Procurement Act 2023
The Procurement Act 2023 (PA 23) will come into force on 24th February 2025. It will be supported by additional Regulations and Cabinet Office guidance/systems but the wording of PA23 itself will form the basis of procurement regulation from that date. In this update, CHIC is providing an overview of the changes for our members and our supply chain partners with guidance to allow you to prepare your organisation for this new procurement landscape.
CHIC will continue to support with these changes and further updates can be expected throughout the summer as we approach the effective launch date.
We recommend that you consider the contents of this update and consider how the matters discussed may impact on your organisation/way of working.
Background Information
As a CHIC member or supply chain partner delivering their services, you are currently governed by the Public Contracts Regulations (PCR) 2015. These regulations imported the EU Procurement Directive into UK law and when we left the EU, those regulations were amended to remain in force as a stand-alone interim solution whilst the Government consulted on and finalised PA23. Key pillars of public procurement promoted through the PCR 2015’s approach to transparency, equal treatment and proportionality are reflected and amplified in the new Act.
Exclusion of Scottish Contracting authorities, and some specific to the devolved areas of government are outlined below. These exemptions mean that some of the more onerous reporting regimes in PA23 do not apply to all our members depending on their jurisdiction, but transparency requirements will increase.
Alongside PA23 sit several ‘exemptions’ for devolved authorities with the ones relevant to the use of CHIC’s frameworks detailed below:
- Welsh contracting authorities can also call off contracts from frameworks and Dynamic markets that align with the Welsh Social Partnership and Public Procurement (Wales) Act 2023.
- Can call off below threshold contracts from CHIC Dynamic Markets
- Exempted from publishing contract details notice for contracts >£5Million
- Scottish contracting authorities can continue to use CHIC frameworks & DPS let under the Public Contract Regulations 2015 as this continues to apply in Scotland.
- Even though the full provisions of the Procurement Act 2023 will extend to Scotland (Section 126 of PA 2023); its application is limited, and there will effectively be dual regulation of public procurement in Scotland.
- Scottish buyers such as universities, local authorities, the Scottish Government and non-governmental organisations operating in Scotland in devolved areas will remain subject to the existing, EU-derived rules, including the Public Contracts (Scotland) Regulations 2015.
- Section 115 of the Procurement Act 2023, therefore, enables both the UK Government and the Scottish Government to make regulations amending the application of those regimes to enable the use of such framework agreements or other arrangements in relation to cross-border procurements and draft Regulations have already been prepared by the UK Government.
- The national procurement policy statement and the Wales procurement policy statement do not apply to a procurement under a transferred Northern Ireland procurement arrangement or a transferred Northern Ireland authority (except in relation to a procurement under a reserved procurement arrangement e.g., established by CHIC).
- The requirement to publish pipeline notices does not apply to a transferred Northern Ireland authority.
- The requirement to publish a copy of the contract along with the contract details notice does not apply to a contract awarded by a transferred Northern Ireland authority (unless it is awarded under a reserved procurement arrangement) or under a transferred Northern Ireland procurement arrangement.
- The requirement to publish a contract change notice (or a copy of the amended contract) or details of contract payments over £30,000 does not apply to a contract that was awarded by a transferred Northern Ireland authority (unless it is awarded under a reserved procurement arrangement or a devolved Welsh procurement arrangement) or under a transferred Northern Ireland procurement arrangement.
- Procurement investigations do not apply to a Northern Ireland department however they may be bound by any recommendations issued.
- Be aware that part 6 of the Procurement Act (Regulated Below – Threshold Contracts) does not apply to transferred Northern Ireland Authorities or procurements under a transferred Northern Ireland procurement arrangement.
Both the current PCR 2015 Regulations and the new PA23 set thresholds above and below which procurement / contracting activity is regulated. These thresholds are updated every two years on the 1st of January. The current thresholds are therefore in place until 31st December 2025 and for non-central Government contracting authorities, are:
Threshold from 1st January 2024 (Excl. VAT):
- Supplies and Services: £179,086.67
- Light Touch Regime: £552,950.00
- Works: £4,477,174.17
Above these thresholds, full compliance with the current Regulations and the future Act are mandatory and cannot be avoided using an exemption/waiver process.
