Key points for local authorities and housing associations: Government Response to the Transforming Public Procurement consultation
On 6 December 2021, nearly 12 months following the publication of the Government's Green Paper on Transforming Public Procurement, the Government published its long-awaited response to the consultation, having concluded its lengthy review of more than 600 responses received from contracting authorities, bidders and professional advisers (the Response).
In addition to amending some of their initial proposals to address feedback raised by the respondents, the Government has also provided some clarification within the Response itself and has also promised much-needed guidance in the future. This article briefly outlines the key issues for local authorities (LAs) and housing associations (HAs) ahead of the introduction of new legislation.
The Response confirms that we will move away from the current set of procedures (which are often viewed as complex and inflexible for contracting authorities to apply) and there will instead be three main procedures to choose from (which are described as modern and flexible):
- The Open Procedure (which will be retained for simple or "off the shelf" products);
- The Competitive Flexible Procedure (which will replace the current restricted, competitive dialogue, competitive procedure with negotiation and innovation partnership procedures, and will give contracting authorities the freedom and flexibility to negotiate and innovate in order to get the best from the private, charity and social enterprise sectors); and
- The Limited Tendering Procedure (which will replace the existing negotiated procedure without prior publication and which will be available for use in certain specified circumstances, such as extreme urgency).
In practice, it is likely to take contracting authorities some time to get used to changes in the procedure, but the Government has promised further guidance (and model procedures) which LAs and HAs might find of assistance in transitioning to a new approach to procurement.
Awarding contracts to the right supplier
The transition from Most Economically Advantageous Tender (MEAT) to Most Advantageous Tender (MAT) enables contracting authorities to take account of wider considerations beyond price or other economic criteria when awarding contracts. It will also be possible for award criteria to be unrelated to the subject matter of the contract in specified circumstances, and evaluation will no longer have to be made solely from the point of view of the contracting authority.
Largely, this is a reshuffling of the deckchairs, and LAs and HAs are already leading the field in terms of achieving the best outcomes possible for their communities and residents (such as incorporating social value outcomes and priorities into their procurements). It is hoped that the move to MAT should allow LAs and HAs greater flexibility in terms of taking account of key strategic considerations (such as net zero carbons priorities, and making use of evaluation criteria which bring Scope 3 emissions under better scrutiny and which will assist in promoting carbon savings), and this should emphasise the ability to take a broader view of evaluation criteria.
Using the best commercial purchasing tools
The Response confirms that the Government will proceed with its proposals for open and closed frameworks, with closed frameworks limited to four-year terms, and open frameworks to eight year terms (subject always to the ability to exceed those durations where there is a relevant justification to do so).
Of particular note, open frameworks will be able to have new suppliers appointed, but will need to be re-opened for competition. Practically, LAs and HAs will need to consider how useful open procedures will ultimately be given the requirement to reopen the competition.
The Response also retains the possibility to charge suppliers when awarding a call-off under frameworks, continuing the ability to use procurement tools as commercial models. However, of note, any profits made by contracting authorities through charging for access to commercial purchasing tools will need to be used solely in the public interest (although this is unlikely to prove problematic for LAs and HAs).
Ensuring open and transparent contracting
In the Response the Government retained its stance on embedding transparency by default throughout the entire procurement lifecycle, though it did take account of the concerns raised around the additional burden, cost and potential anti-competitive implications. To reduce this burden, there will be a value threshold of £2 million or more before appropriately redacted contracts need to be published alongside the contract detail notice, and debrief letters will also no longer be required. This value threshold will be a relief to smaller LAs and HAs for whom the cost of reporting, redacting and publishing lower-value contracts would have been significant.
The proposal to introduce a central digital platform for commercial data goes to the heart of the transparency proposals and is intended to save cost and time through its "tell us once" approach. As a result, it will be imperative for contracting authorities to maintain a fully functional IT system to enable them to discharge their transparency obligations.
Although the new regulations are unlikely to come into force until 2023, LAs and HAs will need to ensure they have adequate resources to fulfil the new transparency requirements whilst also maximising the benefits of the additional flexibility and simplification of the regime. Despite the Government's detailed Response, the actual implications of the new regulations will not become clear until they are published. There will be a six month "go live" period between the detail being published and the regime "going live" – LAs and HAs are well advised to use this period constructively: to ensure that their staff are trained and competent in applying the new rules and that they are in a good position for the new regime.
Whether or not the new regime will have the desired effect will depend on how successfully they are implemented and embraced by contracting authorities in practice. The sector as a whole will need to ensure that those responsible for procurement are trained and upskilled in order to take advantage of the new flexibilities provided, without getting bogged down by the enhanced transparency obligations.