Transforming publicprocurementDate of publication December 2020CP 353Transforming publicprocurementPresented to Parliamentby the Parliamentary Secretary at the Cabinet Officeby Command of Her MajestyDecember 2020CP 353© Crown copyright 2020This publication is licensed under the terms of the Open Government Licence v3.0 exceptwhere otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/opengovernment-licence/version/3Where we have identified any third party copyright information you will need to obtainpermission from the copyright holders concerned.This publication is available at www.gov.uk/official-documentsAny enquiries regarding this publication should be sent to us atprocurement.reform@cabinetoffice.gov.uk.ISBN 978-1-5286-2308-7CCS1020400576 12/20Printed on paper containing 75% recycled fibre content minimumPrinted in the UK by the APS Group on behalf of the Controller of Her Majesty’s StationeryOfficeTransforming public procurement 1ContentsMinisterial foreword 5Executive summary 7Application 11How to respond to this consultation 11Chapter 1: Procurement that better meets the UK’s needs 12Introduction 12International trade obligations 13Corruption in public procurement 13Principles of public procurement 13National Procurement Policy Statement 16Oversight 18Chapter 2: A simpler regulatory framework 20Introduction 20A single regulatory framework 22Structure of the new regulations 23Chapter 3: Using the right procurement procedures 24Introduction 24Current procurement procedures 25The competitive flexible procedure 26The open procedure 28The limited tendering procedure 28Innovation in procurement 30Social, health, education and other services 32Chapter 4: Awarding the right contract to the right supplier 34Introduction 34Most advantageous tender 34Subject matter of the contract 35Evaluating bids from the point of view of the contracting authority 362 Transforming public procurementGrounds for exclusion 36Debarment list 38Past poor performance 38Selection and award criteria 40Chapter 5: Using the best commercial purchasing tools 42Introduction 42Current Dynamic Purchasing System 42Current Qualification System 43Current framework agreements 43GPA rules on multi-use lists 44Dynamic Purchasing Systems (DPS+) 45Framework agreements 45Chapter 6: Ensuring open and transparent contracting 48Introduction 48Open Contracting Data Standard 53Central platform 55Chapter 7: Fair and fast challenges to procurement decisions 59Introduction 59Review Process Reform 60Tribunal 63Pre-contractual Remedies 63Lifting of the automatic suspension 64Capping the level of damages 64Crisis and Extremely Urgent procurements 65Removing mandated debrief letters 66Chapter 8: Effective contract management 68Introduction 68Prompt payment 68Contract amendments 70Contract amendment notices 71Reduce over-payments made during suspension period 72Using feedback to drive supplier excellence 72Annex A: Current Procurement Procedures and Thresholds 74Procurement procedures of the PCR, UCR and DSPCR 74Transforming public procurement 3Procurement under the CCR 76Financial Thresholds 774 Transforming public procurementTransforming public procurement 5Ministerial forewordThe end of the Transition Period provides an historic opportunity tooverhaul our outdated public procurement regime. I have seenmyself that these rules have made it much harder for us to createopportunities for innovative companies to win business and improvepublic services or for public bodies to exclude suppliers that haveperformed poorly in the past. Now we have an opportunity to designsomething that delivers for our communities and our businesses.That is something everyone working on this can see as a dividendfrom the UK leaving the EU, no matter how they voted in thereferendum.The UK spends some £290 billion on public procurement every year. This huge amount ofgovernment spending must be leveraged to play its part in the UK’s economic recovery,opening up public contracts to more small businesses and social enterprises to innovate inpublic service delivery, and meeting our net-zero carbon target by 2050. The Governmenthas already reviewed the Green Book to ensure it supports “levelling up” and is takingother steps for example through the National Infrastructure Strategy to ensure vibrant andresilient supply chains.This Green Paper addresses another element of this programme of reform: the reform ofour procurement laws. For too long, modern and innovative approaches to publicprocurement have been bogged down in bureaucratic, process-driven procedures. Weneed to abandon these complicated and stifling rules and unleash the potential of publicprocurement so that commercial teams can tailor their procedure to meet the needs of themarket.The UK is ready. We have amended our legislation and systems to ensure a smoothchangeover at the end of the Transition Period. The UK’s new “Find a Tender” service forpublishing contract notices will go live on 1 January 2021, replacing the Official Journal ofthe European Union.I now want to create a regulatory framework that delivers the best commercial outcomeswith the least burden on our businesses and the public sector. We have already introduceda policy which will allow below threshold contracts to be reserved for UK suppliers whichwill come into effect at the end of the Transition Period. I want to use these further reformsto drive a culture of continuous commercial improvement across the public