The housing sector must engage with the debate about how we reshape procurement post-Brexit

There is plenty to be happy about in the reforms.

The reduction of the number of procurement procedures to three should be welcomed, particularly as one of those is a direct award process.

The new ‘competitive flexible procedure’ will provide housing providers with freedom to negotiate and adopt a much more nimble approach at the second stage of the process, which will be welcomed by clients and bidders alike.

The introduction of an ‘open’ framework agreement that can last up to eight years, rather than four, and can allow for the introduction of new providers after the third year, will be attractive to housing providers requiring longer, more strategic relationships with their supply chain.

How this will work in practice (eg how subsequent competitions are likely to work) remains for the detail. The same goes for the proposals around ‘DPS+’ arrangements, broadening the scope of their use beyond simple supplies and services to all types of procurement and ensuring that they are flexible and quicker/cheaper to participate in for bidders.

The abolition of Regulation 86 letters, the drafting of which has become a mini-industry in itself, is likely to be welcomed by clients.

However, the proposals are that client-provided feedback is replaced by the potentially more onerous task (for clients) of embedding transparency throughout the process, so that disappointed bidders can ‘pick its own’ feedback at the end.

Are housing providers ready for that level of transparency and presenting the inner workings of their procurement practices to bidders in that format? If they are: are their IT platforms?

The establishment of a single digital platform for supplier registration that ensures bidders only have to submit their data once to qualify for any public sector procurement, as well as a centrally managed and maintained debarment register, would also speed up and simplify the selection of bidders.

The green paper also includes proposals that will assist clients in identifying and disqualifying bidders for past poor performance and (eg) for failure to pay their supply chain promptly. All of this should reduce the burden of the administrative process and be seen as good news for housing providers.

The ability to require place-based outcomes (eg recruitment, training and skills initiatives for local residents) via below-threshold contracts (as well as the ability to reserve contracts solely to SMEs) will be welcome news for housing providers.

As anchor organisations in the community, housing providers and local authorities often see procurement as a barrier to the achievement of local spend.

New Procurement Policy Note 11/20 now allows housing providers to reserve contracts, on either a county-wide or UK-wide basis (nothing in between), and it is anticipated that this will be increasingly utilised by housing providers going forward.

Nevertheless, the importance of underpinning the ability to reserve contracts with a comprehensive community impact plan and effective social value roadmap, so as not to overburden such contracts, cannot be overstated.

There are omissions and/or proposals that housing providers may want to consider further.

The green paper lists other legislation that applies to contract award procedures but which the government does not propose to abolish or include in the reforms.

It is interesting to note that Section 20 of the Landlord and Tenant Act 1985 (as amended by Section 151 of the Commonhold and Leasehold Reform Act 2002) does not receive a mention as a significant piece of related legislation.

Co-ordination of a Section 20 leaseholder consultation with a public procurement process extends any procurement timetable by up to six months. The two procedures, while capable of combining, do not sit easily together and it would be a missed opportunity if any new procurement legislation did not seek to mitigate the difficulties for housing providers of running the two processes side by side.

The green paper does not address the issue of coverage.

The perennial question of whether providers ought to be caught by the regime is not addressed in the paper which may indicate that government considers it a non-issue.  Given the passage of time and the value-for-money benefits that a skilfully conducted procurement can bring, this may be less of an issue than it might once have been. 

Nevertheless, given the “bonfire of red tape” promised by Boris Johnson and the de facto exclusion of for-profit providers from the regime, it is a question which some might choose to ask, while someone is still holding the box of matches.

The question is then: what would you replace the rules with? The blank piece of paper may, at first, seem attractive to housing providers, but bidders may be less keen, given the risk of proliferation of procedures and standards of decision-making.

Ultimately, the blank piece of paper approach could undermine market confidence in the transparency and legitimacy of the decision-making process.

Significant procurement difficulties blight the daily decision-making in housing providers’ development departments.

It is, perhaps, odd that no mention of public works contracts and development agreements has made its way into the green paper, particularly given the developing and current nature of UK case-law in this respect.

We would want to see UK-specific guidance on this issue to help unlock more land development deals and speed up the housebuilding pipeline.

Neither is mention made of the ‘in-house’ or ‘Teckal’ exemption. We would hope that ‘no news is good news’ on this front, and that it finds its way into the final set of rules, given that numerous housing providers in group structures benefit from this practical exemption.

A number of housing providers are at the forefront of addressing both the housing and climate crises through the adoption of MMC in its many different forms.

Procurement regulation has never been kind to emerging technologies, and the benefit of adopting a market and value-led approach has never been highlighted so keenly as in this area of the housing sector at present.

It could be that the new competitive flexible procedure can help in this regard, and the transparency requirements may help underpin a new information revolution that will help reassure housing providers seeking to adopt a life-cycle costing approach.

Finally, the issue of training and upskilling in the sector needs to be addressed and acknowledged. Public procurement is not just about ‘buying stuff’.

It will need a competent, skilled and steady hand to navigate the new public procurement legislation, in whatever form it takes. Housing providers should ensure that their procurement teams receive comprehensive training – and the Cabinet Office has acknowledged this and noted that it will be rolling out guidance and training materials as appropriate.

It will be incumbent on all procurement teams to ensure that they are fully up to speed when the new regime goes live, in order to ensure that they take maximum advantage of the flexibilities it will inevitably offer and avoid falling back on old procurement habits not reflected by the new regulations.

This is a once-in-a-lifetime opportunity to build these rules from the ground upwards. We need to ensure the effectiveness of public procurement regulation for housing providers and guarantee its relevance to our regulatory structure and need.

We will not be ending up with a blank sheet of paper and so you have until 10 March 2021 to respond to the consultation – please get involved!

Rebecca Rees, partner, Public Procurement, Trowers & Hamlins