Procurement in a Nutshell – Procurement Act 2023: ‘Principles and Objectives’
25th January, 2024
This Nutshell will analyse the existing 'Principles' and the new 'Objectives', drawing attention to any key changes from previous procurement legislation which contracting authorities ought to be aware of.
On 26th October 2023 the Procurement Bill received Royal Assent and is now expected to come into force in October 2024.
The Procurement Act 2023 establishes a new public procurement regime following Brexit, and aims to deliver the Government’s promise to grow the economy by creating a simpler and more transparent system.
This new system hopes to ensure better value for money and reduce costs for businesses and the public sector. The Act also seeks to streamline the procurement process, and afford contracting authorities more flexibility to negotiate prices and create innovative solutions with bidders.
The Act will, in particular, revoke the following:
- Public Contracts Regulations 2015 (PCR)
- Concession Contracts Regulations 2016
- Utilities Contracts Regulations 2016
What’s new?
Section 12 of the Procurement Act outlines four specific objectives which contracting authorities must have regard to when conducting a procurement. These are:
- The importance of delivering value for money
- Maximising public benefit
- Sharing information and
- Acting (and being seen to act) with integrity
In addition to these objectives, which authorities must have regard to, section 12(2) states that an authority must treat suppliers “the same”, unless there is a difference between suppliers which justifies different treatment (s.12(3). Despite the new language, this new objective is akin to the principles of equal treatment and non-discrimination under the PCR 2015.
Contracting authorities should note the Act’s deliberate use of language. The objective of same treatment places a strict obligation (must) on contracting authorities when conducting a procurement, while the first four objectives are factors for consideration (must have regard to). Case law suggests that contracting authorities should give thought to, and engage with, the first four objectives, but it is not essential that authorities fulfil each of those objectives in full when conducting a procurement, so long as they have a clear reason for not following that objective.
We recommend that contracting authorities ensure they keep records detailing their engagement with the objectives, as well as providing reasons why they may have departed from some objectives. This will act as evidence that the contracting authority fulfilled their obligation to have regard to the objectives, which is particularly important given that such consideration for the objectives is legally enforceable against authorities (s.100(1)).
Section 12(4) introduces a new obligation that contracting authorities must have regard to the fact that small and medium sized enterprises (SMEs) may face particular barriers to participation and should therefore consider whether such barriers can be removed or reduced. While this objective seeks to encourage greater involvement of SMEs in procurement, section 100(5) specifically states that a contracting authority’s duty to comply with section 12(4) is not legally enforceable in civil proceedings.
Section 13(9) states that a contracting authority must have regard to the National Procurement Policy Statement (NPPS). These national priorities are currently:
- Social value – creating new businesses, new jobs and new skills; tackling climate change and reducing waste; improving supplier diversity, innovation and resilience.
- Commercial and procurement delivery – having the right policies and processes in place to manage the key stages of commercial delivery.
- Skills and capability for procurement – considering your organisational capability and capacity with regard to the procurement skills and resources required to deliver value for money.
As with the first four objectives listed in section 12, contracting authorities should ensure they have records detailing their engagement with the NPPS, as well as providing reasons for why some national priorities may not have been given significant attention during the procurement. The full statement can be found in PPN 05/21.
What’s changed?
The objectives listed in section 12 do not include reference to transparency or proportionality, like the PCR 2015. However, a contracting authority’s obligation to be transparent and proportionate is embedded throughout the Act.
Proportionality is built into the Act particularly in relation to designing a procurement, including the conditions of participation and award criteria. Examples of when contracting authorities must act proportionally include:
- s.20(3) – When using a competitive tendering procedure a contracting authority must ensure that the procedure is a proportionate means of awarding that contract.
- s.22(1) – A contracting authority may set conditions of participation in relation to the award of a public contract only if it is satisfied that the conditions are a proportionate means of ensuring that suppliers have the legal and financial capacity and the technical ability to perform the contract.
- s.23(2) – Award criteria must be a proportionate means of assessing tenders.
- s.36(1) – When a contracting authority sets conditions for membership of a dynamic market, it must be satisfied that those conditions are a proportionate means of ensuring that members have the legal and financial capacity and the technical ability to perform the contracts.
- s.46(1) – When a contracting authority sets conditions for participation in a competitive process for a framework, it must be satisfied that those conditions are a proportionate means of ensuring that members have the legal and financial capacity and the technical ability to perform the contracts.
- s.58(3) – When requiring evidence as to whether or not a supplier is excluded or excludable, a contracting authority must be satisfied that those requirements are proportionate in the circumstances.
As with proportionality, a contracting authority’s obligation to be transparent is incorporated into the Act, despite a lack of specific reference as an objective. The requirements on contracting authorities in relation to transparency will be explored in depth in a future Nutshell.
What does this mean?
While there are some differences between the new Procurement Act and the PCR 2015 in relation to the objectives, the considerations expected of contracting authorities when conducting a procurement are substantially the same.
The language has changed, but the content remains consistent. Contracting authorities are expected to be transparent and proportionate, despite no specific reference in the objectives, and must treat suppliers equally.
Contracting authorities must have regard to delivering value for money, the public benefit and the NPPS (among others), but the key will be accountability and being able to evidence that these matters were given due consideration.
For further information please contact Melanie Pears or Tim Care in our Public Sector Team.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
This page may contain links that direct you to third party websites. We have no control over and are not responsible for the content, use by you or availability of those third party websites, for any products or services you buy through those sites or for the treatment of any personal information you provide to the third party.
