Three key takeaways from the procurement green paper
Rebecca Rees looks at what public procurement law may look like post-Brexit, based on the government’s new green paper.
It has been a busy week or two for public procurement policy in the construction sector: the new social value model has been quickly followed by the publication of the Construction Playbook, and now the Cabinet Office has published its consultation paper for reforms to public procurement law for a post-Brexit Britain, outlining what it promises to be the most radical changes to public procurement in a generation.
The green paper, titled Transforming Public Procurement, sets out reforms that the Government promises will “speed up and simplify” government’s procurement processes, “place value for money at their heart” and “unleash opportunities for small business, charities and social enterprises to innovate in public service delivery”.
The reforms are intended to redefine public procurement law following the UK’s withdrawal from the European Union, building on the Government’s commitment to the World Trade Organisation Agreement on Government Procurement (the GPA). Boasting that more than 350 regulations will be slashed, the direction of travel is clearly towards a single uniform framework of rules and processes designed to meet the needs of the market.
This direction of travel is also evident in the significant sections on innovation and increasing flexibility in the system. These seek to improve the current regime by re-orientating its objectives away from “creating a common market” towards the broader objectives of value for money and the encouragement of innovation.
In line with these objectives, there are three key themes relevant to the construction sector that initially stand out.
1. Value-led procurement
The Green Paper re-emphasises the current position: that clients do not have to select the cheapest bid.
Instead, the new nomenclature (consistent with the GPA) of ‘most advantageous tender’ encourages a broader view of suitable value for money award criteria, more in line with HM Treasury’s Green Book approach.
The Government has indicated that the clarified rules on award criteria will be supported with guidance, aimed at ensuring that clients take advantage of the more flexible rules whilst avoiding ‘gold-plating’ their requirements in a way that places too much onus on the market.
The use of procurement to secure Government’s wider objectives, including achieving net zero by 2050, can be seen across the green paper. One of the principles underpinning the new procurement rules is ‘public good’. This principle acknowledges that “procurement should support the delivery of strategic national priorities including economic, social, ethical, environmental and public safety”.
These priorities will be set out in a new national procurement policy statement. This has yet to be published but will include policies designed to achieve social and environmental value by leveraging every pound spent through public procurement. The proposal to remove the requirement for evaluation to be made solely from the point of view of the client will also allow clients to take account of the wider impacts of a tender, including on the broader society – all of these changes will help prioritise bids that are greener and provide beneficial impact to the broadest section of society.
Clear links are also made to the Construction Playbook and proposals include beefing-up existing requirements on the fair treatment of suppliers and debarment for past poor performance. A bidder’s previous record on prompt payment will also play a central part at a number of points in the procurement process going forward.
The Construction Playbook also encourages clients to develop a more sophisticated understanding of different types of value – including social value, Bidders that are slow to adopt the working practices outlined in the Construction Playbook may find themselves lower down the ranks in future public procurement processes.
The green paper also recognises that public procurement offers significant potential as a strategic lever to drive innovation in the UK, “through fostering markets for innovative new products and services”.
It proposes that procedures and tools such as the new ‘competitive flexible procedure’, early market engagement, the pre-competitive procedure (not detailed in the green paper but earmarked for future reference) and performance of outcome-based specifications will all play their part in encouraging supplier innovation and result in more imaginative and inventive proposals.
Knowing how to evaluate these more imaginative and inventive proposals and pin those down in contractual provisions will be essential, and there is acknowledgement in the green paper that the new procurement regulations will require training, further guidance and case studies to support clients, with the ultimate aim of improving their commercial capability.
3. Buy British for below threshold contracts
One to watch in practice is the new ability (in Procurement Policy Note 11/20 – published alongside the green paper) for contracting authorities to reserve a procurement and specify that only suppliers located in a geographical area can bid for a contract.
Promoted as a measure by which domestic supply chains can be supported and local recruitment, training and skills can be prioritised, this will be a clear favourite with place-making contracting authorities.
Nevertheless, this could result in larger contracts being artificially split to ensure values do not exceed the relevant thresholds and the potential for it to turn into a political playground is a risk. Contracting authorities will want to ensure that they put in place appropriate oversight and governance procedures to ensure that procurement decisions are always made on a value-for-money basis rather than on the basis of favouritism or bias.
What will change?
The green paper is an interesting mix of radical reforms and proposals that don’t seem to go quite far enough.
The government states that the proposed reforms will deliver the best commercial outcomes with the least burden on businesses and the public sector. The devil will, as always, be in the detail – but this objective will only be achieved if the more ambitious proposals (a central online platform for tender information, a centrally-operated debarment register and court reform resulting in an expedited remedies process) are delivered.
Otherwise, bidders may not see much difference and there will be limited opportunities available to contracting authorities to offset the cost and time burdens of the increased transparency requirements and the upskilling and training that will inevitably be required.
Responses to the 42 questions raised in the consultation are invited and should be submitted to the Cabinet Office by 10 March 2021.
Rebecca Rees is partner for public procurement at Trowers & Hamlins.