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Clock ticks on radical plans to overhaul, digitalise £290 billion in UK public procurement

"A significant opportunity to foster institutional change"

The UK plans to tear up rules governing £290 billion in public procurement each year, harmonising some 350+ regulations into a single, uniform framework accessible via a single digital supplier registration platform. The radical set of proposals includes welcome plans to make all contracting authorities implement the Open Contracting Data Standard* so that contract data is machine readable and easier to track and analyse.

A public consultation on the move -- first announced in a December 2020 Cabinet Office “Green Paper” -- closes March 10, 2021. As the clock ticks on the consultation, The Stack took a closer look at the proposals.

UK public procurement reform plans: the detail.

"A historic opportunity to overhaul our outdated public procurement regime” says the Cabinet Office, with the Green Paper citing an opportunity to rationalise complex and overlapping European regulations (as transposed into British law) and develop an "independent" public procurement policy post-Brexit.

The instinctive response of many to rhetoric about a "bonfire of red tape" will be a cautious one; the paper is a robust one though that eases rules where it should -- e.g. to encourage innovation and clarify the ability of public authorities to incorporate social and environmental benefits into tendering processes -- yet one that also strengthens the ability of contracting authorities to block fraudsters and those guilty of persistently poor delivery. It also strengthens the ability of suppliers to tackle payment delays through the supply chain.

(The anti-fraud proposals include plans for a new mandatory exclusion ground for bidders who do not state their beneficial owner; it also includes proposals for a centrally managed list of suppliers with previous convictions to make it "easier... to identify organisations that must be excluded from public procurement". Earlier reports, including by software firm SAS, have suggested procurement fraud is particularly rife in the UK).

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More explicitly, among its proposals, the Cabinet Office suggests consolidating rules currently laid out in the Public Contracts Regulations (PCR) 2015, the Utilities Contracts Regulations (UCR) 2016, the Concession Contracts Regulations (CCR) 2016 and the Defence and Security Public Contracts Regulations (DSPCR) 2011.

(It acknowledges that there are some risks associated with that move: "Four separate sets [of rules, as currently applied] means each can be tailored to the needs of each sector. Commercial teams are generally more familiar with the PCR. The UCR and CCR are generally more flexible than the PCR, which may mean that in some cases there is a risk of flexibility being reduced by our proposals where they are more akin to the PCR.")

Arguably the consultation's most controversial element is plans to include "crisis" as a new ground on which limited tendering can be used, particularly with government procurement post-Covid under close scrutiny over a number of questionable deals. The Cabinet Office says it is baking in safeguards against abuse (see page 65 of the Green Paper), while also reducing the ability of unsuccessful bidders to trigger automatic suspension of a contract award via a legal challenge. The latter will "encourage contracting authorities to make more use of competition in times of crisis or extremely urgent demand" without risk of legal delays, it suggests.

Procurement procedures: From 7, to 3

Public authorities currently have seven procurement procedures available to them:

  • Open procedure;
  • Negotiated procedure without prior publication;
  • Restricted procedure;
  • Competitive dialogue procedure;
  • Competitive procedure with negotiation;
  • Innovation partnerships procedure, and
  • Design contests

As the Cabinet Office has it, some of these have proved "impenetrable" to many buyers and they are rarely used. In 2017, for example, only three contract notices for innovation partnerships and five for design contests were published by UK contracting authorities. In total, the four procedures which allow for more flexible negotiations with bidders accounted for less than 10% of all advertised contracts awarded in the UK between 2016-2018.

It aims to replace them with a declared trio of alternatives.

  1. "A new competitive, flexible procedure that gives buyers maximum freedom to negotiate and innovate to get the best from the private, charity and social enterprise sectors"
  2. Retain the open procedure which "buyers can use for simpler, ‘off the shelf’ competitions as now (expanding its availability to defence and security procurements for which it is not currently available) and
  3. Retain the negotiated procedure without prior publication but rename it as the limited tendering procedure

Steve Morgan, Partnership Director at public sector IT specialist Agilisys told The Stack that he "warmly welcomed" the proposals, adding that "the COVID pandemic has highlighted how, in times of crisis, government at all levels needs to act quickly to procure and implement the services citizens need. Overhauling inflexible and complex procedures and replacing them with three simple modern procedures will, if delivered correctly, allow more freedom for suppliers and the public sector to work together in a consultative way and innovate."

Other early responses from the IT industry to the proposals have been positive. The proposed simplification in particular was welcomed by Peter Ford, public sector principle at Pegasystems, who told The Stack: "A single digital platform to administer public contracts is well overdue and is, therefore, welcomed. The current plethora of platforms is confusing, expensive to operate within, and delivers inconsistent results."

He added: "Rationalisation of contract regulations across all public sector sub-sectors is encouraging news and should be applauded. The government has recognised the need for consistency to lessen the burden that diverse requirements place on suppliers to offer innovation and better value for money. Equally encouraging is the proposal for greater engagement between buyers and suppliers... Suppliers that already have a customer-centric approach and partnership ethos should do well in this type of collaborative regime."

Green Paper, green objectives?

The Green Paper suggests a National Procurement Policy Statement will also be forthcoming that clarifies how public procurement can be used to deliver ESG outcomes, noting that "taxpayers’ money spent through public procurement will be used to deliver government priorities through projects and programmes that generate economic growth, help our communities recover from the COVID-19 pandemic and tackle climate change."

"The Government wants to send a clear message that commercial teams do not have to select the cheapest bid and that they can design evaluation criteria to include wider economic, social or environmental benefits" it notes bluntly, emphasising that the current PCR [public contract regulations] require the evaluation of bids to be based on the most economically advantageous tender (MEAT)". (There's existing wriggle room in current regulations to include social value as part of the quality assessment so the paper's drive on this front can at first glance look a little disingenous, but the Cabinet Office says it aims to "reinforce and add clarity" to these provisions as part of plans in the Green Paper to swap "MEAT" for "MAT" (most advantageous tender) across procurement.

As Ian Thompson, UK General Manager at supply chain software specialist Ivalua was among those welcoming the greater emphasis on environmental outcomes. He told The Stack: "It’s high time that public sector procurement was overhauled and digitalised, particularly if the UK government is serious about its pledge to wipe out its contribution to climate change by 2050. Government procurement can be a vital ally in pushing much-needed environmental change across the country. By digitising procurement and managing it through a single digital platform, government procurement can achieve a holistic view of all suppliers, allowing them to evaluate environmental factors, assess risks, and recognise opportunities to collaborate on sustainability."

You can respond to any of the government's 42 questions in the consultation here until 11:45am, March 10, 2021.

See also: Resistance to change is yesterday’s logic