Public Procurement Reform Update – Government’s response to consultation

Back in December 2020, we informed our readers about the Government’s proposal to shape the future of public procurement legislation, with its publication of the Green Paper: Transforming Public Procurement (the Green Paper). Later that month the public consultation of the Green Paper began, closing on 10 March 2021. The Cabinet Office analysed the consultation responses and published Transforming Public Procurement: Government response to consultation (the Response) on 6 December 2021.

This note summarises some of the key themes identified in the Response and the Cabinet Office’s proposed next steps leading to its implementation. In total, there were 619 responses to the public consultation, with 226 of these being from contracting authorities, of which almost half were from local government.

So what are the key themes?

Overall, there was a good response to the reforms in the Green Paper. Many responses recognised the “ambition and extent of the package of proposals” with support for reform and overarching legal principles of public procurement. With this recognition of the ambition of the proposed reforms, came some concern from many of the respondents, who felt that to realise the benefits of the reforms there will understandably be quite significant challenges in their implementation. This could have a knock on effect for local government procurement teams’ resources. The Cabinet Office recognises that contracting authorities will also need to have capacity and capability within their teams in order to benefit from the reforms, as reform alone cannot make procurement faster or more effective. There were suggestions in responses for the Cabinet Office to make training and guidance available, which it has always said it would, and from the respondents’ point of view, it is clearly vital to help their procurement teams prepare for significant changes.

The following themes stem from the Response as a result of the public consultation.

Single regulatory framework

There was support for a single regulatory framework but with some flexibilities retained for utilities contracts (currently under the Utilities Contracts Regulations 2016) and also some exemptions for contracts awarded under the Defence and Security Regulations 2011.

Light Touch Regime

Interestingly the Light Touch Regime will remain, following the Green Paper’s proposal for its removal.  However, it will still be subject to improvements to its scope and application.  Some respondents were concerned about certain contracts, and felt that the proposed lowering of contract value thresholds would result in more contracts falling within the scope of the new regime, which removes necessary flexibility.

Exclusion of Suppliers

It was clear that respondents wanted a more comprehensive look at updating the legal reasons for excluding suppliers.  Respondents’ provided positive feedback for some proposals to have a more robust approach to the exclusion of suppliers for misconduct (such as fraud, corruption or poor performance).  Indeed, the current regulations appear to be unclear and confusing to many respondents, who, for example, pointed out that the scope of some of the exclusion grounds can be ambiguous.  The Response recognises these concerns and intends to introduce a new “exclusions framework” intended to be both clear and simple with a focus on identifying and excluding suppliers more likely to present an unacceptable risk to true competition in procurements.

Transparency

Respondents indicated their broad support for greater transparency in procurement, and so the Response recognises that transparency needs to be improved throughout the procurement lifecycle.  There were still questions and concerns about how far to go and not creating a burden on contracting authorities, thereby creating a lengthier and more cumbersome procurement process, which would be contradictory to the aims of the reforms.  Reassuringly, the Response confirms the intention to ensure that any transparency requirements are proportionate to the procurement being carried out and, likewise, will be straightforward and simple to implement.  With this in mind, detailed guidance will be published

Capping damages

There appear to be mixed views on the proposed introduction of a cap on the level of damages for bidders successful in a contract award challenge.  On the one hand, there was the feeling that a cap might discourage speculative challenges, whilst on the other hand there was concern about this actually increasing costs by slowing down a procurement.  Although this particular proposal to cap damages has been scrapped, the Response does not lose sight of the fact that something needs to be done to help to expedite the resolution of disputes, and reduce the need to pay compensation to an unsuccessful bidder after the contract has been signed.  Government will therefore consider this further.

Next steps

As mentioned earlier, the proposed reforms are going to bring significant change to public procurement, requiring sufficient time for contracting authorities to prepare, along with their need for training, support and guidance and having appropriate procurement team resource.  Government intends, but has not yet confirmed, to provide six months’ notice of the new legislation coming into force, in order to provide time and support for effective implementation.  Although the reformed public procurement regime is unlikely to come into force until 2023 at the earliest, contracting authorities would be advised to consider their current procurement resource early on, and how any training might be implemented, as well as any possible changes to their internal contract procedure rules that may be necessary to reflect the new rules.

Further articles addressing the new procurement regime will be published in the future to keep you all updated on its progress and implementation.