Adieu OJEU - Hello, New World?

Mundus Novus …?

In 1503 the Italian explorer, Amerigo Vespucci, wrote home an account of his explorations off the coast of Brazil to his patron, Lorenzo de Medici (eagerly awaiting news at home in Florence).  The letter, titled Mundus Novus,  is a now-classic account of Vespucci’s gradual realization during the course of his expedition that he had not in fact reached Asia, but rather had discovered an entirely New World, the Americas. Evident in the tone of his words are his surprise at this slow realization, together with some doubt as to whether it really was legitimate to call this a new world:

In past days I wrote very fully to you of my return from new countries, which have been found and explored with the ships … and it is lawful to call it a new world, because none of these countries were known to our ancestors and to all who hear about them they will be entirely new.

It might well be a stretch to say we have inhabited a completely new world in 2020, but all of us in public procurement have certainly been operating in an unfamiliar landscape due to the Covid-19 pandemic. How many of us this time last year could have imagined circumstances where we would be making Regulation 32 direct awards and extensions due to urgency and unforeseeable circumstances? The pandemic has brought disruption, uncertainty and turned the best-laid plans of many procurement teams and suppliers upside down.

We all expected the end of the Brexit transition period on 31 December 2020 to bring some technical changes to the UK procurement law regime. However, few of us thought in terms of revolutions or new discoveries. Most thought there would be neither the time nor the appetite for any major reform, at least in the short to medium term. Far bigger issues than public procurement seemed to be at stake in the UK’s negotiations with the EU, and it was hard to imagine that government would have resources available for procurement law reform while still coping with the impact of the pandemic.

So, when I read the Cabinet Office’s Green Paper on Transforming Public Procurement (published yesterday), I was surprised and not a little excited by the unexpectedly radical scope of the proposals. Vespucci in his small ship off the Brazilian coast came to mind, as did a dawning realization that something quite different and new might emerge in our field in the next year or two. Perhaps the disruptively transformative effect of the pandemic has given life to the potential for further transformations?

The authors of the Green Paper appear to have shaken off the old world constraints of the EU Directives and embarked on their own exploration of a whole new set of bespoke possibilities for the UK. Of course, the proposals are currently only at the exploratory stage; how many of these are eventually mapped into new law remains to be seen.

New Procurement Principles

The paper proposes enshrining in law the principles of public procurement: value for money, the public good, transparency, integrity, efficiency, fair treatment of suppliers and non-discrimination, thus significantly expanding the three current “EC Treaty” principles with we are all familiar.

One global set of Regulations?

There is an intention to rationalize the procurement regulations. The paper conceives of a single set of regulations to cover public contracts, concessions and utilities. The idea is to also incorporate all those wider obligations that originate in other legislation, such as:

• The Public Services (Social Value) Act 2012
• The Late Payment of Commercial Debts Regulations 2013
• The National Health Service (Procurement, Patient Choice and Competition) (No. 2) Regulations 2013
• The Small Business Enterprise and Employment (SBEE) Act 2015

New procedures

One of the most striking suggestions is the proposal to scrap the seven current procurement procedures (some of which we are only just getting to grips with since their introduction in 2015) in favour of three (comparatively light touch) procedures:

• a new “competitive flexible” procedure that gives buyers freedom to negotiate and innovate, designing their own procedure (subject to basic parameters and safeguards);
• an open procedure that buyers can use for simpler, ‘off the shelf’ competitions; and
• a limited tendering procedure that buyers can use in certain circumstances, such as in crisis or extreme urgency - with there being a fairly broad concept of “crisis” as follows:
  • an event which clearly exceeds the dimensions of harmful events in everyday life and which substantially endangers or restricts the life or health of people;
  • where measures are required to protect public morals, order or safety; or
  • where measures are required to protect human, animal or plant life or health.

The end of the LTR?

Interestingly, there is a suggestion that the Light Touch Regime is removed altogether, given that all the above procedures will themselves become “light touch”. As the paper acknowledges, this would significantly reduce the value threshold for health and social services from approximately £660k to approximately £190k and so potentially bring many of these contracts into the regulated regime for the first time. It will be interesting to see how consultees respond to this idea, not least as the NHS Long Term Plan appears to recommend the removal of clinical health services from competition altogether.

