The Procurement Act 2023: How Schools and Trust Can Thrive Under the New Rules
The introduction of the Procurement Act 2023 marks a significant shift in the procurement landscape for schools and trusts across the UK. This legislation, which emerged from the complexities of Brexit and the subsequent re-evaluation of procurement practices, sets the stage for a more streamlined and effective tendering process. In this blog, we will explore the reasons behind the act, the changes it brings, and how schools and trusts can adapt to these new regulations.
(It should be noted that the information contained within this blog is subject to further legislative updates and amendments.)
Understanding the Procurement Act 2023
The necessity for the Procurement Act 2023 arose from the UK’s departure from the European Union. Prior to Brexit, procurement regulations were primarily derived from EU directives, specifically the Public Contract Regulations of 2015. These regulations were designed to promote fair competition, transparency, and equal treatment in public procurement processes.
Following Brexit, the UK needed to establish its own procurement structure, as the existing EU directives were no longer applicable. This provided a unique opportunity to reassess and reshape the procurement landscape in line with national interests and the evolving global market.
As Nathan Swinney, Education Buying’s Head of Procurement highlighted in a recent webinar, the government sought to develop a new procurement act that would not only align with international obligations under the World Trade Organisation but also reflect the UK’s specific needs. The act went through extensive consultation and revision, culminating in its Royal Assent on 26th October 2023.
However, the initial implementation date of 28th October was extended to 24th February 2025, allowing schools and trusts more time to prepare for the changes ahead.
Key Features of the Procurement Act 2023
The Procurement Act 2023 introduces several notable changes aimed at enhancing procurement efficiency and flexibility:
- Simplification of Procurement Processes: The act seeks to streamline the procurement process by reducing bureaucracy and simplifying documentation requirements. This will enable schools and trusts to procure goods and services more quickly and effectively.
- Greater Emphasis on Social Value: The act places a significant focus on social value, encouraging schools and trusts to consider the broader impact of their procurement decisions. This aligns with the growing recognition of the importance of social responsibility in public sector spending.
- Increased Transparency and Accountability: The new legislation aims to enhance transparency in procurement processes, ensuring that decisions are made openly and can be scrutinised. This is particularly important for maintaining public trust in educational establishments.
- Flexibility in Contracting: The Procurement Act provides more flexibility in how contracts can be structured and awarded. This is especially beneficial for schools and trusts, which often have unique needs and circumstances.
As the Procurement Act 2023 approaches its implementation date on 24th February 2025, schools and trusts must prepare to navigate the significant changes in public procurement. This new legislation is set to replace the existing Public Contract Regulations (PCR) 2015, which have governed procurement practices for nearly a decade. In this section, we will discuss the key changes introduced by the Procurement Act, highlight the obligations under the previous regulations, and explore how educational establishments can effectively adapt to this new procurement landscape.
The Current Procurement Landscape: PCR 2015
Before diving into the changes, it is crucial to understand how schools and trusts have operated under PCR 2015. The current regulations include various sets of rules that dictate how public procurement should be conducted. Specifically, these regulations encompass:
- Public Contract Regulations: Covering most public procurement activities.
- Utilities Contracts Regulations: Governing procurement activities by utility companies.
- Concession Contracts Regulations: Managing contracts that involve granting rights to operate services or works.
- Defence and Security Public Contracts Regulations: Overseeing procurement in the defence sector.
The PCR 2015 established seven procurement procedures, including open and restricted procedures, competitive dialogue, and innovation partnerships. Each of these procedures came with specific rules and requirements, often resulting in a complex and cumbersome procurement process.
Additionally, there were four types of contract notices that required publication:
- Prior Information Notice (PIN)
- Contract Notice
- Award Notice
- Contract Performance Notice
While the PCR 2015 aimed to enhance transparency and competition, many in the education sector find the regulations challenging to navigate, leading to calls for a more streamlined and effective approach to procurement.
Unification and Simplification
One of the most significant shifts under the Procurement Act 2023 is the unification of various procurement regulations into a single regulatory framework. This simplification aims to make procurement more accessible and efficient for schools and trusts. The new act introduces three primary procurement procedures:
- Open Procedure: This is the procedure we should all be familiar with and allows all interested parties to submit bids.
- Competitive Flexible Procedure: A new addition that enables contracting authorities to tailor their procurement processes to fit specific needs, while still adhering to the principles of transparency and equal treatment.
- Direct Award: In very limited circumstances, direct award is permitted, allowing contracts to be awarded without a competitive process.
Increased Transparency Requirements
A standout feature of the Procurement Act is the increased focus on transparency. The number of required notices has expanded from four to fourteen, reflecting the government’s commitment to enhancing accountability in public procurement. Here’s a breakdown of these notices (in no order of importance):
- Procurement Termination Notice: A notice that an authority has decided not to award the contract after publishing a tender or transparency notice.
- Tender Notice: A notice setting out an authority’s intention to award a public contract and commence a procurement process.
- Contract Award Notice: A notice setting out that an authority intends to enter into a contract.