sector. This isgood news for UK companies bidding for public sector contracts. Taking full control of ourrules will allow us to respond to evolutions in procurement methods and techniques muchmore quickly, ensuring our regime remains modern and up-to-date.6 Transforming public procurementCOVID-19 has meant that, across the public sector, commercial teams have had toprocure contracts with extreme urgency to secure the vital supplies required to protectfrontline NHS workers, maintain public services and support our communities. I make noapology for that but there are lessons we can learn and the reforms in this Green Paperwill strengthen our longstanding and essential principles in public procurement oftransparency, ensuring value for money and fair treatment of suppliers.These reforms will also ensure we remain committed to the WTO Agreement onGovernment Procurement, which the UK will join as an independent member on 1 Januaryand which guarantees access for UK suppliers to £1.3 trillion in public procurementopportunities in more than 48 countries. We will respect our commitments to notdiscriminate against parties in this and other bilateral international trade agreements onpublic procurement.In preparing these proposals, we have engaged with a huge range of interestedorganisations and individuals through many hours of discussions and workshops acrossthe country over the last 12 months. This consultation opens the opportunity for each andevery stakeholder to have their say. Delivering the ambitious aims of the Green Paper willrequire a huge effort. I hope this marks the beginning of public procurement becomingmore effective, easier for businesses, and more transparent for citizens.Lord AgnewMinister of State for the Cabinet OfficeTransforming public procurement 7Executive summary1. The proposals in this Green Paper are intended to shape the future of publicprocurement in this country for many years to come. The Government’s goal is tospeed up and simplify our procurement processes, place value for money at theirheart, and unleash opportunities for small businesses, charities and social enterprisesto innovate in public service delivery. The current regimes for awarding publiccontracts are too restrictive with too much red tape for buyers and suppliers alike,which results in attention being focused on the wrong activities rather than value andtransparency. We need a progressive, modern regime which can adapt to the fastmoving environment in which business operates. Markets and commercial practice areconstantly evolving and we must ensure that the new regulatory framework drives aculture of continuous improvement to support more resilient, diverse and innovativesupply chains.2. The UK is open for business. We want British business to be in the best competitiveposition to win international orders. On 2 December 2020, the UK deposited itsInstrument of Accession to join the World Trade Organisation’s Agreement onGovernment Procurement,1 (GPA) and will become an independent member in its ownright when the transition period ends on 31 December 2020. This will guaranteeaccess to £1.3 trillion in overseas public procurement markets providing major exportopportunities for British businesses. In designing the new regulatory framework, weare committed to the GPA and its principles of fairness, impartiality, transparency, andnon-discrimination. The Government will continue to maintain and build on our existinginternational relationships and new bilateral trade agreements.• We propose enshrining in law, the principles of public procurement: value formoney, the public good, transparency, integrity, efficiency, fair treatment ofsuppliers and non-discrimination.3. The Government proposes to comprehensively streamline and simplify the complexframework of regulations that currently govern public procurement. We proposerationalising and clarifying the parallel rules in the Public Contracts Regulations 2015,the Utilities Contracts Regulations 2016, the Concession Contracts Regulations 2016and the Defence and Security Public Contracts Regulations 2011, replacing them allwith a single, uniform set of rules for all contract awards. This will be supplementedwith sector-specific parts or sections where different rules are required for effectiveoperation or to protect our national interest, for example in the defence or utilitiessectors.1 Government procurement – The plurilateral Agreement on Government Procurement (GPA)8 Transforming public procurement4. The procurement procedures for awarding public contracts can be restrictive andcreate complexity and confusion for buyers and suppliers. This stifles innovation anddeters small businesses and start-ups from ever bidding for public contracts. We canget rid of duplication and bureaucracy, making the system more agile and flexiblewhile still upholding fair and open competition. The Government proposes replacingthe outdated procurement procedures with a new procedure which will allow for morenegotiation and greater engagement with potential suppliers to deliver innovativesolutions in partnership with the public sector.• We propose slashing the 350+ regulations governing public procurement andintegrating the current regulations into a single, uniform framework.• We propose overhauling the complex and inflexible procurement procedures andreplacing them with three simple, modern procedures:• a new flexible procedure that gives buyers freedom to negotiate and innovate toget the best from the private, charity and social enterprise sectors.