Transforming Public Procurement: Opportunities and challenges from the proposed new procurement routes

What is changing in the world of Public Procurement?

As many Procurement professionals will already be aware of, the Cabinet Office published a Green Paper in December 2020 which proposes a huge overhaul of the public Procurement sector. The changes, which are set to take place in 2022, intend to provide the UK with a modern, fit-for-purpose set of rules and procedures which reduce bureaucracy, encourage innovation and the participation of SMEs, and improve the process of challenging decisions in the courts.

Whether you work directly or indirectly in Public Procurement, or even if you work predominantly in the Private Sector, it’s vital that you understand the implication of these changes and how they could impact you.

What did the Green Paper consist of?

A range of significant changes to the current EU-regulated public sector Procurement landscape have been proposed, which include:

  • New Procurement Procedures: Replacing existing procedures with 3 simplified procedures that offer greater flexibility
  • Updated Procurement Principles: Updating and expanding the existing Procurement Principles to align with the ‘HM Treasury’s Managing Public Money’ and the 7 principles of public life, as set out by the ‘Committee on Standards in Public Life’
  • Consolidated Regulations: Rationalising and clarifying the rules currently contained within the 4 existing regulations documents, replacing them with a single set of rules for all contract awards
  • New procurement systems: 2 new methods of procuring contracts: a new DPS+ system and an open framework. The DPS+ tool would allow greater flexibility, as new suppliers could join at any time with no maximum duration and it would be available for all types of procurement
  • Remedy reforms: A number of changes designed to improve transparency and reduce the likelihood of lengthy and expensive procurement trials, including a proposed emphasis on pre-contractual remedies

In order to provide further detailed insight into these Green Paper proposals, we will focus on the “New Procurement Procedures”, and the opportunities and challenges which will result from replacing the existing complex and inflexible Procurement procedures with 3 simpler and more modern procedures.

What are the proposed new procedures?

The consolidated Procurement procedures are summarised below, with the existing 7 routes mapped against the 3 proposed new routes. The key changes to be aware of are the removal of the ‘Restricted Procedure’ and the consolidation of a number of complex, overlapping routes into the new ‘Competitive, Flexible Procedure’.

Existing Procedures Proposed Procedures
Open Procedure Open Procedure

“retain the open procedure which buyers can use for simpler, ‘off the shelf’ competitions as now”

Negotiated Procedure Without Prior Notification Limited Tendering Procedure

“retain the ‘Negotiated Procedure Without Prior Publication’ but renaming it as the ‘Limited Tendering Procedure’”

Restricted Procedure Competitive, Flexible Procedure

“a new competitive, flexible procedure that gives buyers maximum freedom to negotiate and innovate to get the best from the private, charity and social enterprise sectors”

Competitive Procedure with Negotiation (CPN)
Competitive Dialogue (CD)
Innovation Partnership
Design Contests

What are the main Opportunities for Public Sector Procurement Teams?

  • Ensure solutions meet requirements: The competitive, flexible route offers greater opportunity for dialogue, through the creation of tailored selection and evaluation processes. Additional dialogue opportunities will make it easier for suppliers to understand and meet the requirements, however complex.
  • Capitalise on innovation in the market: Similarly, freedom in creating tailored processes encourages greater scope for innovation from the market. This is facilitated by greater procurement involvement throughout the whole process, from research and development through to buying the finished product, and use of the outcome specifications.
  • Negotiate with suppliers: Greater opportunity for negotiation to obtain competitive pricing, with procurement teams able to fully utilise their commercial skills to deliver the best possible outcome for the taxpayer.

What are the main Challenges for Public Sector Procurement Teams?

  • Upskilling teams: In order to adapt to the proposed routes, and ultimately capitalise upon them, Procurement functions are likely to face some initial challenges. Procurement teams will need to ensure that their processes are compliant and that team members are equipped with the necessary skills and knowledge to deliver a successful ‘Competitive, Flexible Procedure’ where appropriate. Procurement Leaders will need to quickly train their team members on the proposed changes and provide ongoing support to ensure a smooth transition period.
  • No Restricted procedure: If the only appropriate option for straightforward purchases is an ‘Open Procedure’, the Procurement function may now be faced with an over-burdening volume of offers that need to be evaluated, if there is a wide supply market. Procurement Leaders will need to be aware of the extra time that this might add to the purchasing process and plan for this accordingly.

What does this mean for the Private Sector?

The proposed changes to the procurement routes and wider, including procurement systems, will impact both the public sector and private sector organisations that provide products and services to serve it. These organisations must stay close to Cabinet Office updates and adapt to new legislation as it is introduced, in order to continue competing for, winning and delivering high quality work for the public sector.

So, what’s next?

The proposed reforms present an exciting development for UK public sector Procurement, with opportunities to elevate best practice and significantly improve buying performance.

During October 2021, the Cabinet Office provided a positive, albeit brief update that key proposals are broadly welcomed, whilst acknowledging that there are plans to adjust the approach in some areas, based on feedback.

We eagerly await further updates, as the Cabinet Office indicated that a summary of responses received and details of what the Government intends to do, in light of the consultation exercise, is due to be published within the coming weeks. We believe the coming reforms will lead to a simpler, agile and flexible Public Procurement environment, and that despite their initial challenges, will ultimately lead to a higher performing UK public sector.

 

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