The introduction of the Procurement Act 2023 (Act) will overhaul the UK’s public procurement regime from October 2024. It aims to deliver better value for money, maximise public benefit and increase transparency.
Despite Registered Providers of Social Housing (RPs) not being explicitly named in the Act, it appears from WTO coverage schedules and government briefings that they will be included within its scope. It is therefore essential that RPs are up to speed with what the Act means for their business both in terms of challenges and opportunities.
Opportunities
Against a challenging economic backdrop, the Act brings opportunities for RPs to improve and optimise their procurement processes.
- Broader Scope
The new regime widens the scope for assessing tender submissions from being required to choose the ‘most economically advantageous tender’ to the ‘most advantageous tender’. This change allows for a more comprehensive assessment, enabling the inclusion of factors such as social value. RPs will therefore now be able to align procurement processes with wider charitable objects and regulatory standards which will be of particular interest given the scope of the new consumer standards.
- Bespoke tenders
The Act streamlines procurement procedures, reducing them from six to two, including a ‘competitive tendering procedure.’ This less prescriptive approach empowers RPs to design and implement bespoke tender processes tailored to the specifics of each contract. This flexibility enables a more nuanced approach, allowing RPs to negotiate commercial aspects and gain a deeper understanding of market dynamics before finalising contracts.
- Fewer tendering cycles
The Act introduces the concept of an ‘open’ framework, which allows the lifespan of a framework agreement to extend to 8 years, provided the contract remains on the same terms and new suppliers are eligible to join during its lifetime. This substantial extension reduces the need for tendering every 4 years when contract terms and conditions remain stable, alleviating administrative burden.
Challenges
The Act also brings a range of challenges, particularly relating to increased transparency.
- Notices
The Act will require RPs to publish notices containing a range of information, some of which may be commercially sensitive. This includes, among other things, a Contract Termination Notice where the RP must explain why a contract was terminated. Managing this shift in information disclosure will demand a higher level of accountability from RPs in managing contracts and supplier relationships, as well as an increase in resources. RPs will need to prepare by ensuring they have the skills and systems in place.
- Record Keeping
RPs will be required to keep records of all communications which it considers are necessary to explain material decisions made in relation to the award of or entry into a public contract. The records will be required to be kept for a period of 3 years from the contract award date.
- KPIs
Contracts valued at over £5 million will necessitate RPs to publish at least three Key Performance Indicators (KPIs) via a Contract Performance Notice, reporting against them every 12 months. RPs must carefully manage ongoing contracts and supplier sensitivities when more information is disclosed in the public domain. Note that this obligation excludes framework agreements, light-touch contracts, or situations where the RP deems contract performance cannot be assessed via KPIs.
- Scrutiny
The introduction of public notices and KPIs opens avenues for the public to scrutinise how public money is spent and contracts are managed, potentially impacting an RP’s reputation. RPs must carefully consider the KPIs they publish to navigate this heightened scrutiny.
Furthermore, the Act introduces a Procurement Review Unit (PRU) which will comprise of an independent panel of procurement experts empowered to investigate potential procurement challenges and provide advice. The PRU will have authority to investigate an RP’s compliance with the Act and RPs will have a duty to implement any recommendations made. Note that the PRU will not have the authority to adjudicate on the lawfulness of a particular procurement.
RPs will need to ensure they have appropriate training and support in place for their procurement teams to assist with the transition and to ensure compliance with the new regulations.
The Act brings about a shift in the way public procurement will be conducted and is likely to impact RPs differently, particularly depending on their size. Larger RPs with substantial procurement teams and resources will be more likely to exploit opportunities in creating bespoke tender processes, while smaller RPs could face challenges adapting to increased transparency requirements.
The bottom line is the introduction of the Act presents a great opportunity for RPs to rethink their approach to procurement and consider if there is untapped potential to drive better efficiencies and quality across their business.