Transforming Public Procurement: UK Government responds to consultation

Ever since the 2016 referendum, there has been much speculation about the future of public procurement.

Will there be a new regime? What will be the priorities for change? Transparency? Simplification? Social value?

The Cabinet Office has now published its long-awaited response to the public consultation launched by their Green Paper on procurement in December last year.

This gives us some more clues as to the answers to these questions.

Here are the headlines as we see them:

Nothing is changing in procurement - just yet

The “next steps” section of the response shows that there is much to be done - from getting a bill through parliament, to introducing subordinate regulations, to preparing guidance and other explanatory documents for contracting authorities.

This is why the new procurement regime won’t come into force until “2023 at the earliest”.

A disunited kingdom

The Welsh Government has confirmed the UK Bill will apply to their contracting authorities, and the report tells us that some of the provisions may apply in Northern Ireland.

Conspicuous by its absence in the response is any mention of Scotland.

Although we already have our own procurement regulations north of the border, these and the UK rules were both based on EU law and so were very similar.

It had previously been thought that the new UK Bill may apply in Scotland and bring the two closer together. It now seems that the opposite will happen.

The Scottish Government have previously stated its desire to align with EU law post-Brexit where appropriate, with a view to re-joining as soon as possible. It seems that this, rather than a different vision of how public procurement can be changed, is what is motivating the difference here.

The Scottish Government’s current procurement strategy is intended to be in place until 2023 and proposes policy goals and principles rather than any substantial change to the regulations.

Damages cap scrapped

The Government had previously proposed to cap the level of financial compensation available to unsuccessful bidders who successfully challenged contract awards at one and a half times the cost of making their bid.

Given the considerable value of many public contracts, this could have greatly reduced the amount of compensation available and disincentivised bidders from challenging.

The response says the proposal received mixed responses – but that the Government no longer intends to introduce a cap.

One reason given is that if damages were limited, then unsuccessful bidders may only be more intent on getting the contract as the only remedy they are interested in.

The automatic suspension is changing

Where a contract award is challenged under the current system, the default position is that the contracting authority is prohibited from entering into that contract until the challenge has been decided on.

This “automatic suspension” preserves unsuccessful bidders’ opportunity to win the contract.

The Government proposed – and most respondents agreed – that a new test should be introduced for when this suspension is lifted.

The current test – known as the “American Cyanamid test” – is multifaceted and not only used in public procurement.

The response envisages that the new test will be simple and specific.

Contract amendments to be published

Those involved with procurement will be familiar with contract award notices.

The Green Paper proposed – and the Government now plans to introduce – the publishing of a similar notice if a public contract is changed.

This adds transparency to public contracts, and gives potential bidders an opportunity to challenge any amendments which they see as denying them an opportunity at securing a contract.

While those involved in public procurement will be eager to see the details of the Bill, and what it might mean to them, in due course, this response does give a clearer indication of where things are going.

Some questions have been answered.

Bidders will be particularly pleased to hear that no cap is being introduced to claims for damages as had previously been proposed - buyers may, perhaps, be a little less pleased.

As for those of us in Scotland, we will have to wait and see what the future holds for procurement law here.