Procurement Act Reforms – Performance
The forthcoming changes required from the Procurement Act in October 2024 introduce significant reforms focusing on Key Performance Indicators (KPIs), exclusion and debarment to enhance the efficiency, transparency and accountability of public procurement processes.
Key Performance Indicators (KPIs)
1. Key performance indicators are contractual targets against which a supplier’s contract delivery can be measured. They should be designed around the most important contract deliverables. They must clearly link to the wider contract objectives and should also include minimum satisfactory standards and performance escalation protocols, should these not be met.
2. The Act mandates the establishment of at least 3 KPIs for all major public procurement contracts with a value of over £5 million GBP. These KPIs will be published as part of the Contract Details notice and Authorities must then publish a Contract Performance Notice at least once every 12 months for each of those contracts, rating the supplier's performance against the KPIs. These KPIs are also required to be published if the contract has been terminated. These indicators will measure performance against predefined benchmarks such as quality, timeliness, cost-effectiveness and compliance with contract terms.
3. The notices published on a central digital platform will be available to the Cabinet Office Procurement Review Unit set up by the Cabinet Office (PRU), a new unit to monitor compliance with the Act. The notices will also be available to other public sector organisations as inspiration for similar contracts. The PRU will also oversee exclusions and debarment.
4. According to Cabinet Office advice, KPIs should be designed based on what aspects of contract performance are the most important to its success. They should be Specific, Measurable, Achievable, Realistic and Timebound (SMART), including:a) a clear and realistic target linked to one or more contract objectivesb) a scoring mechanism to determine the supplier’s performance under that KPI, and;c) a “minimum score” that, if not met, could trigger performance improvement measures.
Equally, the advice is to review KPIs which do not add value or are immeasurable which may incur unnecessary additional costs.
5. To enable consistency and ensure that data is comparable across contracts, the central digital platform will require KPI data to be published using the following standardised rating system:
- Good: Performance is meeting or exceeding the key performance indicators
- Approaching target: Performance is close to meeting the key performance indicators
- Requires improvement: Performance is below the key performance indicators
- Inadequate: Performance is significantly below the key performance indicator
- Other: Where performance cannot be described as good, approaching target, requires improvement or inadequate (e.g. where no data is available or where relevant service delivery has not taken place)
CHIC’s experienced team can support members in determining what KPIs are most suitable to support contracts under our key services:
Whilst CHIC will maintain some KPIs that may be standard to the industry, CHIC is also able to advise on KPIs that are tailored to the service / works or supplies contracts under these service lines.
More information on our service can be found here https://www.chicltd.co.uk/services/.
The procurement act has introduced new measures around Exclusion and Debarment, where details of suppliers that have been excluded are maintained in a Centralised Debarment List and vice versa. The debarment list must be used to exclude suppliers that are listed as requiring mandatory exclusion.
Exclusion
1. Criteria for Exclusion: The Act specifies clear criteria for excluding contractors from bidding processes. Grounds for exclusion include poor past performance, non-compliance with contractual obligations, legal and regulatory breaches and unethical practices such as fraud and corruption by the supplier or any associated/ connected persons.
There are two types of exclusion:
Mandatory Exclusion as per Schedule 6 of the ActContracting Authorities have a duty to exclude suppliers from Tendering activities
Discretionary Exclusion as per Schedule 7 of the ActContracting Authorities have discretion as to whether to exclude suppliers from Tendering activities
The discretion will be based on the likelihood of the circumstances giving rise to the application of the exclusion grounds continuing or likely to occur again.
2. Contracting Authorities have the duty to report to the Cabinet Office where a bidder has been excluded from bidding within 30 days from the date of exclusion. A 5 year time limit will apply for all exclusions and, subject to further investigations by the Cabinet Office, the supplier will be entered on to the Centralised Debarment List (more info below).
3. Temporary and Permanent Exclusion: Depending on the severity of the issues, exclusions can be temporary or permanent. Temporary exclusions serve as a warning, while severe breaches can lead to permanent exclusion from all future public procurement opportunities.
4. Right to Appeal: Contractors facing exclusion will have the right to appeal the decision through an independent review process, ensuring fairness and due process. It should be noted that there is an 8 day standstill period from the debarment decision that allows suppliers to apply to the court to suspend the decision. Beyond this period, a supplier can apply to be taken off the debarment list, or revise the length of time they are on the list, however there must be a material change of circumstances or significant new evidence must be presented that has not previously been taken into account by the Government.
1. Debarment Mechanism: The Act introduces a formal debarment mechanism to prevent contractors with a history of significant underperformance, fraud, or other serious misconduct from participating in public procurement. Debarment periods will vary based on the severity of the misconduct.
2. Centralised Debarment List: a centralised debarment list will be maintained and accessible to all public authorities . This list will include details of debarred contractors, the reasons for their debarment, and the duration of the debarment period. These also contain details of suppliers that have been reported as excluded from bidding activities on previous bidding activities and where termination due to poor performance has occurred. This will be maintained by the Cabinet Office and the PRU.
3. Rehabilitation and Reinstatement: The Act provides a pathway for debarred contractors to be reinstated after demonstrating significant corrective actions ‘Self Cleaning’ and compliance with all relevant regulations. Reinstatement will be subject to a thorough review process.
4. These changes aim to ensure that only reliable, ethical and high-performing contractors participate in public procurement, thereby improving the overall quality and integrity of public sector procurement.
If you have any questions about the Procurement Act, please get in touch with Sam Domican at tenders@chicltd.co.uk.