• an open procedure that buyers can use for simpler, ‘off the shelf’ competitions.• a limited tendering procedure that buyers can use in certain circumstances,such as in crisis or extreme urgency.• We propose removing the Light Touch Regime as a distinct method of awardingcontracts and applying the rules applicable to other contracts to services currentlysubject to this regime.5. The Government wants to open up public procurement to a more diverse supply base,making it easier for new entrants such as small businesses and voluntary, charitableand social enterprises to compete and win public contracts. We want bidding for publicsector contracts to be simpler, with procedures that are quicker and cheaper toparticipate in and information on contracts easier to find.• We propose establishing a single digital platform for supplier registration thatensures they only have to submit their data once to qualify for any public sectorprocurement.• We propose legislating for a new Dynamic Purchasing System (DPS+) that maybe used for all types of procurement (not just commonly used goods andservices).6. Transparency will remain a fundamental tenet of public procurement to ensure properscrutiny of contract awards and minimise the risk of corruption. We must exploit digitaltechnology to deliver better value and will legislate to introduce a common data modelfor all contracting authorities in line with the global Open Contracting Data Standard.More procurement data will be published and it will be done in a standard, machinereadable format, accessible to all. By joining up the current plethora of procurementsystems we can simplify the process of bidding for public contracts and drive thecommercial benefits from better sharing of data. We also propose introducing a newground of ‘crisis’ for the most serious of situations with strengthened safeguards fortransparency and use while allowing contracting authorities to compete opportunitiesat pace, this will be supported by clear guidance.Transforming public procurement 9• We propose embedding transparency by default throughout the commerciallifecycle from planning through procurement, contract award, performance andcompletion.• We propose requiring all contracting authorities to implement the OpenContracting Data Standard so that data across the public sector can be sharedand analysed at contract and category level.• We propose introducing a new requirement to publish contract amendmentnotices so that amendments are transparent and to give commercial teamsgreater certainty over the risk of legal challenge.• We propose including ‘crisis’ as a new ground on which limited tendering can beused to provide greater certainty for contracting authorities in thesecircumstances.• We propose making it mandatory to publish a notice when a decision is made touse the limited tendering procedure.7. The huge power of some £290 billion of public money spent through publicprocurement every year in the UK must support Government priorities: to boost growthand productivity, help our communities recover from the COVID-19 pandemic, andtackle climate change. There should be a clear ‘golden thread’ from these priorities tothe development of strategies and business cases for programmes and projects andthrough to procurement specifications and the assessment of quality when awardingcontracts.8. The policies, projects and programmes to which public spending is directed aredetermined by the Government, using the Green Book to develop proposals that bothachieve their intended objectives and deliver improved social welfare or wellbeing –referred to as social value. Public procurement is critical in translating those decisionsinto the right contracts with the right providers to achieve the required outputs in theway that offers the best social value for money.9. Achieving value for money in public procurement will remain focused on securing fromsuppliers the best mix of quality and effectiveness to deliver the requirements of thecontract for the least outlay over the period of use of the goods or services bought. Butwe want to send a clear message that public sector commercial teams do not have toselect the lowest price bid, and that in setting the procurement strategy, drafting thecontract terms and evaluating tenders they can and should take a broad view of valuefor money that includes social value. This includes award criteria for evaluating finalbids and scoring their quality, to encourage ways of working and operational deliverythat achieve social value objectives.• We intend to legislate to require contracting authorities to have regard to theGovernment’s strategic priorities for public procurement in a new NationalProcurement Policy Statement.• We propose allowing buyers to include criteria that go beyond the subject matterof the contract and encourage suppliers to operate in a way that contributes to10 Transforming public procurementeconomic, social and environmental outcomes on the basis of the ‘mostadvantageous tender’.