Regulatory and compliance

Regulated procurement | UK Regulatory Outlook November 2023

Published on 29th Nov 2023

The Procurement Act and Net Zero | Changes to the UK public procurement regimes set to deliver digital healthcare in the NHS | PPN 10/23: Taking account of a bidder’s approach to payment in the procurement of major contracts

The Procurement Act and Net Zero

In our first podcast on the new Procurement Act, Craig McCarthy and Millie Smith discuss the interaction between public procurement and net zero, and whether the new Act goes far enough in its commitments to net zero. Listen to the podcast and subscribe.

For more content on the new Procurement Act, see our "Navigating the changes under the Procurement Act" microsite.

Changes to the UK public procurement regimes set to deliver digital healthcare in the NHS

The digitalisation of the NHS is well underway. The £1.9bn Frontline Digitalisation programme was launched in 2021 to bring all NHS Trusts in England up to a core level of digital capability. The digitalisation of the NHS comes as two significant pieces of public procurement legislation are due to come into force in 2024: the Provider Selection Regime and the Procurement Act 2023. Both regimes will help the NHS to harness the huge potential of AI and data to drive efficiencies, improve patient outcomes and reduce spend. Read our Insight for more.

PPN 10/23: Taking account of a bidder’s approach to payment in the procurement of major contracts

The Cabinet Office has published Procurement Policy Note (PPN) 10/23: Taking account of a bidder’s approach to payment in the procurement of major contracts which sets out how payment approaches can be taken into account in the procurement of major government contracts. It replaces PPN 08/21 from 1 April 2024. The key change to the approach in PPN 08/21 is the introduction of a new threshold based on average payment days bidders have to meet to demonstrate they have effective payment systems in place to ensure the reliability of their supply chains.

The guidance outlines that payment performance is assessed by contracting authorities by looking at the following two aspects of the supply chain management system: whether the bidder has paid its suppliers in accordance with the contractual terms that it applies to its supply chain; and whether, overall, the bidder has paid its suppliers promptly by:

  • paying at least 95% (at least 90% if an action plan is provided) of invoices within 60 days, which is considered an appropriate measure of overall payment promptness, and;
  • meeting the average payment days threshold of at least 55 days for all invoices.

Bidders will need to be aware of this new requirement that when bidding for government contracts exceeding £5 million, they will be required to show that they settle their invoices within an average of 55 days. The recently published Autumn Statement outlined that this change was being introduced to encourage prompt payment and further added that this timeframe will be further reduced to 45 days in April 2025 and eventually to 30 days in the future. Suppliers should note that these payment times apply to payments made under both public and private contracts.

The recently updated standard selection question for central government includes questions in relation to when payments and invoices have been paid. Therefore it is imperative that businesses who wish to bid for government contracts monitor and report on these payment figures in order to provide these to the contracting authority as non-compliance could lead to significant consequences.

PPN 10/23 applies for in-scope public procurements advertised on or after 1 April 2024 and in the meantime, PPN 08/21 continues to apply. PPN 10/23 applies to all Central Government Departments, their Executive Agencies and Non Departmental Public Bodies.

The Public Procurement (Agreement on Government Procurement) (Thresholds) Amendment Regulations 2023

On 26 October 2023, the Public Procurement (Agreement on Government Procurement) (Thresholds) (Amendment) Regulations 2023 were laid before Parliament.

The regulations will amend the Public Contracts Regulations 2015, the Concession Contracts Regulations 2016, and the Utilities Contracts Regulations 2016. The regulations will update the financial thresholds that govern the procedures for the award of public contracts for goods, works and services and will come into force on 1 January 2024.

The amendments to the thresholds are as follows:

 Public Contract Regulations 2015
Contract type Current thresholdNew threshold
Public works contract£5,336,937£5,372,609
Public supply contracts and public service contracts awarded by central government authorities, and their design contests.£138,760£139,688
Public supply contracts and public service contracts awarded by sub-central contracting authorities, and their design contests.£213,477£214,904
Utilities Contracts Regulations 2016 
Contract type Current thresholdNew threshold from 1 January 2024
Public works contract£5,336,937£5,372,609
Public supply and services contracts and design contests£426,955£429,809
Concession Contracts Regulations 2016
Contract typeCurrent thresholdNew threshold from 1 January 2024
Concession contract£5,336,937£5,372,609

 

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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