Transforming Public Procurement: Part 1

What’s the future of public procurement policy in the UK?

02 March 2022

On 6 December 2021, the Cabinet Office published its response to the consultation following the release of the Green Paper 'Transforming Public Procurement' (the 'Government Response'). We provided a 'first glance' summary and reported on the original Green Paper proposals here: Burges Salmon blog (burges-salmon.com)

The publication of the Government Response is a key milestone in the move towards comprehensive reform of the UK public procurement regime. It provides a clear indication of the Government’s direction of travel in relation to reform: highlighting principles and objectives that will be key to procurement decisions going forward, and confirming which elements of the existing system we can expect to stay (either in their current form or reshaped) and to go. 

Given the importance of the Government Response paper for both procuring entities and their suppliers, we have taken a deeper dive into the proposals. This is the first of a series of updates which will provide further detail on the likely future of:

  • procurement policy;
  • procurement routes; 
  • bid challenges; and
  • management of publicly procured contracts.

Although these articles use the term 'UK', at present the proposed new procurement regime will only apply to public bodies in England, although the Welsh Government has confirmed that it expects the new legislation to also make provision for Welsh contracting authorities, and we understand that discussions are ongoing with the Northern Ireland Executive. As procurement is a devolved matter in Scotland, it’s not expected that the proposed reforms would apply to Scottish contracting authorities. It remains unclear, however, how the new legislation is intended to interact with the Scottish procurement regime (a concern raised by the Law Society of Scotland in its consultation response but not dealt with in the Government Response).    

What’s the future of…procurement policy?

It’s clear from both the Green Paper and the Government Response that the proposed reform of the procurement rules is intended to go beyond a simple update, and is instead intended to provoke a comprehensive change in procurement processes and behaviours. The ultimate goal of the reform is clearly set out in the Executive Summary of the Green Paper:

'to speed up and simplify our procurement processes, place value for money at their heart, and unleash opportunities for small businesses, charities and social enterprises to innovate in public service delivery'. 

It is therefore fair to assume that the proposed reforms would be tailored to deliver these goals, and to some extent, this seems to be true (for example, the proposal to consolidate the four existing sets of procurement regulations into a single uniform framework). However, as always, the devil will be in the detail and there are warning signs from the Government’s response that both purchasers and suppliers should not expect the 'bonfire of red tape' that they may have been hoping for. 

Principles of public procurement to be enshrined in legislation 

The Government Response retains the proposal in the Green Paper to enshrine principles of public procurement in the legislation itself. However, it makes some changes to the principles originally proposed, with the creation of the following categories:

  • Objectives: maximising public benefit, VFM, integrity, promoting importance of fair and open competition; and 
  • Principles: transparency, non-discrimination, fair treatment.   

While some expected the principle of proportionality to form part of this list, the Government has proposed that this will not be an overarching principle but will instead be reflected in express requirements in the legislation (for example, to set proportionate timescales and conditions of participation). Further information of how the principle of proportionality will be captured in the regulations is awaited.

The proposal to enshrine certain procurement principles in the legislation could act as a useful reminder of the policy objectives behind the legislation, allowing procuring entities to use these as a benchmark against which they can make procurement decisions. However, it is currently unclear what distinction there is intended to be between 'objectives' and 'principles', and it is likely that some of the principles may come into conflict on occasion, both with each other and also other provisions of the legislation (e.g. promoting open competition vs limited tendering). 

In addition, it is unclear what additional obligations this will place on procuring entities authorities. For example, will procuring entities have to visibly demonstrate that they have had regard to each of the objectives and principles? Will they have to justify decisions in all cases by reference to those objectives and principles? Will this open up a new route (or at least expand existing routes) of challenge?

Procurement Review Unit

The Government Response builds upon the Green Paper’s proposals to recommend the establishment of a Procurement Review Unit ('PRU') to sit within the Cabinet Office. Its powers will stem from the new legislation, and its primary focus will be on addressing systemic/institutional breaches of procurement law, primarily acting on the basis of referrals from Government departments.  

The PRU may make recommendations to improve future compliance but will not target specific procurement decisions.  

The PRU will be advised by a non-statutory panel of subject matter experts appointed by the Cabinet Office, although the Panel will not have any sanctions available (only the Cabinet Office will have the power to make recommendations). It is unclear from the Government’s Response whether the Panel’s recommendations would be published alongside the Ministers decisions, although clearly such an approach would be in line with the principle of transparency. 

It is yet to be seen what impact the PRU is likely to have on a day-to-day basis. While its focus on addressing systematic breaches of the procurement rules is to be welcomed, this seems somewhat at odds with the proposal that it will act primarily on the basis of intra-Government referrals (who seem the least incentivised to draw attention to breaches). It is also unclear how the PRU would function in relation to alleged breaches by the Cabinet Office itself.   

A single regulatory framework

As expected, the Government Response concludes that the existing suite of procurement legislation (PCR, UCR, CCR and DSPCR) should be consolidated into a single uniform framework 'to the greatest extent possible'.

While it was always anticipated that some sector-specific rules would need to be retained in a single framework (for example, to ensure in the field of defence that purchasers have sufficient flexibility to respond to urgent operational requirements), opportunities to provide a single position appear to have been missed in favour of retaining the status quo (e.g. retaining qualification systems and the ability to modify contracts without being subject to a financial cap only for utility contracts). 

In addition, we expect that further differences in approach will apply for concessions and certain healthcare contracts, but no detail has yet been provided. In our view, when taken together, these differences (even where individually relatively minor) may well result in a unified framework in name only. 

It is also notable that there is an express intention to support the new legislation with 'a detailed and comprehensive package of published resources (statutory and non-statutory guidance on the key elements of the regulatory framework, templates, model procedures and case studies)'. Therefore, even if the hundreds of pages of existing legislation are successfully streamlined into a simplified single piece of legislation, those designing, implementing, managing and participating in procurement procedures will still need to be aware of an array of supporting documents, all of which may have different status (statutory v non-statutory) and potentially application. 

How can we help?

We will be releasing further updates on other aspects of the proposals shortly, and holding workshops on the new regime throughout 2022. Please contact John Houlden, Patrick Parkin, Laura Wisdom or your usual Burges Salmon contact(s) if you would like to receive updates, including if you are interested in tailored workshops on issues specific to your organisation.

 

Key contact

John Houlden

John Houlden Partner

  • Head of Public Sector
  • Head of Procurement and State Aid
  • Projects

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