Three years and three Prime Ministers later, Brexit is done, with a trade deal finally being reached as the unprecedented year of 2020 came to an end. Whilst Brexit negotiations have been protracted and turbulent, talks came to an abrupt conclusion the night before Christmas with the announcement that a Green Paper had been produced to outline the new relationship to live, work and trade with the European Community from 1st January 2021. As a former member of the EU, the UK was governed by the Public Procurement Directives set out under the EU legal framework. So, will public procurement processes now change?
In this blog, Procure Partnerships Framework Director Robbie Blackhurst, with commentary from contributors Turner & Townsend and Gardiner & Theobald, will explore life after OJEU and how this will affect you!
The OJEU Process
The Official Journal of the European Union (OJEU) is the online publication of all public sector contracts over a certain value. If a public authority contract is above the OJEU threshold, the European Commission Procurement Regulations require an OJEU compliant route to market; creating a fair opportunity for suppliers in the UK and EU to access tender opportunities published by private and public sector organisations for goods, services, works and utilities, and therefore an opportunity to bid for them. The thresholds set from January 2020 were:
• £4,733,252 for Central Government
• £4,733,252 for other contracting authorities
• £884,720 for small Lots
EU directives on public procurement apply to all tenders above these parameters, but the key principles of the directives are applicable to all procurement frameworks. These are transparency, equal treatment, open competition, and sound procedural management. They are designed to achieve a procurement market that is competitive, open, and well-regulated.
TED Talks and PIN CANS
OJEU notifications are issued in the form of an Invitation to Tender (ITT), typically used in major construction projects where the contracting authority knows in detail what they want, and once this is released suppliers can view these opportunities for free. A mandatory standard Selection Questionnaire (SQ), formerly known as a Pre-Qualification Questionnaire (PQQ), must be used and suppliers who meet the qualifying criteria can submit their bids for OJEU tenders through Tenders Electronic Daily (TED). Unlike the TedX website, there are no motivational speeches, but you can find incentives to grow your business by gaining insights into what the buyer is looking for or applying for contracts to get ahead of your competitors. TED publishes 746,000 procurement award notices a year, including 235,000 ITT’s for tenders which are worth approximately £485 billion. TED offers more than a directory of tender listings; it also provides access to a division of PIN’s. A Prior Information Notice (PIN) is used by the Public Sector as a “heads up” that they are searching for a particular product or service. It could lead to a Request for Proposals (RFP) which is a way for the authority to scope out their requirements and refine specification prior to advertising a formal tender. Suppliers should maximise their chances by making good use of PIN’s to engage early with local authorities, housing associations and care providers to help them define their brief and shorten the tender process. For opportunities below the OJUE threshold, typically a Request for Quote (RFQ) is published, much like a tender but on a smaller scale. Through TED suppliers can also view CAN’s. Public sector bodies must publish a Contract Award Notice (CAN) to detail who was awarded the contract, the contractual term, and the value. This is useful for two reasons. It allows you to direct focus towards the winning supplier to seek out a potential partnership or sub-contracting arrangement and it tells you the timeframe for when the contract will be up for renewal, so you can prepare to submit your bid in line with the award criteria the next time around.
The Future of UK Public Procurement Processes
At 11pm on 31st December 2020, the UK Government launched a new e-notification system to replace OJEU and TED called Find a Tender Service (FTS). UK contracting authorities will no longer need to publish procurement notices in the OJEU with FTS being used instead as the new public sector procurement process. This change does not thwart access to “domestic” portals such as Contracts Finder, MOD, Defence Contracts Online, Public Contracts Scotland, Sell2Wales, or TenderNI. Initially there will be no changes to procurement laws post-Brexit and processes will continue to be based on the EU directives which are incorporated into UK legislation by the Public Contracts Regulations 2015. However, Prime Minister Boris Johnson has already vocalised plans to move away from the level playing field in favour of a “back British” ethos, which could see the UK joining the Government Procurement Agreement (GPA) but adopting its own directives around this for contracts below the GPA thresholds.
