On 6 December 2021, almost a year after launching the public consultation on Transforming Public Procurement in the UK post-Brexit, the Cabinet Office published its long-awaited Government response (the response). This now moves the process of reform of the UK procurement rulebook to the pre-legislative stage, with a Procurement Bill expected to be introduced in Parliament in the relatively near future and changes entering into force not earlier than 2023 — and, in any case, with a planned six months’ notice of “go-live”, once the legislation has been concluded.
The response has been published a few months later than initially expected (due to the high level of interest it attracted, see below) and legislation is likely to be introduced to Parliament with a significant delay as well. The legislative reform process is unlikely to generate practical results much earlier than 2024. This can only be an indication (if any was needed) of the complexity and the difficulty of significantly changing the procurement rulebook, which the consultation and now the response largely gloss over. For comparison, it is worth recalling that the process of reform of the EU procurement rules spanned a period of roughly three years (2011-2014), which the UK’s reform (despite not requiring complex inter-governmental and inter-institutional discussions and negotiations, or does it?) is unlikely to beat by much.
The response is meant to reflect on the 629 (unpublished) submissions to the public consultation and, in itself, the way the analysis of the responses has been carried out deserves some comment. The content of the response, perhaps less so, as it largely leaves the proposals unchanged and is thus liable to the same criticisms the original proposals attracted (in addition to my own comments here, here and here, see eg those of Pedro Telles, or the Local Government Association).
Consultation process: all submissions are equal, or are they?
Shortly after the response was published, it became apparent that the Cabinet Office had dealt with the feedback it received in the same ‘consultation by numbers’ approach that has characterised recent consultations on the reform of other aspects of UK procurement regulation, such as the rules applicable to the commissioning of healthcare services for the English National Health Service (NHS, see comment here) that seek to implement the NHS Long-Term Plan. This is not unique to the UK and, in fact, EU-level consultations on procurement reform broadly followed the same method.
Under this approach, the response provides limited or no engagement with specific submissions or arguments, and simply discloses statistical information on the level of support for each of the different parts of the consultation (as per the government’s own coding of the responses, that is). As the response makes explicit, ‘Throughout this document ‘[clear] majority’ means more than [70%] 50% of respondents, ‘about half’ means 50% ± a few percentage points, ‘some’ means 30-50%, ‘a few’ means 10-30% and ‘a small number’ means less than 10%’ (page 10, fn 1).
This is far from unproblematic, given the diversity of backgrounds and positions of those making submissions to the public consultation. While this was half-jokingly but well encapsulated by Peter Smith on twitter (see image), it is a serious flaw in the approach to public consultations for two reasons. The first and rather obvious is that not all submissions should carry the same weight because the institution or person making the submission and their expertise (own agenda, etc) matter, especially in fields of technical regulation where there is limited scope for canvassing general support for policy direction and the consultation is rather focused on complex legislative changes. While such a ‘referendum-like’ approach to public consultation may suit yes/no policy questions (eg should the UK de-legalise a specific substance?), it can hardly work for more complex proposals. If nothing else, the limited suitability of the approach is implicitly recognised in the response and its frequent indication that a significant number of submissions stressed the need for much more detail on the proposals before passing judgement on them.
The second problem is that such a bunching of responses and presentation of proposals as being supported by the majority can make the relevance of the changes introduced in view of the ‘minority’ opinion of respondents difficult to understand, as well as hide the origin of those changes. This is important from the perspective of accountability in the policy formulation process, but also more prosaically in terms of crediting good ideas and suggestions where credit is due.
Taking Q1 on principles of procurement as an example, the response indicates that ‘a clear majority of respondents (92% of the 477 responses to this question) were in favour of the principles [of public procurement: the public good, value for money, transparency, integrity, fair treatment of suppliers and non-discrimination]’ (at [28]). The rest of the summary of submissions indicates some concerns with the removal of proportionality (20%), and some issues around labelling of the principle of ‘fair treatment’, or how they can be implemented in practice. There is no reference to calls for maintaining the principle of competition, which were quite forcefully made by the Competition and Markets Authority (CMA), or myself if I can say so.
Given that the criticism of an absence of a competition principle is not reflected in the summary of submissions, it is probably difficult to understand (for anyone not having made that point themselves, or having read the very few submissions that are publicly available) why, in the response — seemingly out of the blue — the government indicates that ‘We will introduce an additional objective of promoting the importance of open and fair competition that will draw together a number of different threads in the Green Paper that encourage competitive procurement’ (at [39]). It is also unclear whether this will be narrowly understood as an anti-collusion goal/principle seeking to focus contracting authorities’ attention in the reduction of the risk of illegal bid-rigging cartels, as proposed by the CMA (at [3.3]), or a broader goal/principle in line with my own proposals (at pp 11-12) (or someone else’s).