Added to the above is a much lower threshold of £30,000 (inc. VAT). Any contract above this much lower threshold requires a more limited compliance regime, including the publication of a contract award notice and (under the new Act) a contract termination notice.
Something which is important for our members, however, is the aggregation rule; both the current Regulations and the new Act prevent the disaggregation of spend to avoid the rules. In simple terms, this means that for matters of ongoing spend (i.e. not individual, one-off purchases), organisation spend over a minimum four-year period needs to be estimated, and if that spend is above one of the above relevant thresholds, then the procurement process to follow needs to be that which is mandated by the Regulations/PA23.
Procurement Act Objectives
The Cabinet Office has set out an agenda for reform of wider public sector expenditure, seeking to achieve better value for money and to maximise the benefit of public sector third party spend within the UK economy. Key to this agenda is a perception that transparency of such expenditure will serve to demonstrate the degree of equal treatment and proportionality that removes barriers to tendering for public contracts. Access to this market by SMEs is key, as is obtaining better value through public sector spend targeting strategic priorities.
The UK’s economic strategic priorities are set out in its National Procurement Policy Statement (NPPS), a new version of which was published in mid-May 2024 and unless objected to, will go live on 28th October to complement PA23. This encompasses all aspects of Social Value but whereas the 2012 Social Value Act was not prescriptive in how Social Value could be achieved, the NPPS offers clearer guidance on what public sector bodies should be mindful of, when spending public money.
What happens on 24th February 2025?
What are the key changes?
There will be only two tender processes, an Open Procedure akin to the current open procedure under the 2015 Regulations and a Competitive Flexible Procedure (CFP), which allows for the design of any non-open tender process. We suggest that this second process will be used infrequently, perhaps to design a process akin to the current restricted procedure, used when an open procedure may be expected to return too many tender submissions.
For all above-threshold requirements, you will continue to be best served by seeking established routes to markets through framework agreements, such as those put in place by CHIC. There are changes to the way in which these framework agreements are established, CHIC Procurement can run through these alternatives, nevertheless there will be a continuation of this provision to make your access to supplies & services as simple and as straightforward as possible.
Evaluation of tenders, whether through an open process or call-off from a framework is currently referred to as MEAT — most economically advantageous tender. Under PA23, this becomes MAT – Most Advantageous Tender. Despite ‘economically’ being dropped, tenders will still need to be evaluated based on both price and technical quality, but MAT provides for a broadening of what could be considered as value for money, including emphasis on the objectives of the NPPS mentioned above.
This is probably the biggest change from our members’ perspective. PA23 heralds a new ‘Notices’ regime which requires publication of notices from initial procurement planning, through active procurement and then throughout the life of active contract management. Alongside the publication of new/different notices, will be a requirement to publish redacted copies of any contract with an award value exceeding £5million.
Note that this value is VAT-inclusive, as indeed are any values now discussed in terms of PA23. For any such contract, there will also be a requirement to publish at least annually, compliance with a minimum of three KPIs that will be obliged to be set and reported on (see Contract Management, below).
Finally, another change comes in the form of publishing a Termination Notice each time one of your contracts comes to an end, even those that end through expiry of time, and which are simply replaced.
The second biggest change that PA23 heralds, is the requirement to demonstrate a more active contract management regime. This included mandatory disclosure of all contracts with a value exceeding £5million and a requirement to set a minimum three KPIs for such contracts and then actively report on the management and achievement of those KPIs by your suppliers/contractors.
For any contract exceeding its threshold value, the increase in notices publication and transparency requirements means that third-party above-threshold contracts will require an active approach to the management of their delivery. This will place additional burdens on your budget holders / those for whom the contracts have been put in place and those colleagues will need to be afforded the time and expertise to actively manage the requirements.
This links to achieving Value for Money. It is recognised that active contract management can contribute in savings either in-life or in feeding into the next iteration of your contract requirements, so investing in contract management can pay dividends.
CHIC Member Services Team provide support to members in the ongoing contract management to ensure that the selected contract or service runs smoothly.
Currently, there are two reporting platforms — Contracts Finder (for below-Threshold contracts) and Find a Tender (for above-Threshold contracts). These will merge into a new enhanced Find a Tender platform, which will link into a new Supplier-information Central Digital Platform. The aim is to create a single repository for all public sector contracts and suppliers.
