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 fourth 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
We currently have five different procedures under the Public Contracts Regulations 2015 (as amended) “(PCR”) of which different sets of rules apply.
The Green Paper proposes streamlining the procurement procedures into three more straightforward and modern procedures (which we will explore in more detail, below):
- A Competitive Flexible Procedure – to allow contracting authorities the freedom to negotiate and innovate to best the best possible solutions from the market;
- An Open Procedure – this will facilitate simple, “off the shelf” competitions;
- A Limited Tendering Procedure – this is effectively a re-branding of PCR 32 (Negotiated Procedure without Prior Publication) along with the introduction of a new “crisis” ground.
Competitive Flexible Procedure
It is proposed that this procedure will contain minimal detailed rules other than those needed to ensure compliance with the reformed principles of public procurement and the (Agreement on Government Procurement) (“ GPA”).
The Green Paper suggests that this procedure will be similar to the current “Light Touch Regime” that currently applies to procurements concerning certain social, health and other services to allow greater flexibility to design competitions to meet the needs of the contracting authority and the market. As such, there will be no need for specific provisions regarding the “Light Touch Regime”, as this will fall within the remit of the Competitive Flexible Procedure.
In terms of services where service user choice is important, the Cabinet Office is currently considering this further and the proposed future of this specialist area/sector is yet to be decided.
This procedure would also be the procedure that would be used for the award of all concession contracts, (which are presently governed by the Concessions Regulations 2016).
In summary, the procedure will be based around a broad set of requirements:
- The process is consistent with the reformed set of public procurement principles;
- The opportunity is advertised in line with the reformed transparency principles;
- The contract notices provides relevant information about the procurement – its specifications, timelines and bidding conditions;
- The process follows the information disclosed and complies with the proposed requirements regarding selection and evaluation criteria; and
- The time limits within the competition are reasonable and proportionate (and consistent with GPA minimums).
It is considered that in adopting a more flexible approach, this procedure would be suitable for a wide range of procurements and will not only benefit contracting authorities but will also improve the experience for the market and bidders involved in such a process. There will also be an increased opportunity for using negotiation throughout the procedure; something which currently requires contracting authorities to provide justification for in order to access the procedures under the PCR which permit the use of negotiations (Competitive Procedure with Negotiation and Competitive Dialogue).
The feedback obtained by the Cabinet Office suggests that there were concerns around the need for contracting authorities to give more detailed consideration at the outset to decide on the best manner in which to run their procedure. It is fair to say that whilst this may be correct, and may require more “upfront” time and resource to be committed, these earlier efforts should enable contracting authorities to better design and conduct competitive tendering exercises to align with their requirements. The key requirement being that the competition is sufficiently transparent and is run in accordance with the overarching Tender Notice.
To alleviate the concerns raised, the Cabinet Office intends to issue detailed guidance and provide training for contracting authorities to help them gain a better understanding of the procedure and illustrate the flexibilities afforded to it. In addition, template documents would also be shared with contracting authorities to provide an overview of how competition processes can be designed, but without being too prescriptive.
In our view, we consider that the creation of the Competitive Flexible Procedure is something that should be welcomed by both contracting authorities and the market.
Rather than contracting authorities being limited to conducting procurement in accordance with the present five, prescriptive procedures provided for under the PCR it will allow the creation of bespoke structures that contracting authorities may seek to create which may incorporate various features of the five procedures currently in existence. For example, it should be possible to have a competition under the Competitive Flexible Procedure which would operate similarly to the Restricted Procedure as a single tender stage process. As a variation the authority may decide to carry out a single tender stage process utilising negotiations.
Equally, given the intended non-prescriptive nature of this new procedure, it is of course entirely feasible for contracting authorities to design and conduct procurements in accordance with the existing procedures if they so wish.
The intention is for this procedure to be retained as a standard procedure available to contracting authorities and also something that would be made available to suitable defence and security procurement exercises.
Whilst (as set out above), it is probably possible to undertaken a process akin to the current Open Procedure under the new Competitive Flexible Procedure, the Cabinet Office considers there is merit for retaining this procedure in its own right given that it is the most popular procedure and will be appropriate for simple requirements where an initial selection stage to shortlist bidders is not required.
Limited Tendering Procedure
This procedure is essentially a re-branding of the existing Negotiated Procedure without Prior Publication that is currently contained in PCR 32. PCR 32 sets out a number of derogations that contracting authorities may seek to rely upon in certain circumstances and are considered well established exemptions that safeguard competition and therefore should be retained.
Further to the above, this process will be similar to the existing procedure set out in PCR 32, but subsequent guidance will make it clear that there should be no general assumption that this process is single source – so competition will still be encouraged insofar as is possible despite the presence of one of the circumstances contained within the revised procedure.
As a result of the pandemic, the government recognises that there may be uncertainty when relying on the existing ground of “extreme urgency due to unforeseeable events” where the situation is prolonged or evolving. As such, there is likely to be instances where public bodies still need to be able to source swiftly where action is necessary to protect life in a national or local emergency. Such urgent response may remain but may no longer be considered “extremely urgent”.
In light of the above, the government intends to incorporate a new power for a Minister of the Crown (via statutory instrument) to ‘declare when action is necessary to protect life’. Where applicable, this would permit contracting authorities to procure within specific parameters without having to meet all the tests of the current, extreme urgency ground.
Where a decision is made by a contracting authorities to award a contract under the Limited Tendering Procedure there will be a requirement to publish a notice and (except for cases relating to “extreme urgency” or “protection of life”) it is proposed that a 10-day standstill period will also apply to those awards to provide greater transparency. Those notices will require contracting authorities to set out their justification for seeking to rely on this provision, meaning that such awards may be vulnerable to a declaration of ineffectiveness whereas the ability to seek the automatic suspension would not be available for awards made on grounds relating to “extreme urgency” or “protection of life”.
The above requirement would be in addition to the existing requirement (under the PCR) to publish a Contract Award Notice following entry into a contract.
Further to the above, contracting authorities will need to review and update any existing template procurement documents to refer to the new, streamlined procedures. Additionally, there will also be a need to seek procurement advice to ensure that any proposed competition structures are aligned with the new rules and principles.
There is a big drive for innovation to be supported through public procurement and this would appear to have been an important consideration in proposing to replace the existing procedures with more flexible procedures to facilitate such innovation as procurements will be capable of being adapted to suit the sector requirements to deliver better outcomes.
However, the comments of the consultation response suggest that innovation is being hampered for a wide variety of reasons, but this was mainly due to lack of market knowledge and market engagement before, during and after an award process. The consultation response also suggested that there were a number of challenges associated with collaborative procurements in managing different risk appetites and co-ordinating internal governance processes.
In addition, another commonly raised point was related to the fact that the current processes do not allow sufficient time for the development of innovative bid solutions, contracts not being for appropriate durations and short term thinking in swiftly evolving markets.
From an SME and VCSE perspective there was an added criticism that procurement procedures are often complex and burdensome, involving disproportionate bidding requirements, excessively large contracts and problems accessing information about contracting opportunities which effectively act as barriers.
The government considers that many of the responses received related to behaviours rather than regulatory practice but the new flexible procedures would assist in better managing this. However, whilst this may be of some use, it is recognised that this will place greater emphasis on the planning and pre-market engagement exercises from the point of view of contracting authorities. To assist with this, guidance will be issued to encourage this early engagement and openness in procurements to get the market involved sooner.
If you would like to discuss this topic in more detail, please contact Scott Couzens, Associate.