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. This report follows a National Audit Office report entitled, "Lessons learned: competition in public procurement" published on 17 July 2023

The latest report investigated government spending on the procurement of goods and services in 2021-22 and found that, despite spending £259 billion on public procurement, the government – and by extension public authorities – had not been able to demonstrate effective use of purchasing power to support local and national policies and objectives, nor drive healthy and competitive markets.

Criticisms and recommendations

The report highlights substantial issues with the quality and completeness of data on contracts, rendering the government unable to utilise data that had been collected to effectively evaluate competitive trends, and better cater to small and medium enterprises (SMEs). It was found that of publicly available contract award notices on Contracts Finder for the period 2018 to 2022, 6% of large contracts did not have basic information on the procurement procedure used.

The report also emphasises the need for the government to produce more clearly defined directions and guidance on a range of topics – from the collection and publication of data to best practice for public authorities to conduct early engagement – in order to allow enhanced data collection and to enable more effective communication and engagement with the market and potential suppliers.

Framework agreements have also been highlighted, given their rise to become the most prevalent route for public authorities to buy common goods and services. The report notes that the shortened call-off process for contracts to be awarded to select framework suppliers may limit competition. It also mentions the difficulties SMEs face in competing against incumbent suppliers.  The report concludes that frameworks can be successful, so long as they are carefully managed; its recommendations suggest the issuing of further guidance on key policies for government buyers.

Osborne Clarke comment

The government has estimated that more effective use of competition in public procurement could achieve savings of £4 billion to £7.7 billion per year. The report cites the introduction of the Procurement Act 2023 as an opportunity for the government to make the necessary improvements to the procurement process with a view towards achieving these savings . However, it raises concern that the public sector lacks the time, money and resources required to successfully implement the legislation and achieve "the intended far-reaching changes".

Once the Procurement Act comes into force, it will be interesting to see the implications of the requirement to award to the "most advantageous tender" or MAT. The existing requirement under the Public Contracts Regulations 2015 is to award contracts to the "most economically advantageous tender" or MEAT. The change aims to increase the focus of public authorities on social value and local and national policies and objectives. Will this help or hinder the government's ambition to achieve financial savings?

The government has two months to respond to this report. The public sector and suppliers should keep an eye out for this response. In the meantime, both should ensure that they are preparing for the forthcoming Procurement Act.

Please visit our "Navigating the changes under the Procurement Act" microsite for our insights on the new regime.

If you would like to discuss any of the issues raised in this Insight, please get in touch with your usual Osborne Clarke contact, or one of the experts listed below.