Delayed from last autumn, the government’s new Procurement Act is finally set to come into force next month. It could change profoundly how lighting contracts are procured and agreed
Got any plans for Tuesday 25 February? For local authority lighting professionals, that will be the day when, if you haven’t already, you will need to be getting to grips with the arrival of the new Procurement Act 2023.
In fact, as Michala Medcalf, ILP Junior President Elect and street lighting manager at Derby City Council explains, if you’re only sitting down to get your head around this new legislation at that point, you may well have left it too late.
‘If you’re not focused on the new Procurement Act right now – in preparation for 25 February – you need to be. As it could well impact your business,’ she emphasises.
The arrival – and impact – of this new Act is also set to be a key topic of conversation at next month’s ILP Lighting Live local authority lighting CPD event in Daventry, and see the ‘Events’ section below and our separate story.
This is because the Act, which was originally due to come in last autumn but was then pushed back into next month, has the potential profoundly to change how lighting – both public and private sector – is procured, and possibly for the better.
‘For those who are procuring services – such as local authorities who, as part of the contracting authorities’ landscape, we are responsible for something like £300bn of procurement, so we are spending a lot – when we go to market for our goods and services, a lot of the time that procurement decision is made within the service,’ Michala points out.
‘Under the guidance of our procurement teams, the service area does all the vetting and then plumps on the one we want to go for. The new regulations will see a significant change on how we need to collaborate within our own organisation, and the introduction of “pipeline planning”.
‘Because of this pipeline planning of 18 months for any contract over £2m, you’ve got to really think about how you articulate the needs for your service ahead of the programme. So, you can work with your procurement to make sure there is no delay to delivery, and I think that is going to be key,’ she adds.
MORE FLEXIBLE PROCESS
Unusually for government red tape – and positively – the Act is designed to make procurement simpler and more agile. ‘But as an asset manager you have got to be on A game. You have got to know what you want and forecast it within your programme to allow compliance with the new Procurement Act, and I think that is where some of us are going to fail,’ Michala explains.
‘Before, when we wrote procurement documents, it was always about pounds and pennies, and rightly so; the cheapest tender would always win. Contacts used to be awarded on the basis of being the “most economically advantageous tender” or “MEAT”. Now – and this is key – they are going to be awarded on the basis of “most advantageous tender” or “MAT”.
‘It is a clear signal to the market that procurement in the public sector is interested in more than just the lowest price. It is about value beyond just price, it is about innovation, potentially about sustainability too. It is going to be a massive difference,’ she points out.
MEAT VERSUS MAT: WHAT’S THE DIFFERENCE?
The idea of ‘Most Economically Advantageous Tender’ comes to us courtesy of the European Parliament, where it was intended to make public procurement processes fairer and more transparent, allowing more suppliers to enter the market.
At that stage, the UK government was still an EU member, so it adopted the MEAT method, adapting it to fit the UK public sector in the Public Contracts Regulations of 2015.
The regulations established an assessment criteria to help suppliers develop bids that more accurately incorporated the contracting authorities’ needs into their tender proposals.
Under MEAT, contracts are awarded on a cost-effective basis, with buyers devoting their primary focus to value for money rather than the value of social and environmental responsibility.
After Brexit, the UK government wanted to distinguish its procurement procedures from the EU, while also simplifying the process to encourage more suppliers, especially SMEs, to enter the public sector procurement market.
This, in turn, brings us to the Procurement Act of 2023, which is largely based on the World Trade Organisation’s Government Procurement Agreement (WTO GPA), which is how we get now to ‘MAT’
MAT was first introduced to the UK public sector in the December 2020 green paper Transforming Public Procurement. The intention was to give buyers more leeway when awarding contracts while saving costs along the procurement cycle and working towards sustainable development in corporate governance.
According to the green paper, MAT enables buyers to include criteria that go beyond the crux of the contract. Among other things, this encourages suppliers to conduct their business operations in an ethical manner that contributes to the country’s economic, social, and environmental outcomes. MAT’s aim is twofold, namely to:
1) Provide contracting authorities with more autonomy and choice when it comes to assessing tenders, especially tenders that best meet their criteria and provide the most overall value.
2) Provide suppliers with more opportunities to enter the public sector by ensuring that price is not the only determining factor in awarding contracts. This allows suppliers to showcase their expertise and worth through socially responsible initiatives.
These include strategies for environmentally sustainable business operations (sustainable resources), social and ethical responsibility (fair treatment in the workplace), and economic responsibility (a company’s commitment to sustainable economic growth).
Such initiatives go under the social value umbrella and are measured by the positive impact suppliers and buyers have on their local communities. Value (positive impact) is divided into social, economic, and environmental categories, or in more detail:
1) Social. This encompasses the wellbeing of people and communities through socially responsible projects or initiatives that address community challenges on the ground. This is best achieved through mutual support between government bodies and community leaders as they strive to increase social awareness and ethically responsible behaviour.
2) Economic. This is about boosting the local economy, enhancing sustainable practices, and uplifting disadvantaged communities through corporate social responsibility initiatives, like employing locals and providing training opportunities for entrepreneurs and budding business leaders.
3) Environmental. This is the use of eco-friendly and sustainable practices and adherence to government sustainability goals. Goals include energy efficiency and supply chain management that prioritises environmental performance and renewable energy sources.
Guidance on how to prepare for the Act can be found on the government’s Crown Commercial Service here.
This is an abridged version of the article that appears in this month’s edition of Lighting Journal. Click on the page-turner opposite to read the full article.
Image: Pexels
