Direct award procurement is the process of awarding a contract to a supplier without them going through competitive tendering. During the process, buyers award a contract to a supplier of their choice without having to consider other bidders.
The overall process is much quicker, which is beneficial when a project needs to be started promptly. To learn more about direct award procurement and the benefits that come with it, continue reading.
An Overview of Direct Award Procurement
As mentioned, direct award is when a public contract is awarded without the need for competitive bidding. The process allows contractors to be awarded a contract immediately, helping speed up project completion.
For many, the process of Direct Award has provided many benefits, helping kickstart their project quickly or allowing the same contractors to work on projects where additional funding has been given.
European Commission revealed:
- Public procurement accounts for about 14% of the EU’s gross domestic product (GDP)
- The number of tenders published in the EU has nearly doubled over the past 10 years, reaching 272,000 in 2022
There are several process requirements when it comes to Direct Award in procurement – for example, Procurement Act 2023, a transparency notice must be published before the award is given.
The main reason for a transparency notice to be published is to inform stakeholders that the contracting authority is going to award the contract directly and that there’s transparency regarding the decision.
Who Can Use Direct Award?
So, who can use direct awards? Public bodies (known as contracting authorities), public sector organisations, and non-profit organisations can use direct award procurement.
Direct award is a straightforward call-off method and allows a wide range of public sector clients to negotiate without having to enter a competitive and sometimes lengthy bidding process. Many public sector clients and non-profit organisations benefit from the process of Direct Award, including:
- NHS Bodies
- Education providers
- Leisure providers
- Libraries & Museums
- Local authorities
- Ministry of Defence
- Registered Charities
Generally, the process of Direct Award is used for public sector clients who need to avoid much longer waiting times for projects that have to begin as soon as possible.
Who is Direct Award Not Suitable for?
Direct award is beneficial for urgent projects that require a quick start time, helping eliminate the need for a bidding process. However, although direct award comes with its advantages, it’s sometimes an unsuitable route to go down. Direct Award is not suitable for:
- Project types with significant public interest
- Large or complex project types that often require a competitive process to ensure the best value for money
The Benefits of Direct Award
Awarding a contract directly comes with numerous benefits. Mainly used in situations where clients need contractors urgently, Direct Award allows for a quick and streamlined process. In many cases, contractors are needed immediately due to unexpected funding on existing projects.
For example, if a local council has already found a contractor to work on a construction project to build a leisure centre, and receives extra funding for a playground, it would make sense to award the additional work to the same contractor. By doing so, time and resources can be saved, as the contractor will already be familiar with both the project and the site.
Although Direct Award is useful in certain circumstances, it’s important to note that they should be used sparingly, and only when there’s a clear justification for bypassing the competitive bidding process that usually takes place.
At Procure Partnerships Framework, our direct award process takes just 2 days. All we require is a project initiation form and a business case approval form.
Our project management team will then review your forms, and later send out a letter of compliance which will state whether or not we approve the Direct Award. If approved, you’ll then be able to have an open channel of communication with the contractor.
Potential Risks With Direct Award
Although the benefits that come with direct awards often outweigh the potential risks, it’s important to understand some possible issues that might arise.
The top reported issues in procurement included payment delays, evaluation transparency, and award processes. Other potential issues that sometimes come with Direct Awards are:
- Increased costs – without competitive bidding, there’s more of a chance of paying a higher price for goods and services compared to obtaining them through a competitive bidding process
- Limited innovation – when there are fewer bidders involved in the process, there are fewer opportunities for both innovative solutions and new approaches
- Risk of conflict – some direct awards are prone to accusations of improper relationships between buyers and contractors, even when this isn’t the case
Changes to Direct Award Under the Procurement Act 2023
The new UK Procurement Act 2023, which is coming into effect in February 2025, after being postponed, largely maintains existing Direct Award justifications but will be adding some new elements. The main changes are:
- Public contracts could be awarded when necessary to protect human, animal, or plant life in emergencies
- Contracting authorities can switch to direct award if no suitable tenders are received
- You must publish a specific transparency notice for all direct awards
However, although some key changes have been made, it’s important to note that Direct Award won’t really change much from its original regime and will remain pretty similar to how it was beforehand
Direct Award Procurement With Procure Partnerships Framework
Direct Award usually offers a more compliant route to market, while allowing for a fast and seamless process. Offering several benefits, Direct Award means that your project can begin quickly. As mentioned, at Procure Partnerships Framework, our process for Direct Award is 2 days – during this time, we review forms and compliance.
If you require expert guidance on Direct Award procurement, we encourage you to schedule a consultation with our specialist today! We look forward to hearing from you.
