The Procurement Act 2023, which has now been deferred to February, provides an opportunity to actually transform public procurement.
It’s a classic case of both opportunity and risk. On the opportunity side, the Act offers greater flexibility to public bodies in how they procure goods and services, notably through the competitive flexible procedure guidelines. With its emphasis on reducing barriers for SMEs and other smaller organisations, it could also drive greater supplier diversity and community engagement.
However, on the risk side, the Act also requires greater governance and transparency, with more data-driven accountability and more reporting including of pipelines, notices, supplier performance and payment data.
Operationalising the Act
Despite the implementation start date of the Act being deferred, February is still just around the corner, and it therefore made a timely subject for our latest Time to Talk series – unsurprisingly, attendance was high! Clearly, the topic is very much at the forefront for public sector procurement and commercial professionals, as well as suppliers.
The event created an opportunity to reflect on where organisations currently stand in terms of readiness, and what approach they will be taking in order to fully realise the benefits the Act could provide.
Overarching theme from the discussion, was that procurement professionals are excited about the Act and eager to use its greater flexibilities moving forwards. However, there was also a lot of thinking about how bodies can actually operationalise it all. Clearly, it will take some time to bed in. Existing framework agreements will remain in place. It may be two to three years before we really see a step change in procurement practices.
To date – and understandably – the focus has been on the risk and compliance side. There is a wealth of free government training resources available, and we encourage organisations to look at these. A large batch of templates for various processes and procedures were also being published during September and these will be of significant use too.
One key area is technology. With the increased monitoring and reporting requirements, procurement systems will need to be more integrated with IT, finance and other systems. However, we have found in our work with a number of organisations to date that the reporting capabilities are already there in the modernised IT landscape – it is a question of knowing where it is and automating the flow of data needed to support procurement related reporting.
Phased approaches
More broadly, we find that organisations are generally thinking about the Act in three different ways. The first – and most immediate – is to ensure that the organisation is meeting the minimum requirements to be compliant – a Minimum Viable Product (MVP) approach, if you will. The second approach is more strategic – looking to go further where possible and create more value. The third is to bring about a true transformation of the procurement and commercial function where they act as a strategic partner to the whole organisation, driving better value for money, greater efficiency and improved outcomes.
Clearly, the transformation vision is a longer-term goal. But in our view, this should be the aim of every public sector body. The Act creates the opportunity for this – it is the catalyst through which transformation can happen.
Engaging with suppliers
One aspect discussed in the Time to Talk event was the effect of the Act on suppliers. It was noted that there is some anxiety in the supply chain, given that the flexibility introduced by the Act could result in a much wider variation of tendering processes between different bodies – increasing the time and effort required, and perhaps making the outcome more uncertain (perhaps particularly for big incumbent suppliers).
This is where market engagement is key. Our advice to public bodies is not to focus solely on internal preparations for the Act – look outwards and engage with your supplier base too. Upstream communication about what is coming is a critical aspect. Preparing the way will result in a smoother transition to the new regime.
Are you ready?
There is a lot to be excited about as the Act draws near, but there is also a lot to do. It’s a busy time for procurement professionals across the public sector – and at KPMG, we stand ready to advise and support you as the journey unfolds. We are currently supporting the Cabinet Office with the deep dive training sessions for the whole public sector, so please do get in touch if you’d like to discuss any aspect of the new requirements. We are here to help.
