As public procurement spending reaches approximately £300 billion each year, this presents a timely opportunity for SMEs to capitalise on the new frameworks and procedures within the Procurement Act, helping your business secure its next major contract.
The Procurement Act 2023 aims to transform the regulations governing public sector spending. In this guide, we’ll be covering the main information you need to know to help you prepare for success under the Act, which will be launching at the end of February 2025 following a delay by the Government following the election.
Understanding the Key Changes in the Procurement Act 2023
The Procurement Act simplifies and streamlines the rules, enabling Contracting Authorities (e.g., the NHS, Local Authorities) to carry out procurement activities that are fit for purpose, align with national and local objectives, and deliver value for money.
The Procurement Act also aims to make public sector opportunities more accessible to Small and Medium Enterprises (SMEs) and Voluntary, Community and Social Enterprises (VCSEs), with specific elements of the legislation designed to assist this.
One of the most notable changes is the introduction of a Central Digital Platform. This enables businesses to register their core details once and reuse them for multiple tenders. This reduces the administrative burden and allows you to focus on the quality of your bids. Additionally, the platform will list all public procurement opportunities, enhancing transparency and simplifying access to new contract opportunities
Another key change is the emphasis on early market engagement for larger Contracting Authorities. Organisations that spend over £100 million annually must publish procurement pipelines, providing businesses with advance notice of upcoming opportunities. This early insight will help you align your capabilities and business plans with future tenders, enabling you to make more informed decisions about which opportunities to pursue. Moreover you can also undertake proactive relationship building and early engagement reaching out to these clients; the win often starts long before something actively is on the market.
The Act encourages contracting authorities to adopt more flexible procedures, like the Competitive Flexible Procedure, enabling you to showcase your innovative solutions through presentations, demonstrations, or site visits.
The Act also offers greater financial flexibility for SMEs, by allowing you to demonstrate your financial capacity through alternative means, rather than solely relying on audited accounts. Additionally, the Act eases insurance requirements, letting you secure necessary cover after winning the contract, rather than during the tendering process, which helps reduce unnecessary costs.
How the Central Digital Platform Simplifies the Bidding Process
The Central Digital Platform (CDP), built on the existing ‘Find a Tender’ system, simplifies how you find and access opportunities. It provides a central place to register and upload key business information, such as your company name and accounts—data typically required in most tenders.
This streamlines the process, making it faster and easier for you to keep information up to date and respond to tenders without repeatedly providing the same details, reducing duplication and saving resources.
Within the CDP, you can also set up custom searches and receive alerts for new opportunities that match your business interests. This enables you to easily find new tenders whilst reducing the time needed to search through multiple platforms to manually find them.
The Government have confirmed that the Central Digital Platform will be free to access for all users.
Early Market Engagement for SMEs in the Procurement Act
As with the current regime, Contract Authorities can offer Market Engagement events, also known as ‘Soft Market Testing’.
The new Act encourages Contracting Authorities to engage with suppliers earlier by reviewing upcoming requirements and publishing pipeline notices. This allows you to map your capacity, capability, and business plans against these and make a decision about which ones to tender for.
The new preliminary market engagement notice can alert you to early market engagement activities. By participating, you gain a better understanding of the requirements and can help shape and inform the procedure. It will also allow you to adequately prepare to respond to the tender.
Note that the Act does not require Contracting Authorities to conduct preliminary market engagement; however, section 17 requires that if a contracting authority carries out preliminary market engagement it must:
- Publish a preliminary market engagement notice before it publishes a tender notice; or
- Explain, in the tender notice, why it did not publish a preliminary market engagement notice.
Financial and Insurance Flexibility: Removing Barriers for SMEs
Currently, Contracting Authorities rely on audited accounts to assess a supplier’s financial standing, creating challenges for SMEs and VCSEs that aren’t legally required to provide them.
The new Act changes this by prohibiting authorities from relying solely on audited accounts, except where the Companies Act 2006, or its overseas equivalent, mandates it. This shift enables start-ups, SMEs, and VCSEs to demonstrate their financial capacity through other reliable means, ensuring they remain eligible for procurement even without audited accounts.
Additionally, the Act prevents Contracting Authorities from demanding insurance for contract performance at the tender submission stage. This change spares you from unnecessary costs, as you won’t need to secure insurance without a guarantee of winning the contract.
Transparency and Payment Terms within the Procurement Act:
The Procurement Act 2023 embeds transparency throughout the entire procurement life cycle, covering everything from planning to contract implementation and finalisation. The Central Digital Platform will house all data and information shared through these notices.
The Act enables everyone to search and understand what the public, utilities, and defence sectors plan to purchase, which contracts are active, and how much they are spending. This approach boosts visibility, accessibility, and accountability for all.
These transparency measures will offer several benefits and opportunities, including:
- One single place to view all information/opportunities, reducing the burden on SMEs and VCSEs
- Identifying new opportunities
- Premarket Engagement
- Visibility of Performance Information
- Integrity, Visibility, and Accountability throughout the full procurement lifecycle
Certain transparency rules provide exemptions based on the organisation, the nature of the goods, services, or works being procured, or when releasing the information could compromise national security or reveal sensitive commercial details. Information about this will be available in Fact Sheets on the Gov.uk website.
The Procurement Act strengthens prompt payment in the public sector by extending current provisions to ensure 30-day payment terms automatically apply across a wider range of public sector supply chains in the UK. These terms will cover both primary suppliers and their subcontractors, even if not explicitly stated in the contract.
SMEs and VCSEs will benefit from 30-day payment terms where they are in the supply chain across a much broader range of public sector contracts, increasing the current scope to include those in the public utilities and defence sectors. Imposing 30-day terms on every public subcontract entitles you to claim late payment interest if payments are not made within that period.
