As councils prepare for the implementation of the Procurement Act 2023, I recently had the pleasure of presenting a webinar for Scribe Academy to discuss the key changes and implications for local authorities. With the Act coming into effect on February 24th, 2025, it's crucial for councils to understand these new requirements and prepare accordingly.
Key Changes and Thresholds
The Procurement Act 2023 introduces important changes to public sector procurement in the UK. There are two main thresholds that parish and town councils need to be aware of:
- Works/Construction Threshold: £5,372,609 (including VAT)
- Applies to building new structures
- Renovating buildings
- Installing structures on land
- Land leveling or modification projects
- Goods and Services Threshold: £214,904 (including VAT)
- Applies to purchasing goods
- Applies to service contracts
While these thresholds may seem high for many councils, it's crucial to understand that they apply to the total contract value over its full term. For example:
- A 4-year service contract at £53,726 per year would reach the threshold (4 × £53,726 = £214,904)
- A 3-year contract with a 3-year extension option must be valued as a 6-year contract when determining if it meets the threshold
When estimating contract values, councils must include:
- The full term of the contract
- Any potential extension periods
- All renewal options
- The total cost including VAT
Key Objectives and Principles
The Act emphasizes several core objectives that councils must follow:
- Value for Money
- Ensure public funds are used efficiently
- Consider both immediate and long-term cost implications
- Maximizing Public Benefit
- Focus beyond just cost considerations
- Consider wider benefits to the community
- Evaluate long-term impact of procurement decisions
- Transparency
- Openly share procurement policies
- Document and publish decision-making processes
- Make contract details accessible
- Maintain clear evaluation records
- Integrity
- Act ethically throughout the procurement process
- Maintain professional standards
- Avoid conflicts of interest
- Fairness
- Treat all suppliers equally unless there's justified reason for difference
- Provide equal access to information
- Maintain consistent evaluation criteria
- SME Accessibility
- Actively remove barriers for small and medium-sized enterprises
- Consider splitting larger contracts into lots
- Simplify procurement processes where possible
Procurement Procedures and Requirements
Available Procedures
The Act simplifies procurement procedures to two main types:
- Open Procedure
- Single-step process
- No restrictions on who can bid
- All information published at once
- Fully accessible and non-restrictive
- Electronic submissions: minimum 25-day timescale
- Paper submissions: minimum 30-day timescale
- Can be reduced to 10 days in genuine urgent situations
- Competitive Flexible Procedure
- Allows multiple stages
- Can include pre-qualification steps
- More suitable for complex or technical projects
- Ability to set specific criteria
- Greater flexibility in structure
- Must comply with legal requirements and rules
Evaluation Criteria
All tender evaluations must be:
- Proportionate to the contract
- Relevant to the subject matter
- Clear and measurable
- Published with explanations of weightings
- Documented with decision rationales
Post-Tender Requirements
Once tenders are received, councils must:
- Select the most advantageous tender (best overall for public benefit)
- Provide bidders with an assessment summary
- Publish a Contract Award Notice
- Observe an 8-working-day standstill period
- Publish a Contract Details Notice within 30 days
- For contracts over £5 million, publish the full contract
SME Accessibility
A significant focus of the Act is improving access for small and medium-sized enterprises. Common barriers identified include:
- Lack of awareness of opportunities
- Complex processes
- Unconscious bias
- Vague requirements
- Short timescales
- Excessive middle management involvement
- Complex terms and conditions
The Act requires contracting authorities to actively remove these barriers rather than just consider them.
Below Threshold Procurement
For contracts below the thresholds, councils have more flexibility but must still ensure:
- Value for money
- Removal of barriers to SMEs
- Publication of below-threshold notices for open competitions
- Reasonable timescales
- Fair and transparent processes
The Act implies 30-day payment terms into all contracts, regardless of what's specifically written in them.
Implementation Timeline
The Act comes into force on February 24th, 2025. While this may seem like ample time, councils should start preparing now by:
- Reviewing current procurement processes
- Familiarizing themselves with the new requirements
- Reading the comprehensive guidance available on gov.uk
- Planning for upcoming procurements that may fall under the new rules
Key Takeaway
While this overview provides important highlights, it's crucial to remember that no training session or summary can replace reading and understanding the actual guidance. When undertaking significant procurement, always refer to the official guidance available on gov.uk to ensure compliance with all requirements.
This blog post is based on a Scribe Academy webinar delivered on January 21st, 2025. For more detailed information about procurement training and consultation services, contact your county association of local councils.
Watch the Full Webinar (22mins)
Want to ensure your council is fully prepared for the new Procurement Act 2023? Watch our detailed webinar recording below:
In this session, you'll learn:
- Step-by-step guidance on the new thresholds (£5.37M for works, £214K for goods/services)
- Clear explanations of how the Act differs from the Public Contracts Regulations 2015
- Practical advice on removing barriers for SMEs
- Real examples of how the rules apply to different contract types
Frequently Asked Questions
Q: What are the consequences of not following the rules? A: While there aren't direct financial penalties, non-compliance can lead to legal challenges from potential suppliers who feel unfairly excluded. These legal proceedings must be initiated within 6 months, and the associated legal costs could be significant.
Q: Can we extend existing contracts without new procurement? A: Only if the original contract explicitly included extension provisions and all bidders were aware of this possibility when the contract was initially tendered. Otherwise, new procurement may be required if the extension value exceeds thresholds.
Q: Does splitting contracts into smaller lots violate procurement rules? A: No, if done properly. The Act actually encourages splitting larger contracts into lots to make them more accessible to SMEs. However, you cannot split contracts specifically to avoid reaching procurement thresholds - this would be unlawful.
Q: Does the Act apply throughout the UK? A: Yes, the Act applies UK-wide, including Wales, Scotland, and Northern Ireland, as it implements World Trade Organization agreement requirements.
Q: What happens if tenders come in higher than our estimate? A: If you had a genuine estimate that placed the contract below the threshold, but the actual tenders come in above it, you don't need to restart the process. What matters is your genuine estimate at the time of going to market.
Q: If a contractor is recommended by another council, are they exempt from these rules? A: No, recommendations from other councils don't create exemptions. If the contract value is above the threshold, you must follow the proper procurement process to ensure fair competition.
Q: Do we need to change our Financial Regulations to reflect the new Act? A: If you're using the current model Financial Regulations that reference "the Public Contracts Regulations 2015 and any superseding legislation," you don't technically need to change them as this Act is the superseding legislation. However, it would be good practice to update them to specifically reference the Procurement Act 2023 after February 25th, 2025.
Q: What about contracts between public authorities? A: Contracts between public bodies are exempt only when they're not in competition with the private sector. For example, two councils cooperating to provide a library service might be exempt, but if one council is selling services that could be provided by private companies, normal procurement rules apply.
Q: Where can we find the official guidance documents? A: All guidance documents are available on gov.uk. Search for "Procurement Act 2023 guidance" to find the comprehensive suite of guidance documents covering different aspects of the procurement process.
