Public Procurement: Changes to UK procurement legislation following Australia and New Zealand Free Trade Agreements

The UK’s new free trade agreements with Australia and New Zealand have given rise to a number of amendments to the Public Contracts Regulations 2015 (“PCR”), Utilities Contracts Regulation 2016 (“UCR”) and Concession Contracts Regulations 2016 (“CCR”) that came into effect on 25 May 2023. The changes apply to procurements that were commenced after that date (but do not retrospectively apply to procurements commenced prior to that date). Of course all of these sets of Regulations are due to be repealed when the Procurement Bill becomes law, but until that point contracting authorities and utilities remain bound by the amended provisions of the PCR, UCR and CCR.

The Cabinet Office has published PPN 05/23 to explain the effect of the changes on the legislation.

There are three key changes to the PCR that contracting authorities will need to be aware of.

• Prior Information Notices (PINs): The use of Prior Information Notices (PINs) as a call for competition will no longer be permitted. Using a PIN as a call for competition was previously permitted for sub-central authorities using the restricted procedure or the competitive procedure with negotiation, and for Light Regime procurements.
• Valuation of contracts with unknown value: Regulation 6 of the PCR previously provided that where the value of a contract was not clear at the outset, the contracting authority should take the monthly value and multiply it by 48. This mechanism has been replaced such that now, where a contracting authority is unable to estimate the value of a procurement, the procurement will be taken to be above threshold and therefore subject to the relevant procurement regime.
• Termination of contracts: The final amendment relates to the basis on which contracts can be terminated. Contracting authorities are now expressly prevented from terminating contracts in a manner that circumvents their obligations under the relevant procurement regulations. It will be interesting to see whether termination of contracts is challenged on this basis, but it certainly adds another layer to contracting authorities’ deliberations around potential contract termination.

Note that these changes do not apply to contracting authorities based in Wales.

If you wish to discuss this further, please contact Fran Mussellwhite, Partner.

This article was co-written by Lucie Clevely, Solicitor Apprentice.