The Act aligns public sector payment reporting with the private sector, enabling comparisons of how quickly different organisations pay their suppliers. There will also be a more centralised approach to publishing payment performance data to help hold public bodies to account on their payment practices.
New Flexible Procedures, Frameworks, and Dynamic Markets:
The new regulations reduce the number of competitive procedures to just two: The Open Procedure and the Competitive Flexible Procedure.
The open single-stage procedure remains in place and is still available for straightforward procurements.
The competitive flexible procedure allows Contracting Authorities to design procurement procedures that are appropriate to the market and remove barriers for SMEs and VCSEs. In its simplest form, the process could be similar to that of the Restricted Procedure, however there is no requirement to include a participation stage. This procedure will allow you to showcase and evidence your ability to deliver through presentations, demonstrations, and site visits.
Transparency requirements mean that Contracting Authorities will have to clearly set out their procedures in advance. The tender notice and associated documents must communicate this information.
Pre-Market engagement will also help you understand the process and help to plan your resources.
Frameworks: much like the current regime, a framework will still be a public contract between a Contract Authority and one or more suppliers for the future award of contracts (call-offs). Under the new Act, however, this will be renamed to ‘Open Framework’ and will:
- Give more flexibility to appoint new suppliers over a maximum or 8 years
- Give the ability to apply to join the framework at different stages throughout the term
As a requirement, Contracting Authorities are to re-open the framework at least once in the first 3 years, and it should not remain closed for more than 5 years.
Dynamic Markets: Similar to the current DPS, a Dynamic Market is a list of qualified suppliers who are eligible to participate in future procurements. It still allows suppliers to apply at any time, with no limit on the number of suppliers that can be on the list.
Contracting Authorities must publish a tender notice when they commence a procurement based on a Dynamic Market, however, only suppliers on the list are able to participate.
A register will be available on the new Central Digital Platform (CDP) that will provide a list of all Frameworks and Dynamic Markets available to Contracting Authorities to access.
Benefits of the CDP in terms of Frameworks & Dynamic Markets include:
- Greater Transparency
- Reduced Duplication
- Visibility of the Framework Expiry/Reopening Dates
- Ability to identify and join relevant dynamic markets
The Debarment List:
The Procurement Act 2023 introduces the Debarment list, which clearly specifies which suppliers must or may be excluded from procurements.
A Minister of the Crown can add a supplier to this list if a debarment investigation confirms that an exclusion ground applies and the supplier fails to provide sufficient self-cleaning evidence.
Ministers of the Crown, Welsh Ministers, or a Northern Ireland Department can conduct these investigations. When a Minister of the Crown oversees the investigation, the Procurement Review Unit in the Cabinet Office typically manages the process. Authorities must report the findings of any investigation, and, unless there are national security concerns or sensitive commercial information to protect, they must share these reports with the supplier and make them public.
The Debarment List will be a published list of suppliers and appearing on the list means that a Contracting Authority must, if you are subject to a ground for mandatory exclusion, or may if you are subject to a discretionary exclusion, exclude you from their procurements. The list will be kept under review and amendments made where appropriate.
Suppliers can apply to have their names removed from the list at any time, but requests will only be considered if there is a material change in circumstances or if the supplier can present new self-cleaning evidence.
They can also appeal decisions to add their name to the list or to deny a removal request. Appeals must be filed with the High Court in England, Wales, or Northern Ireland, or with the Court of Session in Scotland, within the prescribed period. Additionally, suppliers have the option to request a temporary suspension of the debarment decision while an appeal is under review.
The list ensures that public funds go only to suppliers who are fit and proper to handle public contracts. You can also refer to this list when evaluating your supply chain.
Preparing Your Business for Success in Public Procurement
Granted Royal Assent on the 26th of October 2023, the Act’s ‘Go Live’ date has been pushed back from October 2024 to the 24th of February 2025. It is important to ensure your company is ready for the new Act. You can do this by:
- Ensuring you fully understand the main changes
- If you’re an industry representative body or a member of one, consider how your sector can prepare and identify opportunities for collaboration within supply chains (if necessary)
- Register and submit your company information on the Central Digital Platform (when it is available, we are assuming this will be the same as the ‘go live date’ due to lack of information around this)
- Use procurement pipelines to plan ahead to respond to opportunities as a prime contractor, or subcontractor
- Establish how your organisation can support any national procurement priorities (i.e., Net Zero)
- Review your organisation & your supply chain to ensure you do not meet any grounds under the new exclusions regime or consider what steps you may take if you do.
To Summarise:
- It’ll be mandatory to consider means other than audited accounts for companies not legally required to have accounts audited when assessing financial capacity.
- The Act will allow suppliers to provide any required insurances needed to deliver the contract prior to contract award at the point that they are notified their tender has been successful rather than at point of tendering.
- Increase visibility of new procurement opportunities through the publication of commercial pipelines on the new Central Digital Platform.
- Include a greater scope for Pre-Market Engagement
- The ability to showcase innovation and supply innovative solutions via the new competitive flexible procedure
- Strengthen prompt payment provisions
- Ensure more consistent feedback following a procurement exercise in the form of assessment summaries
- Simplified tendering process with a new digital central platform and a way of suppliers to submit their core business information
If you’d like to learn more about the Procurement Act 2023, you can watch the Knowledge Drops for SMEs & VCSEs (KD3b) on the Gov.uk website.
If you have an upcoming tender that you need support on, contact us today! You can keep up to date with Bid for Success by following us on LinkedIn.
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