The Procurement Act 2023 has officially come into effect, bringing significant reforms aimed at enhancing transparency in public sector contracts while improving access for small and medium-sized enterprises (SMEs).
A key provision of the Act is the introduction of mandatory 30-day payment terms across all public sector supply chains, ensuring timely payments for contractors. Additionally, contract awards will now be based on the Most Advantageous Tender (MAT) rather than the Most Economically Advantageous Tender (MEAT), allowing factors such as social value and environmental performance to be considered in procurement decisions.
For contracts exceeding £5 million, public sector authorities must establish and publish at least three key performance indicators (KPIs) to assess contract awards and future performance. Authorities will review and publish performance results against these KPIs annually.
To strengthen accountability, public sector bodies must issue public notices in cases of unsatisfactory contract performance or breaches, detailing contract terminations, awarded damages, or settlements. Companies with serious performance failures will be added to a debarment register, housed on a central digital platform.
Further promoting transparency, public sector clients are now required to publish quarterly reports on payments exceeding £30,000 under public contracts.
The Act also seeks to encourage SME participation by incentivizing contracting authorities to divide large projects into smaller lots, enabling specialized SMEs to bid directly.
As part of a phased implementation, existing frameworks and contracts awarded before the Act’s introduction will remain valid until they expire or until February 23, 2029.
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