Report of the Head of Integrated Commissioning and Procurement.

This report provides an update on the new procurement regulations and advises the committee of the implications for future Council procurement activity.

The committee considered a report of the Head of Integrated Commissioning and Procurement which provided an update on new procurement regulations and advised the committee of the implications for the Council’s future procurement activity.

Key points and themes within the report included:

·         Providing an introduction and background to the Procurement Bill 2022;

·         Details of changes to procurement processes; supplier exclusion; resolving disputes over tenders; and social value;

·         The likely impact of these changes;

·         Opportunities for contracting authorities under the new regulations; 

·         New regulations on transparency and publication of data relating to procurement, including the implementation of a Transparency Platform;

·         The establishment of the Procurement Review Unit and its purposes; 

·         Regulations for the Provider Selection Regime, which would come into effect on 1 January 2024; and

·         Training on the new regulations.

Key points and queries that arose from the committee’s discussions included:

·         Whether the new regulations would make the procurement process more difficult; 

·         If the Procurement team were working with IT to ensure the correct systems were in place;

·         Whether there would be any delay to the Council implementing the new regulations as a result of the establishment of central government’s new Procurement Review Unit; 

·         If the new regulations would help to enable the Council to use local suppliers;

·         The solution for the Council, given the national delay in implementing the National Procurement Policy Statement due to technical legal issues; 

·         The impact on resources arising from the new requirement to publish notices throughout the procurement lifecycle;

·         Whether suppliers could be excluded at shortlisting stage; 

·         How value-for-money would be considered in the procurement process as a result of the new regulations; 

·         What kind of contracts would be subject to the ‘light-touch approach’ and why the government did not want to retain this; 

·         The grounds on which a supplier could legitimately challenge a contract award; and

·         What information had been provided by the Cabinet Office on sharing best practice. 

In introducing the item, the Head of Integrated Commissioning and Procurement emphasised the opportunities for the Council that arose from the new procurement regulations, such as taking a more commercial approach and increased transparency. He informed the committee that the new regulations would come into effect in 11 months and that communication and training would be undertaken during this period. He also advised that the Procurement service was fully staffed following recent recruitment. 

The committee was advised that the Council had previously engaged with local suppliers to the greatest possible extent and that the new regulations did not reference dividing contracts into lots. The new regulations would allow the Council to take local priorities into greater account when awarding contracts, although the detail on this remained unclear. The Head of Integrated Commissioning and Procurement also advised that the Local Government Act 198,8 which stipulated that local authorities could not take non-commercial matters into consideration when awarding contracts, would be reworded to allow greater freedom. 

In response to a query from the Chair, the Head of Integrated Commissioning and Procurement stated that the previous regulations were considered difficult and cumbersome and that the new regulations were less prescriptive and allowed authorities greater freedom. He noted that the Council could continue to take similar approaches to contracts as done previously. It was also stated that one aspect of the regulations remained unclear because the details of the regulations would be released over time but there was mention of the Council being able to take local priorities into greater consideration when awarding contracts.  

The committee was advised that the Council had previously engaged with local suppliers to the greatest possible extent and that the new regulations did not reference dividing contracts into lots. The new regulations would allow the Council to take local priorities into greater account when awarding contracts, although the detail on this remained unclear. The Head of Integrated Commissioning and Procurement also advised that the Local Government Act 1988 which stipulated that local authorities could not take non-commercial matters into consideration when awarding contracts, would be reworded to allow greater freedom. 

Regarding central government’s new Procurement Review Unit, members were informed that this was an enhancement of the current Public Procurement Review Service and would have significantly greater powers. The effect on this for the Council was expected to be miniscule, although the Head of Integrated Commissioning and Procurement noted that the Unit may be busy from the outset given that publicity of the new regulations was resulting in many SMEs and companies anticipating more contracts from local authorities at a time when local authorities will have tighter budgets.  

In response to a query regarding the technical legal issues relating to the National Procurement Policy Statement, the Head of Integrated Commissioning and Procurement explained that it was proposed to amend wording within the new regulations to allow contract awards to be restricted in certain circumstances to companies within a county or London borough boundary. It was noted that some contracts, such as those with the NHS, could overlap county boundaries and the technicalities of this were still being agreed. 

The Head of Integrated Commissioning and Procurement confirmed that there would be an implication on resourcing as a result of the new requirement to publish notices throughout the procurement lifecycle but reiterated that there had been significant investment into improving contract management and a tool which would flag expiry dates of contracts. The Commissioning Lead explained that the Council was already required to publish summary details of contracts over a value of £30k on a government website, to which the Council’s procurement portal linked directly, and monthly spend over £500. The new regulations would require publication of performance monitoring for contracts worth over £5m.

The committee was advised that the Council worked closely with the Cabinet Office through the Local Government Association (LGA) and that the Head of Integrated Commissioning and Procurement chaired the LGA’s national advisory group for procurement, which had discussed how sharing best practice would work in reality. Details of approaches to procuring various categories of spend had been provided by the government’s commercial function and the Procurement Review Unit would work with the Crown Commercial Services, which provides frameworks for local authorities. 

In response to a query regarding value-for-money, it was stated that previous practice had favoured the most economically advantageous tender, but the new regulations had revised this to the most advantageous tender, which would encompass price, quality, contribution to local economy and contribution to climate change targets. The Deputy City Treasurer stated that value-for-money remained paramount in the Council’s activity. 

It was noted that the current regulations lend to a drawn-out process for suppliers who may be unhappy with the outcome of a contract award, but the new regulations would enable a more straightforward process to resolve disputes and a body would be established, linked to the Procurement Review Unit, to adjudicate such disputes. 

The Commissioning Lead explained that the ‘light-touch regime’ principally applied to social care services and previously applied to healthcare services, although these were now subject to a different regime. He stated that the new competitive procedure applied a light-touch approach to most contracts and provided greater flexibility, which was retained under the new regulations. He further explained that the new competitive procedure was designed to emulate the ‘light-touch regime’ but a number of authorities, including the Council, advocated for an explicit regime for social care services. Members were informed that the Procurement Bill went further than the new regulations to ensure that there were strong grounds to not require competing tenders, such as in individual contracts where the service user’s choice was taken into account and allowed the Council to make individual judgements on care packages. 

The Deputy City Treasurer welcomed the Procurement Act and reiterated that the Council’s procurement team was nearly fully staffed and had received requisite funding for a new contract management system, which would help with the implementation of the new regulations.

The Executive Member for Finance and Resources also welcomed the new regulations and recognised that this would simplify the procurement process, improve transparency, and could provide a pathway for new businesses and local companies to secure public contracts. He stated that the development of the new regulations demonstrated the improvements for residents that could occur when the government listened to local authorities. 

Decision: That the report be noted.