UK Defence Procurement: Navigating the impact of the Procurement Act

The count-down continues towards the go-live date of the Procurement Act 2023 (the Act) and the Procurement Regulations 2024 (SI 2024/692) (the Regulations) (together, the New Regime).

A key area of change under the New Regime is the overhaul of transparency requirements, which will span the whole procurement lifecycle from pre-procurement planning and market engagement through to expiry/termination of the awarded public contract. This represents a significant broadening and deepening of transparency requirements when compared to the current regime.

In this blog, we consider the provisions of the Act relating to transparency and confidentiality in further detail.

 

Assessment Summaries

Transparency is a key aim of the New Regime. New requirements will be introduced which will result in a significant increase in the amount of information that needs to be published by contracting authorities in relation to public contracts, including following the award of a public contract.

The New Regime includes broad requirements requiring contracting authorities to provide assessment summaries (in place of award decision notices under the current regime) to each supplier that submitted an assessed tender.

Assessment summaries shall include the following details in relation to the procurement:

• the full award criteria (or a summary of these);
• details of the assessment methodology;
• reasons for the score awarded against each award criterion;
• an explanation of how the tender was assessed against different criteria/sub-criteria (if applicable); and
• total and sub-total scores for the tender against all award criteria.

An assessment summary must be provided to an unsuccessful tenderer and shall include: (i) an explanation of why the tender was unsuccessful; and (ii) the above information in relation to the successful tender. In contrast to the existing regime, the characteristics and relative advantages of the most advantageous tender do not need to be provided in assessment summaries for the purposes of the Regulations, but may be required by related guidance published in due course as a matter of best practice.

 

Contract Lifecycle

Transparency requirements under the New Regime will continue post-contract award throughout the contract lifecycle. The New Regime provides that contracting authorities must publish various notices at a number of stages throughout the contract lifestyle, such as:

• Pipeline Notice (section 93 of the Act; regulation 15 of the Regulations) – this relates to the collection of prospective procurements for the reporting period. This will specify information about specific planned public contracts with an estimated value of over GBP2 million. This notice must be published if the contracting authority anticipates a total annual spend over GBP100 million.
• Planned procurement notice (section 15 of the Act; regulation 16 of the Regulations) – this is a new optional notice intended to alert the market to upcoming competitive procurements for which a contracting authority plans to publish a tender notice. This serves a similar purpose to a prior information notice/PIN under the current regime.
• Tender Notice (section 21 of the Act; regulation 18-20 of the Regulations) – this is a mandatory notice will formally commence the procurement procedure where a competitive procedure is used and will invite suppliers to either submit a tender or a request to participate in the procedure. This replaces the Contract Notice under the current regime.
• Transparency Notice (section 44 of the Act; regulation 26 of the Regulations) – this will be mandatory to inform stakeholders that a contracting authority intends to make a direct award of a contract (marking a change from the current voluntary ex ante transparency (VEAT) notice in these circumstances).
• Contract Award Notice (section 50 of the Act; regulations 27-30 of the Regulations) – this will be mandatory to inform the market that the contracting authority intends to enter into a contract. This differs from the approach under the current regime given that the term “Contract Award Notice” describes a notice which must be published within 30 days (under the PCRs) or 48 days (under the DSPCRs) following contract award (rather than before contract award as envisaged under the New Regime).
• Contract Details Notice (section 53 of the Act; regulations 32-36 of the Regulations) – to set out within a specified timeframe depending on the complexity and value of the contract that the contracting authority has entered into a contract. This fulfils a similar purpose to a Contract Award Notice under the current regime.
• Key Performance Indicators (section 52 of the Act) – prior to entering into a contract with an estimated value of over GBP5 million, a contracting authority must publish a minimum of three key performance indicators in respect of the contract in the Contract Details Notice (unless the contracting authority considers that KPIs are not appropriate to assess the supplier’s performance). Where such KPIs are published, under section 52 of the Act, the supplier’s performance will need to be assessed against such KPIs annually, and information about non-performance may need to be published where non-performance has results in termination/damages under the public contract, or poor performance has continued despite an opportunity being provided to improve performance.
• Publication of the Contract (section 53 of the Act) – a copy of public contracts with an estimated value of over GBP5 million must be published (within specific timeframes) (subject to certain information being withheld or redacted where appropriate – please see below for further information).

