(NB may be updated regularly)
The long-awaited government response to the consultation on new UK procurement rules has just been published by the Cabinet Office, after consideration of an unprecedented 600+ responses to the UK’s Green Paper on Transforming Procurement. This shows the huge public interest in what is often considered a backroom function of government.
Procurement is over a third of all public spending (some £300bn+ a year) and we have all seen how the UK’s antiquated and fragmented approach to procurement has struggled under the pandemic (and even before it).
The rules are a once-in-a-generation opportunity to give the UK the data-driven, digitised and inclusive public procurement system that it deserves.
Summary: A significant evolution, if not a revolution
We are ambitious for the reforms and our full Green Paper submission is here. The UK deserves better procurement data across government to improve its planning and decision making; it should ‘ask only once’ to reduce the burden on the private sector; simplified processes should make it easier for SMEs to participate and easier to award contracts with social criteria to help levelling up and tackling climate change. Procurement should be fair and be seen to be fair. We should have one clear version of the truth as well as a more dynamic, data-driven ecosystem that improves collaboration within and outside government.
The government’s response to the consultation is very positive. The new proposals will put the UK in a much better place than before and, if fully implemented, would go a significant way to delivering on this vision, including:
- A single rulebook covering all UK contracts underpinned by new legal principles for procurement.
- New public notices will cover the full cycle of procurement for public contracts across the UK, including better planning and implementation reporting needed to build a better culture of performance management across the UK public sector (with improved support and training as well).
- Information will be published as open data using the Open Contracting Data Standard (OCDS) and provided on a new digital platform that will collect and publish data on the “tell us once” principle, which could save everyone a huge amount of time and give much better analysis and insight into such a vital government function.
- Adoption of OCDS by contracting authorities should also help to drive the digitalisation of the tendering and contracting process.
- An improved debarment regime has been proposed, which should punish bad actors.
And there are some areas where more detail and/or thinking are needed:
- Empowering the new Procurement Review Unit so it can be independent, effective and data-driven.
- Reforming the UK’s procurement complaints mechanism, which is badly needed as the current uncertainty and mishmash of rules stifles innovation
- How the proposed £2m threshold for the publication of redacted contracts from all UK authorities will work in practice (and that the contract redactions will be in the public interest).
- How the new statutory emergency declaration powers will work, although we approve of the intent to encourage quicker competitions versus resorting to sole sourcing.
And of course, execution will be everything.
Let’s go deeper into each of these areas to assess the government’s response (with the caveat that we are still processing the 70+ pages in it, so our analysis may change)…
1) Simplify and clarify the rules around procurement and bring in a single rulebook.
Yes. 81% of respondents supported this too (although many wanted to know more about how it would work in practice).
2) Clear legal principles governing public procurement.
Yes. The Green Paper proposed enshrining the principles of value for money, transparency, integrity, fair treatment of suppliers, the public good and nondiscrimination into law for UK procurement.
92% of respondents were also in favour and the new government response intends to proceed with this, albeit reframing some of the principles as statutory objectives as “it will be clearer what contracting authorities need to do to bring the principles to life”.
This will include open and fair competition, maximising the public benefit to support social value benefits, value for money and integrity. This all makes sense, although it will be important to check how this framing interacts in the final legislation.
On transparency, specifically the government says it intends to “introduce procedural obligations at each stage of the procurement process setting out more explicit publication obligations that will provide clarity to contracting authorities on exactly what they need to publish. The transparency principle previously proposed will set a minimum standard in terms of the quality and accessibility of information where there is a publication obligation elsewhere in the Bill” (para 35). We would want to check that this will still be underpinned by a standalone transparency principle in the legislation.
3) Introduce “transparency by default” across the commercial lifecycle of government contracts
Yes, although the threshold and timing to publish some information has changed.
91% of “respondents … were supportive of the proposal, recognising the role transparency plays in providing a level playing field for suppliers, enabling innovation and productivity, developing public trust, driving competition and value for money in procurement”. That said, there were a number of caveats on making sure that the approach was not seen as too burdensome to frontline authorities and to address some concerns over personal and commercial information. We can’t resist pointing out that the latter are often exaggerated.
