Procurement Reform in Scotland – Are You Ready for April 2016?

There are new rules affecting public procurement – most come into force on 18th April 2016. Whether you are a bidding organisation or a contracting authority – are you ready? What are the main changes and how will these impact on bidding?

The Procurement Reform (Scotland) Act 2014 introduces a new procurement regime for Scotland with significant changes to current arrangements.  The Act is supported by the Public Contracts (Scotland) Regulations 2015; which in turn will have statutory Guidance.  Contracting authorities will need to follow the Regulations; the Act and the Guidance.

  1. Lower Thresholds

Significantly lower thresholds than currently apply i.e.

Works contracts – £2 million threshold rather than £4.104 million

Services / supplies contracts – £50k threshold rather than £164k

So, big implications here for (1) contracting authorities – many more contracts will come within the scope of tendering; and (2) bidders – more contracts coming to market gives you more opportunities to bid and win contracts.

  1. Sustainable Procurement Duty (will apply from 1st June 2016)

Contracting authorities now have a duty to consider how procurement can:

(1) improve social, economic and environmental wellbeing of authority / area;

(2) facilitate the involvement of SMEs (not more than 250 employees), third sector bodies and supported businesses in the process; and

(3) promote innovation.

This is now not just about authorities getting the best deal for themselves but utilising procurement to achieve Government business growth and social value objectives.

  1. Increased Provision of Information to Prospective Tenderers

In addition to consulting and informing the market e.g. through procurement strategies and annual reports; both the costs and the barriers of participating should be reduced.  Expect to see more contracts broken down into Lots to increase the number of successful bidders; and minimum turnover requirements have been reduced to a maximum of 2 times the contract value unless exceptional circumstances apply.  There will, in many cases, be limits to the number of Lots an individual bidder can be awarded.  Contracting authorities are tasked with trying to create a level playing field; making bidding more likely; and providing more detailed debrief information. 

  1. Procurement Strategy

Annual Reports need to be produced by contracting authorities with anticipated regulated procurement of £5 million+ in the coming financial year.  These are to be published by 31 December 2016 and should cover the final quarter of 2016/17 and the whole of 2017/18.  These will set out how the authority will ensure contractors are paid (and pay their sub-contractors) within 30 days of invoice.  Bidders can take advantage of, and / or actively create, opportunities to engage with authorities ahead of procurement commencing.  The Annual Report will provide both a look back at the previous year and a look ahead to the coming year.  Anticipated future procurements will be flagged providing much greater transparency over what will be coming to market and when.

  1. Community Benefits in Procurement (will apply from 1st June 2016) 

When tendering regulated contracts of £4 million+, authorities must consider whether to impose community benefit requirements.  Contracting authorities will have significant discretion on which benefits to include, although these should be proportionate and relevant to the subject matter of the contract.  What should bidders expect to see here?  More detailed and onerous community benefits obligations, which will be more tightly contract monitored than may perhaps be the case at present.

  1. Procedural Changes

Authorities below the level of central government will now have the power to increase the speed of the procurement process.  They can agree timescales with all bidders or, if agreement cannot be reached, set deadlines at a minimum of 10 days.  This will be less time than bidders have in most current procurements.  

Bidders will be able to use the European Single Procurement Document (ESPD) as a form of self-certification that none of the mandatory or discretionary grounds for exclusion apply, thus cutting down the duplication of completing this information separately every time a bid is submitted.

A new procedure of "Competitive with Negotiation" is being introduced and is likely to prove popular e.g. in the construction industry. 

The Competitive Dialogue procedure will now allow bidders to optimise their bids rather than just clarify and fine-tune, so this procedure will now be on a more commercial basis and provide greater scope for negotiation.

The new regulations provide greater flexibility and clarity on changes to contracts during their term.  It will now be safe to make changes to the contract and avoid the need for re-advertisement when certain conditions and limits apply.  This will see a reduction in the number of live contracts which need to go through a costly retender process.

  1. Preparing for the New Rules

Both contracting authorities and bidders will be busy getting familiar with the new rules, especially in ensuring their compliance with them.  For contracting authorities this will involve changes to strategies, policies, procedures, standing orders and templates.  Bidders should be taking the opportunity to exercise their new rights e.g. to be consulted; and, importantly, stay informed and plan ahead for the new procurement landscape.