Regulated procurement | UK Regulatory Outlook January 2024

New procurement regime to go live

The Procurement Act 2023 received Royal Assent in October last year and the Cabinet Office is anticipating a "go-live" date for the new regime of October 2024. However, with the likelihood of a general election this year and "resource changes" that may result from this, the government has indicated that the go-live date may slip.

In addition, following consultations that ran last year, secondary legislation will be introduced early this year to confirm detailed requirements for transparency notices and the scope of the light touch regime. The government has also said it will start publishing formal guidance on the new regime from February 2024.

We have published a series of webinars and Insight articles on the key changes in the new Act on our microsite and we have released the first in a series of podcasts. In the first podcast, Craig McCarthy and Millie Smith discuss the interaction between public procurement and net zero, and whether the new Act goes far enough in its commitments to net zero. Listen to the podcast.

The Government Commercial Function has released "knowledge drops" on the new Procurement Act. These provide high level overviews of the changes and are the only training materials for suppliers that will be made available by the government.

In terms of the transition to the new regime, only those new procurements launched after the go-live date will be governed under the new Act. Any procurement already started at go-live (or contracts already awarded) will remain under the existing regulations, including in relation to any future modifications or extensions. The government has said there will be no mixing of the two regimes and the end point for the application of the old regime is the termination of the relevant contract or framework or procurement where no contract is awarded.

Provider Selection Regime comes into force

As detailed in our Insight,  NHS procurement is changing with the introduction of the new Provider Selection Regime (PSR), which came into force on 1 January 2024.

The PSR will provide a new set of rules for procuring healthcare services by "relevant authorities"; this includes NHS England, integrated care boards, NHS trusts and foundation trusts, as well as local authorities and combined authorities.

The new rules include the introduction of three provider selection processes which relevant authorities can follow to award healthcare services: direct award process, most suitable provider process, and a competitive process.

The PSR regulations, made on 6 December 2023, make provision for mixed procurements (for example, covering healthcare and non-healthcare services) and require that where the PSR is used:

• the main subject matter of the contract is healthcare services; and
• the other goods or services could not reasonably be supplied under a separate contract.

The guidance sets out that the main subject matter of a contract is determined by reference to the respective value of the different elements.  Whether other goods and services could have been separately procured includes consideration of whether a separate procurement would have a material adverse impact on the authority's ability to act in accordance with the procurement principles.

The PSR legislation removes the procurement of health services by relevant authorities from the scope of the current legislation. Where a procurement exercise has started before 1 January 2024 (with definitions of started found here), it will not be affected by the PSR and can continue under the current rules.

April 2024 marks the next milestone in NHS net zero supplier roadmap

In April 2024, the NHS will adopt a two-tiered approach to the next milestone on its net zero supplier roadmap. This aims to proportionately extend the requirement for suppliers to prepare carbon reduction plans to all procurements, not just those for contracts with a value above £5 million (as is currently required).

A supplier who fails to meet the minimum requirements for a carbon reduction plan or the net zero commitment will not proceed to the next stage of the procurement process. See more on the requirements coming into force.

As part of Osborne Clarke's latest Health Check webinar series, Kate Davies and Millie Smith will be discussing NHS procurement  on 30 January 2024: they will examine how the NHS buys from the private sector, the impact of the new Procurement Act and PSR,  and what this means for suppliers. Sign up here.

New guidance on assessing suppliers payments performance comes into force 1 April 2024

As detailed in our previous Regulatory Outlook, Procurement Policy Note (PPN) 10/23: Taking account of a bidder’s approach to payment in the procurement of major contracts, which sets out how payment approaches can be taken into account in the procurement of major government contracts, comes into force from 1 April 2024. A key change introduced by the new PPN is that bidders, when bidding for government contracts exceeding £5 million, will be required to show that they settle their invoices within an average of 55 days. Therefore in 2024, suppliers bidding for these contracts should ensure they have the necessary documents to illustrate their payment performance to the contracting authority.

What procurement questions should contracting parties have in mind when anticipating the expiry of UK PFI contracts?

The Private Finance Initiative (PFI) projects agreed in the 1990s are starting to draw towards the end of their terms with a large number expiring in the  .

Managing arrangements for expiry requires early planning and, following our first Insight in this series, our latest Insight considers some of the procurement questions that the parties should bear in mind.

New thresholds come into force

As outlined in our November 2023 issue of the Regulatory Outlook, the new financial thresholds that govern the procedures for the award of public contracts for goods, works and services came into force on 1 January 2024. See the new thresholds.

MPs call for improved value and competitive measures in UK public procurement

The House of Commons' public accounts committee released a report on 13 December 2023 containing recommendations to the government on competition in public procurement. The committee thinks there is a lot of room for improvement in government procurement and is concerned the "government may not have sufficiently considered the time, money, and resources required to provide the commercial capabilities to successfully implement the Procurement Act 2023." Read our Insight for more.