Of course, it would be difficult and tedious (and probably not very useful) to provide a comprehensive discussion of all submissions received, but the response should be expected to provide much better reasons for changes on the initial proposals, as well as some traceability of the origin of those counter-proposals. In their absence, it is difficult to assess whether the changes are properly justified, or rather reflect some sort of ‘mob rule’ (where a ‘majority’ supported the change) or, conversely, an instance of regulatory capture by a special interest (where a change is untraceable, but likely to have originated from a (super)minority, or perhaps a single or limited number of submissions).
In any case, the response makes it clear that there are limited changes resulting from the public consultation process and that the Procurement Bill will be largely based on the initial consultation proposals. The rest of this post highlights some of the (few) notable changes.
What will change after the consultation?
It would take long to stress what has not changed in the Cabinet Office’s approach to procurement reform after the public consultation, but a couple of unchanged elements of the overall strategy merit some highlight.
The first one is the continuation of the claim that the process will simplify the procurement regulatory framework, while it is clear that this is not a true simplification exercise, but rather one of legislative offloading that will complicate enforcement. This is, in my view, obvious in the response’s proposed next steps, which include the ‘plan to produce a detailed and comprehensive package of published resources (statutory and non-statutory guidance on the key elements of the regulatory framework, templates, model procedures and case studies)’ (at [24]). Post-reform, procurement practitioners will have to fully understand not only the new legislation (primary and secondary), but also the entirety of that ‘comprehensive package’ and the interaction between the different documents. This is not a scenario I would be looking forward to if I hoped for a simpler rulebook post-reform.
The second one is the continued lack of commitment of funding for the training programme (and additional recruitment?) required to deliver the gains expected of the reform. The response continues to indicate that ‘subject to future funding decisions, we intend to roll out a programme of learning and development to meet the varying needs of stakeholders’ (at [24]). This perpetuates the uncertainty on whether the rollout of the new regulatory package will be properly supported and it is difficult to understand why the commitment to fully fund this transformation programme has not yet been made (not even at a political level, unless I missed something). Given the state of UK finances in the foreseeable future, this is a major implementation risk that should have required a different approach.
Moving on to the changes in the original proposals, the following is a non-exhaustive list of the primary changes and some short comments relating to a few of them.
The response announces the introduction of a distinction between objectives and principles of procurement, ‘so that the obligations on contracting authorities are clearer’ (at [34]). Further, some ‘other concepts set out in the Green Paper will be established as statutory “objectives”, ensuring that they will influence decision-making in the procurement process. With some limited exceptions these objectives will apply throughout the procurement lifecycle (at [38]).
Quite how this will provide clarity is anybody’s guess, or at least it escapes me (and it has since 2009, as I already struggled with distinguishing between a goal and a principle of competition in my PhD thesis…).
It is also not clear which will be the statutory objectives, but it seems that ‘public good’ (framed as maximising ‘public benefit’), ‘value for money’ and ‘integrity’ will be statutory objectives (at [40]). This would leave the principles of transparency, fair treatment of suppliers and non-discrimination as the only procurement principles (stricto sensu) and would, in the end, solely imply a repeal of the principle of proportionality (or, rather, its relabelling as ‘fair treatment’), largely neutralised (confusingly) by an atomisation of proportionality requirements throughout the new regulations (at [42], eg in relation to award criteria at [128]). It is hard to see much of a (substantive) change compared to the current regulation of procurement principles in reg.18 PCR2015. Plus ça change …Introduction of ‘an additional objective of promoting the importance of open and fair competition’ (at [39]). This is a welcome development, but the devil will be in the detail (see above).
Revision of the proposal for the creation of a new Procurement Review Unit (PRU) (at [46]), supported by a non-statutory panel of subject-matter experts (at [49], and see also [61-3]), tasked with delivering the same service as the Public Procurement Review Service (at [47]) but with a main focus on ‘on addressing systemic or institutional breaches of the procurement regulations’ (at [48]). Legislation will provide the PRU with new powers (at [52]). PRU will be able to issue mandatory recommendations to address legal compliance (at [53-4]), but not in relation to specific procurement decisions (at [53], ie it will not act as a review body). PRU will also be able to issue statutory guidance if it identifies common patterns of non-compliance (at [56]).
The response maintains the goal of creating a single rulebook combining the existing four sets of regulations, but there will be exceptions for utilities (see also [78-85]), defence & security procurement (see also [87-91]), and a completely separate regime for healthcare services commissioning (at [69-72]). There will also be some specific rules concerning concessions (at [86]).
