Procurers face a dilemma following delay to new legislation
The government has recently announced that the introduction of sweeping changes to the public procurement regime is to be delayed until early next year. Originally intended to come into force on 28 October 2024 following a six-month ‘go live’ period, the Procurement Act 2023 (the Act) will not now become effective until 24 February 2025.
It had been widely rumoured prior to the announcement that a delay was imminent, arising from concerns about the readiness of the government’s ‘central digital platform’ (effectively the IT platform underpinning the operation of large parts of the new regime). However, the announcement gives as the official reason for the delay, the new government’s intention to revise the National Procurement Policy Statement (NPPS) which had been published by the previous government in the weeks prior to the general election.
What is the NPPS?
The NPPS is a relatively short document to which most contracting authorities “must have regard” when carrying out procurements under the Act. The existing version, published in May 2024, deals with matters such as achieving value for money and social value through public procurement, the promotion of SME access to public contracts and building contracting authorities’ capacity and skills in procurement and contract management. According to the government announcement, the current version of the NPPS “does not meet the challenge of applying the full potential of public procurement to deliver value for money, economic growth, and social value.”
Critics of the decision to delay might argue that it would have been open to the government to allow the Act to commence as planned, and to revise subsequently the NPPS. It is perhaps also questionable whether revision of the NPPS will in fact achieve the government’s objectives: while the obligation to “have regard to” the NPPS is hard-wired into the Act (in section 13(9)), case law has clarified that that term does not translate into an obligation to always adhere to government guidance, so contracting authorities would be able to depart from the NPPS if there are good reasons for them to do so.
Moreover, given that the NPPS applies only to central government and English contracting authorities, its revision will be of little practical consequence to their Welsh and Northern Irish counterparts.
Implications for contracting authorities
In the short-term, any contracting authorities that had planned to commence procurements in the early months of the new regime will be left with a decision to make. They can proceed with their existing timetable but will need to ensure that the procurement process (including any associated tender documents and contracts) is tailored to the existing Public Contracts Regulations 2015 (PCR) rules and, once awarded, that such contracts are managed according to the PCR (e.g. in making any future amendments to the contract).
The alternative will be to delay the commencement of a planned procurement until after 24 February 2025, to ensure the tender process and the resulting contracts are governed by the Act, rather than the PCR. In some cases, where existing services are being re-procured, this may necessitate entering negotiations immediately with incumbents and seeking to agree a short extension. Of course, any extension agreed between the parties would need be compatible with regulation 72 of the PCR (which governs how existing contracts can be modified lawfully) and it would be prudent to seek legal advice in that regard.
As a general rule, if a contract notice has been submitted for publication before 24 February 2025, the PCR rules apply. However, not every scenario will be so straightforward, and contracting authorities unclear as to whether the PCR or the Act applies to their situation should refer to the transitional provisions and, again, seek legal advice if necessary.
Clearly, these options may be unsatisfactory to many contracting authorities. Significant time and resources might already have been expended preparing for a process that complies with the Act and authorities who do not have the luxury of simply delaying a procurement until next spring might feel aggrieved at missing out on some of the flexibilities that the Act would have afforded them.
In other cases, the delay will come as a welcome reprieve for contracting authorities (and incumbent suppliers) who were not fully prepared for the original October go-live date. The four-month extension should provide sufficient time for such authorities to get up to speed fully with the changes, including by ensuring that tender documents and contracts are suitably adapted to the requirements of the Act, that internal procurement policies are updated and appropriate staff training has taken place.
Partner, Brendan Ryan is our firm’s Head of Procurement.
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