The Procurement Act 2023 comes into effect on 28 October 2024, reforming the way that public bodies contract their suppliers. While the burden will fall on public sector contracting bodies to introduce more transparency and equal treatment for suppliers, this Act is good to be aware of for businesses already in or tendering for government contracts. With local authorities’ third party expenditure around the £70 billion mark, and the Procurement Act extending to “bodies governed by public law” - like National Highways or Network Rail - there is every chance businesses may be on the receiving end of the new processes.
Which businesses will be affected?
Any that supply goods, works or services to public sector organisations or bodies governed by public law, including some housing associations and colleges. All suppliers contracted by public organisations will be affected, with the Procurement Act 2023 designed to benefit businesses of all sizes, particularly start-ups, scale-ups and small businesses.
What are the key changes brought about by the Procurement Act 2023?
The government seeks to instigate behavioural and cultural change in the public procurement process: empowering smaller suppliers, delivering better outcomes and improving transparency. Measures to achieve this include:
- Creation of a single digital platform for suppliers to register and store their details – making it easier to apply for multiple government contracts, and see all opportunities in one place
- Simplified bidding processes
- More flexible commercial frameworks
- Removing bureaucracy
- Strong exclusions framework to take tougher action on underperforming suppliers
- More transparency – see here for a full list of published notices now required, including requirements that if the contract is worth more than £5m, its details must be published alongside three supplier KPIs
Which government contracts will it affect?
Contracts made after the 28 October go-live date; contracts already in progress will be governed by existing rules.
Why should suppliers care?
The government’s official stance is that “the Procurement Act doesn’t really bind suppliers directly”, but those already doing business with the public and utility sectors may notice improvements in the procurement process.
Procurers in contracting authorities will be receiving training from the government, so it is worth noting that, as a supplier, your key contacts are likely to be getting used to new rules and processes – be cognizant of this and patient with the public authorities you supply.
Businesses who are performing badly on contracts and do not rectify the issue will be at risk of exclusion from future procurements, so the Procurement Act is further incentive to perform well on KPIs.
For smaller firms, this may be the time to consider bidding for government work more often, as the new rules have been designed to shield SMEs from upfront costs that often prove a barrier to entry. The Procurement Act also will provide suppliers who are unsuccessful with an assessment summary to show them directly how their bid compared to the winner. The idea is to allow businesses to fully understand why they missed the opportunity and how to improve in the future.
For some businesses, bidding for government contracts is a key part of business. As a supplier, you will be on the receiving end of this wholesale reform of public procurement. Ensure you have a working knowledge of the Procurement Act 2023 to thrive – and it may even inspire you, as a smaller supplier, to bid for more work from public bodies.
Find out more about the Procurement Act 2023 on the government website.