Efficient electronic procurement and databases

There is an intention to legislate to require all authorities to publish procurement and contracting data throughout the commercial lifecycle to a central platform via links to their own systems or directly as appropriate. Suppliers will be pleased to learn of plans to allow central registration of data on a one-time only basis – then accessed in relation to all procurements.

Expanded publication requirements

The paper calls for the significant expansion of transparency requirements, with a new publication regime for procurement notices. The paper proposes adopting the Open Contracting Data Standard (OCDS). This is a free, non-proprietary, open data standard for public contracting implemented by over 30 governments globally.

Under OCDS, for example, notices will be required for all contract amendments, with a 30-day limitation period for challenges to the amendment to start to run at the date of the notice. Other publication requirements are proposed throughout the life of the procurement, such as around how the evaluation was made. It seems that the intention is for this to be sufficiently detailed as to do away with the need to send each tenderer a bespoke standstill letter detailing the characteristics and relative advantages of the winning tender. This will make the drafting of these letters much more straightforward.

Exclusion of suppliers …

In terms of exclusion criteria, there is an idea of having a centrally managed register of excluded suppliers who have committed the worst offences, as well as a drive to make it much easier for authorities to evaluate and take account of poor past performance. This register would be curated by a new Unit within Cabinet Office (replacing the current Public Procurement Review Service). The Unit would be headed by a panel of senior procurement professionals and have greater powers to monitor authorities’ commercial capability and also to intervene to issue improvement notices.

Most Advantageous Tender?

There is an intention to legislate to require authorities to take into account a national procurement strategy when designing a procurement, as well as encouraging them to use procurement award criteria as way to promote broader policy aims e.g. social value. Attention is drawn to the Outsourcing Playbook and the principles it contains. The concept of Most Economically Advantageous Tender could be altered to Most Advantageous Tender to reinforce the point that other considerations than price can be paramount in procurement. MEAT may well become MAT ...

Frameworks and DPS

The paper suggests allowing a new kind of “open” framework to be awarded of up to 8 years in length, with stated “joining points” at which new entrants might compete for a place on the framework. This is expected to be particularly useful in sectors where longer term contracts are needed e.g. construction. “Closed” frameworks, of a maximum four-year duration and with no joining points, could continue to be awarded.

It also proposes the expansion of the role of Dynamic Purchasing Systems to cover all kinds of supply/service rather than merely commodities. It argues that frameworks are often used when really what the authority requires is a DPS type-arrangement (which is not currently available as an option other than for commodities).

Review and Remedies

The perceived problem here is that only 20% of claims actually make it to trial and the need for full disclosure slows down the speed at which review of the procurement procedure can be carried out.

In response to these difficulties, the paper has several ideas.  First, the creation of a tribunal system to hear procurement claims more efficiently than is currently possible in the High Court. Second, thinking about ways in which claims in the Technology and Construction Court could be expedited, perhaps involving the introduction of new guidance or civil procedure rules. Third, the creation of a new, more procurement-focussed, test under which a court will assess whether to lift an automatic suspension. Fourth, making express statement in the regulations that remedies prior to contract award are to be preferred as these afford a successful tenderer the opportunity to perform the contract. And finally, fifth, a cap on the level of damages (to prevent speculative supplier claims), at legal fees plus 1.5x bid costs (subject to some exceptions).

Conclusion

The paper itself is well worth a read and you may like to respond to some of the questions it asks – the paper asks us to comment by 10 March 2021. It will be interesting to see how many of these proposals end up in new legislation; after all many government initiatives over the years have promised “transformation” and then failed to deliver meaningful change. However, the tone of the paper does seem to express a new vision - if even only some of these proposals survive the consultation period, they have the potential to significantly change the procurement landscape in the UK.

We can only guess at what the new unifying regulations might be entitled, but for what it is worth, my money is on The Public Sector Contracting Regulations 2022. Watch this space!

In the meantime, we leave you with a reminder that we say Adieu to the OJEU on 31 December 2020 at 11pm - and that all procurements commenced after that point should be advertised on the Find a Tender service. Guidance and expanded FAQs are in PPNs 10/20 and 08/20. We are holding a short webinar event at 10am on Thursday 7th January at which my colleagues Christopher Brennan and Shailee Howard will discuss some of these changes and the Green Paper - please click here to register. We would love to see you.