Tender legislation looks to shake-up public sector contracts

The Procurement Act 2023 will allow factors such as sustainability to take precedence over price, and aims to increase transparency around awarded contracts and contractor performance.

The reforms are the biggest changes made to the public sector procurement system for 30 years and will be used when considering a tender on contracts worth more than £5m, .

Perhaps the most significant change is that authorities can now base the awarding of contracts on ‘most advantageous tender’, rather than the previous ‘most advantageous economic tender’.

This will mean considerations such as sustainability, ESG, and other factors can be given more weight when deciding who is appointed.

Another significant change is that the public sector authority will need to publish no fewer than three key performance indicators, which it will then use to publish performance assessments of the contractor every year during the lifetime of a contract.

This will extend to having to publish details of unsatisfactory work from a contactor, including any breaches of contract.

Following this, firms that underperform significantly will be added to a debarment register, which will be held on a central database.

In a bid to encourage more SMEs to bid directly for projects, emphasis will be placed on breaking large-scale schemes into smaller projects.

Mandatory 30-day payment terms throughout the public sector supply chain are also now in place.

Speaking about the new Act and its implications for the construction industry, Lee Powell, managing director of Henry Boot Construction, said: “The new Procurement Act 2023, which comes into force today, marks a significant shift for public sector procurement.

“When it comes to construction projects, the ability for local authorities to award contracts based on long-term value, rather than just the lowest bid, is a welcome change, and one that could lead to higher-quality, community-focused developments across our towns and cities.

“This means factors such as sustainability, carbon reduction, and social value will play a bigger role in contract awards – helping to create developments that genuinely meet the needs of local people and support regional economic growth…

“The Act’s renewed focus on long-term impact will help drive higher-quality developments across the North – creating lasting benefits for our communities and guaranteeing projects are built with the future in mind.

“Overall, if implemented effectively, the Act could drive a more sustainable, quality-driven public procurement system – supporting both contractors and the Northern regions we help to build.”

A plethora of documents and guidance on the Procurement Act 2023 can be found here.