The UK government’s green paper on procurement sets out a plan to fundamentally change the structure of public procurement, signalling major changes ahead for buyers.
Along with proposals for a new unit within the Cabinet Office (CO) to oversee and intervene in procurement and the streamlining of processes, there is also an emphasis on promoting innovation.
Lord Theodore Agnew, CO minister, said the end of the Brexit transition period “provides an historic opportunity to overhaul our outdated public procurement regime.
“I have seen myself that these rules have made it much harder for us to create opportunities for innovative companies to win business and improve public services or for public bodies to exclude suppliers that have performed poorly in the past.
“Now we have an opportunity to design something that delivers for our communities and our businesses.”
Here are seven key takeaways from the green paper:
1. A new commercial tool is proposed
The government intends to legislate to create a new dynamic purchasing system (DPS+) that may be used for all types of procurement (not just commonly used goods and services). This would replace DPS (dynamic purchasing system) and QS (qualification system).
“The DPS+ will be a flexible, highly commercial tool ideally suited to providers of agile online and other dynamic marketplaces. New suppliers will be able to join at any time with no maximum duration. Procurements could be undertaken within a DPS+ using the new competitive flexible procedure. And the DPS+ could be used for all types of procurement, not just common goods and services.”
For frameworks, there are proposals for longer maximum terms and for frameworks to be opened to new suppliers at defined points.
2. You don’t have to select the lowest bid
“We want to send a clear message that public sector commercial teams do not have to select the lowest price bid, and that in setting the procurement strategy, drafting the contract terms and evaluating tenders they can and should take a broad view of value for money that includes social value,” said the green paper.
“This includes award criteria for evaluating final bids and scoring their quality, to encourage ways of working and operational delivery that achieve social value objectives.”
3. There could be a National Procurement Policy Statement that buyers would be legally bound to consider
The government wants there to be a “golden thread” running from high level priorities through to the development of strategies and business cases and on to procurement specifications.
These priorities will be published in a National Procurement Policy Statement and will include delivering social value, publishing pipelines of future procurement and benchmarking commercial capability.
The National Procurement Policy Statement will set out key outcomes, such as:
• Creating new businesses, new jobs and new skills in the UK
• Improving supplier diversity, innovation and resilience
• Tackling climate change and reducing waste
4. Risks have been identified in the new “competitive, flexible procedure”
The “competitive, flexible procedure” will give buyers much more freedom to engage with suppliers and promote innovation in tenders.
But risks have been identified:
• It will be unfamiliar to buyers and suppliers and likely result in familiarisation costs and time to bed in, or buyers may choose not take advantage of the increased flexibility and revert to traditional methods, resulting in limited benefits from the new procedure.
• The increased flexibility may result in greater divergence across buyers, limiting the extent to which standard approaches are developed and increasing the overall time and cost of procurements due to poor practice.
• Greater use of negotiations could prolong procurement timescales and the possibility of negotiation later in a procedure may cause suppliers not to put their best proposals forward in initial tenders.
• An increased number of legal challenges as the new procedure is tested. This could result in principles being established through court judgements, which are always specific to circumstances and as a result can be more difficult to interpret than detailed rules set out in legislation.
5. The government is looking for more procurement innovation
The government wants ideas on areas for innovation. Initial feedback has suggested “innovation labs” to bring innovative suppliers and relevant bodies together to develop ideas. “Multiple supplier collaborative solutions” could be adopted. It has been suggested powers could be granted to enable review and post-contract amendments to contracts so innovation can be considered in variations.
6. A new procurement tribunal could be established
The government intends to work with the Technology and Construction Court, which hears most procurement appeals, to reform court processes, including speeding things up, making it more accessible, and capping the level of damages available to bidders, “reducing the attractiveness of speculative claims”.
Stakeholders have called for a tribunal system so challenges can be heard in a faster and cheaper manner. The government believes these objectives can be achieved with court reform but “we propose that we continue to investigate… the potential to transfer a subset of procurement challenges to a tribunal-based system – while retaining the flexibility to hear more cases in this way in the future should the anticipated benefits of court reform not be realised”.
7. More on late payment
The government wants to ensure all suppliers in a public contract supply chain are paid within 30 days. It intends to legislate so any business in the supply chain can take up payment delays directly with the contracting authority, and to give contracting authorities the right to investigate the payment performance of any supplier in any tier of its supply chain.
A public consultation on the green paper runs until 10 March 2021.
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