The Procurement Act 2023:

The Procurement Act introduces significant reforms to the UK's public procurement system, aiming to make the process more efficient, transparent, and accessible for suppliers. If you supply goods, works, or services to public or utility sectors or intend to do so in the future, changes will impact your business. The Act is set to go live in 2025 with simplified processes and increased support for businesses of all sizes, particularly SMEs.

 

Centralised Digital Platform

The Act will create a central digital platform where suppliers can register once and use their details for multiple bids. This platform will streamline the procurement process, allowing you to see all public sector opportunities in one place and reducing the administrative burden of re-submitting documents for every bid.

 

Simplified Processes

Bidding processes will be simplified, making it easier for businesses to submit tenders and negotiate contracts. This reform aims to level the playing field, particularly for smaller businesses, by removing unnecessary bureaucratic barriers.

 

Stronger Exclusions Framework

One of the most significant changes introduced by the Act is the Stronger Exclusions Framework. Suppliers who fail to meet contractual obligations or underperform will face more stringent consequences, ensuring that only reliable businesses continue to win contracts.

As a supplier, it is crucial to maintain high performance and compliance standards. Under the new framework:

• Contracts will be closely monitored, and consistent underperformance may lead to exclusion from future tenders.
• The aim is to drive better outcomes for public contracts and ensure taxpayers' money is spent Wisely.

 

Why This Is Essential for You as a Supplier

The framework increases accountability, so demonstrating a strong track record and consistently delivering services or goods will be vital to staying competitive. It also means that reliable suppliers can thrive by adhering to high standards as underperformers are weeded out, reducing unfair Competition.

 

Removal of Complex Accounts and High Insurance Requirements at the Bidding Stage

What this means: Previously, SMEs often had to submit complex financial records or show high levels of insurance coverage just to participate in public sector bids, which posed significant financial and administrative challenges.

 

Action Example: 

If you previously struggled with the financial documentation requirements or had to secure large insurance policies just to bid for public sector contracts, the new rules will make it easier. For instance, you might now only need basic financial statements, and insurance coverage might be required after winning the contract instead of upfront.

 

What you should do?

Keep your financial records in order, but focus on what is necessary rather than investing in complex financial audits if they are not required. Review your current insurance policies and ensure they meet general requirements, but wait until after securing a contract to expand coverage if needed.

 

Breaking Down Larger Contracts into Smaller Lots

What this means: Large contracts that previously could only be awarded to big companies are now being divided into smaller, more manageable pieces, allowing SMEs like yours to bid on portions of the work that are more suitable to your capacity.

 

Action Example:

Instead of bidding for a nationwide contract to supply all government departments, a contract might be broken down into regional or product-specific lots. For instance, if you're a tech supplier, you could bid to provide IT support for just one region rather than an entire national service contract.

 

What you Should Do

Focus on identifying smaller lots that match your company’s strengths. This could mean reviewing upcoming public sector contracts to find lots that align with your expertise. Use local connections or specialisations (e.g., geographic area or industry focus) to make your bids more competitive.

 

Adapting Procurement Processes to Support SME Participation

What this means: Public sector buyers will need to actively consider and mitigate challenges faced by SMEs, such as lengthy paperwork, high upfront costs, and lack of flexibility in payment terms.

 

Action Example:

The bid submission process might now include more accessible online forms, shorter submission timelines, or reduced submission costs. Payment schedules could also be more SME-friendly, such as allowing for incremental payments instead of large upfront payments or reimbursements.

 

What you Should Do

Look for contracts where the public sector buyer is offering flexible payment terms (e.g., quicker payments or phased payments). Ensure that your bid submissions clearly explain how your SME can meet the requirements without overburdening your business. For example, highlight your ability to scale as needed or provide unique solutions that larger companies might overlook.

 

Why This Is Essential for You as a Supplier

Example of Removing Financial Barriers: Previously, you might have been excluded from bidding on contracts due to financial thresholds. Now, you have fewer restrictions when bidding for smaller lots, meaning you can bid for projects with manageable scales.

 

Fewer Bureaucratic Hurdles

If you had to prepare detailed financial projections or expensive documentation upfront, now you can enter a bid without these pressures. For instance, you could supply your basic business financials without needing a full audit.

 

Levelling the Playing Field

Larger companies often have teams dedicated to public procurement, but SMEs can now compete on an equal footing. For instance, public buyers are incentivised to consider innovation, flexibility, and regional expertise—where SMEs often excel.

 

Next Steps

• Monitor upcoming public sector opportunities on digital procurement platforms. Keep an eye out for smaller lots that match your business size and capabilities.
• Simplify your bid submissions, focusing on your strengths without worrying about complex financial and insurance documentation unless explicitly required.
• Engage early with public sector buyers when possible. This might involve attending buyer-supplier engagement events to get insights into how larger contracts will be broken down.

 

These changes are designed to help SMEs like yours win more public contracts and compete more effectively. By leveraging these new rules, you can increase your chances of successfully securing public sector work without the barriers that previously favoured larger firms.

 

Prompt Payment

The Act introduces rules ensuring that businesses in public sector supply chains receive payments more promptly, improving suppliers' cash flow. This particularly benefits SMEs, where delayed payments can severely impact business operations.

 

Transparency and Accountability

The Act increases transparency throughout the procurement lifecycle, making all procurement data publicly accessible. This not only allows for better scrutiny of public spending but also ensures that the process remains fair for all suppliers.

 

The Procurement Act 2023 represents a major shift in how public procurement is conducted in the UK, offering significant advantages for SMEs and creating a more accountable environment for all suppliers. To benefit from these reforms, suppliers should be aware of the more substantial performance expectations and the expanded opportunities for SMEs.