Private as well as public sector organisations need to be prepared for the new Procurement Act 

The Procurement Act 2023 comes into force on 24 February 2025, changing the rules that shape how public bodies buy goods and services. This follows publication of the National Procurement Policy Statement (NPPS) on 12 February, which sets out the wider policy objectives to which the government expects public procurement to contribute.

Where does social value fit into the new Procurement Act?

The Act aims to introduce measures to ‘improve and streamline the way procurement is done and benefit prospective suppliers of all sizes’,  including SMEs and social enterprises’. So far, so good. The NPPS notes that contracting authorities must have regard for the importance of delivering value for money. This means procurement policy objectives should balance effectiveness, efficiency, and economy over the life-cycle , acknowledging that there are circumstances in which the policy objectives are irrelevant or disproportionate to a specific procurement. This seems reasonable. It's also encouraging that the NPPS emphasizes equitable treatment of suppliers and consideration of barriers for SMEs. 

Although the Act and the NPPS strengthen alignment between procurement and social value, there remains a lack of standardized guidance on how to implement social value plans and activities. Contracting authorities are still finding themselves under resourced to devise their own social value strategy and implement it operationally. Any procurement exercise undertaken by a contracting authority should allow for the societal and economic needs of the area where the contract term will be delivered. Every contracting authority should have a policy explaining their specific social value needs, and how these should be considered within their procurement. This policy should be an explicit requirement, stated in the NPPS.

The Act is nonetheless a welcome arrival and we briefly explore below the implications and the preparation needed to secure the best outcomes.

The Act applies to all new procurement

The Procurement Act will apply to new procurement only.  Previous procurement will still be handled under PCR 2015, the existing Public Contracts Regulations Act, and other current procurement legislation. This includes frameworks until their last call-off is terminated, which could be up to 10 years until construction is completed.

As an example, AtkinsReális is a Lot 1 provider under the Pagabo Professional Services Framework, which was procured under PCR 2015 Regulations and as such, remains a compliant route to market for contracting authorities.  

Content of the new Act

The Act requires procurement teams to award the contract to ‘the most advantageous tender (MAT) that the contracting authority considers: 

a) Satisfies their requirements, and  

b) Best satisfies the award criteria by reference to the assessment methodology and the relative importance of the criteria.’ 

The key principles are to deliver value for money, maximize public benefit, and procure with integrity while treating bidders equally. There is greater emphasis on transparency, supplier performance and non-financial criteria such as quality, local job creation and environmental impact.

Monitoring and reporting on performance is now much more prominent, and aligned to the three (or more) KPIs that public contracting authorities must establish and publish for most contracts over £5m (including VAT).

Early supplier engagement (ESE) is encouraged and this should be welcomed by all parties, so as to achieve the planned outcomes and value for money. Investing time in ESE can lead to more effective designs, reducing changes and potential cost increases downstream as a way to achieve faster delivery within the design and construction stages.

Preparation

Here at AtkinsRéalis, as a private sector organisation that advises a substantial public sector client base, we’re reviewing our procurement activities to ensure they remain compliant and transparent under the new rules. Like other organizations, we need to examine these through commercial, contractual and reputational lenses. 

As an industry, we all have work to do on this, to get to up to speed and familiarize ourselves with the new procurement rules. The private sector should be putting processes and governance in place.

The public sector needs to continue updating policies and digital systems, as well as producing new procurement templates. Both sectors should be training staff. This means a busy time ahead, but hopefully by working together we will achieve the outcomes that the Procurement Act set out to reform the public procurement system: enhance efficiency; ensure fairness; deliver better value for money; promote competition; improve transparency, and support the national strategic priorities.