The good news is that there will be a major increase in procurement information in the UK:
1) Planning notices are being brought in for all major contracts from any UK authority (over £2 million);
2) Award notices will cover more than just who won and will contain details of the bidding processes (this is important as information such as the identity and number of bidders are key to understanding the level of competition in a market) and beneficial ownership;
3) Losing bidders will be sent their scoring/evaluation and that of the winner for comparison;
4) A new Contract Implementation notice will be brought in to report on progress on a contract’s key performance indicators (KPIs). This is an important development to encourage better performance and delivery on public contracts, and is missing from the majority of contracting information in the UK.
5) Swift production of contract award notices for the new Dynamic Market (new term for DPS+) will be enabled using the Open Contracting Data Standard.
6) Public reporting of beneficial ownership information will happen, albeit at the award stage as opposed to tendering once the standstill period after an award is ended.
A new £2 million threshold will be applied to contract publication by authorities, although this may be lowered in future. We understand the existing GBP10k threshold for central government contracts will still stand. “As set out in the Green Paper, the Government will provide clear guidance on disclosure of information including appropriate use of redactions and what should be disclosable in accordance with the FOI Act. It is also important to note that the notices will require information which is already gathered and available to contracting authorities when carrying out procurements”
Having a £2m threshold for UK authorities to start with is disappointing but it will to some extent be offset by increased disclosure of procurement data from other notices. We would also want to make sure that the redaction policy is clear and doesn’t undermine the public interest intent of these provisions (in line with analysis from the UK’s Information Commissioner and the Government’s Transparency Principles that “all in-scope organisations should operate on a presumption in favour of disclosing information”).
4) Publish open data on contracting and bring in a single integrating platform to share user-friendly information (on the “tell us once” principle).
Yes! A clear majority (77%) of respondents supported the implementation of the Open Contracting Data Standard (OCDS), although it is fair to also note that a third of them highlighted that implementation of the OCDS would require significant system changes and integration with existing e-tendering systems.
“The Government intends to introduce the proposal into legislation as described in the Green Paper. Adoption of OCDS will significantly improve data quality and interoperability. We recognise the important role of contracting authorities’ e-tendering system providers in taking this forward and we intend to work closely with these providers in implementing OCDS.” (para 231). We agree completely and stand ready to provide our technical advice to providers to enable the smooth adoption of OCDS by contracting authorities.
80% of respondents to the Green Paper were also supportive of a central digital platform for commercial data, including supplier registration information, albeit with caveats around interoperability with existing systems, security, making it user friendly and having it properly funded.
The Government intends to proceed with this, funding it centrally and making it free for all users. “We recognise the challenge involved in integrating a range of different systems into an overarching platform and understand that this is likely to require some additional development work on the part of providers. We will work closely with users and other stakeholders whilst building the system to ensure that the needs of the user community are met. We will be holding digital platform discovery workshops in parallel with the legislative process to ensure the system meets user needs … Publicly available information on the central platform would be published under the Open Government Licence and would not require registration to view or download, whilst other information on the central platform may require registration to enter or access data”. Done well, this would be a major step forwards for UK transparency and management of public contracting, especially if the platform offers detailed business intelligence tools to users and helps frontline procurement teams manage and visualise their own data.
Reassuringly the Government’s response remains consistent with broader reforms in the Declaration on Government Reform in June 2021 which proposed to “do better at making our data available to all so that we can be more effectively held to account”; “do better at monitoring and managing how we spend, encouraging new organisations to provide public services, holding those with whom we contract more rigorously to account, and minimising the risk of fraud, error and waste” and to “ensure all data is as open as possible to public and third parties”. We hope they will also be spurred on by UK’s renewed international commitments to transparency in the Carbis Bay G7 Summit Communiqué to strive for “transparent, open, economically efficient, fair and competitive standards for … procurement”
As the Welsh Government has indicated, provision for Welsh contracting authorities is to be made within the UK Government’s Bill, so we are excited by the possibility that Wales will join the UK and Scottish Governments in publishing their procurement data openly in OCDS. Next up, Northern Ireland!
