Preparing for the public sector procurement bill: technology & transition

As the UK separates from EU Public Contract Regulations 2015, the introduction of new legislation under the Procurement Act 2023 gives an opportunity to overhaul previous policies. With the new UK Procurement Bill coming into force in just a matter of months, excitement surrounding the opportunity it brings is mounting, but so are concerns regarding the level of risk and of preparedness of departments, trusts, local authorities and other public sector bodies that need to rapidly operationalise the new act into their processes.

Procurement bill objectives

The new bill is designed to promote a speedier procurement process whilst increasing transparency, competition and sustainable procurement by broadening the supplier pool for the Public Sector to include more SMEs, local, diverse and sustainable businesses. 

Value for money

While attempting to remain true to the concept of selecting the Most Economically Advantageous Tender, via the “MEAT method”, with guidance from Senior Officials stating that the bill is designed to ensure “that every penny goes further for our public services,” the new bill does alter focus to a new: Most Advantageous Tender (MAT) method giving some potential allowance to contracting authorities to give greater weighting to non-price criteria for example a bigger focus on social value. 

Additionally, streamlining the existing 350 procurement processes into a single, simpler regime, applied uniformly across the sector is designed to save time for both public bodies and suppliers and ultimately support the delivery of more value for money for the Government and Taxpayers. The new regulations will therefore change the way that public bodies award, for example, their annual £300bn spend on goods and services.

The new bill, coming into force in October 2024, in fact confirms that: “In carrying out a covered procurement, a contracting authority must have regard to the importance of—

1. delivering value for money;
2. maximising public benefit;
3. sharing information for the purpose of allowing suppliers and others to understand the authority’s procurement policies and decisions;
4. acting, and being seen to act, with integrity.”

Attracting SMEs

Attracting SMEs will play an increasingly important role in the selection of suppliers across industries in the near future. The new, slimmer and simpler procurement model is expected to attract these businesses that traditionally would not have engaged with the public sector due to perceived obstacles in the contracting process. When it comes to supporting increased access to tenders for SMEs, the bill specifically continues to confirm that buyers must: 

1. have regard to the fact that small and medium-sized enterprises may face particular barriers to participation, and
2. consider whether such barriers can be removed or reduced.”

By focusing on opening up access to small businesses, voluntary, community, faith and social enterprises, the new bill also highlights, the continued importance, that social value and sustainability will need to be taken into account by awarding public sector bodies. The bill specifically includes “acting, and being seen to act, with integrity” as features of note when evaluating a new supplier.

Transparency

When it comes to transparency, the new bill encompasses greater reporting of results to the Cabinet Office and that underlying performance data will be public. In addition, the bill requires  the publishing of additional notices from planning through to contract expiry, with the public sector authority also having to provide greater visibility into how funds are being spent and how suppliers are performing over time. As transparency is embedded throughout UK Public Procurement, bodies will in fact be called upon to ensure that suppliers continue to deliver against contractual obligations and to carry out ongoing evaluation throughout contract lifetime to ensure there is no drop off in performance and value. Government transparency objectives therefore cover: contracting authorities which will be given better visibility of procurement plans and tender opportunities; suppliers who will gain better visibility of procurement plans, engagement events, and tender opportunities as well as the general public and media who will be able to monitor how taxpayers money is spent.

New volumes and sources of data

Adapting to the new model calls for public sector bodies to not only understand the new legislation and look to revise their processes but also to manage supply chain risks such as those posed by attracting new players to the marketplace (smaller, younger businesses for example) via innovation and efficient management of data sources. 

It is expected that any increase in resource overheads as a result of the bill will largely be supported by procurement applications. Efficient real-time information retrieval and analysis, enabled by automation for example, can support buyers in being more efficient by mitigating supply chain challenges posed by say SMEs via reporting with better informed decision-making. 

Due diligence in vetting suppliers for compliance with regulations is key, but there is also increased importance given to monitoring supplier performance and ethical behaviour during the lifecycle of a contract, meaning greater interoperability between systems is needed. 

The Procurement Act also aims for greater monitoring and accountability when it comes to improving the quality of delivery, with authorities poised to take tougher action on underperforming suppliers, exclude suppliers who pose unacceptable risks, and embed transparency throughout the commercial lifecycle so that the spending of taxpayers’ money can be more accurately scrutinised.

It is here that digitisation and automation will play a key role in helping buyers to fulfil their obligations in tracking supplier performance against the satisfaction of a contracted service whilst managing the larger volumes of data from diverse sources required to make new types of value assessments.

The bill therefore initiates a mind-set shift that requires a significant revision of the existing and often siloed procurement and supply cycle where each department was focused on delivering a specific stage of the procurement process, to a more collaborative and objective-driven approach. Each stage of the procurement process will play an organic role in an end-to-end model that prioritises the selection of cost-effective businesses that, for example, invest in social value and ESG. 

Preparing for a more joined-up approach

Will Public Sector Procurement be able to adapt rapidly enough to reap the benefits of the new legislation without disruption to their existing Procurement and Supply Cycles, or will the processes continue to support the overriding procurement policy- that all public procurement must be based on value for money- throw a spanner in the works and add unknown risk elements?

While mindset change requires a significant communication and education effort, fortunately  some procurement systems are already developed to support and drive transformational procurement at the same time as managing huge volumes of data to give better insights. 

Specifically, whereas previously in any public sector body, regardless of size, each department would tend to focus on a single phase of the Procurement Cycle with its own specific human resources, technology system and even rules, the new mindset requires an integrated end-to-end approach.

Contract managers, finance teams, service commissioners, legal advisers and reporting teams all tended to operate within silos that were thinly interconnected with each stage (such as gathering design specifications, costing information, reaching out to potential suppliers, assessment, contract awarding and finally supplier management) only loosely connected to the other. The new model requires that all these steps and resources are closely interconnected, sharing the same information and updates in real-time.

Fortunately, procurement solutions that enable a cohesive approach to the procurement lifecycle have already been specifically developed for the Public Sector. What the sector will have to manage however, are tools that have a lack of system integration and therefore reduce capability for an organisation to streamline and join up all aspects of its procurement processes.

Training and development

To face some of these challenges, the Cabinet Office has announced it will be rolling out a comprehensive programme of learning and development for procurement and commercial teams as well as other staff whose work touches on procurement.

This programme will cover a review of commercial strategies including planning, governance, assurance and resources, the comprehensive sharing of the aims of reform with senior stakeholders and change makers and their communications across government and the wider public sector. 

Help is at hand

Partnering with procurement technology suppliers that offer end-to end-visibility into all elements of the procurement lifecycle as well as extensive experience in procurement within different public sector bodies will prove to be a game changer in supporting procurement strategy reform whilst maximising the delivery of value in speedy and effective compliance with the new bill. 

Everyone will have a different approach to aligning to the changes brought about by the Procurement Act. While change may move at different speeds in different authorities, it is possible for those wanting to embrace the benefits of the new procurement process rapidly to do so effectively and speedily with the support of a partner that understands the objectives of this new bill and is able to offer both the end-to-end technology and the training to support and effect this radical transformation.