The Procurement Act 2023 – hidden flexibility for light touch contracts!

Alison Walton, our Head of Procurement, examines how flexibility has been built into the new Procurement Act 2023 for certain types of contracts.

When the Procurement Act 2023 text was first released, many commentators (myself included, I confess) were quick to say that the promised flexibility in the new regime was not apparent at first glance.

Having delivered many training sessions on the topic and re-reading the Act and the draft Regulations numerous times, I may have to go back on my word, at least in part. The flexibility in relation to “light touch” contracts is scattered around the Act, but when put together, it reveals a real departure from the previous approach of the procurement regime to “tighten up” the restrictions on the award of light touch contracts and make them almost as fully regulated as other service contracts.

A quick recap of the light touch regime

The “light touch” regime is something procurement veterans will remember being called “Part B services”. Originally, under the EU regime, services were all categorised as unlikely to be of cross-border interest because of the nature of the services provided. Only an exhaustive list of services (known as Part A services) was deemed to be of interest across member states, and those were subject to the full procurement regime. Everything else was deemed a Part B service and subject to a lighter touch regime that did not require EU-wide advertisement.

This distinction changed in the 2015 Regulations, and the “light touch” regime was created, which required the advertisement of light touch (former Part B) service contracts, but only where their value exceeded a higher threshold than “normal” service contracts. Light touch services have made it through to the new Act and now comprise a defined list of service types, including education and training, healthcare and “social” services, catering, legal and security. A full list can be found in the draft Regulations recently laid before Parliament.

The new light touch regime

It is always worth checking whether the services you are procuring or tendering for are classed as “Light Touch” because your rights and obligations will likely differ from those that would arise for a fully regulated contract.

The new regime means far less restriction for light touch services contracts and almost a cursory nod to procurement without strict regulation that applies to fully regulated contracts. Differences include:

• No standstill period – there will be no requirement to observe a standstill period for light touch contracts.
• No minimum time periods – there will be no minimum period to observe for submission of Selection Questionnaires or Tenders during a process.
• Frameworks – the rules on when a direct award can be made, and the rules on what information needs to be included in a framework agreement will not apply to frameworks for light touch services contracts. Direct awards, bespoke contract terms, and bespoke pricing mechanisms, for example, will therefore be permitted with little restriction.
• Maximum Term of Frameworks – there is no maximum term for a light touch framework agreement (other frameworks are restricted to 4 years in length, generally speaking).
• User choice - an ability to use user choice criteria when evaluating tenders – award criteria can include the views of individual service recipients or their care providers in relation to who should provide the services and how and when they should be supplied.
• Contract variations permitted – there are no restrictions on varying or changing a light touch services contract, as there are for other types of contract under the Act.
• No contract change notices – the Act requires details of all contract variations to be published, but this requirement does not apply to changes made to light touch contracts.
• Modifying a procurement – there will be no restrictions on changing a procurement process for a light touch services contract after the initial advertisement.
• No KPIs – the Act requires contracts valued at over £5m to be published and contain at least 3 KPIs to assess a supplier’s performance. There is no requirement to publish KPIs in a light touch services contract (although the publication requirements still apply, subject to a longer time period for publication after the award of the contract).
• No contract breach reporting – the Act requires publication of details about contract breaches leading to termination, damages or settlement. This will not apply to light touch services contracts.
• No automatic suspension on challenge – with no standstill period, this means that there can be no automatic suspension of the contract award process where a light touch process is challenged in court.

Carte blanche for light touch?

This all feels a little too “light touch” for those of us who are used to the current regime, which was starting to tighten the light touch regime to bring it in line with the fully regulated requirements under the 2015 Regulations.

However, it is worth noting that it will not be a complete “free for all” in relation to light touch contracts. While some may think that the above means authorities can simply do what they want in relation to light touch contracts, it is worth remembering that there are overarching objectives in the Act that will still need to be observed by authorities when procuring light touch contracts. These include the express obligations:

• To act, and be seen to act, with integrity.
• To treat all suppliers equally and equitably.
• Not to put one supplier at an unfair advantage or disadvantage.

In time, this might result in judgments of the courts adding to the Act through case law where appropriate. For example, we might see a reversion to a test akin to the “Pressetext” principles for the modification of contracts where statutory requirements do not adequately regulate the modification of light touch contracts. This remains to be seen and may well be addressed in guidance, which is due to be published by the Cabinet Office to accompany the Act. Other guidance has already been published and can be accessed here.

Are you ready for the Procurement Act 2023? We are here to help. Our procurement team has a range of seminars and training workshops available on the practical implications of the new Act. To discuss how you can prepare, please contact Alison Walton on 0191 211 7850 or email [email protected].