The Procurement Act 2023: How Businesses in the Aerospace Industry can navigate the supply shift
Michael Winder, partner in the commercial team and public procurement specialist at purpose-led independent law firm Brabners, explores how businesses in the aerospace sector can prepare for the introduction of the Procurement Act 2023 later this year.
The Act
The Procurement Act 2023 is set to be brought into force by the government on 28th October this year, with the primary goals of creating a simpler and more flexible public sector procurement process and promoting transparency regarding the spending of taxpayers’ money. The new Act will replace the current procurement regime, made up of the Public Contracts Regulation 2015 and its counterparts. This will bring significant changes to the law that governs UK public procurement, looking to benefit suppliers and buyers alike.
Essentially, the Procurement Act overhauls an existing framework, simplifying the procurement process by slimming multiple different procurement routes to just three: the Open Procedure, Competitive Flexible and Direct Award. The Competitive Flexible route allows public sector buyers to build a procurement process that is tailored to the contract being procured, rather than rigidly adhering to a set process. It’s likely that buyers will initially use previous routes in all but name due to familiarity and desire to avoid challenge, however, this may change over time. It’s important that sector bidders carefully read each tender process, as each one could be different.
In a sector that depends on its goods suppliers, all players in the aerospace industry should be prepared for the transition to the new Act and the ways that the legislation is likely to impact their business.
What will change
The Act will entail lots of changes of various sizes. Some are major while others may have little effect beyond changed terminology, at least in the Act’s early days. It will take some years of cases in the courts to test the new Act and the regulations that sit under it.
Chiefly, the Act intends to enable suppliers of all sizes to access public sector work more easily and maximise flexibility, helping to deliver the services that the country needs.
A central change from the legislation will be an increased transparency burden on the public sector, with a requirement to publish much more information at each stage of the procurement lifecycle. This will significantly benefit suppliers, who can easily research buyers before tendering for contracts with them. Suppliers can access greater information in relation to planned and ongoing procurement opportunities and find details on the quality of contracting authorities as customers, such as how often they meet 30-day payment terms. This can help guide suppliers on which opportunities to go for and who they wish to work with. Concurrently, suppliers will be better equipped when bidding for certain contracts and more informed when looking to challenge an award.
At the same time, greater transparency will affect suppliers. Larger contracts are required to apply KPIs to supplier performance (with limited exceptions), which the public sector buyer will have to publish data on. There are also mandatory reporting requirements in instances of failure and breach of contract by the supplier. This will also feed into the expanded grounds for public buyers to exclude suppliers from procurements, and the new central debarment list maintained by the Procurement Review Unit.
Support for SMEs is a key focus for the legislation, with the act set to increase opportunities and business workstreams for small businesses across the country. While the aforementioned flexibility for procurement routes feeds into this goal – as it means smaller businesses can create bespoke frameworks that complement the scale and tempo of their operations – the Act importantly sets out an obligation for the public sector to remove barriers to SMEs. For example, by removing obstacles around provision of accounts and insurance at the bidding stage, increasing their chances of being awarded contracts.
New opportunities
In the time since the Act was introduced by the previous Conservative government, Sir Kier Starmer has reaffirmed his administration’s commitment to prioritising the growth of aerospace and defence. This will be realised through government funding to the sector, such as support for sustainable air fuels, and a pledge to spend 2.5% of GDP on defence, funnelling more public money into the aviation industry.
Furthermore, businesses that push sustainability could receive additional support under the new procurement model. The National Procurement Policy Statement, which sets out the strategic priorities for public procurement, and guidance on how contracting authorities can support their delivery, states that all buyers should take social value into account in procurement activities. Aside from creating opportunities for employment and skills development, and driving supply chain resilience, the social value contribution should also be judged by impact on tackling climate change and reducing waste.
Putting your best foot forward
At an operational level, businesses can implement small adjustments that will mean they are best placed to deal with the legislative changes under the Procurement Act as they arise. For example, the Act will see the introduction of a central digital platform for suppliers to register and store their details. By collating supplier profiles in one place, and introducing simplified bidding processes, negotiating and securing work in partnership with the public sector should become easier for smaller businesses.
But it’s still important that businesses across the sector’s supply chain stay up to date with the introduction of the platform, creating accounts as soon as possible to make the most of the opportunities.
Crucially, the way that the legislation works means that any tenders advertised, or contracts awarded before the 28th October will be subject to the current legislation for the duration of the procurement and term of the contract. This means that after the introduction of the new Act, two tendering processes and/or two contracts running concurrently will be subject to two significantly different pieces of procurement legislation, simply because they commenced on different sides of the October 28th cut-off date. This will impact rights, remedies and risks under the law.
Aside from being aware of this fact, companies in the aviation industry should start setting the groundwork for tendering and contracting under the new Act now. Similarly, if a procurement of a contract is delayed and is pushed to after the October date, much of the previous work may have to be redone to fit with new routes. This is an opportune moment to get in touch with a specialist procurement lawyer, who can offer guidance on the best approaches that businesses can take during the transition period.
Additionally, with the Procurement Act 2023 offering increased flexibility for the use of frameworks of suppliers, businesses in the aerospace industry could strengthen their position by obtaining a place on the frameworks.
For support in navigating the legislative shift to the Procurement Act 2023, and advice on how to take advantage of the new flexibility, you can get in touch with Brabners’ Commercial team, contact michael.winder@brabners.com
