Shoosmiths’ Procurement Act seminar: Key takeaways

We were thrilled to welcome many of our clients to Shoosmiths’ Procurement Act seminar on 6 February*. Our event featured expert guest speakers Michael Bowsher KC and Azeem Suterwalla from Monckton Chambers, and David Stokes from the Department for Business and Trade.

The seminar was an opportunity to explore the imminent ‘go-live’ of the Procurement Act 2023 (the ‘Act’) on 24 February 2025, and how changes to the regime are anticipated to play out for public sector suppliers in practice. The panel discussion revealed key areas of interest but also uncertainty for clients in the coming months, which are explored below.

The Act’s objectives

Section 12 of the Act highlights four main goals that contracting authorities ‘must have regard to the importance of’: delivering value for money; maximising public benefit; sharing information; and acting with integrity. However, the exact interpretation of these objectives remains unclear. Will they just serve as guidelines for authorities, or will they have a more significant impact?

There is also uncertainty regarding how the courts will enforce this duty. The open-ended nature of this provision makes it difficult to predict how it will be monitored or challenged. If bidders try to use section 12 in procurement challenges, they might find it difficult to use this provision to their advantage. Only time will tell the practical impact of this provision, and if the impact is meaningful.

The National Procurement Policy Statement

A similar issue arises with the National Procurement Policy Statement (‘NPPS’) in its updated form. According to section 13 of the Act, contracting authorities must ‘have regard’ to the NPPS. The NPPS aims to align the Act with broader government policies, including social value and creating a level playing field for SMEs looking to be awarded public sector contracts. However, the exact scope of this obligation is unknown.

The Cabinet Office’s stated intention is to create a culture where contracting authorities consider SMEs alongside large corporations. Currently, there is doubt whether the Act provides the necessary foundation for SMEs to succeed in participating in public procurement processes. Large corporations might use their more substantial resources, including AI, to produce sophisticated responses to tenders, potentially disadvantaging SMEs that do not benefit from access to the same resources. Strangely, therefore, in having ‘regard to’ social value, it is foreseeable SMEs may be disadvantaged, contrary to one of the key policy aims of the Act.

From MEAT to MAT and award decisions

Section 19 of the Act shifts the focus from awarding contracts to the Most Economically Advantageous Tender (‘MEAT’) to the Most Advantageous Tender (‘MAT’). This means a move from focusing on price to considering overall holistic value. While the policy change is clear, it is uncertain whether this shift will be evident in award decisions. SMEs may still be at a disadvantage compared to larger companies with more resources. Training specifically targeted at SMEs to assist in drafting bid responses could help address this issue.

Under the 2015 Regulations, it was challenging to interpret what information an authority needed to provide when communicating its award decision. The new Act changes this. Before publishing a contract award notice, section 50 requires the contracting authority to provide an assessment summary, which will set out information about the assessment of a losing bidder’s tender as well as the (winning) MAT. The information to be provided, as detailed at Regulation 31 of the new 2024 Regulations includes an explanation of the scoring for the MAT. In the context of threatened or actual High Court proceedings challenging the outcome of a tender, it has become usual to push for and obtain disclosure of additional information to enable a losing bidder to understand better an authority’s evaluation of the bids and the prospects of a successful challenge. Going forward, it’s possible challenging bidders will experience less success when seeking early/specific disclosure where contracting authorities maintain that sufficient information has already been provided to bidders in the new assessment summaries.

On the topic of potential challenges, bidders should be aware of the changed position that, not only is the standstill period changing from 10 days to 8 working days but also the automatic suspension of the award of the contract will only arise under the Act if a challenge is issued prior to the expiry of the standstill.

Sub-contractors, exclusion and debarment

Section 28 of the Act requires contracting authorities to request information to determine if any intended sub-contractor is an 'excluded' or 'excludable' supplier.

If a supplier intends to use an excluded sub-contractor, the main supplier will be excluded from the tendering process. A contracting authority may exclude a supplier from a tender process where an intended sub-contractor is excludable.

This poses a significant risk for suppliers relying heavily on subcontractors. It is therefore crucial for suppliers to conduct thorough due diligence and maintain robust internal processes to address exclusion risks.

The Act also introduces a centrally managed debarment list. Inclusion on this list means a supplier's past behaviour or circumstances may disqualify them from participating in public procurement. The Act now includes discretionary grounds for exclusion based on competition law infringements. While this centralised approach addresses the difficulty of obtaining sufficient information for exclusions on a contract-by-contract basis, participating bidders must ensure their affairs are in order to avoid the risk of falling foul of the new debarment regime.

Frameworks under the Act

Under the new Act, there will now be frameworks, “open” frameworks, and dynamic markets (an updated form of dynamic purchasing systems). Dynamic markets create a list of pre-qualified suppliers, offering efficiency for contracting authorities by narrowing the market. While there may be interest in working around these new rules, it is advisable for suppliers and contracting authorities to focus on operating within the new framework rules, which have been put in place further to consultation in advance of the Act.

Prompt payment terms

The Act mandates that all public procurement contracts include 30-day payment terms, which will be implied even if not explicitly stated. This includes contracts lower down the supply chain. Importantly, invoices must be paid within 30 days of receipt or the due date, not within 30 days of validation as per the 2015 Regulations. However, there is uncertainty as to how this requirement will be verifiable. On this topic of payments in particular, further guidance has now been issued* and suppliers have the new Fair Payment Code available that they can sign up to. 

Conclusion

With uncertainty affecting significant changes to the public procurement regime, bidders in public procurement processes need to take care to ensure they are up to date on the nuances of the practical implementation of the Act and the impact on their bids after ‘go-live’ on 24 February 2025.

*The updated NPPS and payment guidance were published after the date of Shoosmiths’ Procurement Act Seminar and further updates will follow with regard to those documents.