By Jane Brighouse, quality & compliance manager at Procurement for Housing (PfH)

With the political and economic turmoil of 2022 dominating headlines, you will be forgiven for perhaps overlooking the passage of a new piece of legislation as it worked its way through the House of Lords.

The Procurement Bill was published in May 2022. It harnesses the opportunities provided by Brexit to reform the Public Contract Regulations that dictate how public bodies such as housing associations must procure goods, works and services over relevant thresholds.

Lord Agnew, the then Minister of State for the Cabinet Office, was bold in his introduction to the Green Paper:

For too long, modern and innovative approaches to public procurement have been bogged down in bureaucratic, process-driven procedures. We need to abandon these complicated and stifling rules and unleash the potential of public procurement so that commercial teams can tailor their procedure to meet the needs of the market.

So, what are the risks for your business?

Enhanced transparency requirements

Transparency is at the heart of the reform and will be embedded throughout the procurement process. Pipelines of future procurements will need to be published, additional notices such as contract detail notices and contract termination notices will be introduced and certain redacted contracts will be placed under public scrutiny. All this will add time and resource to the process, allow greater scrutiny by suppliers, tenants and third parties and, more importantly, shine a light on procurement practices. Boards, more than ever, will need to seek assurance that their procurement practices are robust, efficient and compliant in order to reduce legal and reputational risk.

Increased pressure on the supply chain and legal risk

There will be an impact on the supply chain too. KPIs will become compulsory for contracts over £5m (with some exceptions) and performance against those KPIs will be monitored and made publicly available. Consistent poor performance could lead to the supplier becoming an ‘excludable’ supplier and being placed on a centrally managed debarment list. This could lead to suppliers avoiding high value or high-risk contracts, pricing for higher risk or increased contractual disputes over performance, detracting from service delivery to tenants. Preparation for high value contracts and monitoring of the associated KPIs should be a priority in order to manage these risks and maintain strong supply chain relationships.

Supporting SMEs to access procurement opportunities is another bedrock of the reform. There will be a legal obligation on housing associations to ‘have regard to’ the barriers a procurement will have on SMEs and what measures can be taken to overcome those barriers.  Aggrieved businesses, of any size, will be able to take their concerns to an oversight body. It is possible that the new regulations will create a flurry of legal challenges, impacting service delivery and reputation, as the new legislation is tested.

However, one of the biggest risks of procurement reform could well turn out to be a failure to embrace the opportunities that the new legislation offers.

Plan carefully for a more flexible process

The reform will introduce a new procurement procedure – the ‘Competitive Flexible Procedure’. This will allow public bodies to design their own procurement process (in line with specified principles), allowing for increased levels of engagement and negotiation – a significant departure from current practice which limits discussion and dialogue. This will undoubtedly lead to better procurement outcomes, such as more responsive or more innovative service delivery, but will be lengthier and more resource intensive for procuring authorities and bidders. It will require careful planning and consideration and success will depend on the capability and commerciality of procurement teams. Those organisations that are flexible, creative and less risk-averse will reap the greatest benefits of reform. Boards would be wise to start considering now where they are positioned and how they will exploit these new procurement opportunities.

The Bill is expected to receive Royal Assent in the Spring. Whilst we are around a year off full implementation, there is much to be done if we are to be able to manage the risks and maximise the strategic advantage that this exciting reform brings.