Government procurement in the United Kingdom

At around £290 billion every year, public sector procurement accounts for around a third of all public expenditure in the UK.^[1] EU-based laws continue to apply to government procurement: procurement is governed by the Public Contracts Regulations 2015, Part 3 of the Small Business, Enterprise and Employment Act 2015,^[2] and (in Scotland) the Public Contracts (Scotland) Regulations of 2015 ^[3] and 2016.^[4] These regulations implement EU law, which applied in the UK prior to Brexit, and also contain rules known as the "Lord Young Rules" promoting access for small and medium enterprise (SMEs) to public sector contracts, based on Lord Young's Review Growing Your Business, published in 2013.^[5] In November 2016 an advisory panel of 24 entrepreneurs and business figures was formed to advise the government on purchasing goods and services from SMEs, and a campaign was launched to demonstrate that "government is open for business",^[6] with a target of increasing government spending with SMEs to 33% of all third-party public expenditure by 2020.^[7]

The Defence and Security Public Contracts Regulations 2011 apply to defence procurement.

Health commissioners in England are exempt from the Lord Young Rules when procuring clinical services and these rules do not apply in Wales (i.e. to wholly or mainly devolved functions).^[5]

Procurement policies[]

In the light of the economic downturn of 2008 onwards, sometimes referred to as the "Great Recession", the UK government adopted a series of ten "procurement for growth" principles, intended to ensure that UK government procurement would "take account of supply chain opportunities for UK companies in policy and delivery planning" and "analyse markets to assess where growth is achieveable".^[8] In the March 2008 budget statement, the government announced that it wanted to see small and medium-sized enterprises (SMEs) "compete more effectively for public sector contracts". The statement also announced that businesses supplying services to Government would be able to sell their public sector invoices to debt specialists, a change which was expected to be "particularly advantageous to SMEs in managing their cash flow".^[9] This was a reversal of previous government contracting practice in model contract documents, where assignment of debts was allowed only with the prior consent of the relevant public body.^[10]

The coalition government of 2010 made a "commitment to promote small business procurement", in particular by aiming to award 25% of government contracts (by value) to small and medium sized enterprises.^[11] At the same time a policy presumption was made that individual ICT contracts and projects "should be less than £100m lifetime costs".^[11] The government promoted and welcomed reform during the period from 2010 onwards, especially the development and implementation of European Commission's proposals to modernise procurement legislation published in 2011. The Cabinet Office was responsible for leading on UK engagement with the EU. In research undertaken by the Local Government Association (LGA) in 2010 to inform the LGA's views on the proposed modernisation legislation, 36% of local government officers responding to a survey stated that the 2006 directives had led to more efficient and effective procurement practice, but 54% felt that "the simplicity of the procurement process" had deteriorated. The 2006 directives had created greater legal uncertainty within the local government procurement community. Several responses highlighted the need for better guidance and support from the EU and from the Office of Government Commerce (OGC), which was then responsible for procurement policy.^[12] In February 2011 the UK Government stated its view that "the public procurement regime needs to be radically simplified to reduce red tape and improve value for money".^[13]

Part 3 of the Small Business, Enterprise and Employment Act 2015 allows the Minister for the Cabinet Office or relevant Secretary of State to impose further regulations on public bodies regarding how they undertake procurement.^[14] The Minister for the Cabinet Office is the minister with overall responsibility for procurement policy, which is delivered through the Crown Commercial Service, an executive agency sponsored by the Cabinet Office.^[15]

The Crown Commercial Service (CCS) publishes Procurement Policy Notes from time to time, which advise procurement staff in the public sector of government policy developments and best practice in relation to procurement.^[16] Procurement Policy Notes on responding to the 2019-2020 coronavirus pandemic were published in March 2020 ^[17] and remained in effect until 31 October 2020, allowing public bodies to make advance payments and retention payments for contracts which have been interrupted by the measures taken to reduce the spread of the coronavirus. Since 1 January 2021, the social value model in use among central government public bodies has included COVID-19 recovery, employment and social and community support as a key aspect of the economic, social and environmental well-being supported by public sector contracting.^[18]

CCS operated a Mystery Shopper scheme from February 2011 to November 2018, whose remit was to provide a route for suppliers to raise concerns about public procurement practice in England,^[19] The service was rebranded as the "Public Procurement Review Service" in November 2018, responding to feedback from suppliers and public bodies that the "mystery shopper" title did not properly reflect the role of the service.^[20]

General transparency principles applicable to government procurement were published in March 2015 and updated in February 2017, stating that there is a presumption in favour of contractual information being made publicly available (except in matters of commercial confidentiality such as pricing, intellectual property and business plans).^[21] Tender opportunities advertised by public sector bodies in the UK are legally required to be published to the following sites:

• Contracts Finder for England for all tenders and contracts valued over £10,000 for central government and £25,000 for sub-central authorities and the NHS.^[22] According to OpenOpps, a tender publishing company, only 27% of all UK public sector tenders were published on Contracts Finder between 2015 and 2017.^[23] Updated information regarding the use of Contracts Finder was published by the Cabinet Office on 21 June 2021.^[24]
• Public Contracts Scotland for Scotland
• Sell2Wales for Wales
• eSourcing NI for Northern Ireland, in use since May 2008.^[25]

