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The Procurement Act 2023 – Setting and Publishing KPIs

Westminster and Big ben lite up.

As part of our ongoing series of blogs on the Procurement Act, we take a look at Sections 52 and 71 of the Act, which includes a mandatory requirement for publishing key performance indicators.

Key performance indicators (KPIs) form an important part of government tenders and public sector procurement. KPIs allow contracting authorities to set minimum levels of acceptable performance and monitor suppliers against this to ensure adherence to crucial parts of a contract – for instance, response times.

We have previously covered other topics included as part of the Procurement Act 2023, including an initial analysis, the new public debarment list and the future of social value under new procurement legislation.

The Act is currently due to come into force in October 2024 – meaning bidders and buyers alike have already begun preparations to ensure compliance.

KPIs in the Procurement Act

While KPIs are commonly used as part of current public sector contracts, new legislation has formalised and strengthened existing requirements. These measures can be found in Section 52 of the Procurement Act, as described below:

“… Before entering into a public contract with an estimated value of more than £5 million, a contracting authority must set and publish at least three key performance indicators in respect of that contract.”

There is leeway for contracting authorities to set KPIs which align with the scope and purpose of the contract – meaning it could apply to any area of performance. Common KPIs suppliers and providers are measured include:

Importantly, the social value tender commitments for each bidder will also form a contractual commitment and KPI over the contract term.

Furthermore, Section 71 of the Act gives additional guidance around assessing and publishing information on KPI performance:

“… At least once in every period of twelve months during the life-cycle of the contract and on termination of the contract the contracting authority must –

  1. Assess [supplier] performance against the key performance indicators, and
  2. Publish information specified in regulations under Section 95 in relation to that assessment.”

Consequently, statistics on KPIs for suppliers of eligible contracts will be subject to public scrutiny – allowing other clients and authorities to monitor their performance. In addition to the £5 million value threshold, framework agreements and contracts which qualify for the government’s ‘light touch’ regime – such as health and social care contracts – are excluded from this requirement. However, it is likely that authorities will also adopt these measures for non-qualifying government contracts, as part of a best practice approach.

What does this mean for bidders?

There are a number of outcomes stemming from the new KPI guidance under the Procurement Act which bidders should be aware of.

Suppliers who have extended or multiple non-compliance of contract-specific KPIs could risk inclusion on the public debarment list – where they will stay for a predetermined or unspecified amount of time.

How you can prepare for changes

As in the introduction, bidder organisations should begin preparing in advance of the Procurement Act coming into force in October 2024, minimising risk of non-compliance. By proactively addressing the list below, this should ensure a smooth transition into new procurement policy.

The tender process already subjects bidder organisations to significant scrutiny. However, the central government and contracting authorities are hopeful that changes will increase the quality of works and services taxpayers receive. Ultimately, it remains to be seen how changes will affect tendering. While other measures, such as increased use of AI in procurement, may result in increased bidding activity, the new KPI requirements may discourage some from submitting a bid.

As part of our position as thought leaders within the bid and tender writing industry, we will continue to provide analysis and explain change to the public procurement process in advance of the October 2024 ‘go live’ date for the Procurement Act 2023.

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Since 2009, Executive Compass have supported more than 7,000 PQQ, SQ and ITT submissions, with an 85% success rate and 75% repeat businesses evidencing our experience and expertise. If you would like to discuss the bid writing support, bid review services or bid training courses that we offer, contact us today at info@executivecompass.co.uk or 0800 612 5563.

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