Will it simplify or obfuscate? The Procurement Act 2023

By: Jai Jethwa

The current state of government contracting to the private sector may appear on the surface to be a niche concern. However, its significance should not be understated, with a recent HM Treasury report calculating gross spending by the Government on procurement at £393bn in 2022/23 alone. Procurement monies have historically been issued to solve the whole gamut of challenges faced by government – whether that be the maintenance and upgrading of the UK’s rail infrastructure, emergency remedial work to offset the effects of RAAC (Reinforced Autoclaved Aerated Concrete) or funding associated with government’s overseas development spending. In short, these are significant sums of cash we’re talking about, constituting one of the UK’s biggest commercial markets hiding in plain sight. 

In this context, the Procurement Act 2023, which will come into legislative force from October of this year, is a significant act with some notable constitutional consequences. It is the biggest piece of government procurement legislation in forty years, and will bring in considerable changes to how contracting authorities issue and procure services. In the future, that could be to do with the establishment of new infrastructure to meet the challenge of decarbonisation (such as the establishment and running of new wind farms), the likely increase in UK defence spend tied with emerging geopolitical challenges affecting UK interests abroad and of course spend associated with political issues that cannot be easily predicted. Whatever the colour of the rosette of the next government, they will need to lean on the Act regularly. This blog first looks at the substantive legal changes the Act will usher in for public procurement, and then will turn to some of the constitutional challenges that may arise from the legislation.

How will the Act change the procurement of public services?

Broadly, the Government has said that the Act aims to make public procurement “more flexible, transparent, efficient and competitive, while delivering value for money and public benefit”. The Government is clear that it especially wants the Act to benefit smaller players in the commercial market, who have typically been shut out of larger contracts by mainstay providers. It says that engagement has been very fruitful with the industry – but crucially hasn’t disclosed who it has engaged with yet. 

One of the key statutory changes embedded into the Act is that it will allow contracting authorities to be more flexible in how they design and award contracts, so long as they can satisfy a minimum criteria. What this means in practice is that contracting authorities (this in the jargon of the Act essentially means government departments and associated arms-length bodies) will be afforded more flexibility than they have been by previous legislation and that they will have greater autonomy, protected by law, to design contracts based on needs. The absence of real detail here is telling – it points to a Government which is more alive to the reactive approach procurement will need to take in the future to tackle emerging policy priorities effectively. 

On the same theme, the Act contains wording that contracting authorities will be able to issue direct awards (i.e. without competition) on new grounds, “such as where a Minister of the Crown considers it necessary to protect life, health, public order or safety”. Put straightforwardly, this clause is essentially an override mechanism that has been prompted in response to the Covid-19 pandemic. Issues around procurement during the pandemic have already been detailed extensively – a recent National Audit Office (NAO) investigation makes for sobering reading, plainly stating that there were a number of issues relating to the Government’s procurement of goods and services like PPE. These included, according to the report, “insufficient documentation on key decisions, or how risks such as perceived or actual conflicts of interest have been identified or managed. In addition, a number of contracts were awarded retrospectively, or have not been published in a timely manner”. The inclusion of these new rules governing the issuing of direct awards is a proactive step that will entrench the constitutional right for governments to be on the front foot when it comes to future crises and procuring relevant services. 

Lastly, the Act will usher in reform by introducing a new “Procurement Division” within the High Court, which will have jurisdiction over procurement disputes. 

What constitutional issues might arise?

One thing that’s uncertain is to what degree the Act will enhance transparency. Government contracting is already seen as a practice cloaked in shadow, a perception that has been made worse by innumerable reports into how widespread private sector contracting has become over past decades. It’s up there with cash-for-honours and cash-for-questions as common reference points for how insincere a vocation politics can be. To an extent, that is undeserved – government is quite open about most of its contracting, and any citizen can access government contracting records through the Find A Tender service. This Act asks that issuing authorities post more information on this archive. Only time will tell, however, if the Government and administrations of the future can live up to this rhetoric. 

The Act could be bolder, though. It doesn’t say much about ‘framework agreements’ : essentially bundles of one or more contractors working together in preferred supplier lists that have historically been subject to less official disclosure. It will be interesting to see when the Act goes ‘live’ whether there will in fact be more transparency. 

Secondly, contracting authorities being allowed more flexibility when setting their own rules will affect how authorities across the UK design their own contracts. The devolved governments and their associated arms-length bodies will now hold the pen themselves rather than being expected to conform to a standardised model issued by diktat from Westminster. This could lead to further divergence across the four nations. A construction company building a brand-spanking new bus station in Scotland, for example, may face different rules and criteria to be awarded a government contract to renovate a decaying London tube station. The Government may utilise the United Kingdom Internal Market Act 2020 to overcome this, but because of the breadth of policy areas that services are procured for in government — transport, in this example, which is historically a devolved power — this could lead to further tension between Westminster and the devolved governments.

What appears on the surface to be an Act designed to help suppliers may in fact lead to more confusion when suppliers bid for different contracts based on who the contracting authority is and where they are based.

Concluding remarks

Issues around procurement during the Covid-19 crisis have demonstrated the criticality of a smooth and efficient services procurement process. The new Procurement Act 2023 will bring in significant changes to the legal powers governments have when it comes to working in partnership with the private sector for the running and upkeep of public services and utilities. The flexibility instilled in the Act will overhaul contracting, but it may bring issues like divergence and uncertainty in reporting and transparency. Governments of any colour will need to reflect particularly on the issuing of direct awards, rather than invoking them as a kneejerk measure when overcoming policy objectives. As ever, the proof will be in the pudding when we see, perhaps during future crises, just how much leeway this Act will grant governments of the future. 

Jai Jethwa.

Jai Jethwa holds a BA in Politics from the University of York. He has worked as a public affairs consultant and in the BBC’s central press office, as well as in the civil service in the Cabinet Office and the Department for Transport.

The Constitution Society is committed to the promotion of informed debate and is politically impartial. Any views expressed in this article are the personal views of the author and not those of The Constitution Society.