The UK Government has unveiled details of its proposed Procurement Bill, designed to make it easier for small limited companies to bid on big public contracts.
In this post, we’ll explain how the Bill is designed to work and what you can expect.
Coming in at around £300 billion per year, public procurement accounts for about a third of all public expenditure. That makes it the largest area for public spending. But over the past few years, the UK Government has faced increasing pressure to open up the procurement process to a wider range of businesses.
There have been a number of high-profile investigations questioning how and why particular companies were able to secure big government contracts — and so ministers are finally working to restore faith in the procurement system by reforming the rules around who can bid for public contracts, how they bid, and increasing the level of resources that are available to them.
This has all been outlined in the UK Government’s upcoming Procurement Bill.
To help you understand what this bill entails, this guide will walk you through key changes on the horizon and what they could mean for your limited company.
Slashing red tape
One of the key goals of the government’s Procurement Bill is to reduce the number of procedures that public bodies must adhere to when placing contracts up for bid.
When the UK was part of the European Union, there were a total of seven procurement procedures. Moving forward, the Bill is calling for three procedures.
The first procedure will be a new “flexible competitive procedure” that will give buyers the freedom to negotiate and innovate to get the best from the private, charity and social enterprise sectors. In terms of “innovation”, the Bill specifically references the ability for buyers to tailor procurement to their exact needs, building in new stages such as demonstrations and testing prototypes.
Second, the Bill calls for the introduction of an “open procedure” for simpler off-the-shelf competitions.
Finally, it will create a “limited tendering procedure” that can be used in certain circumstances — for example, if there’s a public contract that must be fulfilled as a matter of “extreme urgency”.
Because the new regime will be dropping EU procedure, the UK’s Procurement Bill is set to maintain compliance with international obligations via the World Trade Organisation’s Agreement on Government Procurement. In doing so, ministers say that British businesses will be guaranteed access to an estimated £1.3 trillion worth of public procurement opportunities overseas.
A new digital platform
A key facet of the Procurement Bill is to make it easier for smaller UK companies to do business with the public sector.
One way this is going to be achieved is through the creation of a single digital platform that suppliers will use to register their details. That platform will then be used for all bids — meaning procurement won’t be split over different websites or services.
This new platform will make the process of procurement more transparent, because it should enable all UK limited companies keen on bidding for public contracts to find every single opportunity in just one place. On the public body side of things, the Bill will force entities to include notices mandated for direct awards and publication requirements extended from planning to termination, including contract performance, in all of their opportunities.
According to the government, this should accelerate public spending with small and medium-sized enterprises (SMEs) — who are also going to benefit from prompt payment terms which will be upheld by regulators.
Levelling up the UK
The UK Government has been campaigning to “level up” the UK for several years. The intention here is to ensure that direct investment in public infrastructure and local economies extends beyond the city of London and is more evenly spread across the country.
The Procurement Bill is set to help the government put a dent in those plans, by requiring procurement buyers to take account of national strategic priorities when uploading procurement opportunities onto the system. This includes areas like job creation potential, tackling climate change or improving supplier resilience.
Public bodies will also be able to reserve competitions for contracts below a certain threshold for UK suppliers, SMEs and social enterprises only. This means the Bill should theoretically push public bodies into ringfencing certain procurement opportunities for small UK companies only — meaning more business for SMEs.
It’s worth noting these are just the biggest changes the UK Government intends to introduce as part of the upcoming Procurement Bill. It also includes a new exclusions framework that will make it easier to exclude suppliers who have underperformed on other contracts, as well as create a new “debarment register”, that will list companies who should be excluded from contracts.
Thanks for reading
At present, ministers have yet to unveil a concrete timetable as to when the Procurement Bill will go to a vote and be enacted. But if you want to keep your ear to the ground and stay up-to-date on how the Procurement Bill progresses, you’re in the right place.
Be sure to visit the 1st Formations central blog page for more information and all the latest news on UK limited companies, Corporation Tax, startup taxes and more.