No longer will suppliers have to provide the same information on their establishment, finances, and compliance for each individual tender they respond to. Instead, this information will be uploaded to a centralised platform which public sector buyers can then access to assess supplier suitability. The Cabinet Office is also introducing a debarment service which will preclude poor performing suppliers from participating in public sector contracts.
A mix of the above will generate more transparent public sector spend, with suppliers and other interested parties being able to quickly access tender and contract information. This is being formalised by the creation of a Procurement Review Unit within the Cabinet Office, which builds on the current mystery shopper service, to have more formal oversight of compliance with PA23 and its provisions. One prediction is a rise in the number of Freedom of Information requests linked to procurement and contracting activities as the wider supply market become aware of the increase in transparency and compliance obligations.
Notices
Transparency will be achieved through a new regime of published notices. For members who use the services of CHIC, whether calling off our frameworks or members using our procurement services, the systems provided by CHIC facilitate most of the current regulations requirements and we expect that this will be enhanced by improvement to CHIC eSourcing, our in-house eProcurement portal for the new PA23.
With the longstanding requirement to conduct procurement activity electronically, our members should be using eSenders (electronic procurement) platforms for their above-threshold tendering activities, such as eSourcing (used by CHIC). It has been promised by the Government, working with UK eSenders, that all commercial platforms will provide the functionality you require, though they will not be automated and will need your intervention to process and issue the required notices.
In the table below is a summary of the new notices’ regime, with notes where CHIC Procurement considers that requirements for compliance may be more limited for most of our members. The table is divided into the three stages of the procurement lifecycle — procurement planning, procurement, and contract management. We have flagged where the notice is mandatory or optional for below-Threshold contracts; otherwise, the notices only apply to above-Threshold procurement/contracting activity.
Pipeline Notice
Mandatory (for organisations where spend is £100m+ per annum). A 12-month forward-look at planned procurements individually of £2m+ value. CHIC envisages publishing this notice by virtue of annual third party spend volumes.
Preliminary Market Engagement
Mandatory where pre-market engagement is anticipated or has taken place (or explain in the tender notice reason for not publishing). When CHIC intend to run a full Open or CFP tender process you will be encouraged to advise the supply market in advance through the publication of this notice and will have to explain why preliminary engagement was not conducted in any contract notice which forms the commencement of procurement activity.
Planned Procurement Notice
Optional best practice to advise the supply market of an upcoming procurement. A qualifying planned procurement notice can reduce tender timescales by up to 10 days if timescales are tight.
Tender Notice
Mandatory when undertaking an open or competitive flexible procedure (including procurement through a Dynamic Market (the replacement process for the current Dynamic Purchasing System) or a regulated below-threshold open procedure. This is the direct replacement for the Contract Notice under the 2015 regulations.
Transparency Notice
Mandatory when undertaking a direct award above threshold (publish prior to award). As with the next notice, Contract Award, this must be prior to entering into contract and allows for a standstill period in which suppliers have a chance to challenge the planned award. It is a replacement for the current voluntary ex-ante transparency (VEAT) notice, and it is recommended that the same 8-working-day standstill period is observed. The standstill period under PA23 changes from 10 calendar days to 8 working days.
Contract Award Notice
Mandatory and communicates the outcome of the procurement (following the provision of feedback to participating suppliers) and commences a newly defined standstill prior to awarding a contract under either the open or competitive flexible procedure. A major change from the current regulations, which require only a notice to the market after the contract has been formally awarded.
Contract Details Notice
Mandatory details of the awarded contract and must be published within 30 days of contract signature (or 120 days under the light touch regime). It must also include a copy of the redacted contract and KPI information, for any contracts of £5m+.
Procurement Termination Notice
Mandatory where, after publishing a tender or transparency notice, the process is terminated without awarding a contract.
Dynamic Market Notice
CHIC will replace the current complement of DPS for our members, (by the effective date 28th February 2029) requiring a mandatory series of notices when advertising, establishing, changing, or terminating our new dynamic markets. CHIC will determine whether Dynamic Markets provide a cost-effective route to market for our members’ use, and use and will manage this process accordingly.