• We propose retaining the requirement for the evaluation of tenders to be madesolely from the point of view of the contracting authority, but amending it so that awider point of view can be taken exceptionally and only within a clear frameworkof rules.10. Awarding the right contract to the right supplier is the cornerstone of publicprocurement and the litmus test for an effective procurement regime. In order to havethe best public services we need the best suppliers and we believe the proposed newregulatory regime will better support contracting authorities in selecting thosesuppliers. The current procurement regulations allow contracting authorities to takeinto account the past performance of a supplier on only very limited grounds andcommercial teams often have to rely on bidders’ self-declarations rather thanobjective, evidence-based information. We can act now to raise the bar on thestandards expected of all suppliers to the public sector and ensure that outstandingsmall suppliers are able to secure more market share, increasing productivity andboosting economic growth.• We propose using the exclusion rules to tackle unacceptable behaviour in publicprocurement such as fraud and exploring the introduction of a centrally manageddebarment list.• We propose giving buyers the tools to properly take account of a bidder’s pastperformance and exclude them if they clearly do not have the capability to deliver.11. Much of the bureaucracy that suppliers complain about in a public procurementprocess arises because of the fear amongst buyers of a decision being challenged inthe courts. Most of this comes from ambiguity in the procurement regulations thatcreate a particular vulnerability in the supplier selection and contract award stages.The current processes for legal review cost too much time and money; smallbusinesses in particular find the process too resource-intensive to pursue. In thisGreen Paper we look at the options to reform the legal review system as well astackling claims over minor issues that delay contract awards. We want to tacklevexatious claims which slow down delivery and speed up dispute resolution.• We propose reforming the process for challenging procurement decisions tospeed up the review system and make it more accessible.• We propose refocusing redress onto pre-contractual measures while capping thelevel of damages available to bidders, reducing the attractiveness of speculativeclaims.12. The Government wants to improve commercial practice across the public sector andwill intervene if capability is lacking. Contracting authorities should be held to accountfor ensuring their commercial teams have the necessary skills and experience toensure taxpayers’ money is spent effectively and efficiently.13. Taken together, the Government believes these legislative reforms can transformpublic procurement to make it faster, fairer and more effective. But they will not inTransforming public procurement 11themselves deliver unless contracting authorities act to ensure their commercial teamshave the right capability and capacity to realise the benefits. To support this theGovernment will, subject to future funding decisions, provide a programme of trainingand guidance on the reforms.Application14. The Government anticipates that the new rules proposed in this Green Paper wouldapply in respect of contracting authorities undertaking wholly or mainly reservedfunctions. We will continue to engage with the Welsh Government, Northern IrelandExecutive and Scottish Government about the application of these proposed reforms.How to respond to this consultation15. In producing this Green Paper, the Cabinet Office has engaged with over 500stakeholders and organisations through many hundreds of hours of discussions andworkshops. This has included stakeholders from central and local government, theeducation, and health sectors, small, medium and large businesses, the charities andsocial enterprises sectors, academics and procurement lawyers.16. The Government also established a Procurement Transformation Advisory Panel,which brought together procurement experts from across the world to discuss theopportunity for reform and ideas of how that could best be done. We would like to takethis opportunity to express our thanks to the panel members and all those who havetaken part in the engagements to date; your views and ideas have all contributed tothe proposals.17. In this next stage, we invite you to respond to the questions in this public consultationtogether with any evidence that could help us develop, implement and monitor thesuccess of the reforms.18. Responses should be sent to procurement.reform@cabinetoffice.gov.uk by 10 March2021.12 Transforming public procurementChapter 1: Procurement that better meetsthe UK’s needsWe propose enshrining in law the principles of public procurement: the publicgood, value for money, transparency, integrity, fair treatment of suppliers andnon-discrimination.We intend to legislate to require contracting authorities to have regard to theGovernment’s strategic priorities for public procurement in a new NationalProcurement Policy Statement.We propose establishing a new unit to oversee public procurement with powers toreview and, if necessary, intervene to improve the commercial capability ofcontracting authorities.Introduction19. At £292 billion2, public procurement accounts for around a third of all publicexpenditure. Every penny of this vast sum must be focused on delivering full value formoney for the United Kingdom. By improving public procurement, the Government cannot only save the taxpayer money but drive social, environmental and economicbenefits across every region of the country.20. Procurement reform is not new but it has always had to work within the framework