This bulletin, the latest in our changing landscape series on the Procurement Act 2023, looks at how the Act requires contracting authorities to award contracts to the supplier offering the "most advantageous tender" (MAT), as opposed to the "most economically advantageous tender" (MEAT). As required by the current public procurement regime.
The current landscape
Contracting authorities must, under the Public Contracts Regulations 2015 currently in force, award contracts following competitive tendering procedures to the supplier who submits the most economically advantageous tender. The position is similar for utilities contracts, while in the Defence and Security Public Contracts Regulations 2011 the distinction is still drawn (and the choice offered) between awarding on the basis of MEAT or, alternatively, simply the lowest price. In some parts of the current regime, reference is made to the "best price-quality ratio". Where that applies, contracting authorities must clearly balance price (which can include whole-life cost) with the technical quality of the tender, to identify the product or service that represents best value for money.
In practical terms, the current requirement to identify the MEAT could, if desirable, allow award on the basis of lowest price only as distinct from a combination of price and technical quality (except where there is an express requirement to award on the basis of the best price-quality ratio). In reality, only the most straightforward awards - and probably those of relatively low value - are likely to be made on the basis of purely lowest price. For the most part, contracting authorities will seek to balance price against the technical quality of the tender, using an appropriate score weighting.
The new landscape: does price no longer matter?
The Procurement Act 2023 will require contracting authorities to award public contracts to the bidder who submits the most advantageous tender. The word "economically" is conspicuous by its absence. So what is the effect of this shift? Is price no longer important?
The answer is that price will still be a relevant, and important, factor in the awarding of public contracts. Despite the change in terminology, the relevance of price is still seen in the parts of the Act that deal with the basis on which awards are to be made.
Specifically, section 19 of the Act provides for contracting authorities to award a public contract to the supplier that submits the most advantageous tender in a competitive tendering procedure. The most advantageous tender is described as the one that the contracting authority considers: (a) satisfies its requirements; and (b) best satisfies the award criteria when assessed by reference to the assessment methodology, and (if there is more than one criterion) their relative importance.
The rules governing the setting of award criteria are found in section 23, which includes a non-exhaustive list of what can constitute the subject matter of a contract (to which the award criteria can, and should, relate). These include "price, other costs or value for money in all the circumstances".
All of this means that there is no real difference in practice between the current regime and the Act in terms of the fact that contracting authorities are able to factor price into the equation - so that, come the Act, they will still be able to take economic factors into account in identifying the MAT.
Where the Act does bring a change of emphasis is in setting out the broad range of factors that contracting authorities will be required to give due attention to when conducting public procurement. These are found in section 12, and are not limited to delivering value for money. Notably, they also include "maximising public benefit" - a factor that has the potential to encapsulate environmental and social objectives of many kinds. Contracting authorities must have regard to the importance of these objectives. This helps shine the spotlight on such factors by emphasising their importance alongside economic ones, and emphasises the fact that authorities should be using public procurement to deliver greater social and environmental benefits. While the explanatory notes to the Act do comment that awards can still be made on the basis of lowest price where this is the sole criterion (see paragraph 133 of the notes), this should not detract from careful consideration of wider matters which, where relevant, should be taken into account to maximise public benefit.
Finally, section 13 of the Act requires contracting authorities to have regard to the National Procurement Policy Statement. There is already a published National Procurement Policy Statement dating from 2021 (see Procurement Policy Note 05/21), which contains detail on delivering social value from procurement. However, once the Act is in force, the Statement will need to be reissued - because section 13 refers to the National Procurement Policy Statement as being one that a Minister "may publish" under that section. Because the 2021 Statement pre-dates the Act, it is not a Statement "published under" section 13. What is therefore needed is a new National Procurement Policy Statement - which will, thanks to section 13, be placed on a statutory footing. The draft of this - the 2024 National Procurement Policy Statement - was published on Monday 13 May 2024; it will come into effect on 28 October 2024, alongside the bulk of the Procurement Act. Contracting authorities will therefore do well to consider very carefully how their objectives can be delivered through the procurement procedures that they conduct.
Want to learn more about the key changes under the Public Procurement Act 2023?
Sign up to our mailing list to receive the next insight in this series, as well as further updates from our Public Procurement team. You can also read the previous articles in our Public Procurement Act 2023 changing landscape series here:
- Issue 1: The context of the forthcoming new public procurement regime
- Issue 2: Utilities contracts
- Issue 3: Concession contracts
- Issue 4: Defence and security considerations
- Issue 5: The new routes to market
- Issue 6: Technical specifications
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