It's Procurement Act Day: Are You Up To Date?

The introduction of The Procurement Act 2023 today marks a major shift in the way public procurement operates.

With public sector contracts accounting for a significant portion of government spending, the act is designed to streamline processes and ensure smaller businesses get a fair shot at competing.

At its core, the new legislation simplifies how contracts are awarded, reduces bureaucracy and places greater emphasis on social value. 

Key changes under the new legislation

One of the most significant reforms is the introduction of a competitive flexible procedure, making it easier for businesses to negotiate and collaborate with public sector buyers. This shift moves away from rigid frameworks, allowing for a more dynamic procurement process.

The act also increases access to commercial frameworks, preventing suppliers from being locked out of contracts for extended periods. For small businesses, this means greater opportunities to enter the market and secure public sector work.

Another major change is the removal of bureaucratic hurdles that have traditionally disadvantaged small and medium-sized enterprises (SMEs) and voluntary, community and social enterprises (VCSEs).

Strengthened payment terms now require many public sector contracts to settle invoices within 30 days, ensuring faster cash flow for smaller businesses.

A new central digital platform, 'Find a Tender,' has been launched to simplify the bidding process. Businesses can now register and store their details, allowing for quicker and more efficient applications across multiple tenders. This centralised approach increases the visibility of procurement opportunities, making it easier for companies to access contracts.

To oversee these changes, the Procurement Review Unit (PRU) has been established. The PRU is responsible for ensuring compliance with the act and maintaining high standards in public procurement.

It consists of three key services:

• Public Procurement Review Service (PPRS): Handles supplier complaints about procurement processes and late payments.
• Procurement Compliance Service (PCS): Investigates whether public bodies are following the new procurement rules.
• Debarment Review Service (DRS): Reviews suppliers to determine if they should be placed on a public debarment list to protect public funds from high-risk companies.

Supporting small businesses and social value

A major goal of the act is to create more opportunities for SMEs and social enterprises, ensuring they can compete fairly for government contracts.

By reducing unnecessary red tape and simplifying bidding, the government hopes to make public sector contracts more accessible to a wider range of businesses.

Public agencies are now required to factor social value into their procurement decisions. This means contracts won’t just be awarded based on cost alone but also on their impact on local communities, sustainability and overall public benefit.

Local councils, for example, can now prioritise contractors from their own region rather than automatically choosing the cheapest option.

The act replaces the traditional “most economically advantageous tender” approach with a “most advantageous tender” model. This subtle change gives decision-makers more flexibility to consider social and environmental factors alongside price and quality.

Now, businesses that can demonstrate their impact in areas such as sustainability, job creation or community support may have a competitive edge in winning contracts.

Industry reaction and potential challenges

The response from the business community has been largely positive.

Steve Haskew, Group Director of Sustainability and Growth at Circular Computing, describes the new legislation as “a win for Davids over the Goliaths of the business world." 

He sees the act as a crucial step in levelling the playing field, bringing more transparency to procurement and breaking down barriers for smaller companies.

Steve also notes that the act embeds circular economy principles into procurement, ensuring environmental and social impact are considered alongside cost. He argues that this shift will encourage sustainable choices, particularly in areas such as technology procurement for schools, the NHS and government departments.

However, some concerns remain. Critics question whether small businesses have the time and resources to meet the new requirements, particularly around social value reporting. While many SMEs are already delivering social value, formalising these efforts and tracking impact could prove challenging.

The success of the act will ultimately depend on how willing commissioners and buyers are to change their approach. Historically, large, well-established firms have dominated public procurement, as awarding contracts to recognised names was seen as a lower-risk option. 

But with public services under pressure and taxpayers demanding better value for money, the argument for giving smaller, innovative businesses a chance has never been stronger. 

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