The University of Nottingham School of Law hosted the first in person conference on procurement law regulation since the pandemic.
As an Alumni, it was really exciting to be back to discuss a number of topics and put forward views on the future of regulation in the UK, it was good to touch base with Government Policy, Legal and NHS colleagues who are trying to deliver services at Trust and Policy level for patients and to hear the challenges for practitioners and interpretations of lawyers of the impacts of the changes within the legal framework.
The new UK procurement regulations and Sustainability were the focus of the workshops that I attended in order to understand and plan our future support of members.
In summary; New Procurement UK Regulations.
The new regulations are moving away from Most Economically Advantageous Tender (MEAT) towards Most Advantageous Tender (MAT). This is more in line with language and rules within the WTO Agreement on Government Procurement, which is the primary international instrument regulating the conduct of international trade in government procurement markets. (GPA).
This is signalling the change in approach away from price-based tenders to be more holistic and being able to include non-price factors. The current EU rules, and the UK PCR 2015 regulations do allow for other “horizontal” award criteria but it is primarily focused on price and cross-border trade.
One of the key objectives is to simplify the rules – by removing the number of procedures. The UK government believed the existing procurement procedures (PCR 2015) were too inflexible, and will replace them with three simple, modern procedures (allowing the public sector more scope to negotiate with potential suppliers to deliver innovative new solutions); there will be Direct Award, Open and Competitive Flexible procedures. – this is where Contracting Authorities are able to individually design the structure of the tender to best suit the needs of that particular Contracting Authority, this may simplify it for the buyer, but potentially this will be more complex for the bidders. It is expected that these will be similar design to the current restricted procedure but as the name suggests, with more flexibility for customer specific needs. Eg. Demo’s etc. This should be more open to supplier engagement.
The language and style of the procurement bill will be much more in line with the UK domestic legislation rather than the terminology and language associated with the EU rules, which have generally been transposed into UK law as written in the EU Regulations. Whilst this will align terminology, the risk with this, is that a generation of procurement professionals in the UK are only familiar with language from the EU and some of the definitions differ, particularly Direct Award and what that means in terms of competition, more guidance on this will be provided as the detail is issued. Currently this is confusing and misleading.
The Procurement Bill itself is high level with the principles and objectives outlined, the expectation is that the rules and detail will be set out in secondary legislation so as to simplify the overall law. The new UK rules will consolidate many existing regulations governing public procurement to create a single, uniform framework, including for defence procurement. The government hopes that this framework will be quicker, simpler and better able to meet the country’s needs while remaining compliant with its international obligations.
The Bill has been proposed in the House of Lords and after the second reading will proceed to the Commons, this is not expected to be before 2023 at the earliest.
The principles within the UK Procurement Bill include a re-orientation of procurement objectives to confirm the overriding importance of certain key principles of public procurement: value for money, public benefit, transparency, integrity, fair treatment of suppliers, and non-discrimination. The main objective of the EU rules was a simple “open market” approach to ensure cross border competition and tendering to prevent discrimination. A major issue that was always part of the remedies directive in terms of challenging the contract outcome, is that Industry assumed that Value for Money was an objective of the public procurement rules, but it was not – only the domestic guidance included the additional objectives rather than the law itself. This is an explicit change in focus.
The new rules have Transparency at the heart of the matter, and this focuses on contracting data, KPI’s and Contract Termination information to be widely shared. The intention is that this should make it easier for SME’s to work within the system in a genuine once only approach which is defined within the UK’s procurement system rather that individual Contracting entities requirements Eg. NHS.
Some aspects of the new Procurement Bill are derived from the experiences and lessons from the pandemic, primarily relating to the chaos that ensued with public procurement and the ability of buyers to fairly and transparently navigate the rules on emergency procurement and the apparent cronyism in the procurement of supplies in response to COVID-19. The new rules are expected to introduce procurement processes that allow urgent procurement in an emergency with strengthened safeguards for transparency.
There will be an Open Contracting Approach, which an approach to open up and re-design public procurement by promoting transparency, collaboration, and achieving results.
