What does it really mean for suppliers and contracting authorities?

Yesterday, the new Procurement Act officially came into force across the UK. The Act aims to raise transparency around contract awards and contractor performance while making it easier for small and medium-sized enterprises (SMEs) to access public sector supply chains.

Key objectives

For those supplying government departments, the NHS, universities, schools, social housing organisations and utility companies, the Act sets new objectives:

• Value for money
• Maximising public benefit
• Acting with integrity

These objectives align with the National Procurement Policy Statement (NPPS) priorities, including commercial and procurement delivery, skills and capability for procurement and Social Value.

But what does this mean for those who supply to ‘in-scope’ organisations procuring these goods, services and works, and what are the new standards those organisations need to consider?

For suppliers:

Social Value

Social Value is firmly on the agenda with requirements being expanded across more contracts and the weighting of Social Value in bid evaluations given more prominence. Standardised reporting will ensure suppliers are held accountable for their commitments.

Increased opportunities

The Procurement Act aims to create a more even playing field for SMEs and specialist small contractors, breaking large projects into smaller lots creating more opportunities, more flexibility, and a more competitive market. All tenders will be accessed by the central digital platform at gov.uk/find-tender.

Change from MEAT to MAT

Contracting authorities can now evaluate and base tender awards on a Most Advantageous Tender (MAT) basis, rather than Most Economically Advantageous Tender (MEAT). This means that evaluation of proposals can now include factors like Social Value and environmental performance, rather than simply the lowest cost.

For those in contracting authorities:

Value for money

Social Value is front, and centre of public contracts and contracting authorities are required to prioritise value for money, which includes considering the whole-life cost of contracts and the social and economic value they deliver.

Reporting and performance

Clear KPIs: New rules state that if a tender is worth more than £5m, contracting authorities must set and publish at least three key performance indicators to judge awards and future delivery performance by. Performance will be assessed and results published against these KPIs at least every 12 months.

Repercussions

Contracting authorities will have to publish public notices in cases of unsatisfactory performance or breach of contract, including details of any contract termination, award of damages or settlement agreements. Additionally, the Act provides more security and introduces mandatory 30-day payment terms throughout the public sector supply chain.

Conclusion

The message is clear, the Public Procurement Act 2023 is demanding more from organisations looking to supply services to public bodies. There will be an increased scrutiny of what is promised, and what is delivered.

Organisations that want to win work with ‘in-scope’ organisations need to consider how well prepared they are for these incoming changes. Those organisations who have good local connections and can speak the language of Government, aligning their Social Value objectives with the Government’s ‘5 missions’ are likely ahead of the pack. Being able to set out clear Social Value strategies at bid stage and making commitments at the outset of a tender that suppliers can transparently report and measure impact throughout delivery has never been a higher priority.

At Cavendish, we are experts in understanding development projects and how they should bring lasting benefits to communities that they sit in. Our Social Value specialists help cement project’s positive legacy, enhancing our clients’ reputations with the government, local authorities, and communities.

Cavendish is arranging a roundtable to discuss Social Value, and the effects of the Procurement Act will have on the wider industry. If you would be interested in attending, get in touch here.