Green paper outlines plans to transform procurement to help promote innovation and growth

The Cabinet Office has outlined new plans to overhaul procurement rules, cutting red tape and making it easier for smaller businesses to win government contracts.

Published in a new green paper – ‘Transforming public procurement’ – the UK Government sets out proposed changes to procurement rules, which aims to make the bidding process for public sector contracts simpler, quicker and cheaper to participate in, while encouraging competition and innovation amongst providers.

The measures, which have been developed over the last 14 months by a team of specialists in international procurement and set out in a green paper, take advantage of new powers now that the UK has left the European Union.

Changes to current procurement rules intend to help SMEs win government contracts by removing complex regulations and allowing buyers to exclude suppliers who have failed to deliver contracts in the past.

Commissioning is the process by which health and care services are planned, purchased and monitored. This process covers a range of activities, including assessing needs, planning services, procuring services and monitoring quality. Alongside providing services in-house, public sector organisations can also contract providers to deliver a suitable service to individuals, such as community equipment services or wheelchair services.

Part of the commissioning process is procurement, which, in the healthcare sector, is defined as the purchase of goods and services by a public sector organisation from another, external organisation. Essentially, procurement means doing the shopping for items that will meet the healthcare needs of a particular area.

According to the UK Government, every year, it buys around £292 billion of services from the private sector. It says that the new measures will transform the current procurement process by allowing more flexibility for buyers.

“The changes will make UK procurement rules more modern, flexible, innovative and diverse, by allowing government to consider wider social value when picking suppliers,” the green paper underlines. “This will ensure that taxpayers money goes further and has more of a wider benefit for society.”

In another new move, the government will allow the public sector to buy British for contracts not subject to international trade rules, by allowing competitions for government contracts under £4.7million for public works and £122k for goods and services to be limited to small businesses, voluntary, community and social enterprises, or to a certain geographical area.

These new rules will support SMEs by opening up new opportunities to them and making it easier for them to win contracts, in turn helping to drive local growth, promote innovation, support local recruitment and level up communities across the UK.

Specific changes to the rules proposed include:

• Removing over 300 complex regulations to create a single uniform rulebook
• Overhauling inflexible and complex procedures, replacing them with three simple modern procedures. This will allow more freedom for suppliers and the public sector to work together and innovate
• Allowing buyers to include wider social benefits of the supplier, such as economic, social and environmental factors, when assessing who to award a contract to, while also still considering value for money
• Giving buyers the power to properly take account of a bidder’s past performance, allowing them to exclude suppliers who have failed to deliver in the past
• A new unit to oversee public procurement with powers to improve commercial skills of public sector contractors
• A single digital platform for registering contracts, improving transparency and making life significantly simpler for business

The plans will also make procurement more transparent and effective during times of crisis where government needs to act quickly to ensure vital goods and services are bought, the government highlights.

Importantly, awarding authorities will also be encouraged to consider how public contracts can support social or environmental issues or promote local communities, small businesses and charities. The rules will provide more flexibility to allow contractors to take account of wider government priorities and support work to build back better from the pandemic.

Current procurement regulations, the government notes, allow contracting authorities to take into account the past performance of a supplier on only very limited grounds and commercial teams often have to rely on bidders’ self-declarations rather than objective, evidence-based information. Now, it wants to raise the bar in the standards expected of all suppliers to the public sector and ensure that small suppliers are able to secure market share, increasing productivity and boosting economic growth.

To help with this, the green paper proposes using exclusion rules to tackle unacceptable behaviour in public procurement, such as fraud, and allowing buyers to take into account a budder’s past performance and exclude them if they have previously failed to acceptably deliver services.

Read the full green paper here