Part 1 of the Procurement Act covers key definitions and outlines the regime's scope. Here's a guide.
Procurement and covered procurement
The new definitions make it clear that, for the purposes of the Act, “procurement” is to be understood in its widest sense.
The term "procurement" means not only the procurement process itself, but also pre-market steps in the route to award, the operation and management of a public contract once the procurement process itself is completed and the exit of the contract whether by termination or expiry.
"Covered procurement" means the procurement of a services, works or goods contract which is over the relevant value threshold and is fully regulated by the Act.
The definition is needed to distinguish fully regulated procurements from those that are not fully regulated (such as in relation to below-threshold contracts).
Government guidance on these definitions is available here.
Definition of Contracting Authority
In general, the Act makes no core conceptual changes to the definition of "contracting authority" even though the language has been changed.
Nor does it extend the reach of the procurement rules to organisations or contracts that were not covered by the previous regime.
The wording of the new definition has been tweaked and the old concept of a “body governed by public law” has been removed.
This has been replaced by a concept of a "public authority"; this assesses whether the entity has “functions of a public nature” and is either wholly or mainly funded from public funds or subject to oversight by another contracting authority, and whether or not the public authority operates on a commercial basis.
Section 2(4) goes on to provide examples to guide the assessment of whether a body operates commercially or not.
Government guidance on the definition of "contracting authority" is available here.
Exempted contracts
Exempted contracts are now listed out in Schedule 2 of the Act. The Schedule is organised to group the available exemptions by type, as follows:
Contracts which are exempt by virtue of the identity of the counterparty
This section covers "vertical" (Teckal) arrangements and "horizontal" (Hamburg) arrangements. These largely mirror the exemptions for these types of contracts under the previous regime in relation to in-house companies and joint collaborations.
Secondary legislation will provide further rules and detail on the approach to calculation of the 80% activity test (by reference to the average turnover amount in a relevant period, with various caveats).
This section also exempts defence contracts where the supplier is the government of another country, as well as certain utility contracts.
Contracts that are exempt due to their subject-matter
This section broadly mirrors the list of exemptions in the previous regime, for example, in relation to land and building contracts, broadcasting, electronic communications services, ADR services, certain legal services, certain financial services, employment contracts, emergency services, certain R&D services, and certain international agreements.
A new addition in the Act is an exemption for a contract which a contracting authority considers necessary to national security.
Government guidance on Exempted Contracts is available here.
Special Regime Contracts
The Act covers concessions, utilities, defence, and light touch regime contracts via sections 6 to 10; these are “special regime” contracts under the Act.
Generally, the rules in the new Act apply to concessions, utilities, and defence contracts, where special regime contracts are treated differently.
For example, for utilities and defence contracts, greater flexibility is offered around the duration of framework agreements.
Utilities will also have some limited differences in how dynamic markets are to work and defence contracts will enjoy a greater flexibility to amend contracts as required by the sector.
Concession contracts are broadly subject to the standard new regime, albeit that the sector specific features are provided for via the definition of “concession contract” and the specific rules around the valuation of concession contracts.
In relation to the Light Touch Regime, several parts of the Act do not apply. See our note here for more detail.
A list of which services will fall under the Light Touch Regime is provided at schedule 1 to the Procurement Regulations 2024.
Section 10 of the Act deals with the situation where a contract could be regarded as “mixed” – i.e., part “ordinary” public contract and part “special regime” contract and sets out the factors that should be considered when assessing whether a special regime contract should be
treated as an “ordinary” public contract.
Government guidance on special regime contracts is available here.
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