Will the new procurement bill apply in Scotland?

Following a Government green paper published in 2020 and consultation exercise in 2021, we now know the details of the new procurement regime proposed by the UK Government, as set out in its Procurement Bill (“the Bill”).

The Bill was introduced in the House of Lords on 11 May 2022 and received its second reading in the Lords on 25 May 2022. The second reading debate can be read here.

The Bill has now moved to Committee Stage in the House of Lords, which is the first opportunity for detailed, clause-by-clause consideration and possible amendment of the Bill’s provisions. The first Committee hearing on the Bill is scheduled for 4 July 2022.

The Bill is a complex piece of legislation, extending to 116 clauses within 13 parts and 11 schedules. It also contains a number of powers for Ministers to make secondary legislation in the form of regulations.

Objectives underpinning the Bill

The UK Government considers the current legal framework to be unduly complex and restrictive and has signalled its desire to introduce something that is simpler and brings greater flexibility. The provisions in the Bill seek to reform the current public procurement rules, which derive largely from EU legislation and the key procurement principles of non-discrimination and equal treatment are included in the Bill, as are the objectives of achieving value for money, maximising public benefit, ensuring transparency and maintaining integrity.

However, the UK Government has also included provisions in the Bill which it considers would make public procurement processes quicker and simpler, would place a key emphasis on value for money and would promote innovation in public service delivery, including creating more opportunities for smaller businesses or social enterprises in that regard.

Application to Scotland

Whilst the desire may be for greater simplicity, the proposed reforms of the procurement rules actually appear to introduce a degree of complexity in respect of Scotland. Concerns were reflected about the uncertainties created during the second reading debate on the Bill in the House of Lords by a number of speakers. We knew already that the Scottish Government had chosen not to adopt the proposed new regime. However, what was not clear was whether any Scottish procurement would be affected by the new legislation, although it was anticipated that the Act would at least apply in Scotland to UK Government bodies conducting procurement activities in Scotland.

The starting point

Clause 114 of the Bill gives the starting position – “This Act extends to England and Wales, Scotland and Northern Ireland”. This means that, once enacted, the legislation will apply in Scotland. The Court of Session has jurisdiction to preside over civil proceedings that will be raised under the Act in Scotland. The Scottish Ministers can make subordinate regulations under the Act. Perhaps controversially, the Act will allow for UK regulations to amend existing Scottish laws in an area devolved to the Scottish Ministers and Scottish Parliament.

Scottish Regulations still apply to devolved Scottish authorities

The new UK legislation will only apply to a “contracting authority” as defined in clause 1 of the Bill. “Devolved Scottish authorities” are categorised in clause 1 of the Bill as “excluded authorities”, i.e. they are excluded from the definition of a “contracting authority” to which the legislation will apply. Under the new legislation, devolved Scottish authorities will continue to be governed by the Scottish legislation, namely:

• the Public Contracts (Scotland) Regulations 2015;
• the Utilities Contracts (Scotland) Regulations 2016; and
• the Concession Contracts (Scotland) Regulations 2016.

What is a devolved Scottish authority?

The definition of devolved Scottish authority is contained in clause 1 of the Bill. An authority is a “devolved Scottish authority” if it exercises its functions only in or as regards Scotland and either none of its functions relate to reserved matters, or some of its functions relate to reserved matters and some do not, i.e. mixed functions, with ‘reserved matters’ being defined as those reserved under the Scotland Act 1998.

In the case of a public undertaking or private utility, they are to be treated as a devolved Scottish authority for the purposes of the legislation if they operate only in or as regards Scotland and either none of their activities relate to reserved matters or some relate to reserved matters and some do not.

This raises significant questions for bodies exercising functions or operating in Scotland, but whose activities may also extend beyond Scotland. Consideration should now be given by bodies in Scotland who may potentially be caught by the definition of a ‘contracting authority’ as a result of their activities, as to whether or not they are excluded authorities, e.g. whether or not they exercise their functions only in or as regards Scotland.

If a body does not meet the test of being a devolved Scottish authority (or the other very limited excluded authorities in the legislation), the provisions contained in the Bill will apply and any procurement activity must be carried out in accordance with the terms of the new legislation.

Keep your eyes open

If you’ve made it this far, you probably have some questions. It is likely that some of these questions will be addressed in amendments to the Bill as it passes through Parliament. Others may not be settled until a body of caselaw builds up around the new Act, once in force. Those bodies subject to procurement regulations (whichever ones that might be) will need to keep up to date with the rules as they are changed and clarified over time. Getting caught on the wrong side of the rules can be costly.

If you would like to know how the Bill applies to your organisation, or where you will stand when the implementing regulations come, please contact: Graeme.Palmer@burnesspaull.com or Fiona.Killen@burnesspaull.com.