The Cabinet Office has published new plans to overhaul procurement rules, including cutting red tape and making it easier for smaller businesses to win government contracts.

The Green paper sets out long-planned changes to UK’s procurement rules aimed at putting value for money and transparency at the heart of the new approach.

The measures, which have been developed over the last 14 months by a team of specialists in international procurement and set out in a green paper, take advantage of new powers now that we have left the European Union.

Every year, the government buys some £292 billion of services from the private sector. The Cabinet Office said the new measures “will transform the current procurement regime to put value for money at the heart of the new approach, by allowing more flexibility for buyers, enabling government to be more strategic and save the taxpayer money. This will also drive increased competition through much simpler procurement procedures.

“The changes will make UK procurement rules more modern, flexible, innovative and diverse, by allowing government to consider wider social value when picking suppliers . This will ensure that taxpayers money goes further and has more of a wider benefit for society.”

Cabinet Office Minister, Lord Agnew, commented:

“The measures outlined today will transform the current outdated system with new rules, providing flexibility to the public sector and less burden on business.

“These long standing plans have been developed with international procurement specialists and will help unleash innovation across the country and provide a fairer system for small businesses.”

In another new move, the government will allow the public sector to buy British for contracts not subject to international trade rules, by allowing competitions for government contracts under £4.7million for public works and £122k for goods and services to be limited to small businesses, voluntary, community and social enterprises, or to a certain geographical area.

Cabinet Office - "new rules will support SMEs by opening up new opportunities to them and making it easier for them to win contracts"

According to the Cabinet Office, the new rules will support SMEs by opening up new opportunities to them and making it easier for them to win contracts, in turn helping to drive local growth, promote innovation, support local recruitment and level up communities across the UK.

Specific changes proposed to the rules include:

• Removing over 300 complex regulations, to create a single uniform rulebook
• Overhauling inflexible and complex procedures, replacing them with three simple modern procedures. This will allow more freedom for suppliers and the public sector to work together and innovate
• Allowing buyers to include wider social benefits of the supplier, such as economic, social and environmental factors, when assessing who to award a contract to, while also still considering value for money
• Giving buyers the power to properly take account of a bidder’s past performance, allowing them to exclude suppliers who have failed to deliver in the past
• A new unit to oversee public procurement with powers to improve commercial skills of public sector contractors
• A single digital platform for registering contracts, improving transparency and making life significantly simpler for business

The Cabinet Office commented:

“The plans will also make procurement more transparent and effective during times of crisis where government needs to act quickly to ensure vital goods and services are bought. Throughout the COVID pandemic, the UK, along with many other countries internationally, has relied on direct awards to ensure that vital supplies, such as life-saving PPE, have been bought quickly and to high standards.”

“The new measures will bring more competition into this process, by changing the rules to encourage more competitive buying in a quick time frame. This will allow for multiple companies to bid for emergency work, without slowing the process down in times of emergency.”

"Unique opportunity to ebnsure public money is spent wisely"

Gavin Hayman, Executive Director of the Open Contracting Partnership said:

“This is a unique opportunity to make sure public money is spent wisely.

“We’ve all seen how old school procurement has struggled during the pandemic. These proposals will digitize and transform how contracts are planned, awarded and delivered in the UK with open data and public transparency at their heart.

“Done properly, the proposals will save huge amounts of time and money for both government and business, and deliver smarter public services to us all.”

“SMEs, who feel the effect of long, bureaucratic and costly processes more, will benefit in particular”

The Cabinet Office also said that while suppliers of all sizes will benefit from the changes, “SMEs, who feel the effect of long, bureaucratic and costly processes more, will benefit in particular.”

The green paper will also bring forward extra measures on transparency, meaning taxpayers will be better informed about how their money is spent, as well as the ability to exclude poorly performing companies from winning valuable contracts and preventing spurious legal challenges from unsuccessful bidders, which all too often delay public sector projects and lead to spiralling costs.

Awarding authorities will also be encouraged to consider how public contracts can support social or environmental issues or promote local communities, small businesses and charities.

Click here to download the Green Paper Transforming Public Procurement