Public procurement law reforms and UK businesses

Answer

What’s procurement law?

Procurement law refers to the legal framework that governs how public bodies and organisations purchase goods, services and works from external suppliers. It aims to ensure that these purchasing processes are fair, transparent, and competitive, and that they provide good value for money.

In the UK, procurement law is primarily governed by the Public Contracts Regulations 2015 (PCR 2015), which implemented the 2014 EU Procurement Directive into national law. These regulations apply to the procurement of goods, services, and works by public sector organisations, such as central and local government, academies and hospitals.

There are three other sets of regulations that also currently govern procurement law in the UK. These are:

• The Utilities Contracts Regulations 2016 (which apply to certain utilities such as water, energy, and transport suppliers);
• The Defence and Security Public Contracts Regulations 2011 (which apply to certain defence and security contracts); and
• The Concession Contracts Regulations 2016 (which apply to the award of a concession contract such as the operation of a toll road).

What’s the Procurement Bill?

Following Brexit, the UK is no longer bound by the EU Procurement Directives. It’s therefore free to adopt its own approach to the regulation of public procurement and introduce new legislation to reflect this, so long as the new legislation is compliant with the UK’s international obligations and trade agreements.

The Procurement Bill is a proposed piece of legislation currently going through Parliament that will repeal the PCR 2015 and the associated regulations when it comes into force. The government has announced that the reforms proposed within the bill will “shake up our outdated procurement system” and “place value for money, public benefit, transparency and integrity at the heart of our procurement system”. The new regime is intended to be a more flexible system that will open up public procurement to new market entrants, such as small businesses and social enterprises more effectively so that they can compete for and win more public contracts. 

The Procurement Bill will consolidate all of the existing regulations into one piece of legislation with the aim of making the regime simpler. The Procurement Bill is expected to receive royal assent later this year, with a six-month advance preparation period likely to follow before the new act takes effect.

What impact will the Procurement Bill have on UK businesses and public bodies?

As currently drafted, and noting that the bill could change through the parliamentary process, the Procurement Bill will make a number of changes to how procurement processes should be run. The bill will regulate everything from the initial engagement of public bodies with the market through to setting requirements and evaluating tenders, to awarding a contract and then managing a contract throughout its lifetime.

Both public sector bodies and UK businesses will need to ensure that they understand what’s required of them under the new legislation.

For public sector bodies, they’ll need to be aware of duties and obligations imposed on them under the new legislation. A key premise of procurement law has always been the need for public bodies to act transparently – for example, in setting their requirements and explaining how tenders will be evaluated. The transparency obligations on public bodies will be increased under the act with public bodies needing to publish a significant number of new notices throughout the procurement process and following contract award to explain their intentions and to allow the market to respond. Public bodies must be aware of what the different notices are and the relevant timescales for publication to ensure that they comply with the law.

UK businesses will also need to be aware of the changes so that they understand how procurements should be run and what rights and remedies are available to them under the act. A further example of the increased emphasis on transparency is that contracting authorities will be required to provide suppliers that have bid in a procurement with a greater amount of information once the outcome of the procurement has been communicated. That information will need to cover the full audit trail of the evaluation process and will therefore enable the unsuccessful bidders to scrutinise the robustness of the process from the very outset, rather than having to make formal disclosure requests (and possible court applications) for this information.

Another key change envisaged under the new procurement regime, that will impact suppliers, is the introduction of a centrally-managed public debarment list. If a supplier is excluded from a procurement because, for example, it’s been convicted of tax offences or it was considered to have engaged in professional misconduct, it can subsequently be placed on the debarment list (following an investigation). Being on the list could mean that it’s prevented from bidding in future procurements. Bidders will therefore need to ensure that they’re aware of what behaviours could lead to them being placed on the debarment list to protect against this occurring.

How does the introduction of new legislation such as the Procurement Bill impact lawyers?

The introduction of new legislation such as the Procurement Bill will of course require lawyers practising in this area to adapt to the changing legal landscape. The introduction of new legislation can also create opportunities for law firms that are able to effectively navigate the changes and assist clients in understanding and complying with the new requirements. For example, lawyers may be able to offer training sessions to ensure that clients are aware of the reforms and the specific impact that these changes will have on them.   

In commercial practice, it will be vital for lawyers practising within the procurement sector to stay informed about the legal developments and changes that the Procurement Bill will implement and, more importantly, how these changes will impact clients.

Victoria Croshaw is a solicitor at Bevan Brittan LLP.