Navigating The New Procurement Act – Q&A for Education Professionals

Our recent webinar, Navigating The New Procurement Act Of 2024 And How It Can Be Used To Help You Achieve Net Zero, gave us an opportunity to understand the questions and concerns those working in the education sector have about the upcoming legislation changes.

We’ve pulled together the questions asked and answers given by Jessica Brydon, our Procurement, Quality & Compliance Director and expert in the forthcoming Procurement Act during the session below.

If you have any questions about the Procurement Act, please don’t hesitate to reach out to us. You can also watch a recording of the recent webinar here.

Q&A

1. Are the threshold contract values inclusive or exclusive of VAT?

Inclusive, bear this in mind when you’re calculating how large your contracts are.

2. Are the threshold contract values for the entire value of the contract?

Yes, for instance a 3 year contract value will need to account for the 3 years. Try to estimate as accurately as possible based on historic or predicted spend, but include an overestimate to account for inflation, minimum wage increases, market changes etc, as well as any known or anticipated increases during the contract (e.g. new sites planned to join).

3. What is the best way to manage transparency notices to ensure we remain compliant?

Set up a contracts register. This could be as simple as an Excel spreadsheet that lists the contracts, when they were tendered, when they started and when they are ending. This will help remind you when you need to undertake activities such as restarting the tender, publishing notices etc. You can also use a CRM system to record the same information. We have templates you can use.

If you use an e-procurement tool for your tenders, many of these will link directly to the government website for publishing the required notices and will guide you on what is required

4. Schools are exempt from the rules for under the threshold procurement. Does that mean Multi-Academy Trusts will be exempt and do not have to publish all the notices? I was under the impression that all contracts over £30K had to follow the new rules.

Schools are exempted from the below-threshold elements of the Procurement Act, as well as certain payment notices under the act – the definition of a school within the Act includes the proprietor of a school or Academy (i.e. the person or body of persons responsible for the management of the school).

In principle, this would therefore include Multi-Academy Trusts within the exemption as proprietors, however it is likely further guidance will be published on how the rules apply specifically for Trust procurement in due course.

There are still a wide number of notices which will have to be published by schools for any above-threshold procurements however.

5. If any works are going through frameworks, do notices still need to be submitted?

Not all of them. Since the suppliers are already selected for a framework, you don’t have to publish a tender notice, but you do have to publish a contract award notice and contract details notice, to show you used the framework.

6. What is the difference between works and services, thinking mainly around maintenance such as new roofing, heating replacements etc?

This is slightly complicated. A contract is a works contract if the main purpose of the contract is to carry out works. However, if the works are incidental to providing a service, as the main reason for the works is to support delivery of a service, these may class as service contracts. If you have concerns around whether your contract would classify as works or services, we would recommend you get advice from a consultant or procurement specialist.

Additionally, you can now find a list of what classifies as works activities at Schedule 3 of The Procurement Regulations 2024 which were recently approved by the Government.

7. With reference to construction works, are we saying this falls into the “Works Contract” category £5,336,937 and above, and therefore anything below this value does not need to follow this procedure? It certainly feels though construction related works have been an afterthought in this Act?

Correct, if it’s below this, you don’t have to follow the procedure, but you can if you would like to (and it may be good practice to follow some of the key principles anyway). The works threshold has always been considerably higher than services, due to the nature of works contracts and the supply market for such works, and is a similar value under the current regulations.

If you are doing large value contracts, your internal financial policy may have a lower threshold and still want you to tender, and you should still look to compete where feasible. For non-school organisations, the below threshold regulations will also still apply here which mandate certain notices and elements of competition.

8. A Contract Change Notice must be issued if there is a substantial change to a contract, but what is considered to be a substantial change, lets say in terms of price? 5%, 10%?

A change (increase or decrease) of below 10% of the contract value for a services contract, or below 15% for a works contract, would be classed as a “below-threshold” modification (i.e. non substantial). This is provided it meets certain other criteria, including not materially changing the scope of the contract, not increasing or decreasing the contract length by more than 10%, and not materially changing the economic balance of the contract in favour of the supplier.

9. What happens if the contract term ends (i.e. cleaning), but the school is happy with the contractor and wants to extend it for another year? Do we need to publish it?

There are other ‘permitted modifications’, such as where the possibility of the change is clearly and unambiguously provided for in the contract, as well as any tender or transparency notices published. This could apply for things such as optional extensions of contracts, provided this was included for in the tender and contract. This would be allowed to exceed the values stated above, provided the change does not materially change the overall nature of the contract.

We suggest building options to extend into your contract at the outset as part of the tender. We advise not going beyond 5 years, because markets change and it may be advantageous to retender. If you haven’t built these options in, then you would need to retender, or look for a suitable framework to utilise to meet your requirements.

10. If you built in an option to extend the contract by another year and decided to do that, do you still have to publish a contracts change notice?

If you take up any modifications set out in the contract you would be required to publish a contract change notice, unless the effect of the modification would be:

• A change in contract length of 10% or less of the maximum term provided for on award of the contract

• A change in value of 10% or less for a services contract, or 15% or less for a works contract.

You would therefore be required to publish a change notice if the extension does not meet the above criteria.

11. What happens for example if a cleaning company goes into liquidation? Are you able to appoint as a temporary measure?

Yes, there is a direct award ground for urgency, which could apply if a company suddenly goes into liquidation and it is not possible to undertake a competitive tender. The urgency ground for direct award only applies for extreme and unavoidable urgency outside of your control and not due to your own actions. You can’t direct award if you have simply forgotten to tender or caused delays due to your own actions.

12. Can you still direct award within a framework?

You can if the framework allows for it. It depends on how the framework has been set up, and whether there is a compliant direct award option available. Some frameworks are more flexible than others so it is worth speaking to the framework providers directly to understand the rules of any frameworks you are considering using. Over time, the government aims to list available frameworks on their Central Digital Portal, however this will not be immediately available.