The PA23 intends to consolidate and streamline the current procurement regulatory framework, which is currently based on legacy EU law, and in doing so simplify the procurement process to better meet the UK’s needs.
This article, which is part of a series of deep dives into the new procurement lifecycle, will focus on commencement of the PA23 and its coverage.
Commencement
The PA23, which is now expected to “go-live” on 28 October 2024, will replace:
- the Public Contracts Regulations 2015
- the Utilities Contracts Regulations 2016
- the Concessions Contracts Regulations 2016
- the Defence and Security Public Contracts Regulations 2011.
The existing legislation will however continue to govern UK public procurement until the “go-live” date, as well as procurements that started (e.g. where a contract notice has been published under the existing legislation) before the change in law. Contracts procured under existing legislation will also need to be managed under existing legislation. For example, a contract procured under the PCR can only be modified if permitted under Regulation 72 of the PCR even if the modification occurs after the PA23 is live. Procurement practitioners will therefore have to manage two parallel procurement regimes for a number of years after the PA23 comes into force.
The PA23 will be supplemented by secondary legislation to give provisions of the PA23 full effect. Following consultation and the publication of the Government’s response to that consultation, draft regulations have now been laid in Parliament and will now be debated in both Houses before being signed into law. We expect further secondary legislation on, for example, transition and the utilities calculations to be published shortly.
The Cabinet Office has also committed to providing comprehensive guidance (which is being released on a rolling basis, with the full site of guidance not expected to be published until end June 2024) and has started rolling out a supporting training package.
Which entities does the PA23 apply to?
The PA23 applies to “contracting authorities” which is defined as:
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Term
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Where relevant
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Description
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Public authority
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All
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A person that is:
- wholly or mainly funded out of public funds, or
- subject to public authority oversight
and
- does not operate on a commercial basis.
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Public authority
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Utilities contracts only
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As above
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Public undertaking
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Utilities contracts only
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A person that:
- is subject to public authority oversight, and
- operates on a commercial basis.
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Private utility
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Utilities contracts only
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A person that:
- is not a public authority or public undertaking, and
- carries out a utility activity.
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Generally, organisations that are already “contracting authorities” under the existing regime should proceed on the basis that they will remain “contracting authorities” under the PA23.
What is governed by the PA23?
The Act will govern “covered” procurements and will apply throughout the lifecycle of a public contract, from the pre-procurement phase, through to the implementation of the procurement process and entry into and management of the contract.
“Public contract” is defined widely and encompasses all contracts for the supply, for pecuniary interest, of goods, services or works to a contracting authority (including framework agreements), provided that:
- the estimated value of the contract is above the relevant financial threshold; and
- the contract is not exempt.
When estimating the value of a contract, the contracting authority must consider the maximum amount it could expect to pay under the contract, including any amounts already paid. This includes amounts that would be payable if an option to extend the contract was exercised, and must include VAT.
The relevant financial thresholds vary depending on the nature of the contract. The key thresholds for contracts for goods, service and work are currently:
- £138,760 for central government authorities
- £213,477 for sub-central government authorities.
A list of exempt contracts is set out in Schedule 2 of the PA23. This largely reflects the contracts that are exempt under existing legislation and includes, for example, vertical and horizontal arrangements (i.e. in-house and cooperation arrangements between multiple contracting authorities) and contracts for the acquisition of land and buildings. Whilst these contracts are exempt from the requirements in the PA23 that apply to “covered procurements”, it is important to note that sections of the PA23 that apply to “procurements” will apply to these contracts, e.g. the provisions on the National Procurement Policy Statement at section 13.
How can we help?
We will be releasing further updates on other aspects of the PA23 shortly and holding workshops on the new regime throughout 2024. Please contact Laura Wisdom or another member of our procurement team if you would like to receive updates, including if you are interested in tailored workshops on issues specific to your organisation.
Read the rest of the articles in the series here >>>