Procurement in a Nutshell: Procurement Act 2023 – Direct Award
12th April, 2024
This Nutshell will analyse the new obligations on contracting authorities in relation to making a Direct Award, drawing attention to any key changes from previous procurement legislation which contracting authorities ought to be aware of.
Introduction
On 26th October 2023 the Procurement Bill received Royal Assent and is now expected to come into force in October 2024.
The Act will, in particular, revoke the following:
- Public Contracts Regulations 2015 (PCR)
- Concession Contracts Regulations 2016
- Utilities Contracts Regulations 2016.
What’s new? (Section 41)
A contracting authority may award a public contract directly to a supplier, that is not an excluded supplier, if a direct award justification applies. The direct award justifications are set out in Schedule 5. These justifications include (among others):
- The public contract concerns the creation or acquisition of a unique work of art or artistic performance.
- The public contract concerns the production of a prototype, or supply of other novel goods or services
- the goods, services or works to be supplied under the public contract are strictly necessary for reasons of extreme and unavoidable urgency
The Act also allows a contracting authority to carry out a selection process or take such other preliminary steps as it considers appropriate for the purpose of awarding a contract directly.
A direct award may be awarded to an excluded supplier if the contracting authority considers that there is an overriding public interest. There is an overriding public interest in awarding a public contract to an excluded supplier if it is in relation to:
- The construction, maintenance or operation of critical national infrastructure
- Defence or security issues or economic stability
- Military or security operations
- A matter of extreme and unavoidable urgency
Section 42 provides that if a Minister considers it necessary, they may by regulations allow specified public contracts be awarded under section 41 as if a direct award justification applies. “Necessary” means necessary to:
- Protect human, animal or plant life or health, or
- Protect public order or safety
Section 43 also allows a contracting authority to switch to a direct award if they have not received any suitable tenders following a competitive tendering procedure. A tender is not suitable if the contract authority considers that
- It would be disregarded in an assessment of tenders
- It does not satisfy the award criteria
- There is evidence of corruption or collusion between suppliers
- It materially breaches a procedural requirement in the tender notice or associated tender documents.
Before awarding a contract under Section 41 or 43 a contracting authority must publish a transparency notice. A “transparency notice” must state that the contracting authority intends to award a contract directly, and any other information specified in regulations under section 95.
What’s changed?
In light of Covid-19, the Government has ensured that the ability to award a public contract directly, to protect human life, has statutory footing. However, for other contracting authorities, the direct award justifications in Schedule 5 are similar to the justifications outlined in Regulation 32 of the PCR.
What does this mean?
The ability to award public contracts directly remains strict for contracting authorities as the threshold to satisfy remains high. As such, caution should be taken when awarding contracts under Section 41.
For further information please contact Melanie Pears or Tim Care in our Public Sector Team
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
This page may contain links that direct you to third party websites. We have no control over and are not responsible for the content, use by you or availability of those third party websites, for any products or services you buy through those sites or for the treatment of any personal information you provide to the third party.