5) Truly digital and unlocking automation
In our response to the Green Paper, we urged that the UK pushes to make its procurement systems truly digital, exploiting the untapped potential of many of the existing eProcurement platforms used by contracting authorities across the country.
The UK is only at the start of this journey. It is encouraging that Government Commercial Function Strategy 2021-2025, which is also hot off the press, includes a commitment to “publish and implement a digital and data strategy and roadmap for public procurement, including developing a central platform that enables required services, inputs, outputs and interfaces to support greater transparency and user needs” (p14). The Strategy also reiterates the commitments made here to open data, full commercial cycle transparency and growing a performance culture.
We need sustained follow-up with the UK’s eGP and eSender community on a digital-first approach to unlock the benefits of automation and open data for the UK’s frontline procurement teams so that their lives become easier and they get useful, interoperable information back that helps them do their jobs better.
6) Introduce a new unit to oversee public procurement with powers to review &, if necessary, intervene.
Yes, although ambition is scaled back. More than half of respondents agreed and credit to the Cabinet Office for holding the line on this proposal, which we believe will be vital to oversee the health and functioning of the overall market and to raise overall performance.
The new unit will be known as the Procurement Review Unit (PRU) and will sit in the Cabinet Office. Its main focus will be addressing systemic or institutional breaches of the procurement regulations and it will have the power to make formal recommendations aimed at addressing these unlawful breaches. It will also be able to investigate individual cases of poor policy and practice reported by suppliers and to make informal recommendations to the specific authority for improvement.
It is important that the Unit is independent and can hold other UK actors accountable: we’ve seen the incredible value that independent procurement oversight agencies create in other countries. The Unit should use its data-driven mandate to report regularly and independently on whether the outcomes of the Green Paper are being delivered and oversee contracting authorities’ compliance with their legal obligations to publish contract notices at the right time with the right level of transparency.
7) Simplify the complaints mechanism to put an emphasis on fixing the procurement before it goes wrong (as opposed to litigation and damages afterwards).
Not clear. There was strong support from over 80% of respondents for these proposals, albeit recognising the tension that increasing efficiency could lead to more complaints but also contributes to trust in the system.
That said, the Government does not offer specific proposals for how to do this, saying: “we are continuing to explore feasible options for faster and more accessible routes for valid challenge of procurement decisions. Changes to the Civil Procedure Rules and/or Technology and Construction Court Guidance are intended to align with statutory reform, but will be subject to review by the Ministry of Justice and the Civil Procedures Rules Committee.”
It is a shame not to have more details here. Other countries have already cracked this with simplified and transparent complaint procedures and fear of litigation is a major impediment to innovation in the UK.
8) A clear and effective debarment regime for bad actors
Yes, although full details on the new regime are awaited.
Based on the feedback from the Green Paper, the government said that it now intends to go further than initially proposed to set out a new, simplified and clarified exclusion regime, especially given feedback from contracting authorities who will have to implement it. “The new exclusions framework will retain the current concepts of mandatory and discretionary exclusion grounds but will be simpler, clearer and better suited to the UK’s commercial and legal landscape. Exclusion grounds will be more focused on suppliers that pose an unacceptable risk to public confidence in procurement, effective competition for contracts or reliable delivery, and on protection of the public, the environment, national security interests, public funds or the rights of employees. We will publish statutory guidance to assist contracting authorities in considering and applying the exclusion grounds, including on the form and manner of self-declarations, the assessment of supporting information and self-cleaning evidence, how to assess whether the exclusion grounds apply and the exercise of discretion to exclude in relation to discretionary exclusion grounds” (para. 151). Details of the various offences to be considered are covered in para 152 and in 153, additional details are provided:
- A five year limit for both mandatory and discretionary exclusions, with the trigger point being the date of conviction or the decision for mandatory exclusion or the point at which the authority knew or should have known about relevant misconduct in a discretionary exclusion period
- The process will be blind to whether misconduct happened in UK or overseas
- Allows for exceptional circumstances in which overriding public interest supports a supplier to participate in a procurement even if mandatory exclusion
- Power to amend exclusion grounds via secondary legislation
Exclusions will also cover not only the actions of the bidder but also those of individuals and entities to which the bidder has a close connection including beneficial owners, as defined as Persons of Significant Control under the Companies Act 2006 and parent and subsidiary companies which is positive.
