Procurement Act 2023: landmark reform and its impact on schools

Over the last few years, the Cabinet Office, alongside stakeholders across the United Kingdom (‘UK’) has undertaken work on ‘Transforming Public Procurement’. This initiative has culminated in the new Procurement Act 2023 (the ‘Act’), which took effect as of the 24 February 2025. The Act is a landmark piece of legislation in the UK, which marks a significant overhaul of procurement regulation and practices; consolidating and replacing the previous regime based on transposed EU directive (including the Public Contracts Regulations 2015 and the Utilities Contracts Regulations 2016 (the ‘Previous Regulations’)). It introduces a more flexible, strategic approach to public procurement, streamlining processes to both benefit both contracting authorities and suppliers.

Under section 12 of the Act, contracting authorities conducting covered procurement “must have regard to the importance of:

a)      delivering value for money;

b)     maximising public benefit;

c)      sharing information for the purpose of allowing suppliers and others to understand the authority’s procurement policies and decisions; and

d)     acting, and being seen to act, with integrity.”

What does the Act cover?

Essentially, the provisions of the Act cover the “award, entry into and management of a public contract”, as outlined under section 1 of the Act.

In layman’s terms, this encompasses all public sector procurement activities across England, Wales and Norther Ireland. The Act unifies various procurement regimes under one single framework - including public contracts, utilities, concessions and defence/security procurements.

Where do we draw the line and transition from the Previous Regulations?

A clear distinction is drawn between the new Act and Previous Regulations:

-          Any procurement that is started before 24 February 2025 will fall under the Previous Regulations; and

-          Any beginning on 24 February 2025 or later will come under the new Act.

A procurement is considered to have commenced upon the publication of any notice (excluding prior information notices or non-statutory pipeline notices.) In cases where no notification or call for competition is required (e.g. direct awards using the negotiated procedure), procurement commences when a supplier is contacted with the intention of entering into a contract.

What’s New?

Whilst the Act establishes what must happen, the Procurement Regulations 2024 (the ‘Regulations’) outline how it should happen in practice. The Regulations introduce a list of mandatory and voluntary notices (from A – Z), procedural details and administrative requirements to ensure compliance with the Act, including:

-          Preliminary Market Engagement Notices;

-          Contract Award Notices;

-          Key Performance Indicators;

-          Payments Compliance Notices;

-          Contract Change Notices;

-          Contract Performance Notice; and

-          Contract Termination Notices.

To enhance efficiency and reduce administrative burdens, the Regulations mandate the use of a centralised digital platform for sharing core supplier information – modernising the “Find a Tender” service. This includes basic information (regulation 9), economic and financial standing information (regulation 10), connected persons information (regulation 11) and exclusions grounds information (regulation 12). This platform allows suppliers to submit their information once, which can then be accessed by all contracting authorities during procurement procedures, streamlining the process and minimising repetitive submissions.

Furthermore, to uphold the integrity of public procurement, there is an established debarment regime, which (under section 62 of the Act) enables Ministers to put suppliers on a published debarment list. The mandatory or discretionary exclusion grounds are outlined in Schedule 6 and 7 of the Act. Inclusion on the list means that the supplier’s past behaviour/circumstances leave it illegible for participation in covered procurements or the award of public contracts. Suppliers may be added to this list if they are found to have engaged in any of the exclusion grounds or serious misconduct, such as fraud or corruption. The regime aims stop/minimise supplier-related risk in public procurement, which in turn incentivises suppliers to achieve compliance. Contracting authorities are required to consult the debarment list during each procurement process and must exclude suppliers listed as "excluded" and have the discretion to exclude those marked as "excludable."

SMEs

The legislation also encourages and places strong emphasis on public sector buyers to engage more often with small and medium-sized enterprises (‘SMEs’). Several key reforms include reduced bureaucracy through the centralised core supplier information system, removing barriers such as pre-award insurance requirements (which are often stringent requirements prior to bidding), fairer payment terms and through the competitive flexible procedure outlined below; allowing for the reservation of smaller contracts specifically for UK-based SMEs.

Procurement Procedures

The Act procures three main procurement procedures:

1.      Open Procedure: A single-stage procedure without any restriction on who can submit tenders. Contracting authorities must ensure that all suppliers have equal access to relevant information and are assessed based on transparent criteria.

2.      Competitive Flexible Procedure: An intentionally flexible non-prescriptive procedure, offering contracting authorities considerable flexibility to design a procurement process that suits their specific needs.

3.      Direct Award: This method allows a contracting authority to award a contract directly to a supplier without a competitive process, typically in situations where there is only one suitable supplier or in cases of extreme urgency (with schedule 5 of the Act listing such justifications). The regulations require authorities to publish a Transparency Notice before making a direct award, providing justification and ensuring public awareness.

Frameworks

A framework is a long-term contract between a contracting authority and one of more suppliers, setting out the terms and conditions for future contracts (call-offs) over a specified period. The Act enables contracting authorities to continue to establish and operate frameworks as they do currently (under the mandatory requirements at sections 45, 47 and 48 of the Act), with the most significant change being the introduction of open frameworks, which can run for up to eight years and allow new suppliers to join during the life of the framework.

An open framework is defined as "a scheme of frameworks that provides for the award of successive frameworks on substantially the same terms". Effectively, it is a framework that rolls over successively and is reopened to new suppliers at set times. Suppliers can be readmitted under this framework (depending on the numbers). A dynamic market is a new concept introduced by the Act that replaces the dynamic purchasing system used under previous regulations, which is restricted to common commodity contracts. A dynamic market serves as a qualification mechanism, establishing a pre-approved panel of suppliers that meet a contracting authority’s participation criteria. Public contracts can then be awarded based off the supplier’s inclusion in the market across a broader range of procurement needs.

What about Schools?

A “School” is defined under section 123 of the Act as meaning:

a.      “the governing body of a maintained school (see section 19(1) of the Education Act 2002);

b.      the proprietor, within the meaning given by section 579(1) of the Education Act 1996, of an Academy within the meaning given by that section;

c.      the proprietor, within the meaning given by section 579(1) of the Education Act 1996, of a school that has been approved under section 342 of that Act;

d.      the governing body, within the meaning given by section 90 of the Further and Higher Education Act 1992, of an institution within the further education sector within the meaning given by section 91 of that Act;

e.      the Board of Governors of a grant-aided school within the meaning given by Article 2(2) of the Education and Libraries (Northern Ireland) Order 1986 (S.I. 1986/594 (N.I. 3))”

Difference for schools

Any schools, academies of six forms falling under the remit of this definition, may find some differences in the applicability of the Acts provisions. Some key differences for schools include:

-          No implied payment terms under section 68 of the Act;

-          No payments compliance notices under section 69 of the Act;

-          No information about payments under section 70 of the Act;

-          No implied payments terms in sub-contracts under section 73 of the Act; and

-          No regulated below-threshold contracts (these remain unregulated) under section 84 of the Act, meaning those provision in Part 6 of the Act will not apply here.

What should you do and how can we help?

In order to take full advantage of the new regime, organisations should continue to treat this as an organisational change programme and consider future pipelines of work and which procurements would benefit from the new flexibilities. Contracting authorities should review commercial strategies including planning, governance, assurance and resources to enable the implementation of the new regime.

Here at Forbes our specialist procurement solicitors can assist you in navigating the complexities of the new Act through the provisions of legal guidance on compliance, risk management and strategic implementation. This covers anything between advising on the transparent and competitive tendering process, ensuring compliance with regulatory requirements, mitigating potential legal challenges and assisting with drafting and reviewing procurement documents. For further information, please contact us on the form below.