The UK Procurement Act 2023 (the ‘Act’) will belatedly be implemented on 24 February 2025, and contracting authorities are busily continuing to work away to ensure they are prepared for ‘go-live’.
While the regulations apply to a wide variety of NHS procurement activity, this should not be seen as a burden.
The new legislation could provide opportunities and avenues for authorities to find different procurement solutions to challenges that have historically faced the sector
In fact, the new legislation could provide opportunities and avenues for authorities to find different procurement solutions to challenges that have historically faced the sector, particularly when it comes to construction.
Widespread impacts
Not all NHS procurement will be changed by the launch of the new Act. Currently, procurement of certain healthcare services in England are carried out under the Provider Selection Regime (PSR) that came into effect on 1 January 2024 (further detailed within the Health Care Services - Provider Selection Regime Regulations 2023).
Not all NHS procurement will be changed by the launch of the new Act
Once the Act comes into force, the PSR will remain applicable for the procurement of healthcare services however, the Act will apply to construction-related work, the acquisition of goods, and services that are outside of the scope of the PSR or where they are procured by public sector organisations (that are not categorised as relevant authorities under the PSR).
Opportunity for change
The implementation of the Act comes at an opportune moment. Healthcare and construction are often seen as areas of significant complexity – and particularly at the moment are facing well-documented structural challenges.
These challenges are not exclusive to procurement; issues surrounding labour and skills shortages, rising costs, and demand outstripping supply continue to be prevalent.
Given the importance of its success for the NHS and the wider growth agenda, making procurement reform and utilisation of the Act part of the solution is essential
At the same time, both sectors are front and centre of the Labour government’s plans for reform and growth, given their essential place in society both economically and culturally.
Even with the recent restructuring of the ‘New Hospitals Programme’, it remains a prime example of the two sectors intersecting, with major new construction and enhancement of the NHS estate planned in the coming decade.
Given the importance of its success for the NHS and the wider growth agenda, making procurement reform and utilisation of the Act part of the solution is essential.
More inclusive procurement - maximising the benefits
The launch of the Act presents some significant opportunities for both the NHS and the construction market alike. For example, how to access new pools of talent.
Major construction projects, which would include many of the projects commissioned by the NHS, can tend to be so complex, specialist, or multi-facetted that smaller businesses are discouraged when it comes to tendering.
Given that small and medium sized enterprises (SMEs) make up 99.9% of the UK construction employment, this rules out a vast number of experienced and skilled workers.
The new Act actively introduces measures to make public procurement opportunities more accessible to SMEs by removing barriers to participation
As a result, this can leave the opportunities to a few major contractors capable of taking on whole projects of this scale or specialism, and can mean healthcare authorities are competing against one another within a limited pool of relevant skills and labour.
The new Act actively introduces measures to make public procurement opportunities more accessible to SMEs by removing barriers to participation. At a rudimentary level, unless mitigating circumstances permit, it will now be a requirement for contracting authorities to ‘have regard’ for how SMEs are included within the procurement process.
There will also be the introduction of the new ‘Competitive Flexible Procedure’, which will allow contracting authorities to design a bespoke procurement exercise for each situation that truly aligns to specific healthcare construction needs and the market.
The Act now introduces ‘open frameworks’ and ‘dynamic markets’
Within this, there is scope for increased ‘preliminary market engagement’. This is potentially a great opportunity for authorities to connect with SMEs to make the most of their niche knowledge and innovative solutions. This early engagement will give SMEs the forum to better demonstrate their skills and experience.
It could also benefit SMEs for a tender opportunity to be broken down into ‘lots’ where businesses can bid to work on a part of a contracted opportunity without needing the scale and capacity to complete a whole project. The new encouragement of this approach should more easily enable this.
In addition to this, the Act now introduces ‘open frameworks’ and ‘dynamic markets’. Simply put, these are routes in which suppliers that are initially deemed unsuccessful can have a second bite at the cherry for inclusion at a later date. Open frameworks will be reopened for competition at certain predetermined points, and dynamic markets will
be continuously open for suppliers throughout its duration.
Embracing the opportunities
These are just some of the ways that the new Act opens the door to a wider set of suppliers, improving the scope for competition, and should help to access a greater breadth of industry talent.
At a time of ongoing construction skills shortages and some concerns over major healthcare programme deliverability, such changes are welcome.
There will be a significant transition period to the new Act
There will be a significant transition period to the new Act. This means contracting authorities will have a period of time in which they will need to manage contracts under both the previous and new regulations, so attention to detail and awareness of potential post-implementation changes from government will be essential.
Yet while some may be feeling ‘procurement act fatigue’ almost 18 months since its royal assent , it is clear that there are significant opportunities to revitalise NHS construction procurement, and that this will only be truly realised post implementation as authorities start to put the theory of the Act into practice.