­The Road To Reform Section 7

Introduction

On 6 December 2021 the government published its response to the Green Paper on proposed reform to public procurement. A link to the response can be found here.

This is the seventh in a series of articles which the procurement law team at Bevan Brittan LLP are producing on what the proposed reforms will mean for the public sector and suppliers. Each article will give practical commentary on the different themes within the proposed reforms.

Here is a menu of what we will be covering, with links to each Part which will become live once each Part is published:

• Section 1 - An overview
• Section 2 - Principles and objectives, the National Procurement Policy Statement and the PRU
• Section 3 - Single set of Regulations with exemptions, interface with health procurement, light touch regime and concessions
• Section 4 - New procedures, including for urgent procurements, emphasis on pre-market engagement and planning
• Section 5 - Evaluation (MAT not MEAT), links to NPPS and other legislation
• Section 6 - Exclusion: grounds for exclusion, debarment register, past performance and supplier registration system
• Section 7 - Purchasing tools – new DPS+, new rules for open and closed frameworks
• Section 8 - Transparency – notices, debriefing, what has to be published and Open Contracting Data Standard
• Section 9 - Remedies: reforms to Court process, no independent review up front by the authority, disclosure, new test for automatic suspension, no cap on damages, no tribunal and alternative route via PRU
• Section 10 - Contract Management: prompt payment, amendments to contracts after signature

Purchasing tools - new DPS+, new rules for open and closed frameworks

Open and Closed Frameworks

The Government reforms intend to permit the creation of “open” and “closed” frameworks.

Closed frameworks are similar to the current structures where suppliers are appointed at the establishment of the framework and no new suppliers can join during the term. The Government intends to allow utilities to award longer term closed frameworks under the new rules. For other organisations, the current flexibilities to be able to keep open frameworks for a longer term than the relevant maximum term will continue where the justifications are set out in the tender notice.

Open frameworks will provide a new flexibility to allow contracting authorities to appoint new providers to the framework during its term. These frameworks must contain at least two providers. With open frameworks lasting over three years, new suppliers would be given the opportunity to join the framework at least once during the term. Open frameworks cannot be closed to market access for longer than five years.

Where the required access to join is provided in the arrangements then the maximum duration of an open framework can be up to 8 years. This provides an opportunity for new entrants to displace incumbent framework providers and allow the panel to be refreshed.

However there will be some practical procurement issues to resolve where existing framework appointees stick with their original tenders in competition against the fresh tenders of new applicants to join the framework. Do you carry over the scores from the original competition or do you reassess them afresh when you evaluate the new tenders?

We would suggest that the latter approach would result in greater consistency in scores and accountability in debriefing information through the use of a common panel of evaluators but this will also reduce the efficiency in reopening the framework. Furthermore, the variability of scores for incumbent providers could be a cause of dispute if those providers are displaced. We await to see whether the Government guidance will suggest best practice to navigate this issue.

Dynamic Markets

The proposals for DPS+ in the Green Paper will be now be called the dynamic market.

Dynamic markets will be based on the current dynamic purchasing system flexibilities. Suppliers must satisfy selection requirements to be admitted to the dynamic market. The ability to admit new suppliers to the dynamic market will continue over the lifetime of the agreement providing opportunities for supplier and market access for contracting authorities.

However, its use will no longer be limited to commonly used purchases available on the market and will now be available for all types of works, services and goods. The new competitive flexible procedure will be available to dynamic markets giving it the procedural tools to source complex requirements and negotiate with providers.

The Government intends to set up a single point electronic data storage system owned by the Cabinet Office where suppliers can lodge selection stage information. In setting up dynamic markets, contracting authorities will be able to access this information to make admissions more efficient.  

The Government intends to issue guidance on the use of dynamic markets and mechanisms to categorise suppliers as well as categories of works, services and goods. Award notices will only be required for call-off contracts which are above the relevant procurement thresholds.

Dynamic markets will provide effective platforms to prequalify providers and having a broad supply base available to compete common purchases and complex needs. However, contracting authorities will need to consider the practicalities of conducting procurements using dynamic markets with a high (and ever increasing) number of eligible tenderers particularly for complex requirements where bid costs can be high. They will also need to carefully scope the tender notice and call-off contract terms to be suitable to capture the range of requirements they intend to source through the dynamic market in order to satisfy the transparency principle.

Improved Governance and Transparency

For both open and closed frameworks, contracting authorities will be able to suspend suppliers from being awarded further call-off contracts if any of the mandatory or discretionary exclusion grounds apply. This will be a useful clarification of permitted governance controls once the framework is established as a common view currently is that the formal assessment of selection grounds is concluded on the completion of the selection questionnaire stage or on the award of the framework.

Framework transparency and definition of scope will also be improved by requiring contracting authorities to identify in the tender notice (or in the procurement documents) the nature, scope and overall maximum estimated value of the contracts to be awarded under the framework. However, it remains difficult to accurately gauge anticipated usage to define a maximum value given the ad hoc nature of framework purchasing and in not knowing how commercially attractive tenders populating the framework will be to potential public sector customers.

A central register of frameworks and dynamic markets to be set up by the Government will provide a useful directory of active arrangements for contracting authorities.

Charging Suppliers

The proposed reforms will now permit suppliers to be charged when they are awarded call-off contracts under a framework agreement or dynamic market. The charges can reflect a percentage of the maximum estimated value of the call-off contract awarded. Any charges recovered must be proportionate and used solely in the public interest. This will help finance the establishment and use of the new and revised procurement tools.

If you would like to discuss this topic in more detail, please contact Matthew Mo, Partner.