- Contract Performance Notice: Required annually, this notice informs stakeholders about the performance and outcomes of a contract.
- Contract Change Notice: Documents modifications made to a contract, including changes in terms or scope.
- Pipeline Notice: Alerts suppliers to proposed public contracts valued over £2 million, outlining potential opportunities.
- Planned Procurement Notice: A notice announcing an authority’s intention to commence a specific procurement in the future.
- Payment’s Compliance Notice: A notice setting out specified information about an authority’s compliance with the payment terms (not applicable to schools)
- Contract Termination Notice: Provides details when a contract is terminated before its completion.
- Transparency Notice: Used when a contracting authority wishes to inform the market about a decision to award a contract without competition.
- Below-Threshold Tender Notice: A notice setting out that an authority intends to award a contract which has a value below the threshold for the application of the Act (not applicable to schools)
- Contract Details Notice: A notice setting out that an authority has entered into a contract.
- Dynamic Market Notice: A notice setting out the establishment or modification of a dynamic market
- Preliminary Market Engagement Notice: A notice announcing that an authority is planning to conduct or has conducted a pre-market engagement exercise
Schools and trusts will need to familiarise themselves with these notices to ensure compliance with the new regulations under the Procurement Act 2023.
Central Digital Platform
The government plans to launch a central digital platform that will allow suppliers to upload and manage their due diligence credentials in one place. This aims to reduce the administrative burden on both schools and suppliers, fostering a more efficient procurement environment.
Additionally, a new Procurement Review Unit (PRU) will oversee procurement processes, ensuring compliance with the act and maintaining a list of suppliers who have been barred from public procurement due to poor performance.
Redefined Principles and Objectives
The principles guiding procurement have also evolved. The previous focus on principles such as transparency and non-discriminatory practice has shifted towards objectives aimed at delivering value for money and maximising public benefit. This includes:
- Delivering value for money
- Maximising public benefit (Social Value: While the act does not explicitly mention social value, the emphasis on “maximising public benefit” encourages schools and trusts to consider the broader impact of their procurement decisions. This aligns with the anticipated National Procurement Policy Statement (NPPS), which is expected to include strong social value considerations).
- Sharing information
- Acting with integrity
Enhanced Conflict of Interest Management
The Procurement Act introduces a formal process for assessing and recording conflicts of interest. This requirement aims to enhance integrity in procurement by ensuring that any potential conflicts are disclosed and managed appropriately throughout the procurement process.
Pre-Procurement Engagement
Another notable change is the emphasis on pre-procurement engagement. Schools and trusts are encouraged to engage with the market before initiating a procurement process. For instance, if a MAT spends over £100 million in a financial year, it is mandated to publish a notice outlining specific information about proposed contracts. Even those below this threshold can issue notices to facilitate early market engagement, ensuring suppliers are informed of upcoming opportunities.
Adapting to the Changes: Key Strategies for Schools and Trusts
With these changes on the horizon, schools and trusts must proactively adapt their procurement practices. Here are several strategies to facilitate this transition:
- Comprehensive Training for Staff
Understanding the intricacies of the new Procurement Act is vital. Schools and trusts should provide training for all staff involved in procurement to ensure they are equipped to handle the new requirements.
Suggested Actions:
- Organise workshops and training sessions led by procurement experts.
- Create accessible resources that summarise the key changes and obligations.
- Review and Update Procurement Policies
It is essential to review existing procurement policies and practices to ensure they align with the new legislation. Schools and trusts should identify gaps and make necessary adjustments to comply with the updated requirements.
Suggested Actions:
- Conduct a thorough review of current policies against the new regulations.
- Consult with legal and procurement experts to ensure compliance.
- Implement Transparent Reporting Mechanisms
With the introduction of multiple new notices, schools and trusts must establish transparent reporting mechanisms. This involves documenting procurement decisions, publishing required notices, and maintaining open lines of communication with stakeholders.
Suggested Actions:
- Develop a system for tracking procurement activities and outcomes.
- Ensure that all required notices are published in a timely manner and in accordance with the regulations.
- Focus on Social Value in Procurement Decisions
To align with the objectives of the Procurement Act, schools and trusts should incorporate social value considerations into their procurement decisions. This can enhance community impact and foster positive relationships with local suppliers.
Suggested Actions:
- Keep up to date with the development of the National Procurement Policy Statement
- Establish criteria for evaluating suppliers based on social value.
- Engage with local businesses and organisations to explore collaboration opportunities.
- Enhance Pre-Procurement Engagement
Encouraging pre-procurement engagement will help schools and trusts build better relationships with suppliers and enhance competition. This can lead to more favourable procurement outcomes.
Suggested Actions:
- Publish planned procurement notices (where applicable) to inform suppliers about upcoming opportunities.
- Organise preliminary market engagement sessions to gather insights from suppliers.
Key Points on Exemptions from Procurement Regulations
There are some exemptions from procurement regulations changes introduced by the new Procurement Act. Here’s a summary and analysis:
Existing Contracts and Frameworks:
Existing contracts and frameworks that were procured before the new Procurement Act takes effect (after February 23, 2024) will remain valid and continue to be governed by the previous regulations (the Procurement Regulations 2015).
