Procurement in a Nutshell: Procurement Act 2023 – Transparency Part 2
9th February, 2024
This Nutshell will focus specifically on transparency requirements following a procurement, particularly in relation to contract management. For an exploration into the transparency requirements prior to, and during, a procurement, please see our previous Nutshell.
The Procurement Act 2023 (the Act) is expected to come into force in October 2024.
The Act will, in particular, revoke the following:
- Public Contracts Regulations 2015 (PCR)
- Concession Contracts Regulations 2016
- Utilities Contracts Regulations 2016
What this Nutshell covers
This Nutshell will focus specifically on transparency requirements following a procurement, particularly in relation to contract management. For an exploration into the transparency requirements prior to, and during, a procurement, please see our previous Nutshell.
What’s new?
- Key Performance Indicators (KPIs) (s.52):
- Section 52 states that before entering into a public contract with an estimated value of more than £5 million, a contracting authority must set and publish at least three key performance indicators in respect of the contract. These KPIs will be set out in the Contract Details Notice and are then used to assess contract performance under section 71 (see below).
- Procurement Termination Notice (s.55(2)): This section applies if, after publishing a Tender or Transparency Notice for a public contract, a contracting authority decides not to award the contract.
- Notification of Exclusion of a Supplier (s.59): This notice should be sent to the Government, when a contracting authority has applied an exclusion ground to a supplier (s.59(3)). If the Minister decides to investigate an exclusion ground in relation to a supplier, then they must give the supplier in question notice of the investigation (s.60(3)).
- Payments Compliance Notice (s.69(1)): This is a regular notice that has to be published by a contracting authority if, during the period prior to the publication date, that authority has made a payment, or a payment has become due, under a public contract. This builds on the current obligations in the PCR under Regulation 113.
- Assessment of Contract Performance (s.71(2) and (5)):
- Section 71(2) states that an assessment of contract performance must be published at least once every 12 months during a contract and on termination of the contract. This notice is used to assess the performance of a supplier against the relevant KPIs (set in accordance with section 52) and must be rated either good, approaching target, requires improvement, inadequate or ‘other’.
- Section 71(5) states that if there is a breach of contract which has resulted in termination, the award of damages or a settlement agreement, then within 30 days the contracting authority must publish information setting out the circumstances which give rise to the application of section 71.
- The publication requirements under Section 71(5) also apply if a contracting authority considers that a supplier is not performing a public contract to its satisfaction, has been given proper opportunity to remedy the breach or improve performance and has failed to do so.
- The Assessment of Contract Performance Notice requires a significant amount of information to be disclosed, including, under section 71(5), details of any damages paid in a settlement and the terms of any negotiated settlement. Thus, we advise that a contracting authority’s confidentiality clauses be updated to expressly permit this disclosure in order to avoid disputes.
- Contract Change Notice (s.75(3)): This must be published every time a contracting authority intends to modify a contract. This triggers a voluntary standstill period of at least 8 working days.
- Contract Termination Notice (s.80(3)): This must be published within 30 days of the date on which a public contract is terminated (including expiry).
- Conflicts Assessment (s.83): A contracting authority, prior to publishing a Tender Notice, Dynamic Market Notice or Transparency Notice, must prepare a Conflicts Assessment. When publishing “any relevant notice” (such as the Contract Details Notice) it must confirm that a conflicts assessment has been prepared and (if relevant) revised.
- Below Threshold Tender Notice (s.87(5)): This must be published when a contracting authority intends to award a contract that is below threshold.
- Pipeline Notice (s.93(2)) – This must be published within 56 days of the beginning of the contracting authorities financial year if it considers that it will pay more than £100 million under “relevant contracts”. It must also contain information about any public contract with an estimated value of more than £2 million in which that authority intends to publish a Tender Notice or Transparency Notice during that period. A “relevant contract” is any contract for goods, services or works, other than an exempt contract.
What’s changed?
A significant change under the Procurement Act is the requirement to publish an assessment of a supplier’s contract performance. This could be useful to contracting authorities as a supplier who fails to meet their contractual requirements will be exposed in the public domain, providing an incentive to comply with contract requirements and, where KPIs are set, to satisfy the KPIs to a ‘good’ standard.
What does this mean?
The new requirements in relation to contract performance, while advantageous in enforcing a supplier’s contractual obligations, must be given thought by contracting authorities. As previously noted, contracting authorities should review, and potentially update, their confidentiality clauses to expressly permit disclosure under section 71 in order to avoid disputes.
Contracting authorities should also be prepared to incorporate more detailed KPIs into public contracts so that suppliers are clear on how to meet the contract obligations and avoid negative publicity under section 71.
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.
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