The Procurement Act granted Royal Assent by Parliament late last year is poised to usher in significant change for public sector procurement in the UK.
The Act aims to modernise procurement practices, maximising public benefit, transparently sharing information, placing integrity at its core and delivering Value for Money. However, this transformation necessitates prompt action to ensure compliance with the new regulations and optimise procurement outcomes. All public sector bodies should proactively assess their current procurement processes, identify areas for improvement, and implement necessary changes to align with the new standards laid out by the Act.
The enhanced transparency requirements represent a significant shift towards greater openness in public sector procurement. Indeed, legislation mandates a thorough disclosure of procurement information, providing insight into upcoming tendering activities; compelling organisations to make relevant procurement pipelines public. Additionally, contracts exceeding £2 million must include at least 3 KPI’s with this information being published in the public domain. Transparency and therefore (potential) scrutiny will be at the heart of the Act; reflected in the number of potential external notices increasing from 4 to 11!
Under the existing PCR 2015, other than addressing contract variations, contract management is not mentioned. This changes significantly under the Act where reporting on contract performance will now become mandatory for relevant contracts. I view this as a welcome change as currently, the public sector doesn’t typically place enough emphasis on the criticality of contract management. Rather, it focuses heavily on the upstream tendering process but neglects what needs to be done downstream during the life of a contract to ensure outcomes are delivered and benefits (financial and non-financial) realised.
4C has collaborated with numerous public sector clients (central government, local governments and universities) and the insights gathered reveal common challenges within their procurement processes. The prevalent use of multiple, non-integrated systems creates a fragmented landscape that poses a significant obstacle to compliance with the new Procurement Act. The lack of integration results in an inefficient and often inaccurate dataset, particularly impacting transparency, and the ability to make informed commercial decisions.
Understanding of the Procurement Act is fairly immature across the majority of the public sector. While there is a general awareness of key changes, specific details, particularly related to enhanced transparency, the new competitive flexible procedure and contract management, remain unclear. The potential consequences of this knowledge gap are manifold, including non-compliance risks that may lead to fines, legal challenges, and reputational damage. Additionally, the lack of clarity increases the risk of missed opportunities to streamline processes, promote innovation, and maximise social value.
What to do
With full implementation of the new act likely to be required by October 2024, the clock is ticking for organisations to plan for, and invoke the necessary changes. We recommend organisations embracing and prioritising procurement technology as a strategic tool to help them manage some of the changes under the Act.
By capitalising on the existing foundational functionalities within procurement systems, configuration of features and workflows can effectively meet numerous requirements outlined in the new Procurement Act. The exploration of upgrading and configuring existing systems emerges as a compelling option due to its potential for lower upfront costs and minimised disruptions. To illustrate, developing centralised repositories within systems that can store and manage all procurement information, including contract documents, supplier information, and award decisions meaning you can adhere to new transparency requirements without breaking the bank! However, there is the dangerous possibility that integrating additional modules or tools may introduce technical complexities and compatibility issues. Customised configurations may require ongoing maintenance and updates to ensure alignment with changing regulations or the underlying system, potentially increasing both workloads and resource.
While configuration may present a more budget-savvy solution, it’s important to recognise that due to its challenges, moving to a single-source system may also be a viable alternative; a single, powerful tool for navigating sourcing alongside the intricacies of the new procurement Act. A single system solution enables streamlined processes, heightened transparency, and automated compliance checks, positioning users as leaders in modernising public procurement. Centralised platforms simplify compliance workflows, reducing the risk of human error and inconsistencies, while providing a unified system for documenting detailed spend data, vendor qualifications, and approval hierarchies. Beyond generic benefits, tangible advantages include a reduction in contract leakage, a decrease in supplier onboarding time, and enhanced data analytics for optimised cost-saving and supplier relationship strategies. This unified approach not only ensures transparency but also tackles the challenges posed by the Act head-on, fostering efficiency and compliance with the stringent requirements of the Procurement Act.
To effectively navigate the necessary changes for the Procurement Act and capitalise on technology, a strategic implementation plan is crucial. For starters, public sector bodies need to dig into their existing systems, understanding what they can and can’t do before diving into any changes. Connecting with legal and procurement experts enables organisations to not only ensure compliance but also create a strategy that aligns with an organisation’s unique needs. This involves a thoughtful exploration of whether tweaking the existing systems through configurations is sufficient, or if the better path lies in a transformation journey toward an entirely new system. It’s all about finding the sweet spot that optimises efficiency and compliance for a tailored, powerhouse solution. External consultants are instrumental in this process as they discern what tasks need attention, identify who should be involved, establish when implementation is required, pinpoint where challenges and changes are prevalent, and articulate why these actions are necessary. It’s not just about ticking boxes, it’s about fostering a comprehensive and sustainable transformation.
How we can help
At 4C, we understand the complexities public sector bodies face and are committed to helping them successfully navigate these challenges. Our approach involves a knowledgeable, flexible, and customised methodology, working closely with our clients to understand their goals and challenges. We believe that for a strategy to be successful, it must be tailored to the unique needs of an organisation. Because let’s face it, one size often fits none in the world of strategies.
GET IN TOUCH WITH OUR TEAM TODAY
Engaging with 4C means tapping into a wealth of expertise and a commitment to sustained transformation. To understand more about how we can help your organisation get Procurement Act Ready, please reach out to Ross Hodgkins or Darren Blackburn.