The above list is not exhaustive and additional notices may need to be published during the procurement lifecycle.

Under section 94 of the Act, there is a general exemption from the duties to publish or disclose information in relation to commercially sensitive information where there is an overriding public interest in it being withheld from publication or disclosure.

It is possible in future that legal challenges may arise if a relevant claimant does not have a proper opportunity to challenge the award of the public contract or modification of such public contract – for example, if the requisite notices are not published in accordance with the Act. Contracting authorities will need to be vigilant when structuring and carrying out public procurement processes to ensure that all of required information is published and not inadvertently omitted.

 

Contract Change Notices

The requirements relating to Contract Change Notices (CCNs) under the New Regime also represent a widening of the current regime. CCNs will be mandatory where above-threshold modifications are made to public contracts. This will provide greater transparency to the market than under the current regime where contract modification notices are only required in limited circumstances.

Section 75 of the Act provides that a CCN must be published unless the contract change increases or decreases the estimated value of a contract by a de minimis amount (10% or less for goods or services contracts; and 15% or less for works contracts). A CCN must describe the nature of the change, the impact on the public contract being changed, and the reasons why the change is permitted under the Act.

Where a CCN is required and the contract is worth (before or after the modification) more than GBP5 million, contracting authorities must also publish a copy of the modified contract or the modification itself within 90 days of the date the change is made.

 

Reconciling Transparency and National Security

The procurement of defence and security contracts is governed by the same transparency and noticing requirements as all other procurement under the Act, albeit, that:

• there is no requirement to publish a contract award notice for a call-off contract under a defence and security framework; and
• there is no requirement to publish a CCN nor the modified contract when a defence and security contract is being modified.

Under section 94 of the Act, there are also an exemption from the duties to publish or disclose information including for the purposes of protecting national security. This may result in a contracting authority redacting specific information or withholding information entirely for the purpose of safeguarding national security, where justified.

A strong audit trail should be maintained by the contracting authority where it relies on such general exemption in order to record its reasons for not publishing information.

 

The Impact of the Transparency Provisions under the Act

There are benefits to more transparent and inclusive procurement processes. The publication of pipeline and tender notices for opportunities on centralised platforms should encourage uniformity amongst contracting authorities in communicating information to the market, which may mitigate some of the confusion and lack of clarity suppliers have struggled with under the current regime.

Notwithstanding a generally positive reception towards the increased transparency provisions under the New Regime, a concern of contracting authorities and suppliers alike, is likely to be the protection of confidential and commercially sensitive information. Although the Act provides some protections, these will need to be carefully relied upon/applied in order to protect such information, and it would be prudent to ensure that such protections are contractualised in the awarded public contract.

Potential consequences of non-compliance with the new transparency provisions could be significant, and range from financial penalties to suspensions and/or termination of contracts that have been awarded unlawfully.

A greater focus on contract management must also be expected. The New Regime places emphasis on the role of contracting authorities in monitoring the performance of each supplier throughout the contract lifecycle, including the publication of information in relation to performance.

 

Conclusion: What Does This Mean For You?

Contracting authorities should ensure they are familiar with the precise requirements for the publication of notices under the New Regime. They should also review their notice document templates to ensure they reflect all the information that is required by the New Regime, and should enact policies and process to ensure compliance with the New Regime throughout the contract lifecycle.

Suppliers should familiarise themselves with the upcoming transparency rules to ensure they know what to expect as a supplier going forward. They may wish to consider deploying additional monitoring of notices across their relevant market to be able to benefit from the increased publicly available information – however, such increased availability may also lead to increased “noise” in the market which may mean it is more difficult to select the most pertinent information which is of interest and use to the supplier.

 

Further information

Please refer to our previous blog where we consider the provisions of the Act relating to exclusions, debarment, termination and national security – “Exclusions, Debarment, Termination and National Security”.

Please contact the authors if you have any questions, or if it would be useful to discuss anything further.

This publication is intended to be a general overview and does not create a lawyer-client relationship. It is not intended to be, and should not be used as, a substitute for taking legal advice in any specific situation. DLA Piper will accept not responsibility for any actions taken or not taken on the basis of this publication.