Miles Delap, Partner, Gardiner & Theobald: “The new FTS process is very similar to OJEU and for the foreseeable future nothing changes, except the name on the website.Watch out for future developments though!”
Green Paper Cultivates Green Shoots for Improved UK Public Procurement
On 15th December, the UK Government published a green paper on Transforming Public Procurement, which calls for improvements in procurement processes to be better aligned with the needs of the UK public sector and its suppliers. With plans to streamline procedures through the new FTS system, the Government wants to ensure a commercially sound framework that is simple to regulate, is flexible and can adapt easily to the mood of the market, be competitive and match the right suppliers to the right contracts. These improvements are key to help strive towards economic recovery and achieve net-zero carbon goals by 2050. For UK tender contracts that fall below GPA thresholds we could see increased opportunities and advantages for UK suppliers as they are given preferred status through the FTS above their European competitors. The proposal to introduce a central procurement database will create new opportunities for SME’s as they will have better access to company details linked to tender processes. There is also discussion of introducing an open framework to allow suppliers to bid at designated intervals throughout the timeline of the framework and for awarded parties to renew their bids, generating a flexible and competitive dynamic. The Dynamic Purchasing System (DPS) will also be reviewed to increase flexibility for procurement across the whole public sector.
How will the change to the tendering process impact UK suppliers?
The GPA is an agreement between the 20 parties of the World Trade Organisation. It permits UK businesses to bid for government contracts in other countries and overseas businesses to bid for contracts in the UK. The UK was enrolled on the GPA through its EU membership, and therefore will no longer have the same level of access to EU procurement markets that it had as an EU member. Whilst the UK might lose some guaranteed access provided by the GPA, this is thought to be temporary, as from 1 January 2021 the UK joined the GPA on essentially the same terms, causing minimal effect for UK suppliers. UK businesses will still have access to government procurements in many international markets. The challenge for UK suppliers bidding for EU contracts will be their ability to demonstrate continued value for money as other aspects of Brexit may increase costs for UK companies to operate in the EU.
Important next steps
UK contracting authorities and businesses currently using third party e-Senders (e.g., Proactis, European Dynamics, In-Tend Ltd, etc) to submit OJEU notices will need to ensure that their e-Sender has integrated with Find a Tender Service. For contracting authorities who submit notices directly to OJEU, they will need to register notices directly with the FTS. Suppliers looking for UK contract opportunities will need to access FTS instead of TED.
So, whilst Brexit has forced the UK to step away from the OJEU process to formulate its own Find a Tender Service, this is predicted to have very little disruption for UK suppliers and could potentially see an advantage for UK suppliers to win more UK contracts. The new year brings a new tendering portal and an opportunity for suppliers to create a new public sector strategy.
Michael Grace, Director, Turner and Townsend “Public sector clients now face a significant change in procurement, our market intelligence suggests that client and supplier awareness is low about what FTS is and how it will work. Procurement Policy Note 08/20 located at PPN 08/20, contains the important facts on the FTS service. We know that FTS will operate in the same way as OJEU in the sense that portals will be used and that FTS is being integrated into third party provider software, so the market can expect to receive notice of tenders in the same way. The key element is that the adaption to FTS and its structure is seamless right across the supply chain.
None of this gets away from strong business relationships and knowledge of the supply chain, there is a requirement for both suppliers and employers to make sure each other know about the revised approach to engage the market. A great example of this is if it is known that a European supplier has a proven track record for the goods or services required, the relationship becomes critical to make sure they know they can still access tenders by using the FTS system.
The second notable change relates to the Green Paper that has been recently published. We welcome the intentions detailed within, it sets out long planned changes to the UK’s procurement rules, putting value for money and transparency at the heart of the new approach. Although its only consultation at this stage it contains some much-needed reforms that will shape the future of public procurement for many years to come.