CPD module: the Procurement Act 2023 – how will it affect landlords?

The rules governing procurement by public authorities and bodies – including housing associations and local councils – are to change in the coming months, with the Procurement Act 2023 coming into force.

The act will apply to procurement by devolved authorities in Wales and Northern Ireland.

Scotland will maintain its own legal framework, while the legislation will provide for arrangements covering joint and cross-border procurement with Scottish contracting authorities.

The new regulations aim to make it easier to get best value from public procurement. They introduce greater flexibility into the regime, which should represent a real opportunity for social landlords to secure better value.

This article considers the changes introduced by the act, what those changes mean for the sector, and what leaders should be doing to prepare for compliance.

The Procurement Act 2023 creates a new set of rules and regulations relating to public procurement in the United Kingdom. It formally passed into law in October 2023, with the government describing it as “one of the largest shake-ups to procurement rules in this country’s history”.

The stated aims of the new regime are to:

• Make public sector procurement simpler and more efficient
• Make it easier for small and medium-sized enterprises to successfully bid for – and, where appropriate, win – public contracts
• Give buyers greater flexibility, allowing more room for negotiation on all aspects of the contract and for more innovative solutions to be procured
• Introduce greater scrutiny of public procurement

While the act officially became law in October 2023, its measures have not yet fully come into force. The intention is for the new regime to begin in October 2024. At that point, housing associations and local councils will need to comply with the rules set down by the act and its associated legislation.

What are the most important changes?

Introduction of the ‘competitive flexible procedure’

This is intended to give contracting authorities (buyers) greater flexibility over how procurements are run. So as long as a procurement process demonstrably treats all bidders equally and is not designed to deliver a pre-determined result, it can now take whichever specific form the buyer feels will produce the best outcome. There will no longer be any restrictions on negotiations during the tender process. Contracting authorities will be free to carry out market engagement with suppliers to help develop the procurement approach, and will be able to negotiate on the terms of any bids.

Requirements for greater transparency

Contracting agencies will be required to publish more procurement notices than they do currently, making every stage publicly visible – from planning for a procurement process, through to contract expiry. The idea is for public bodies to give a clear sense of their planned procurement pipelines, so it is evident at which points there are opportunities for businesses to pitch and provide services. All notices will have to be published in one central digital platform, run by the government. This is designed to ensure a range of businesses are aware of opportunities in the public sphere and to give citizens a better view of decisions.

Greater scrutiny of public procurement decisions

The act creates a new procurement review unit. Sitting within the Cabinet Office, this unit will be able to investigate a contracting authority’s compliance with the act. Where recommendations are made, the authority will have a duty to implement them.

Greater scrutiny of supplier performance

Where a contract’s value is over £5m, the performance indicators against which the supplier’s performance will be measured must be published within that contract. It is also a requirement to regularly report performance against those indicators.

In a practical sense, what does the act mean for social landlords?

The act is likely to represent both an opportunity and a challenge for social landlords. The greater degree of flexibility it affords over processes could constitute a real benefit. This change should enable members of procurement teams to not simply process tenders, or to ensure processes are compliant with relevant rules and regulations, but to become more commercial in their approach. With considerable opportunities to negotiate with suppliers, there should be more of a chance to secure bespoke, value-for-money solutions. Procurement should be able to become more of a strategic function within the organisation, rather than one solely centred on compliance and process.

Public procurement has traditionally been process-based, however, many of those working in procurement at landlords will have limited negotiation experience. Capitalising on the opportunities afforded by the act may require investment in bolstering such skills.

Paradoxically, there may at the same time be a need to invest in greater administrative support. The requirements to publish more notices, much further in advance, and to publicly monitor suppliers’ performance, could create a greater administrative burden on procurement teams than exists at present. Separately, there may be sensitivities around the publication of such data. Suppliers might contest information if they feel it is inaccurate or presents them in an inappropriately bad light. There may be a delicate balancing act required of social landlords here.

For the past two years, work has been under way to build stronger connections among social housing procurement professionals and the Cabinet Office.

Procurement leads at the roughly 250 housing associations responsible for providing 95% of the UK’s social housing have received regular updates on plans for the implementation of the Procurement Act 2023, via a single point of contact between the sector and the Cabinet.

There has also been the formal creation of 10 regional communities of practice. These unite procurement professionals from all of the social landlords within a specific region. Meeting monthly, the groups discuss progress and any obstacles in preparing for the full implementation of the act. They also share best practice. It is hoped that these regional communities come together to form a national housing procurement association.

The Cabinet Office has already begun issuing e-learning and video content to help social housing professionals prepare for implementation. Available freely online, it is expected that this content will be added to as time goes on.

There are also face-to-face sessions being run for those in job roles which require detailed knowledge of the act. Around 9,000 places will be offered for the sessions, which will be open to anyone working in public organisations.

How should social landlords be preparing?

In some ways, it is difficult to know precisely what preparations are sensible to make at this stage. That is because we do not yet know how some measures will be implemented – until the central data platform is live, for instance, it is difficult to know how time-consuming it will be to upload notices. Even when the platform is in place, not all of the new requirements over notices will immediately apply: they will be phased in gradually.

Similarly, it is not yet clear how decisions will be scrutinised. We do not know how proactive or interventionist the new procurement review unit will be.

With that said, there are some preparations that social landlords can and should be making now:

Review negotiation capacity in procurement team

The greater capacity for negotiation in procurement will remain central. This means it is worth social landlords considering to what extent negotiation and commercial skills are already present in procurement departments. Additional training can help bolster such skills – at Clarion, for instance, all procurement staff are going through negotiation skills learning and development.

Review communication between the procurement team and the rest of the organisation

It will be more important than ever to have a clear schedule of what the organisation will need to procure when, because of the need to publicly make clear the procurement pipeline. Leaders will need to think through what is likely to be needed from procurement over the next 12 months, 18 months and two years – and communicate that to the department in advance. Regular meetings between relevant directors and procurement team members can help, as can assigning members of the procurement team to specific directorates rather than to specific projects. Building up these relationships will help lay the groundwork for a more strategic approach to procurement and compliance with the act.

Ensure record-keeping is up to scratch

Having a record of all signed contracts, with details of when they were signed and when they expire, will make compliance with the act much simpler. Where these records do not exist, teams need to build them quickly.

• If you work within a procurement team, what do you think the act will and won’t change about the way you work? What training needs might you or colleagues have?
• If you work outside procurement, how do you think you can support your procurement colleagues in meeting the requirements of the new regime? How well do you think you currently share information about your procurement plans with colleagues? Are there ways in which this communication could be improved? How?
• What one point in this piece do you want to share with colleagues who may not have read it? How will you share it?

Summary

The Procurement Act 2023 represents a significant change to the public procurement regime. For landlords, the new flexibilities afforded by the act should represent a chance to achieve better value. There is the opportunity for procurement to become a more strategic function, tied more closely to the overall aims of the organisation. Seizing this potential will involve preparatory work, possibly including capacity-building within teams.

The final form that the new regime will take is not yet fully determined. However, there are already important steps social landlords can take to prepare for it – and to prepare to make the most out of these changes.

Next, answer the questions below. Get all the questions correct and you will receive a certificate confirming your award of 30 CPD minutes within 10 working days via email. Get any questions wrong and you can retake the test by refreshing your web browser.

• Wallace, J./National Housing Federation (2023), Are you ready for reforms to procurement? 
• UK government (2024), Procurement Act 2023 guidance documents 
• UK government (2023), The Official Transforming Public Procurement Knowledge Drops

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