Procurement Act

By Dean Fazackerley, LHC Head of Procurement

Along with flexibility, transparency is one the cornerstones of the new act and is clearly demonstrated throughout. This article explores what we believe are the top three areas related to transparency and how they demonstrate this commitment within the act.

1. The new notices

The suite of new notices introduced is the clearest signal from government that transparency is at the heart of the act, and will both encourage and enforce contracting authorities to be more open about procurement and contract management activities.

This article will provide an overview of key examples, however for a deep dive analysis of each of the new notices, refer to LHC’s ‘A focus on the new notice regime’ article.

Planning and Early Engagement Notices

The introduction of the Pipeline, Planned Procurement and Preliminary Market Engagement notices demonstrates the government’s desire for public sector authorities to be more open about their plans and engage with suppliers early on. At LHC we are advocates for early market engagement, and welcome these additions as encouraging best practice.

Transparency Notice

Replacing the current Voluntary Ex Ante Transparency (VEAT) notice, buyers will be mandated to publish this prior to award whenever a direct award has taken place.

Contract Termination Notice

Contracting authorities will be required to issue a Contract Termination Notice whenever a contract is terminated early, for example, for poor performance or changing requirements but also simply when a contract naturally expires. The latter requirement is unusual, and we would suggest it is an example of transparency rather than adding any further benefit, however this may be ironed out or explained further in the secondary legislation.

2. Assessment Summaries

Following their evaluation process, and before proceeding with the standstill period, contracting authorities must provide an Assessment Summary to each supplier who submitted a tender. Whilst the obligation to provide feedback to bidders on the merits of their bid is nothing new, the act goes much further than the current regulations in setting out the obligations and detail of feedback that is required.

There are three important feedback areas to draw attention to in terms of content required for the Assessment Summary:

1. The score, and detailed reasons for the score given against each award criterion
2. Where applicable, the reasons why the tender was not given the score immediately above the score for that criterion (e.g. why did a bid score a three not a four)
3. In the case of an unsuccessful tender, a comparison with the winning tender against each criterion

In addition to the extra level of detail expected in the Assessment Summaries, what is important to note is this process must be carried out before publishing any Contract Award notice.

Again, a clear signal on the requirement for openness and transparency to support the decision making process of who is successful, and who is not.

From a contracting authority perspective, this will require additional time and resources allocated to collate this information and will likely be a source of additional clarification and potential challenge if the feedback provided is not adequately detailed.

At LHC, we recommend buyers audit their current evaluation practices in advance of the new act to ensure the level of evaluation commentary detail, and how it is captured, will meet the requirements going forward. Where there are gaps or lack of detail consider refresher training and developing new tools and evaluation templates.

3. Publication of contractual information

The act brings in a clear shift in expectation for greater transparency in the contract management stage, setting out new notices and the publishing of additional contract related information for contracts over £5 million, as follows:

Publishing the contract

Where the contract has a value exceeding £5 million, in addition to publishing a contract details notice, a copy of the contract itself must also be published with the notice (commercially sensitive information can be withheld).

Publication of contract performance

Where a contract value exceeds £5 million, an authority must include at least three KPIs within the contract and monitor the supplier’s performance against these.

Then, at least once annually, the authority must publish details of the supplier's performance under these KPIs in accordance with ascribed ratings. The details must also set out any breach and what actions have been taken by the contracting authority.

At LHC, whilst we understand and applaud the government’s intention to use the act as a catalyst to improve the standard and visibility of contract management across the public sector, we believe this is an area that has the potential to generate friction between buyer and supplier.

When it comes to contract management, as we all know, there are often nuanced reasons why performance is not met and there can be issues on both sides that cause poor KPIs. Suppliers may feel aggrieved by the public disclosure of KPIs that – without more detailed knowledge of the operation of the contract itself – could cast the supplier in a poor light.

Additionally, the contract between the buyer and supplier is a commercially sensitive matter and without clear guidance provided by government on what level or redaction can take place (and to what level of detail the published contract should be), LHC can foresee protracted negotiations between legal teams on what can and should be published.

LHC are hoping to see further guidance as part of the training provision, and/or secondary guidance to better address the concerns raised to date by buyers and suppliers alike. This will ensure we can embrace this intention, without ending up in disputes and disagreements at the cost of productivity.