Yes, the Procurement Act 2023 (PA23) is a piece of legislation that really is a big deal. With the UK’s departure from the EU, we are replacing the current procurement system. Yes, that’s a new law governing about £300bn per annum of HMG’s public sector expenditure. The new Act covers England, Wales and Northern Ireland. This legislation was officially given Royal Assent in October 2023, meaning that the regulations governing this spend are about to change. From as early as October 2024, this new regime will go live to create a simpler, more flexible and effective system. We wait with baited breath to see if this deadline is achieved and the committed L&D resources. So, it is a big deal if you deal with the public sector or you are considering it. Let’s go into a bit more depth about the Procurement Act 2023 and getting ready for procurement transformation.
The benefits of the Procurement Act 2023
In theory, the new legislation should yield a number of benefits to public sector procurement, the economy and to potential suppliers. Who knows, it may even reduce the estimated £33bn to £58bn annual losses from economic crime and fraud. Crucially, the Government sees this as removing barriers to SMEs and VCSEs working with Government and the rest of the public sector. One key tenet of PA23 is a duty on contracting authorities to consider the barriers facing SMEs and how to overcome them. We already know that the Government also wanted SME involvement in supply chains in up to one third of cases by 2022. Not only was this to increase innovation but also to stimulate social value via widespread social, economic and environmental benefits.
Procurement Act 2023 benefits
Systems and processes
- Creating a simpler, more transparent and more flexible procurement system.
- Reducing bureaucracy and red tape with 350 rules removed from the EU regime.
- Removing underperforming suppliers and those who pose material risks.
- Creating a centralised digital platform for suppliers to register (aka “tell us once”).
- Implementing a set of unique identifiers to enable tracking and matching of work.
- Enabling transparency over records of contract awards and to monitor performance.
Contracting authorities
- Improving the way authorities conduct procurement and manage contract lifecycles.
- Increasing value for money for taxpayers via more effective procurement processes.
- Requiring authorities to secure value for money, act in the public interest and with integrity.
- Mandating a minimum of 3 KPI’s for contracts worth more than £5m.
Tendering suppliers
- Requiring large authorities to publish pipeline contracts worth more than £2m at least 18 months in advance.
- Increasing opportunities to join at any time and participate in ‘quick competitions’.
- Extending longer-term frameworks to up to 8 years but giving others an opportunity to join rather than becoming ‘locked out’.
- Improving feedback for failed bids with a direct comparison to the winner.
Social value
- Encouraging small-medium enterprises and social enterprises to gain a larger share of spend.
- Stimulating local economies and also encouraging new, innovative solutions.
- Enabling proper and full scrutiny over how taxpayers’ money is spent.
- Expanding award criteria from ‘most economically advantageous’ to ‘most advantageous’.
Getting ready for Procurement Act 2023
It is tough not to get excited by a change to the current procurement regime. With real terms economic growth of 0% in the UK since 2019, we really need to change up a gear. If you are currently contracted with one of the national or local procurement authorities, it is recommended to treat this as a change programme in its own right. Anyone on your staff who is involved in public sector procurement processes needs to know about these changes. It is also important to note that these new regulations do not apply to ‘in-contract’ work. New contract awards following go-live in October 2024 (we hope) will need to adhere to the new system.
What can senior leaders do to prepare for PA23?
Senior leaders need to start planning for these changes now. Start by nominating an expert or ‘champion’ internally to lead the change. In some cases, organisations will be running two sets of regulations in parallel, where they are part-way through a contract. Similarly, internal commercial and bid teams will require training and can begin to assess any innovations that might help you to secure work. Additionally, SMEs can begin to prepare for the new regime, ensuring that their record-keeping, accreditations and testimonials are up-to-date.
It goes without saying that professional bodies, chambers of commerce and business networks need to start preparing to support SMEs. The UK Government’s definition of SME is less than 250 staff and turnover under £50m. Ultimately, there is a big difference between a micro business with 10 staff and £1m turnover and a medium business with 249 staff and £49m turnover. It is therefore with optimism that we look at ‘most advantageous’ alongside HMG’s stated objectives.
Preparing for a new procurement regime
Think Beyond supports senior leaders with achieving their targets in the right way. Some targets are linked to public sector contract awards, revenue growth or ESG metrics. Either way, it seems that PA23 is a major change programme, especially if you already operate under legislation governing previous contract awards. Aside from the compliance and process changes, there is also the innovation and social justice angle. Under Procurement Act 2023, it should be more difficult for contracting authorities to choose previous suppliers. Similarly, the criteria for contract awards is changing to force consideration of SMEs and the barriers facing them. There is opportunity ahead of us, so let us work together to seize it.
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Finally, why not read about the power of finance involvement in procurement processes.
You can also read the entire legislation here for the enacted Procurement Act 2023.