The UK Procurement Act 2023 brings new rules for frameworks and dynamic markets
Published on 4th Mar 2024
The changes that are set to be introduced later this year could prove useful for both suppliers and authorities
While the Procurement Act 2023 will make changes across a number of areas of the procurement regime, frameworks will continue largely as before. There are, however, some innovations of which both suppliers and authorities should be aware that will increase the flexibility of framework options once the legislation is in force from October 2024. It also introduces dynamic markets, which will replace the lesser-used dynamic purchasing systems (DPSs) that exist in the current regime.
Suppliers and authorities should both be aware of the characteristics and potential benefits of frameworks and dynamic markets.
Procurement frameworks
Frameworks exist in the current procurement landscape and provide a streamlined and often quicker route for authorities to purchase goods, works and services, especially where their requirement is for regular purchases that would otherwise necessitate repetitive tender processes.
Frameworks limit authorities to procuring goods, works and services from a list of pre-approved suppliers and provide for a set of pre-agreed terms and conditions and legal protections. Under the current regime, once a framework goes live, new suppliers cannot be added until the framework in question expires and the framework is re-tendered.
In line with the existing regime, a framework term may not exceed four years – though frameworks for defence and security and for utilities are able to run for a longer term of eight years. In addition, the Procurement Act 2023 now provides for situations for extensions to this term "if a longer term is required", though how this will operate in practice remains uncertain.
The Procurement Act 2023, also introduces a subtle change in the "call off" process from a framework, with a presumption that there will be a mini competition between the suppliers appointed to the framework and a direct award to an individual supplier only where certain conditions are satisfied.
Under the legislation, authorities and suppliers will have access to both the normal "closed" frameworks and also the newly introduced "open" frameworks. A scheme of frameworks awarded in succession on substantially the same terms, open frameworks operate like a longer framework that can be reopened to the market for new suppliers to join and can be lightly amended at defined intervals.
Open frameworks, therefore, provide a more flexible option for authorities looking to put in place a longer-term arrangement which can be refreshed periodically. When bidding, suppliers should watch out for this new framework type and ensure that they are clear on the full details of the opportunity for which they are bidding.
Dynamic markets
Dynamic markets are an evolution of the DPSs that exist under the current public procurement regime. While the current system has a lot of benefits, it is not commonly used. Similar to a framework, a DPS sets up a panel of pre-approved suppliers from whom goods, works and services may be purchased. In contrast to a framework, new suppliers may be added throughout the life of the DPS, but there is a restriction that generally only "off the shelf" goods, works and services may be purchased in this way. Any bespoke requirement will necessitate use of another procurement route.
Under the Procurement Act 2023, DPSs are renamed dynamic markets but operate in an otherwise similar way. One key change, however, will be the removal of the restriction to commonly used off-the-shelf purchases. It is hoped that, by lifting this restriction for dynamic markets, there will be a greater appeal to a wider range of contracting authorities. Additionally, the new dynamic markets will allow for authorities to set conditions on membership – though these conditions must be proportionate and cannot be modified during the term. Together, these changes appear designed to encourage greater use the use of a more streamlined and efficient system offered by a dynamic market.
Osborne Clarke comment
The introduction of dynamic markets and "open" frameworks, alongside changes to the operation of "closed" frameworks, suggest a push towards simplifying the procurement process and removing barriers for newer suppliers to enter the market.
Authorities and suppliers alike should look to familiarise themselves with the new processes being introduced by the Procurement Act 2023 to ensure that they are able to transition seamlessly once it goes live later in 2024.
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 new developments raised in this Insight, please get in touch with your usual Osborne Clarke contact, or one of the experts listed below.