ofEU based regulations. The latest EU Directives were transposed into UK law in 2015and 2016, while the Public Services (Social Value) Act 2012 sought to maximise thebenefits of public spending in the UK. And there have been many non-legislativereviews of commercial capability across the public sector, for example Sir PeterGershon’s 1999 review of civil procurement identified the need for more strategicprocurement skills in government procurement.21. The COVID-19 pandemic has underlined the need for an effective regulatory regimefor public procurement. Hospitals, healthcare professionals and workers urgentlyneeded medical supplies, personal protective equipment, cleaning and hygiene2 Combined figure of gross current procurement (£220,428 million, pg 80) and gross capital procurement(£71, 583 million, pg 81) from the Public Expenditure Statistical Analysis (PESA) 2019.Transforming public procurement 13products. The importance of public procurement has rarely been so prominent in thepublic domain and it can now play a significant role in the economic recovery.International trade obligations22. The UK is now free to develop an independent policy on public procurement, buildingon our new membership of the WTO Agreement on Government Procurement (GPA)in our own right as a sovereign country. Membership of the GPA provides Britishbusinesses with certainty that they will be able to continue to bid for overseas publicsector contracts worth £1.3 trillion each year, and means that overseas suppliers havethe right to bid for UK public sector contracts under the GPA, delivering inwardinvestment and better value for UK taxpayers.23. Our new regulatory framework will therefore be founded on the principles and rules setout in the GPA, namely: non-discrimination, transparency and impartiality. Competitiveprocurement will continue to be the standard approach, with single sourceprocurement remaining the exception, to be used only in strictly definedcircumstances.24. The UK will continue to comply with its procurement obligations under otherinternational Free Trade Agreements (FTAs). The agreements we have agreed or planto negotiate with trade partners such as the US, Japan and Australia, will encourageand promote the UK’s interests in fair and transparent cross-border trade in publicprocurement while retaining the opportunity for the UK to transform its own publicprocurement regime.Corruption in public procurement25. Corruption in public procurement is a crime. It wastes public resources and leads toinefficient procurement. Public procurement is susceptible to corruption due to thelarge sums of money involved and the large volume of contracts. To preventprocurement corruption, the reforms to the procurement regime will be based ontransparency, competition and objective criteria in decision-making. They will supporttransparency and accountability in the management of public finances, includingbudgeting, reporting on government revenue, expenditure and performance, auditingand risk management. The principles outlined below will underpin the regulatoryframework and demonstrate our commitment to tackling corruption in publicprocurement by ensuring open, transparent, non-discriminatory behaviours andprocesses are the foundation of procurement.Principles of public procurement26. The principles of the new regulatory framework for public procurement should beconsistent with HM Treasury’s Managing Public Money and the seven principles ofpublic life as set out by the Committee on Standards in Public Life.27. The Government proposes that the following interdependent principles should beincluded in the new legislation:14 Transforming public procurement• Public good – procurement should support the delivery of strategic nationalpriorities including economic, social, ethical, environmental and public safety.• Value for money – procurement should enable the optimal whole-life blend ofeconomy, efficiency and effectiveness that achieves the intended outcome of thebusiness case.• Transparency – openness that underpins accountability for public money, anticorruption, and the effectiveness of procurements.• Integrity – good management, prevention of misconduct, and control in order toprevent fraud and corruption.• Fair treatment of suppliers – decision-making by contracting authorities should beimpartial and without conflict of interest.• Non-discrimination – decision-making by contracting authorities should not bediscriminatory.The public good28. The decision to invest public funds into policies, services, projects and programmes issubject to analysis and appraisal to assess the public good that is expected to accrueas a result of the expenditure. For national spending this will have been conducted inaccordance with the HM Treasury Green Book guidance and subject to National AuditOffice scrutiny. Procurement should draw a clear link between the objectives,outcomes and anticipated benefits that underpin the investment decision and theselection of contracting parties to deliver those benefits.29. Public procurement should also be leveraged to support strategic national priorities.Commercial teams should have regard to the Government’s national priorities whenconducting public procurement. These will be set out in the National ProcurementPolicy Statement (see below). This is consistent with international practice wherepublic procurement is regularly leveraged to achieve social and environmental