However, any framework or dynamic purchasing system (DPS) that requires an extension must be re-procured under the new Act before February 23, 2029.
Direct Award Provisions:
There are provisions for direct awards in cases of extreme urgency, such as protecting life. However, even in these cases, a transparency notice must be issued to explain the circumstances surrounding the direct award.
The situation must be genuinely urgent and not simply due to oversight.
Below Threshold Contracts:
Contracts below certain thresholds have more flexible rules but must still ensure transparency, value for money, and fairness. Schools benefit from simplified processes for these lower-value contracts.
Vertical and Horizontal Exemptions:
Vertical Exemptions: These allow for procurement within a Multi-Academy Trust (MAT) without going through standard rules.
Horizontal Exemptions: These apply to contracting authorities sharing a common purpose, but schools should seek specific advice as these can be complex.
Payment Compliance Notices:
Schools are exempt from issuing payment compliance notices, which require reporting on compliance with payment terms.
An implied term within the new Act mandates payment within 30 days of receiving a valid invoice, but schools do not need to issue additional notices related to this requirement.
Next Steps for Schools in Adapting to the Procurement Act 2023
As schools and trusts prepare for the implementation of the Procurement Act 2023 on 24th February 2025, it is essential to take proactive steps to adapt their procurement practices. The changes introduced by the act necessitate a thorough evaluation of existing processes to ensure compliance and maximise the benefits of the new regulations. Below are key steps schools should consider to facilitate a smooth transition and enhance their procurement capabilities.
Conduct a Procurement Needs Assessment
Schools should begin by evaluating their current procurement arrangements to understand what they have in place and where improvements can be made. This involves identifying who is responsible for procurement within the institution, including any staff roles related to purchasing decisions. Conducting a needs assessment allows schools to pinpoint inefficiencies, gaps, or areas requiring additional resources. It serves as the foundation for aligning procurement strategies with the new requirements of the Procurement Act.
Establish a Contracts Register and Forward Procurement Plan
Keeping a detailed record of existing contracts and future procurement needs is crucial for managing compliance effectively under the new regulations. A Contracts Register should document all current contracts, including their terms, renewal dates, and performance metrics. Additionally, a Forward Procurement Plan will help schools anticipate upcoming procurement activities, allowing them to align resources and timelines accordingly. This proactive approach ensures that schools remain compliant and prepared for forthcoming changes.
Review and Update Procurement Policy
An up-to-date procurement policy is vital for ensuring compliance with the Procurement Act. Schools should review their existing policies to align them with the new legislative framework. This involves identifying any gaps or outdated practices that need revising. Furthermore, it is essential to communicate these policies clearly to staff and provide ongoing training to ensure consistent application across the organisation.
Staff Training and Awareness
Providing comprehensive training for all staff involved in procurement is crucial for enhancing understanding and compliance with the new regulations. Training sessions should cover the key aspects of the Procurement Act, including compliance requirements, documentation processes, and the importance of transparency and social value. Regular training ensures that staff are well-informed about their responsibilities and the implications of the new procurement rules.
Consider the Procurement Operating Model
Schools should evaluate whether a centralised procurement model would be beneficial for managing procurement processes, particularly within Multi-Academy Trusts (MATs). A centralised approach can lead to improved efficiencies, standardisation of practices, and better negotiation power when dealing with suppliers. Assessing the existing operating model can help schools identify whether a shift towards centralisation would yield significant benefits in terms of cost savings and streamlined operations.
Be Aware of Challenges and Remedies
Understanding the potential legal challenges that may arise if procurement regulations are not followed is essential. Schools should proactively ensure that all procurement processes are transparent, compliant, and well-documented to mitigate risks. This includes maintaining clear records of procurement decisions, supplier communications, and compliance measures. Developing a robust process for addressing any issues that arise will help schools navigate the complexities of the new procurement landscape and reduce the likelihood of legal disputes.
Conclusion
Nathan Swinney’s insights underscore the importance of understanding the limited exemptions within the new Procurement Act while highlighting the necessity for schools to prepare adequately. By focusing on proper assessment, policy development, and staff training, schools can navigate the new regulations more effectively and minimise legal risks. This approach also aims to reduce administrative burdens, allowing schools to concentrate on their core mission: providing quality education.
As we navigate the changes brought about by the new Procurement Act, remember, there’s no need to panic—many others are in the same boat. While it’s essential to take these changes seriously, it’s also an opportunity for growth and improvement in our procurement practices.
Nathan encourages you to explore the Transforming Public Procurement government website, which offers valuable resources, and check out the Department for Education (DfE) materials that can assist you further.
As we move forward, let’s view this change not just as a challenge but as a chance to innovate. Together, we can transform procurement into a strategic advantage for our schools, ensuring that it supports our core mission of providing quality education.
Get in touch with Education Buying to ensure your school or trust complies with the latest procurement regulations.
