Preparing for the Procurement Act 2023: transitional arrangements

As set out in our earlier article, we now know the Procurement Act 2023 will apply to all procurements commenced on or after 28 October 2024. This article takes a closer look at the transitional arrangements to help contracting authorities prepare for the new Act. This article is part of a series that looks at the impact of the Procurement Act 2023. Please see Procurement Act 2023: who needs to comply?, with other articles to follow in due course. 

What are transitional arrangements?

Transitional arrangements determine how the changeover from the previous procurement legislation to the Procurement Act 2023 will be managed.

The transitional arrangements are due to be set out in regulations to be issued under the Procurement Act. We are still waiting on these regulations, however the Government has recently confirmed how these transitional arrangements will work in practice.

All procurements “commenced” prior to 28 October 204 will remain caught by the previous legislation. This means that contracting authorities will be dealing with these two different regimes for a long time to come. The concept of a “procurement” includes the entire life cycle of the resulting contract. So, where a long-term contract is awarded off the back of a procurement (even a below threshold one) that commenced prior to the 28 October, it will continue to be subject to the old rules until it expires or terminates. The key message being don’t throw away your copy of the PCRs just yet!

Determining which legislation applies to a procurement

As the previous legislation differs from the Act in a number of important ways it is vitally important that contracting authorities know which regime applies to which procurements. 

In most instances this will be an easy task, but there will be some where a closer look into the transitional arrangements will be necessary.

What triggers a procurement to “commence” for the purpose of the transitional arrangements?

• In most instances, the submission of a contract notice is the clear starting gun. Note it is the submission by the contracting authority, not the resulting publication of the contract notice that counts here.
• In respect of procurements that are directly awarded in accordance with Regulations 32 following the negotiated procedure without prior publication (or "direct award" in new money), then the act of contacting a supplier with the intention of entering into a contract will “commence” the procurement.
• Below-threshold procurements must also be considered here. If a below-threshold opportunity is published, then the publication of that opportunity triggers the starting gun.
• Publication of a voluntary transparency notice (issued where a contracting authority considers a full procurement process unnecessary) will “commence” the procurement for the purpose of these transitional arrangements, to the extent that such a procurement hasn’t otherwise been caught by the above-mentioned rule on directly awarded contracts.
  
  

What doesn’t trigger commencement?

• There is no statutory obligation on contracting authorities to issue a pipeline notice (this obligation does not kick-in until 1 April 2025). Accordingly, the publication of a pipeline notice will not, in and of itself, trigger the commencement of a procurement for these purposes.
• Similarly, issuing a PIN indicating an intention to procure certain goods, works or services is generally not enough for a procurement process to have “commenced”. The slight gloss to this is where a PIN was used as a call for competition by a sub-central contracting authority before 26 May 2023. In such an instance this PIN will “commence” the procurement.
  
  

Once you identify the correct regime

Once you have determined which procurements are caught by which legislation, you generally run such procurements, and the related contracts, in accordance with that legislation, without reference to the other.    

There appears to be one exception to this rule, and that relates to the payments compliance notice provisions (set out in Section 69 of the Act), which apply to all public contracts, irrespective of whether they were commenced under the previous legislation or the new Act. What is required here is a statement from the contracting authority on the average number of days taken to make a payment under a public contract and what percentage were paid within 30 days and which were paid after 30 days. So, while the implied terms around prompt payment set out in Section 68 of the Act are not implied into contracts governed by the prior legislation, these contracts will have a bearing on the contacting authorities’ calculations for the purpose of Section 69. 

Other points to consider

It goes without saying that all procurements which were not “commenced” before 28 October 2024 will of course be subject to the provisions of the new Act. 

In respect of procurements that might start shortly after ‘go-live’ there may well be steps that a contracting authority needs to follow now, in compliance with the Act, to ensure that once the procurement officially “commences” it can do so in full compliance with the Act. 

For example, contracting authorities need to have regard to the National Procurement Policy Statement and procurement objectives when carrying out a procurement (something that was not required under the previous legislation), which may have a bearing on how the contracting authority approaches the procurement. 

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

© Farrer & Co LLP, May 2024