The extent to which there will be a single rulebook other than in name will depend on the scope and number of such special rules, but I have my doubts that there will be much of a practical change other than (harmless) duplication of (mostly identical) provisions across the existing sets of regulations.The response proposes to abandon the regulation of a new regime of ‘crisis procurement’ and to instead ‘include a limited tendering ground, in the form of a new power for a Minister of the Crown (via statutory instrument) to “declare when action is necessary to protect life” and allow contracting authorities to procure within specific parameters without having to meet all the tests of the current extreme urgency ground’. This would be based on Article III of the WTO Agreement on Government Procurement (GPA) and only be used extremely rarely and subject to parliamentary scrutiny (at [102]).
Re-introduction, with some (unspecified) modifications of the light-touch regime for social and special services, including the possibility to exempt from competition those services where service user choice is important (at [118-121]).
Here, the response seems to fail to recognise that user-choice systems are not covered by the PCR2015 (as interpreted in line with CJEU case law such as Falk Pharma and Tirkkonen).Creation of a new exclusions framework going beyond the more limited original proposals (at [151-8]), including abandoning the proposal to include Deferred Prosecution Agreements (DPAs) as discretionary exclusion grounds (at [161-165]).
Much detail is still to be published in the draft Procurement Bill and secondary legislation, guidance, etc, but the retention of the distinction between mandatory and discretionary exclusion grounds, as well as the classification of some of them (eg ‘risk to national security’ being a discretionary ground) raise quite a few questions. If a complete overhaul of the system is planned, would it not be better to have a single category of exclusion grounds and a clear set of requirements for their disapplication (eg due to self-cleaning, or in the public interest)? Here, it seems that UK policymakers have been unable to break away of the EU legislative design, even in an area where there are clear practical problems in the EU Directives.The response proposes to retain the creation of a DPS+ mechanism, but relabelling it as Dynamic Market, which will be available not only for common purchases, but for all types of procurement (at 198-203]).
The response proposes some limited changes to the transparency requirements included in the original consultation (at [220-8]), including: not requiring disclosure of tenders submitted in a procurement (at [221], a good development); introducing a value threshold of £2 million for the requirement to publish redacted contract documents (at [222], which however means that large parts of eg services procurement could remain below the threshold. Should transparency thresholds relative to coverage thresholds be considered instead?); introducing a restricted disclosure of evaluation documents implying ‘sharing with all participants certain redacted evaluation documents (on the winning bid only) and sending the unsuccessful bidders their own documents privately’ (at [223], also a welcome development, but one that makes the changes regarding debriefing letters rather unclear, see [263-6]); and changes to some of the proposed transparency notices, in particular concerning beneficial ownership (at [224]).
The response abandons the process of independent contracting authority review proposed in addition to the review system (at [241-2]).
The proposal abandons the possibility of using an existing tribunal to deal with low value claims and issues relating to ongoing competitions (at 246-7]).
This is perhaps one of the most regrettable changes in the response, as the creation of a review tribunal (not in the terms of the original proposal, but still) is very much needed, especially in a context of more regulatory complexity and increased discretion.Significant changes in remedies, including abandoning specific proposals on pre-contractual remedies (at [249}), and abandoning the cap on the level of damages available to aggrieved bidders (at [254-5]), as well as the proposal to cap profits on contract extensions where the incumbent supplier challenges a new contract award (at [294-5]). However, the proposed new test concerning lifting of automatic suspensions remains on the table (at [251-2]).
Increased scope for the (de)regulation of contract modifications, including specific rules for the modification of complex contracts (at [281]), flexibility for uncapped modifications in utilities contracts (at [282]), and minimisation of constraints in the modification of defence & security contracts (at 283]).
Final thoughts
In my view, the outcome of the consultation is mostly unsatisfactory in its limited effect on the initial proposals (other than some very high level issues regarding the principles of the system), its introduction of further sources of complexity through an increased number of exceptions (eg for utilities and defence), but also for social and special services, and its abandonment of the few procedural and remedy-related innovations (ie the creation of a new tribunal) that could have made a practical difference.
Linked to the criticism of the way in which the consultation was carried out (above), it seems like a significant number of these changes could be the result of regulatory capture by specific groups (utilities, MOD, third sector providers of care services) and the reasons for abandoning proposed changes are not always very clear.
All in all, however, the post-consultation Transforming Public Procurement agenda remains largely intact and, as above, liable of the same criticism already raised in relation to the original proposals. Not much more can be said until a Procurement Bill is made public and, then, it will be interesting to see to which extent it can survive the legislative process without suffering a Frankenstein-like deformation in the hands of special interest groups and other agents with specific agendas. The seeming ease with which some interest-specific changes have cropped up after the consultation does not, in my view, bode well for the new UK procurement rulebook.
