December 20, 2023

The Procurement Act and what it means for the construction industry

The construction industry is on the brink of a significant transformation with the upcoming implementation of the new Procurement Act, set to come into legislation in October 2024.

This change follows the Government’s response to the consultation on transforming public procurement.

Simplifying the framework

One of the most notable changes is the consolidation of the procurement regulations.

Currently, the industry navigates through multiple sets of regulations, including the Public Contracts Regulations 2015 and the Utilities Contracts Regulations 2016.

The new regime promises a more streamlined approach with just one set of regulations, albeit with sector-specific elements. This simplification could lead to more efficient and less cumbersome procurement processes for construction projects.

Enhanced flexibility and transparency

The new Act introduces three procurement procedures: open, limited tender, and competitive flexible. This change marks a significant shift from the current six procedures, offering greater flexibility to design bespoke procedures within a broad framework.

For the construction industry, this could mean more tailored procurement strategies that better fit specific project needs.

Transparency is also a key focus in the new regime. The introduction of the Open Data Contracting Standard (ODCS) mandates the disclosure of data and documents at all stages of the contracting process.

This move towards openness and accountability is likely to create a more competitive and fairer environment in construction procurement.

Focus on innovation and dynamic markets

The Act recognises the importance of innovation in the construction sector. The previous Innovation Partnership procedure is being replaced with a more flexible approach, encouraging the use of the pre-market engagement phase and the competitive flexible procedure.

This change could spur more innovative solutions in construction projects, as it allows for broader engagement with potential suppliers.

Additionally, the expansion of Dynamic Purchasing Systems (DPS) is set to accommodate more complex requirements. This evolution could be particularly beneficial for construction projects that often have unique and evolving needs.

Implications for contract management

The new Act places a strong emphasis on effective contract management. It introduces a Contract Performance Register to track supplier performance against key KPIs, enhancing accountability in the construction industry.

The Act also proposes a more transparent approach to contract modifications, requiring Contract Amendment Notices for all significant changes.

Challenges and opportunities ahead

While the new Procurement Act brings many positive changes, it also presents challenges.

The construction industry must adapt to the new regulatory environment, which may initially bring some uncertainty. However, the potential benefits, such as increased flexibility, transparency, and a focus on innovation, are likely to outweigh these challenges in the long run.

The Act’s emphasis on streamlined processes, transparency, and innovation aligns well with the evolving needs of the construction industry.

As we move closer to its implementation in October 2024, industry stakeholders should stay informed and prepare for the changes ahead. This proactive approach will ensure they are well-positioned to leverage the opportunities presented by this transformative legislation.

If you would like to know more about the Procurement Act and how to prepare for it, please contact us today.