Government Response to Public Procurement Green Paper Consultation

In December 2020 the government published its Green Paper on transforming public procurement in the UK. It has since consulted on these proposals and has just published its Response to this consultation.

There is a lot to take in, and it will be a while before we see a copy of the draft legislation effecting such changes, which themselves aren’t expected to take effect until 2023. In the meantime though we set out below some key observations from the government response[1].

Background

Freed from EU-wide regulation but still shackled by the terms of the GPA[2], the government is seeking to overhaul the current public procurement regime, moving away from the EU rules-based approach that was designed to facilitate access to the single market, and instead towards a simplified approach that, we’re told, prioritises growth, maximising value for money, promoting efficiency, innovation and transparency. That’s the plan, at least.

The changes are perhaps not as radical as one might have expected, and the government is keen, where possible, to retain terms and concepts familiar to practitioners. There’s also a lot that is not mentioned in the Green Paper (for example the Teckal and Hamburg exemptions and the definition of “bodies governed by public law”), with an expectation among practitioners that where existing provisions/concepts are not mentioned, they are unlikely to be significantly altered in the new regime.

The overall reception of the proposals was positive and as a result the majority of the provisions found in the Green Paper will be taken forward into draft legislation.

Key proposals

• A set of key public procurement principles will be enshrined into law. These are: value for money; public good; transparency; integrity; efficiency; fair treatment of suppliers; and non-discrimination.
  
  
• The current legislation (which includes the Public Contracts Regulations 2015, the Utilities Contracts Regulations 2016, the Concession Contracts Regulations 2016 and the Defence and Security Public Contracts Regulations 2011) will be replaced by a single uniform set of rules for all contract awards.
  
  
• Instead of the current six procurement procedures (open, restricted, competitive dialogue, competitive procedure with negotiation, innovation partnership, competitive procedure without prior publication) there will be three procedures:
  
  • “Flexible procedure” that gives buyers the chance to design a procedure that suits the specific requirements of the contract (provided it adheres to the public procurement principles).
    
    
  • “Open procedure” for simple off-the-shelf purchase.
    
    
  • A “limited tendering procedure” that buyers can use in certain circumstances, such as in a crisis or extreme urgency.
• There was concern that use of the flexible procedure would lead to a greater administrative burden on contracting authorities at the outset of any procurement process and could lead to increased cost to suppliers, especially SMEs. However, the government is convinced that increased effort at the outset will enable more complex procedures to be run efficiently and effectively. The government will provide guidance and some template examples that could be followed when using the new flexible procedure. 
  
  
• The proposal to remove the Light Touch Regime completely has been dropped following the consultation, though some improvements to its scope and application are expected.
  
  
• A new exclusions framework will be provided, simplifying the current rules around mandatory and voluntary exclusions of suppliers. There will be a centrally-managed debarment list. 
  
  
• Increased transparency requirements will be retained and detailed guidance will be provided to assist contracting authorities in implementing these requirements.
  
  
• The need for debrief letters has gone. This is due in part to the increased transparency requirements and the thought that economic operators themselves should, with the information provided, be able to undertake an evaluation of relative advantages of their bid compared with the successful bidder. 
  
  
• The Green Paper proposal of capping the level of damages available to bidders who successfully challenge a contract award decision has been removed.
  
  
• The term MEAT (most economically advantageous tender) will be replaced by MAT (most advantageous tender) to reinforce the message that value for money is not the only consideration when deciding to whom to award a contract.
  
  
• The proposals for reforming the court rules around procurement challenges have been withdrawn for now, though are continuing to be considered.

We are told there will be a period of at least six months between the legislation being published and it coming into force, to give contracting authorities the chance to familiarise themselves with the new regime. We await sight of the draft legislation with interest and will keep you updated on developments, particularly as you anticipate future procurements and consider whether the "old" or "new" regime becomes a factor in when you might want to commence the procurement exercise.

[1] These proposals are among many required to UK legislation post-Brexit.  For our related assessment of the proposed changes to the UK subsidy control regime please see this article.

[2] Agreement on Government Procurement see here.

If you require further information about anything covered in this briefing, please contact Paul Jones, Jane Randell or your usual contact at the firm on +44 (0)20 3375 7000.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, January 2022