Contract Payment Notice
A notice which is published quarterly by the wider public sector to provide details of each (and every) supplier payment over £30,000 (incl VAT) made under a public contract. Each client organisation can publish a consolidated notice for all payments on a quarterly basis.
Contract Performance Notice
Mandatory to report (a) annual KPI scores for public contracts exceeding £5m; and (b) poor supplier performance / breach of contract (within 30 days of event). Not required for light touch regime contracts or for the framework agreements which CHIC puts in place and which can be accessed by our members as a value for money route to market but applicable to relevant call-off contracts.
Contract Change Notice
Mandatory prior to a qualifying modification taking place (and must publish a copy of the modified contract for public contracts over £5m). Section 74 of PA23 stipulates permissible modifications and sets out the grounds for qualifying modifications.
Contract Termination Notice
Mandatory when a public contract ends. This includes contracts which come to a natural end or are replaced with a new iteration of the same requirement.
Payments Compliance Notice
A biannual notice, providing details of contracting authority performance against 30-day payment terms. CHIC Procurement can assist with publishing these details via CHIC eSourcing.
For members based in either Wales or Northern Ireland, certain notices will not be required but will be replaced by a similar internal reporting mechanism to the devolved assemblies and so preparation for the issue of notices is still required in practice.
What does this mean for our members?
The CHIC procurement function is preparing for the changes which come into effect on 24th February 2025. The housing sector will come under closer scrutiny from both central Government and the wider supply market. Systems and procedures, rules and regulations will need to be reviewed and those in a procurement role, finance colleagues and budget holders will need to be briefed and trained.
The Cabinet Office has a dedicated webpage — Transforming Public Procurement – which contains information and links to resources which will support your organisation and colleagues to prepare. Members who access our framework agreements or use our procurement consultancy services will be supported through this process, but the emphasis must be on ownership from the leadership team down, if you are to successfully transition to the provisions of the new Act.
The key resources available to you now, comprise of the (following:
Knowledge drops for senior leadership and heads of service, providing an overview of the new Act. It includes overviews of PA23 for suppliers, so can be shared with your supplier base.
Comprising a series of ten modules for those on the procurement coalface and which provides more in-depth knowledge of the provisions of the new Act. The CHIC Procurement team have all completed the Advanced Practitioner training and can assist with this eLearning.
Guidance which is being drip-fed from the Cabinet Office to support the transition to the new Act.
CHIC Procurement have completed a number of lunchtime byte size sessions which can be viewed here (Links to Pdf presentation to be inserted)
What will CHIC be doing?
The CHIC Procurement Team is preparing for these changes, to make sure that the Framework Agreements and new Dynamic Markets (replacing our current DPS by the effective date 24th February 2029) that we put in place to support Members with compliant, value-for-money and less time-consuming access to the markets are fit for purpose. Colleagues across CHIC’s Member Services and Strategic Services Teams are equally preparing themselves for these changes, to best support our members with their procurement requirements.
Procurement Advice Notes (PAN) will be issued as and when there is sufficient further information to share and accessible through our website.
Finally, the CHIC Procurement area of our website will be expanded and updated to provide a one-stop-shop resource for members to access templates and guidance notes for the key areas of the procurement function
Your next steps - top tips
- 1. Review your contracts with third party suppliers. Spend analysis is the starting point and this will feed your contracts register, which in turn will give you a pipeline of repeat work. In addition, review your asset management strategy to ensure you have a clear plan of other contracts you will need to procure.
- 2. Make sure your Finance System is capable of reporting for the new requirements to assist your procurement function in succeeding.
- 3. Encourage procurement colleagues within your teams to undertake the Practitioner eLearning.
- 4. Review your Finance Regulations & Procurement Policies and plan for the changes you'll need to introduce in the autumn.
- 5. Begin to understand how to properly manage your contracts and how to use learning from them to feed into future requirements. If a contract is £5m+ (only £4.2m excl’. VAT), be prepared to publish them and the KPIs that you will need to establish. Consider what software you may need to permanently redact sensitive commercial information prior to their publication.
- 6. Think about how your organisation can incorporate National Procurement Policy Strategy requirements (including wider social value) into your third-party spend and consider creating a NPPS-orientated social value policy
- 7. Cascade this briefing note to your budget holders and finance/procurement colleagues and give them time to prepare for PA23 going live.
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