Nearly there: the Procurement Act 2023 finally goes live on 24 February

After a long and winding legislative journey, the much-anticipated Procurement Act 2023 (the Act) will finally enter into force on 24 February 2025. The Act constitutes a major overhaul of the existing, EU-based rules governing the award of contracts by public authorities and utilities for the purchase of works, supplies or services. 

The Act will apply to contract award procedures commenced (through publication of a tender notice) on or after 24 February. Procedures commenced before that date will continue to be governed by the old regime.

The key features of the Act are outlined below.  

Consolidation of the existing regulations  

As from 24 February, the Act will consolidate and replace the four existing sets of regulations applicable to public procurement in England, Wales and Northern Ireland: namely, the Public Contracts Regulations 2015, the Utilities Contracts Regulations 2016, the Concession Contracts Regulations 2016 and the Defence & Security Public Contracts Regulations 2011.  

As a result, the main rules on public procurement will be found in a single, consolidated instrument. The Act has also been supplemented by various secondary regulations. These include the Procurement Regulations 2024, which set out the required content of the various types of notice that have to be published under the Act. The Act is also supported by extensive Government guidance on every stage of a public procurement process.  

Extensive re-wording that may leave scope for judicial re-interpretation 

The Act lays down broadly similar rules to those found in the current regulations, governing all aspects of the award of a public contract. However, those rules have been extensively re-written in a style more typical of English legislation, which deviates from the wording originally found in the EU directives on procurement. Such re-wording may allow British judges to interpret the rules in new ways which deviate from previous case law, much of it laid down by the Court of Justice of the European Union.

Broader policy objectives

Under the Act, contracting authorities are required to have regard to several specified objectives. Two of these objectives capture the existing principles of transparency and equal treatment. Other objectives are stipulated for the first time, including: (i) delivering value for money; (ii) maximising public benefit; and (iii) acting, and being seen to act, with integrity.

These wider objectives evidence a partial move away from the previous, narrow focus on ensuring the fairness and openness of contract award procedures. Under the Act, contracting authorities must also take account of broader concerns, including the rather vague and open-ended concept of maximising public benefit. 

The National Procurement Policy Statement

The Act also requires contracting authorities to have regard to the National Procurement Policy Statement (NPPS). An NPPS was initially published by the previous Government in May 2024, but that version was scrapped by the new Labour Government, which finally published a new NPPS on 13 February 2025. 

The NPPS sets out the Government's strategic priorities for public procurement. These are:

• delivering value for money;
• driving economic growth, including by giving a fair chance to small and medium-sized enterprises (SMEs) and voluntary, community and social enterprises (VCSEs);
• delivering social and economic value; and
• building commercial capability to deliver value for money and stronger outcomes.

A simpler competitive flexible procedure for awarding contracts

The existing regulations provide for an overlapping and potentially confusing range of competitive award procedures, including open procedures, restricted procedures, competitive dialogue, the competitive procedure with negotiation, and innovation partnerships. Under the Act, this range is reduced to just two main alternatives: the open procedure and the competitive flexible procedure.

As under the current regulations, the open procedure is a single-stage tendering process in which any interested party may submit a tender. It is mostly used for straightforward, off-the-shelf supplies and services.    

The competitive flexible procedure is defined by the Act as "such other competitive tendering procedure as the contracting authority considers appropriate." This procedure replaces all of the previous multi-stage procedures. Government guidance stresses that contracting authorities are free to structure this new procedure largely as they see fit, provided the number of participants is sufficient to ensure genuine competition.   

Extensive new transparency requirements

The greater procedural flexibility under the Act has to be balanced against its extensive requirements for increased transparency. The Act requires the publication on a Central Digital Platform of various types of notice and information at every stage of a procurement. For example, the Act requires the publication of the following new types of notice:

• Preliminary market engagement notice
• Pipeline notice (annually, if the authority expects to spend over £100 million)
• Transparency notice (before any direct award)
• Procurement termination notice
• Payments compliance notice (regarding compliance with the new implied term that all undisputed supplier invoices must be paid within 30 days of receipt).
• Contract change notice (before any contract modification)
• Contract termination notice

Furthermore, if a contract is worth more than £5 million, the contracting authority must set and publish at least three key performance indicators (KPIs). The authority must then publish an assessment against those KPIs at least every 12 months during the contract's term.

These extensive new publication requirements will impose a heavy administrative burden on contracting authorities. Authorities should ensure that they have in place the necessary resources and systems to comply with these new obligations.

Provision for longer-term, open frameworks

The Act retains the possibility of using framework agreements, which are re-named "frameworks". The Act allows for a new option of using an open framework. Such a framework may last for a total period of 8 years, instead of the current maximum of 4 years, provided the framework is re-opened to competition at least once during its first three years and once in the subsequent 5 years. 

It remains to be seen whether this new option offers any real improvement on the current possibility of awarding two (or more) successive frameworks of four years each.

New approach towards the debriefing of unsuccessful bidders

Under the current regulations, contracting authorities are required to send a standstill letter to the unsuccessful tenderers, setting out the scores, characteristics and relative advantages of the tender submitted by the winning bidder. The authority must then respect a standstill period of at least ten calendar days before signing the contract with the successful bidder. 

Under the Act, authorities will be obliged to send an assessment summary to each tenderer which sets out information about the authority's assessment of that tenderer's tender and the tender of the winning bidder. This summary will contain similar information to that found in a standstill letter, but without the need to spell out the relative advantages of the winning bid.

The authority will then be obliged to publish a contract award notice, publicising its intention to enter into the contract with the winning bidder. This published notice will trigger the standstill period, which must be at least eight working days, rather than the current 10 calendar days. 

These changes will increase the level of publicity surrounding an intended award decision before the contract is signed with the winning bidder. This aligns with the general trend towards greater transparency under the Act.

Modified rules on contract modifications

The Act retains the well-established principle that where an existing public contract is substantially modified during its term, the contracting authority is in principle required to hold a new competition.   

As under the current regime, the Act allows for various exemptions from this general principle. These "safe harbours" are set out in Schedule 8 of the Act, headed Permitted Modifications. For example, a safe harbour applies where the modification (i) was provided for in an unambiguous review clause in the original contract, or (ii) has arisen from circumstances that could not reasonably have been foreseen by the contracting authority.   

The Act allows for a new exemption where the contracting authority considers that, because of the materialisation of a known risk, the contract cannot be performed to its satisfaction. For this ground to be available, both the known risk and the possibility for modification must have been identified in the original tender notice published by the authority.

The Act also includes a new rule that, before modifying an existing public contract, the contracting authority must publish a contract change notice, describing the intended modification. This notice may provide for a voluntary standstill period of at least 8 working days.

Conclusion

Overall, the Procurement Act 2023 represents a substantial re-working of the current, EU-inspired rules on public procurement. The Act introduces greater flexibility for contracting authorities, but also more burdensome requirements for transparency. All contracting authorities and their suppliers need to be aware of the Act's provisions ahead of its entry into force on 24 February 2025.