The new procurement procedures: law and practice

There were a number of procurement procedures under the old Regulations. The Procurement Act 2023 (the Act) reduces these to improve efficiency and flexibility.

This briefing explains the changes to the competitive procedures, and what potential risks this creates for contracting authorities.

The Changes

Under the old Regulations, contracting authority could choose for example the open procedure, restricted procedure, competitive dialogue, innovation partnerships or the competitive negotiated procedure.

Under the Act, there are now just two competitive tendering procedures: the open procedure and the competitive flexible procedure.

This is in addition to the non-competitive tendering procedures of direct award and award of some call-off contracts under frameworks.

Open Procedure

The open procedure under the Act closely resembles the open procedure under old Regulations. It is a single stage procedure tender procedure: there is no down-selection of bidders at a pre-qualification questionnaire stage.

Bidders must still answer questions on the grounds for exclusion (for example whether they have committed certain serious crimes) but this information is provided at the point of tender. The contracting authority must consider the exclusion grounds prior to assessing the rest of the tender.

Contracting authorities may still set conditions of participation should they deem it appropriate, to make sure for example the bidders have suitable experience and financial standing. Should a supplier fail to meet the conditions of participation, the contracting authority can reject the bid.

Timescales for suppliers to submit tenders have been reduced to:

1. 25 days if submitted by electronic means;
2. 10 days where a qualifying planned procurement notice has been published; and
3. 10 days in a state of urgency where any other timescale is impractical.

These are minimum timescales but contracting authorities should also consider whether it is appropriate to use these timescales or extend them.

The open procedure is designed for those simpler, one stage procurement exercises, where the tender sets out the entire bid. It should not be used if the contracting authority needs to interview bidders, invite presentations or hold dialogue at any stage of a procurement process – where this is necessary, the competitive flexible procedure will be more appropriate.

Competitive Flexible Procedure

If a contracting authority’s procurement exercise is more complex, specialist or has a large market to consider, then the competitive flexible procedure is likely more appropriate.

The competitive flexible procedure replaces all the old Regulations competitive procedures, other than open procedure. It allows the contracting authority flexibility to design and run a bespoke procurement procedure. For example, a contracting authority can opt to design a procedure which involves negotiation and dialogue with bidders, various rounds of down-selection or demonstrations of products if necessary.

The competitive flexible procedure allows contracting authorities considerable flexibility provided that:

1. they set out their planned process in the tender notice and/or associated tender documents;
2. the process is proportionate (for example a procurement with multiple tendering rounds may not be appropriate for a simple requirement of say stationary);
3. the authority checks whether bidders are excluded or excludable before inviting them to submit tenders;
4. the objective criteria for down-selecting bidders at intermediate tendering / negotiating stages and for final award must be set out in the tender notice. They must be sufficiently clear, measurable and specific; and
5. the contracting authority has regard for the procurement objectives and meets the procedural requirements set out in the Act (such as timescales, mandatory exclusions, conflicts of interest and standstill).

Contracting authorities need to allow enough time for standstill in their timetables. Please refer to our previous briefing for full details about standstill. In practice, authorities should also continue to allow time to provide proper feedback to unsuccessful bidders who are down selected or rejected during intermediate stages (e.g. at conditions of participation, initial tender stage or following interviews).

Authorities may well design a process that replicates one of the old procedures (such as the restricted procedure) and Government guidance encourages this.

The competitive flexible procedure can be designed with interviews, site visits or product demonstrations. In practice, a clear plan is needed in these cases, to design an evaluation process that is objective.

In practice, one difficulty with interviews and product demonstrations is that whilst the written tender may form part of the bidder’s contract obligations, an interview is unlikely to be incorporated into the contract. Contracting authorities should consider whether in this case to allow a few days for bidders to fine tune their bids in light of commitments made during interview, with those fine-tuned bids being formally evaluated, rather than the interview itself.

The Act permits a contracting authority to refine the award criteria under this procedure in certain cases. This may be particularly useful in a complex multi-stage procurement process (for example a contracting authority may wish to amend the weightings or add new sub-criteria at later stages).

Although not mandatory, preliminary market engagement remains crucial to successful and effective procurement, particularly where the authority’s requirements are complex. It can simplify the procurement, resulting in a swifter, lower cost process. In short, the greater freedom that the competitive flexible procedure offers authorities should not be used as a substitute for proper preparation.

In practice, it remains to be seen whether contracting authorities will utilise the full flexibility benefits of the procedure, at least initially. We anticipate that many contracting authorities will continue to use ‘tried and tested’ procurement methods, with slight tweaks to comply with the Act. The rationale behind this is to minimise risk of challenge, especially in the early stages of the Act, where case law will be limited.

Conclusion

The new procurement procedures have similarities and differences from the old Regulations, but on the whole, contracting authorities may design a process that resembles the procedures already followed by them under the old Regulations.

If contracting authorities decide to make a radical change from their tried and tested methods, they should take particular care to ensure they are transparent. They should consider whether this creates increased risks, particularly if they are not adequately prepared, and how they can mitigate those risks.

Regardless of what process authorities designs, much of the good practice they are used to under the old Regulations, particularly in terms of transparency, equal treatment and proportionality will stand them in good stead when running procurement under the Act.

Nicola Cullen

Associate

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