It is about engaging public, private, and civil sectors to use procurement information and smarter processes to deliver better public goods, works, and services, this includes a single data platform for supplier registration which ensures that suppliers only have to submit their data once to qualify for any public sector procurement and tackling unacceptable behaviour such as supplier fraud through new exclusion rules and giving government buyers better tools to take account of a bidder’s past performance; and reforming the process for challenging procurement decisions to speed up the review system and make it more accessible.
Related to this is that the obligations on what Contracting Authorities should report back to tenderers will change, the detailed information that is required in the “standstill letter” will be amended through secondary legislation to enable Contracting Authorities to use what they have in terms of the evaluation against the criteria of the contract rather than the requirement to compare against other bidders. It is not known how this will be dealt with, and there is some concern that EU case law may not apply with the requirement to detail the relative characteristics of the winning bidder and the losing tenderer. How this affects the identification of a breach is not known, but some of the remedial provisions attempt to address this.
Currently there is a need for the Courts to balance between damages and other remedies, the UK government wants to remove speculative claims as from an economic viewpoint, it is perceived that contractors tend to prefer damages in the form of profit lost without the cost of actually performing the contract. They would like to remove the poor application of the rules and resulting damages and re-run the competition.
The new rules will require a number of conditions to be met for set aside of contracts and if a set aside condition is met, then damages must be provided for and this is either on award of a contract or after a modification to an existing contract is made.
There is provision for an “over-riding public interest” consideration and the new Bill is expected to include examples of situations that this applies to, for example continuation of the public service.
It is expected that a Court should ignore the cost to a Contracting Authority on legal ramifications of setting aside a contract that is found to be in breach of the rules. If a breach is found but the “over-riding public interest” is found to apply – then the Court must reduce the term/ quantity/ services or goods to allow for re-procurement. This is something that does not currently happen and a contract that should be set aside rarely is. There is also an introduction of terminology that enables the setting aside of a contract when a breach is found after the contract is awarded or modified. The current rules require a claim to be made within 6 months from the time the breach is known to be made, and the new rules will allow the Court to extend this limitation if appropriate.
It is important to note, that the international treaty (GPA) requires competition, but the new system will satisfy this requirement within the burden on competition being the primary objective. The way to achieve this doesn’t need to be written in administrative (written/ hard) law but can be through practice as is intended with the new rules and end goals. Competition is a means to achieve the end goals.
Competition itself is not explicit within the new procurement regime although in practice if the principles of the new rules are met, then competition will be achieved, however it is not a principle in itself which moves away from the EU model.
A key point to note is that Scotland intend to deliver their own legislation but are “working with” the UK government and there may be other limitations with regard to Wales and Northern Ireland depending on how they deal with this at a devolved level. The potential issues with this divergence include North/ South competitiveness, difference in treatment of Scottish suppliers and Scottish public bodies, how UK bodies in Scotland are affected, what the procurement capacity and capability is and the political situation. There will in all likelihood be commonality in principles in accordance with the GPA and the legislative common framework.
For the NHS Health and Social Care Act, there will need to be further understanding of how these 2 pieces of legislation will interact in practice as they already have some different provisions around provider selection. Similarly, some framework provisions can be applied via a light touch regime, which is not currently undertaken.
UK Modern Slavery Act could also be amended to require public sector to report against their modern slavery objectives. The new procurement rules have tried to tighten up on exclusion grounds so that Contracting Authorities can exclude bidders on evidence rather than a conviction which is the current requirement.
Interestingly, Social Value as a subject is not mentioned in the Bill. This is to be found in the National Procurement Policy Statement and will be in the secondary legislation.
One final point is that the Procurement Transformation Green Paper did appear to imply that the UK government would use the new rules to favour domestic providers, however this is not in accordance with the international treaties and access to markets is paramount, so we will not see a favourable regime to domestic suppliers, however some of the guiding principles and competition may potentially have an impact on the cross-border element. This is purely academic and remains to be seen.
If members would like to discuss any of this in more detail, I am happy to do so, please contact me!