The Procurement Act 2023 is reform that has been brought forward by government following the UK’s departure from the European Union in 2020, with four core objectives of:

• Creating a simple and more flexible purchasing system
• Opening up public procurement to new entrants such as small businesses and social enterprises, allowing them to compete for and win more public contracts
• Taking tougher action on underperforming suppliers – and excluding those that pose unacceptable risk
• Embedding increased transparency through the commercial lifecycle

All objectives aim to make the new procurement regime better and maximise the huge opportunity to embrace flexibility and innovation.

The Procurement Act changes will come into effect on 24 February 2025.

Whether you are a client in the public sector or a supplier in the private sector, you can visit our useful links section above to view the latest government guidance and other handy resources.

The Procurement Act 2023 will impact public sector organisations – from local authorities through to NHS trusts – and private sector suppliers offering goods and services.

Professionals working in procurement, estates or director roles should familiarise themselves with the changes.

If your business supplies goods, works or services to organisations in the public or utility sectors – or hopes to do so in the future – you need to know about the changes.

The Procurement Act 2023 includes several changes. Some of the key areas include:

• Procurement terminology
• Pipelines of future procurement activity
• Greater due diligence on supply chains
• Updated Procedures
• Processes associated with tender evaluations
• Standstill periods
• Publication of key performance indicators (KPIs) and supplier performance against them
• Debarment list
• Exclusion grounds for poor performance
• Notices for most changes made to a contract during its term
• Digitalisation

On 12 September 2024, Cabinet Office announced that the Procurement Act 2023 will now commence on 24 February 2025 – a delay of four months from the original go-live date of 28 October 2024 to allow time for a new National Procurement Policy Statement (NPPS) to be produced.

The Procurement Act 2023 applies to England, Wales and Northern Ireland, as well as contracting authorities with reserved functions carrying out procurement in Scotland. There are a small number of exemptions for devolved Welsh and Northern Ireland procurements, and further specific exemptions apply to certain utilities, defence and security, and healthcare contracts.

Before leaving the European Union (EU), public procurement consisted of four sets of regulations – Public Contracts Regulations 2015 (PCR 2015), Utilities Contracts Regulations 2016 (UCR 2016), Defence and Security Public Contracts Regulations 2011 (DSPCR 2011) and Concessions Contracts Regulations 2016 (CCR 2016).

The Procurement Act 2023 consolidates the UK’s public procurement regulations into a single piece of legislation.

There are multiple benefits of procurement reform for SMEs.

1. The change from MEAT to MAT

The Act encourages contracting authorities to award a public contract to the supplier that submits the most advantageous tender in a competitive tendering procedure.

The guidance says:

“The overall basis of award is now referred to as the ‘most advantageous tender’ (MAT), rather than, as in the previous legislation, the ‘most economically advantageous tender’ (MEAT). However, this is not a change in policy and the change is to clarify and reinforce for contracting authorities that tenders do not have to be awarded on the basis of lowest price/cost, or that price/cost must always take precedence over non price/cost factors.”

This opens up opportunities for SMEs that can demonstrate wider capabilities in the bidding process.

2. Section 12(4)

Contracting authorities must consider barriers to participation and take steps to reduce or remove them.

3. Encouraging SME engagement

Contracting authorities should encourage SME engagement pre-procurement to support in designing SME inclusive opportunities that avoid unnecessary barriers for entry.

The open framework concept is a series of frameworks that allows a contracting authority to design a framework with pre-defined re-opening opportunities for a maximum term of eight years. The closed framework is the traditional framework that has been used in the sector for some time, which has a single-entry point at the beginning of the framework and for a maximum term of four years generally.

The length of standstill periods will change as a result of the Procurement Act 2023 – moving from 10 calendar days to 8 working days.

The process in which standstill periods commence will also change, with new notices required prior to the start of standstill. While this change will increase administrative tasks for procurers and contracting authorities, it’s further evidence of the transparency agenda in action.