Procurement Act 2023 — new procedures for contracting authorities explained

The current public procurement regime — as embodied in the Public Contracts Regulations 2015 and its counterparts — is being replaced this year by the Procurement Act 2023 (the Act). A key change is the reduction in the number of procurement procedures, also known as procurement routes, available to contracting authorities in favour of fewer, more flexible, procedures.

Here, Michael Winder compares the new procurement procedures to the existing regime ahead of the Act’s introduction in February 2025.

Current regime — Public Contract Regulations 2015

There are a number of procurement routes under the Public Contract Regulations 2015, including:

• Open Procedure
• Restricted Procedure
• Competitive Dialogue
• Negotiated Procedure
• Negotiated Procedure without Prior Publication (i.e., direct award)
• Innovation Partnerships. 

This doesn’t include the availability of frameworks or dynamic purchasing systems as options to procurement.

Each procedure comes with its own set of mandatory minimum timescales — and there’s also a mandatory gateway that must be met before the Competitive Dialogue and Negotiated Procedures can be used. A practitioner must be fully aware not only of the overriding principles of public procurement law but also the detailed rules for operating the particular procedure they are using. There’s significant duplication and redundancy, with over 90% of public procurement occurring under either the Open or Restricted Procedures — and the Competitive Dialogue and the Negotiated Procedure being almost identical for large parts of their processes.

New procurement procedures — Procurement Act 2023

The new Act uses only three procedures, not including frameworks and dynamic markets (the new name for dynamic purchasing systems). This rationalisation of procurement procedures reflects the ethos behind the new Act — to create a simpler and more flexible procurement system.

The new procurement procedures are:

• Open Procedure
• Competitive Flexible procedure
• Direct award.

Open procedure — removal of specific time limits

The Open Procedure has been carried over from the current regime. It is the only one that has a prescribed form in the Act — namely, a single stage tendering procedure without a restriction on who can submit tenders. The biggest difference between the current Open Procedure and the new one is that the minimum time limits set out between the publication of a contract notice and the deadline for the receipt of tenders is no longer procedure specific. Instead, time limits are generally dependent on other factors, as set out in s.54 of the Act. This means that the Open Procedure no longer has its own specific time limits.

Competitive flexible procedure — proportionality requirements

This procedure is described in the Act as a competitive tendering procedure “which is such procedure as the contracting authority considers appropriate for the purpose of awarding the public contract”. 

S.20 of the Act clarifies that when using this procedure, contracting authorities may:

• limit the number of participating suppliers — either generally or in respect of particular tendering rounds or selection processes
• provide for the refinement of award criteria
• prevent participation of suppliers that didn’t submit a tender in an earlier round of tendering or were excluded following an earlier round
• let a contract by using lots (to which the number of lots a supplier is bidding for can be limited).

This represents a significant shift away from the current regime. There is no mandatory process for the procedure provided that it’s “a proportionate means of awarding the public contract, having regard to the nature, complexity and cost of the contract” (as stated in the Act). Again, there are no procedure specific time limits beyond the general time limits in s.54.

This move away from a regulated framework for undertaking a procurement procedure is designed to offer more flexibility to contracting authorities and allow them to design their own procurement procedures that best fit the opportunity for which they are advertising. This helps to meet their needs without the contract in question being straitjacketed into a specific procedure. Also, a more complex procurement can require a more complex procurement procedure without any need to justify whether any gateway for such procedure is met.

It should be noted, however, that such flexibility also places a significant burden on contracting authorities. A contracting authority must ensure that whatever process they design for a specific procurement complies with the general procurement objectives and meets the proportionality requirement mentioned above. Given the increased transparency requirements woven throughout the Act, there will be greater scrutiny on the contracting authority’s approach. 

At the time of writing, we note that regulation 19 of the Procurement Regulations 2024 (which expands on a number of points in the Act) sets out what would be required in a tender notice for a competitive flexible procurement. 

These requirements include:

• a description of the process that the procedure will follow
• clarity on the number of suppliers that will be invited at different stages
• any limits on the number of tenderers
• how tenders can be submitted. 

This demonstrates a need for a fully realised process to be established prior to going to market. The procedure cannot be made up ‘on the fly’.

The result of this is that while it’s intended to encourage simplicity and flexibility, contracting authorities — aware of the scrutiny upon them — may be less inclined to embrace flexibility in favour of the known quantity that a familiar structure can provide. 

While the current procurement routes are bureaucratic, they’re clear on what’s required for, say, a Restricted Procedure versus Competitive Dialogue. It’s very likely that — in the early days of the new Act at least — any Competitive Flexible procedure used by a contracting authority for a covered procurement will significantly reflect one of the procedures from the current regime. Only when robust examples have been seen in the market or a specific need arises will contracting authorities start becoming brave enough to use the flexibility afforded to them.

Direct award

Direct awards are available in limited circumstances under the current regime as part of the Negotiated Procedure without Prior Publication. 

Under s.41, the new Act allows for direct awards — provided that one of the limited grounds in Schedule 5 is present. While this is relatively similar to the current regime, the direct award ability is widened out to additional abilities in s.42 and s.43. 

The cost of flexibility

The simplification and rationalisation of the procurement routes procedures has been a long time coming and is very welcome. Contracting authorities will now better understand the best route to take and/or what’s available to them. Each contracting authority has been given the ability to use a more flexible public procurement regime, which is much less prescriptive in terms of execution. 

However, such flexibility does have a cost. If a contracting authority wants to make use of it, there will be a lot more work required to establish a robust procurement process — as well as documenting this process to protect against any claims that it has breached the Act or any of the subordinate regulations.

Contracting authorities — how to prepare for February 2025

Ahead of the Act’s go-live date in February 2025, contracting authorities should consider what procurements they have coming up in the next year (now known as their ‘procurement pipeline’) and start planning for how they’ll use the new procedures to procure those contracts. It may also be worth reviewing procurement documentation now to be ready in February to commence any such procurement. Most importantly, contracting authorities must ensure that their procuring officers are fully up to date on the potential and pitfalls of the new procedures.

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