, but this is at the moment clearly some way down the road.

It is also indicated that in order to avoid cases being so expensive that any award of damages is capped at the value of legal fees plus 1.5 times the bid cost, to make somewhat speculative challenges less attractive.

Contract Modifications

Currently, Regulation 72 of the PCR 2015 allows contracts to be varied in certain circumstances within various limits. However, it is a complex regulation and it is suggested that Regulation 72 will be amended to make it easier to follow – a long overdue change in our view! to allow for the publication of Contract Modification Notices and to have a standstill period for contract modification notifications. This may make the VEAT notice redundant.

Our suspicion is that some of these changes will not be implemented within the short term, but generally speaking the government seems to be making a genuine attempt to simplify and expedite what is currently a very difficult set of regulations for both public authorities and private contractors alike. We are told that there is a keenness to introduce at least some modifications this year if possible.

Stephen Pearson



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