The Public Contracts Regulations 2015 provide that public sector buyers must pay prime contractors within 30 days and must ensure that any subcontracts through the supply chain include a similar provision. In 2014–15 at least 33 NHS trusts paid fewer than half of their trade invoices on time, up from 23 in 2015–16 and 11 in 2014–15. Under the Better Payment Practice Code, they should pay at least 95% of non-NHS invoices within 30 days.^[26]

Within the context of local government, many local authorities have adopted the National Procurement Concordat for Small and Medium-Sized Enterprises to encourage SMEs to engage in procurement and supply for local public services. Examples include the City of Wakefield's Concordat agreed in 2005,^[27] and the Concordat agreed by East Suffolk Council in 2019.^[28]

The UK government requires all government departments and their related organisations to ensure that they meet the minimum mandatory Government Buying Standards (GBS) when buying goods and services. Organisations in the wider public sector are also encouraged to specify the minimum mandatory standards in their tenders.^[29]

Supplier management information[]

The OGC introduced a recommendation to central government departments and non-departmental public bodies in March 2010 suggesting inclusion within contracts of a clause under which the public body concerned could require the supplier to submit detailed management information.^[30][31]

Devolved administrations[]

Northern Ireland[]

In Northern Ireland the Central Procurement Directorate within the Department of Finance (formerly the Department of Finance and Personnel) is responsible for procurement policy. A revised public procurement policy for Northern Ireland departments, agencies, non-departmental public bodies and public corporations was adopted on 16 May 2002;^[32] the latest version (version 11) was issued in August 2014.^[33] A Concordat on Public Procurement was agreed on 1 June 2001 by the UK Government and the Northern Ireland Executive for the handling of EU, international and policy issues on public procurement.^[34]

Scotland[]

In Scotland the Public Contracts (Scotland) Regulations of 2015 ^[35] and 2016 ^[36] apply. The Procurement Reform (Scotland) Act 2014 requires contracting authorities to consider whether to impose community benefit requirements on contractors bidding for contracts in excess of £4,000,000 in value.^[37]

Under the Public Contracts (Scotland) Regulations 2015, actions for alleged breach of a public authority's duty owed to an economic operator may be brought in the Sheriff Court or the Court of Session.^[38]

Wales[]

In Wales, two organisations – the National Procurement Service, established in 2013, and Value Wales – oversee Welsh public sector procurement. The role of Value Wales includes shaping procurement policy, monitoring procurement in practice, supporting, advising and developing procurement staff and ensuring compliance with procurement regulations.^[39] The Welsh government requires public sector bodies in Wales to include the delivery of social, economic and environmental benefits for the community as an integral consideration in procurement and for this purpose each public body in Wales must appoint a Community Benefits Champion.^[40]

Government Commercial Function and Government Commercial Organisation[]

The Government Commercial Function (GCF) is a cross-government network procuring or supporting the procurement of goods and services for the government. Sitting within the GCF, the Government Commercial Organisation (GCO) is the employer of senior commercial professionals (at Grade 7 and above) and consists of 250 senior commercial specialists. Around 4,000 civil servants who undertake or support the procurement of goods and services for government form the GCF alongside the more senior GCO professionals.^[41]

The GCF is responsible for the Government Commercial Operating Standards,^[42] whose purpose is "to set expectations and drive consistency in the planning, management and execution of commercial activities, ensuring contracts and relationships with suppliers realise value for money and result in delivery of high quality public services",^[43] and for optimising use of procurement information across UK government. The GCF's "Contracts and Spend Insight Engine" (CaSIE), first established in 2017, includes a "data lake" embracing current and future supplier and expenditure information used to enhance procurement decision-making and contract management.^[44]

Post-Brexit government procurement[]

This section needs to be updated. Please help update this article to reflect recent events or newly available information. (March 2020)

Under the agreement on the withdrawal of the United Kingdom from the EU, procurement procedures commenced under the EU regulations before the end of the transitional period will continue to be governed by the relevant regulations up to the issue of a contract award notice.^[45] From 11 pm on 31 December 2020, "a UK-specific e-notification service" called the Find a Tender Service (FTS) will replace the use of OJEU. Contracting authorities and entities would be expected to ensure that their contract notices are published on the new e-notification service as well as the relevant site listed above.^[46]

Since 31 December 2020, most UK e-senders (third parties who operate publication systems which submit notices to the EU Publications Office) have been able to post notices to the FTS, although the Cabinet Office has identified several e-senders who had not as of December 2020 successfully completed integration work to post notices.^[47]

A green paper on reform of public procurement was published on 15 December 2020, taking advantage of "the end of the [Brexit] Transition Period", according to Lord Agnew, "to overhaul our outdated public procurement regime".^[48] Subsequently a "National Procurement Policy Statement" was published, establishing that public procurement "should be leveraged to support priority national and local outcomes for the public benefit", in order to secure the creation of new businesses, jobs and skills, waste reduction, climate change mitigation, supplier diversity, resilience and innovation.^[1]

References[]