valuebeyond the primary benefit of the specific goods, services and capital works throughoperational delivery that contributes additional social value.Value for money30. The Government is making clearer the ways in which value for money is assessed atthe point of the investment decision, which will be set out in a revised Green Book. Acritical element of the assessment is a strong strategic case that sets: a clear objectivealigned to government priorities, a rationale for intervention, and/or robust evidenceand analysis for how different options for delivering that intervention will advance thatobjective (the ‘logical process of change’).31. The role of procurement is to translate the desired outcomes into the right contractsand select the supplier or suppliers that will deliver these in the way that offers bestsocial value for money. For many procurements there may only be a single contract,but for complex major projects there will be many hundreds of separate contracts ofdifferent types, sizes and sectors that need to be packaged and procured in such aTransforming public procurement 15way as to deliver the whole project successfully. Whether there is one contract ormany it is critical to maintain the “golden thread” from government priorities via thebusiness cases through to procurement specifications and the assessment of priceand quality when awarding contracts.32. Value for money does not therefore mean simply selecting the lowest price, it meanssecuring the best mix of whole-life quality and effectiveness for the least outlay overthe period of use of the goods, works or services bought. Value for money alsoinvolves an appropriate allocation of risk and an assessment of the procurement toprovide confidence about its probity, suitability, and economic, social andenvironmental value over its life cycle.Transparency33. The principle of transparency in public procurement is central to the integrity andaccountability of the system and the fight against corruption. This is consistent withbest international practice. It ensures business opportunities are accessible, andprocesses and decisions can be monitored and scrutinised. It ensures that decisionmakers are held accountable for spending public money and helps open up publicprocurement to more effective competition that, in turn, can deliver better value formoney.Integrity34. The principle of integrity is key to strengthening trust and combating corruption.Procurement professionals must always bear in mind the needs of the “customer” or“user”. Planning a public procurement must promote good governance, soundmanagement of public money, and a professional relationship between buyer andsupplier, e.g. managing conflicts of interest, protecting intellectual property andcopyrights, confidential information or other standards of professional behaviour.Fair treatment of suppliers35. The principle of fair treatment of suppliers means all suppliers must receive fair andreasonable treatment before, during and after the contract award procedure so as toencourage participation by suppliers of all types and sizes. Suppliers should havetimely access to review mechanisms to ensure the overall fairness of the procurementprocess.Non-discrimination36. The principle of non-discrimination applies to procurement under the new regulationsand means contracting authorities cannot show favouritism among domestic suppliers.This principle also applies to suppliers who have rights under an international tradeagreement that covers the procurement. Non-discrimination in this context means thatsuppliers, goods and services from any other party to the agreement are given no lessfavourable treatment than domestic suppliers, goods and services.16 Transforming public procurementNational Procurement Policy Statement37. Taxpayers’ money spent through public procurement will be used to delivergovernment priorities through projects and programmes that generate economicgrowth, help our communities recover from the COVID-19 pandemic and tackleclimate change. To ensure that the procurement process itself scrutinises suppliers’methods adequately and reflects the requirement to deliver the full range of benefits ineach contract, the Government will separately set out plans to legislate to requirecontracting authorities to have regard to national priorities of strategic importance inpublic procurement. These priorities will be published in a National ProcurementPolicy Statement including:• delivering social value including economic, social and environmental outcomes;• commercial delivery including publishing pipelines of future procurement;• commercial capability including benchmarking performance.38. Linking the elements of social value through into procurement is critical to ensuring thesocial, economic and environmental benefits are delivered through the contract. TheNational Procurement Policy Statement will set out key outcomes that the Governmentbelieves all contracting authorities should have regard to in their procurement andcommercial activity where they are relevant to the subject matter of the contract and itis proportionate to do so, such as:• Creating new businesses, new jobs and new skills in the UK;• Improving supplier diversity, innovation and resilience;• Tackling climate change and reducing waste.39. Following the collapse of Carillion, the Government published the OutsourcingPlaybook and has recently developed the Construction Playb