In a change of plan, the government has said that Deferred Prosecution Agreements (DPAs) will not count as grounds for disqualification, as they can be seen as evidence of self-cleaning and changed behaviour as they “require the supplier to accept culpability for the offence, cooperate with the relevant authorities, and make reparations for harm caused” (para. 164). In the interests of transparency, it would be beneficial if the contract award notice indicates if the awarded supplier is subject to a DPA.
9) New flexible, competitive procurement procedures with more social criteria allowed
There is a common thread in both the Green Paper and in the responses to it on how to better encourage innovation and user choice in public services.
The government is still proposing to bring in a new competitive, flexible procurement procedure that gives “contracting authorities the ability to design and run a procedure that suits the market in which they are operating” which also links to a shift in the award criteria for contracts from “Most Economically Advantageous Tender” under the EU regime to “Most Advantageous Tender”. We support these changes as did the majority of respondents. Importantly, the government also noted that improved transparency, especially in the planning, early market engagement and tender notices will be crucial to get the best out of this approach. “Contracting authorities will be obliged to set out how the procurement process is to function, and this will be laid out in a Tender Notice. The Tender Notice will cover any conditions for participation; time limits for contacting/responding to the authority; evaluation criteria, and the phases involved in any multi-staged procedure. As contracting authorities will have to conduct the procurement in compliance with the Tender Notice, this will provide suppliers with visibility and assurance” (para. 97).
Long story short, it looks like the Government recognises that giving increased flexibility should be balanced with more transparency and better market engagement to make sure that these powers are being used correctly and fairly.
The Government also added: “we are considering the extent to which we can exempt from competition those services where service user choice is important” (para. 121). In these instances, it will be particularly important to provide a high degree of transparency, not only for the award of such contracts but also for their implementation and performance against contractual KPIs. BBC Newsnight showed the disastrous consequences of getting this wrong for teen’s overnight accommodation services in the past: you can’t award on the lowest price and you need oversight and transparency.
10) Better emergency procurement procedures
A work in progress but better than before. Obviously, the UK’s Covid procurement response was deeply problematic and its emergency procurement rules are in sore need of an upgrade.
The government has modified its approach under the Green Paper as a result of feedback. The proposal is now to include a new power for a Minister of the Crown (via statutory instrument) to ‘declare when action is necessary to protect life’ subject to Parliamentary scrutiny. This declaration would allow contracting authorities to proceed with limited tendering. Contracts awarded under extreme urgency and/or this ground would be notified via the new mandatory transparency notice requirement and therefore may be challenged if the reliance on these grounds is inappropriate (para. 102).
The intent of these new arrangements is to support contracting authorities to run accelerated competitions in situations where measures may be required to protect life, without fear that this will result in legal challenge that prevents a contract award. The exact mechanism to do this is still being thought about but we approve of the intent and this approach worked well elsewhere during the pandemic.
These proposals will put the UK’s procurement in a much better place than before. Done well, provisions like end-to-end transparency and open data will be a gift that keeps giving, a flywheel for better management and insight that can drive a culture of continuous performance improvement, especially when linked to the new procedures, better social criteria and simplified rulebook. There are also some important elements that need further development, especially on a simpler, better complaints mechanism.
Parliament will now be crafting primary legislation to give the Cabinet Office and others new powers in line with these proposals. We will be following these developments closely, keeping ambition high and sharing what has worked well elsewhere.
A new digital platform for all this information will be developed in parallel with the legislation so our open data helpdesk, training and support will be stepping up to help (and we have a non-binding MOU with the Cabinet Office team to provide support to this end).
Resources will be vital, especially a significant investment in training and support to the UK’s 20,000+ frontline procurement teams to take best advantage of the new regime and to support the new digital platform. But the return will be huge: the reforms, implemented well, could save millions, if not billions of pounds, in the long run as well as the better outcomes – the roads, schools and hospitals etc – that we all deserve.