Government prepares for sweeping procurement reform

On 6 December 2021, almost a full year after the publication of its Green Paper on Transforming Public Procurement (the Green Paper) the government published its much-anticipated response following its review of the numerous responses received from contracting authorities, procurement professionals and contractors (the Response).

In total, there were more than 600 responses for the government to consider, so we can forgive the slight delay in the publication of the Response (for comparison, similar consultations in the past on procurement law have only generated in the region of 250 consultation responses).

It is clear that the government has listened to the numerous consultation responses and has made several notable changes to the original proposals set out in the Green Paper. It is also clear that the sweeping reforms are still a work in progress, with several areas still requiring further consideration, and further detail still to be confirmed in subsequent secondary legislation and guidance which has been promised throughout the Response.

In general, the Response confirms the government’s original proposals for a more flexible, commercial and simplified set of procurement rules, and it is confirmed that we will move to a single set of consolidated procurement rules across the various sectors (with some notable exceptions for the utilities and defence sectors).

In addition, the Response confirms the intention to strip back the current procurement procedures (which are often viewed as being complex and inflexible) and we will instead have a pick of three modern and flexible procedures:

For the construction sector, a key feature confirmed in the Response is the proposals for contractor selection and the introduction of the centrally managed debarment list. The Response confirms that the existing mandatory and discretionary exclusion grounds will be recast to better reflect a UK-specific set of selection requirements, and will align both the mandatory and discretionary exclusion grounds to apply to the previous five years (as opposed to the current five years for mandatory exclusion grounds and three years for discretionary exclusion grounds).

Where a contractor meets any ground for exclusion they will be included on the centrally managed debarment list where they will remain for five years (although there is potential for contractors to apply for early removal where they can demonstrate sufficient self-cleaning). The consequence of being on the list is automatic exclusion from all regulated procurements where a contractor is included for a mandatory exclusion ground, and contracting authorities will retain the discretion to exclude for discretionary exclusion grounds.

Importantly, contracting authorities will still be able to exclude bidders not on the list on a case-by-case basis, but the debarment list should make it easier for contracting authorities to manage the exclusion of suppliers at the selection stage of the procurement.

Of particular note, the Response confirms that the exclusion grounds will not only cover the actions of a bidder alone, but they may also be applied to individuals and other entities to which that bidder has a close connection. This is of interest as it aligns with the statement from the secretary of state for housing, that there will be consequences for those responsible for the building safety crisis, and his decision to exclude Rydon Homes (a sister company of Rydon Maintenance, the contractor for Grenfell Tower) from the government’s Help to Buy scheme.

Another change confirmed in the Response is the move from evaluating the ‘Most Economically Advantageous Tender’, to an evaluation of the ‘Most Advantageous Tender’. This seeks to reinforce the messages already set out in numerous Procurement Policy Notes throughout 2021 that contracting authorities may take a broader view of evaluation criteria, rather than confining themselves to price or other economic criteria. In practice, contracting authorities already have considerable flexibility to take account of broader evaluation criteria such as social value and other environmental considerations.

This move from MEAT to MAT, coupled with the ability to break the link between the subject matter of the contract and the award criteria in certain prescribed circumstances, will give contracting authorities the flexibility to ensure that their future procurements give sufficient regard to key policy priorities such as achieving net carbon zero (a key national policy priority in the National Procurement Policy Statement, and a hot topic across the public sector).

The changes themselves will still require some lead in time, with the Procurement Reform Bill expected to be brought forward when parliamentary time allows (expected in 2022) and the secondary legislation and further guidance not anticipated until 2023 “at the earliest”.

Additionally, the Response indicates that there will be a six-month transitional, or ‘go live’, period to allow contracting authorities and bidders alike to ready themselves for the reforms. During that time, we can expect an extensive learning and development programme to be rolled out by the Cabinet Office, focusing on the key changes and contracting authorities should avail themselves of this developmental opportunity and bidders will also need to get to grips with the new rules, in order to place themselves in good stead for these significant changes to the public procurement regime.

Rebecca Rees is partner and head of procurement at Trowers & Hamlins.