Procurement Bill 2022-23

This briefing refers to the Procurement Bill before its adoption as an Act of Parliament (Procurement Act 2023) in October 2023.

Procurement rules regulate public authority purchases of supplies, services and public works from the private sector. About a third of public sector spending goes towards procurement.

The Government sees a reform of the UK’s EU law-based procurement rules as an opportunity to better tailor the procurement framework to the country’s needs. It believes reform will make procurement simpler, quicker, more transparent and less bureaucratic.

In its view this would create more opportunities for innovation and support new businesses, including small and local companies, wishing to enter the market and deliver public contracts.

The Government first laid out its reform proposals in a green paper on transforming public procurement in December 2020. A public consultation on these proposals ran until March 2021. In December 2021, the Government published its response to the consultation.

A Procurement Bill was announced in the Queen’s speech of May 2022 and soon introduced in the House of Lords. The Bill completed the Lords stages on 13 December 2022 and entered the House of Commons on the following day.

Procurement Bill

The Procurement Bill would repeal the current EU law-based procurement regulations. It would lay out new rules and procedures for central government departments, their arms-length bodies and the wider public sector when selecting suppliers and awarding contracts with a value above certain thresholds. It would also make provisions for smaller, below-threshold contracts.

The Procurement Bill as brought from the House of Lords and introduced in the House of Commons has 124 clauses arranged over 13 parts, and 11 schedules. The Bill contains a number of regulation-making powers.

Value for money and national strategic priorities

The Bill would introduce a new supplier selection regime, based on principles including non-discrimination, fair treatment, value for money, maximising public benefit, transparency, and integrity. While value for money would remain the core objective of procurement, the Bill would require public sector buyers to take a broad view and take account of the national strategic priorities set out in the National Procurement Policy Statement (NPPS).

The NPPS asks public authorities to consider wider public benefits, such as creating new (local) jobs, tackling climate change, improving the diversity of their suppliers, and innovation throughout the procurement process. This would also allow authorities to consider supporting local community priorities through public purchasing.

A single regime

The Bill would consolidate the current four sets of regulations, which transpose EU Directives into UK law, into a single regime. This would cover regulations for:

• public contracts, awarded by most central government departments, their arms-length bodies and the wider public sector including local government, health authorities and schools
• utilities contracts by utilities operating in the water, energy and transport sectors. It would not cover private utilities operating on a competitive market
• concession contracts for the supply of works or services where public authorities give a supplier the right to exploit works or services
• defence and security contracts.

Devolved procurement

The Bill would apply to procurement by devolved authorities in Wales and Northern Ireland. Scotland, however, would maintain its own legal framework, while the Bill would provide for arrangements covering joint and cross-border procurement with Scottish contracting authorities.

International obligations

The Bill would provide for the UK to meet its international obligations on public procurement included in treaties that it has signed. This includes the World Trade Organisation (WTO) Agreement on Government Procurement (GPA), the Trade and Cooperation Agreement (TCA) with the EU and a range of other agreements.

Approach of the Bill

The Bill would regulate the procurement process throughout the lifecycle of a contract: from the point when a public authority (a contracting authority) considers whether and what to buy, through the selection of bidders, weighting their bids, to awarding a contract, and monitoring its performance up to its endpoint.

Enhanced transparency requirements under a new ‘noticing’ regime would span the full lifecycle of procurement. This would include publishing information about future procurement ahead of time, and publicising new contract opportunities, procurement results and information on contract performance.

The Government aims to establish a single platform for accessing procurement data, a public debarment list for excluded suppliers, a ‘tell us once’ system for supplier registration and other innovations.

Lords second reading

Members across the House of Lords generally welcomed the Bill.

The opposition Labour and Liberal Democrat members noted that the Bill went less far in some respect than the green paper would suggest, for example, with regard to transparency requirements. They argued that the Bill’s text did not sufficiently define key procurement principles such as integrity, did not include specific requirements to have regard for climate objectives, and did not emphasize the social value in procurement.

Several Conservative members emphasized the need for simple, effective rules. They cautioned against enhancing requirements, for example around transparency, at a cost of creating an additional administrative burden. Members debated a range of issues including procurement of health services, defence, SMEs, ethical procurement and modern slavery.

Lords amendments

The Grand Committee of the House of Lords considered the Bill over seven sitting days between 4 July and 26 October, covering over 500 amendments, including 350 government amendments. A total of 279 government amendments were agreed. Most of these changes were narrowly focused and technical, “to ensure that the Bill functions properly and effectively”, accompanied by a large group of consequential amendments. The bulk of the amendments did not change the Bill’s policy intent.

The Lords report stage took place on 28 and 30 November.

The Government again tabled a significant number of amendments for inclusion in the Bill. Of the 205 amendments proposed on report, 161 were agreed to, of which 155 were government and five non-government amendments.

Members passed government amendments which substantively clarified definitions in the Bill, including definitions of procurement, a contracting authority, and utility transport activities. Further government amendments were agreed to introduce new, higher reporting thresholds across the regime, aiming to reduce administrative burden associated with smaller contracts.

Members of the House of Lords defeated the Government on five non-government amendments. They supported:

• bringing NHS procurement fully in scope of the Bill
• requiring a Minister to consider certain principles before publishing a national procurement policy statement (NPPS)
• including specified strategic priorities in the NPPS
• allowing contracting authorities to exclude suppliers from contract awards for their involvement in activities linked to forced organ harvesting
• ensuring removal of physical surveillance technology which has been delivered by suppliers involved in modern slavery, genocide or crimes against humanity.

Further debate in the House of Lords covered issues such as the scope of procurement rules, and the scope of delegated powers in the Bill. Members discussed provisions on supporting local suppliers and social enterprises, exclusion of suppliers for financial or economic offences, and addressing conflict of interest. Other issues included audit of the Ministry of Defence procurement spending and tackling human rights abuses in the supply chain.

Labour members said they disagreed with the Government on a fundamental point: whether procurement legislation is the right tool to enhance other policies beyond narrowly defined procurement interests.

Progress of the Bill

Information on the Bill's progress through the House of Commons is in Commons Library briefing, Procurement Bill: Progress of the Bill. The House of Commons passed the Bill with amendments on 13 June 2023.

In September and October the Bill went through the “ping-pong” process between the two Houses, with the Commons and the Lords agreeing to the final version of the Bill on 25 October 2023.

The Bill received Royal Assent on 26 October 2023, becoming the Procurement Act 2023. The Act will come into force in October 2024, along with secondary legislation required to implement certain Act's provisions.