Transforming Public Procurement: Part 2

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

09 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 on our Burges Salmon blog

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 second 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).   

You can also read our previous article on this topic here:  

What’s the future of procurement routes?

The Government’s response to the Green Paper retains the proposal to introduce new procurement procedures. At present, contracting authorities may choose from five procurement procedures:

  • The open procedure;
  • The restricted procedure;
  • The competitive dialogue procedure ('CD');
  • The competitive procedure with negotiation ('CPN'); and
  • The Innovation Partnership. 

The open and restricted procedures are to be used by default, whilst CD and CPN are reserved for more complex requirements. The Innovation Partnership is used less frequently, where an authority needs to procure a solution that is not yet available in the market. In addition to these procedures, authorities may use the negotiated procedure, without prior publication, to award contracts without competition, including where there is extreme urgency, or where there is no competition in the market. 

New procedures

There will be fewer procedures available under the new procurement regime. Contracting authorities will be able to choose from:

  • The open procedure;
  • The limited tendering procedure; and
  • The competitive flexible procedure ('CF'). 

In practice, we would expect those procurements that were previously conducted under the open or restricted procedure to adopt the new open procedure – which the Green Paper response states will be suitable for 'simpler, off the shelf products'. We also expect that the CF procedure will be used for those procurements that previously would have been run under CD or CPN.  

The Limited Tendering Procedure will cover those circumstances that are currently set out in Regulation 32 PCR 2015, including when there is extreme urgency – with further guidance promised to define a new 'crisis' ground to cater for procurements where there is a local or national emergency, when 'action is necessary to protect life'. On first inspection, this suggests that it may be capable in more circumstances than the current 'urgency' exemption, which should be used only when the need for the goods, works or services was not 'foreseeable'- which is a high threshold to meet in practice. 

The responses received by Government were lukewarm about the new procedures, with 44 per cent of responses providing only qualified support. Interestingly, it seems that the flexibility offered by the new CF procedure works both ways – it provides authorities with a level of autonomy to design procedures that are tailored to the procurement in hand. However, with that flexibility comes inconsistency and a level of uncertainty, which resource-stretched authorities can ill-afford, in particular with the series of other resource-intensive measures that the new regime will introduce. In our view, whilst the reforms are brought with good intentions, the reservations are well-founded, particularly outside of central government and larger contracting authorities that are more likely to have the people and budget to tailor procurements on a case-by-case basis. 

Template options

In response to reservations from authorities that the new competitive, flexible approach could increase the time it takes to plan a new procurement, the Government has said that it will develop guidance with 'template options for contracting authorities to design their procedures, without being so prescriptive that it stifles innovation or the use of bespoke processes where deemed appropriate'. In our view, this is a sensible approach, but its ultimate success will be on the quality of the templates and accompanying guidance. 

Ideally the templates will set out a clear approach that can be implemented in practice without significant cost, but with clear indicators (including case study examples) of how procedures may develop. Guidance, for instance, on the options available for down-selecting bidders at award stage, for the development of contract terms and for the actual conduct of bidder engagement meetings would, we are sure, be welcomed by authorities.  

Light Touch Regime

For the procurement of certain health and social care services, the proposals to remove the Light Touch Regime have been withdrawn. This gives authorities greater flexibility to design a procurement process outside the constraints of the procedure above, so long as they adhere to the core principles set out in Regulation 18 – namely, transparency, equal treatment, proportionality, non-discrimination and mutual recognition. 

However, the Government also received some resistance at the proposed removal of the Light Touch Regime. The feedback raised concerns that 'important flexibility would be removed and contracts for services such as health/social care would be adversely affected, for example requiring set time limits could delay delivery of services.' 

The Government response signposts that further consideration will be given to exempting certain procurements from the need for competition (e.g. where service user choice is important, such as the appointment of providers for children in secure education and care settings). 

It is not expressly stated in the report that a large proportion of procurements that are currently subject to the Light Touch Regime will also cease to be when the NHS Provider Selection Regime is introduced, which will apply to certain healthcare services procured by NHS Trusts and Foundation Trusts Integrated Care Systems, NHS England and local authorities. The net result is that, in practice, the Light Touch Regime would have become largely redundant under the new procurement rules. In our view, the removal of it now makes sense and helps to simplify the rules (even if that leaves many authorities and bidders with a need to familiarise themselves with an entirely new and separate NHS regime). 

How can we help?

We will be 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 regarding these events, or if you are interested in tailored workshops on issues specific to your organisation.

 

Key contact

Patrick Parkin

Patrick Parkin Partner

  • Healthcare
  • Procurement and State Aid
  • Commercial

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