Tendering trends in 2021

We therefore expect to see some changes to tendering every year. However, if 2020 is anything to go by, 2021 will be no normal year. Tenderers who have been nervously – or excitedly – waiting to see how Brexit will impact on public-sector tendering since 2016 now have COVID-19 and the associated restrictions to contend with, too.

As if that wasn’t enough, the UK Government is pressing on with a series of consultations and changes to some of the most fundamental tenets of central and local government procurement processes.

Put it all together and this means that there’s a lot for UK businesses to think about if they want to make the most of public-sector tender opportunities in 2021.

Find a Tender Service

Whereas some events might take longer to filter through to changes to UK public-sector tender processes, the end of the transition period for the UK’s departure from the European Union on 31 December 2020 brought some immediate changes.

In-scope procurements run by public-sector buyers across the United Kingdom had been publicised, by law, on Tenders Electronic Daily (TED), the electronic supplement to the Official Journal of the European Union – most commonly known by the acronym ‘OJEU’ – since the website’s creation. When the UK formally left the EU on 31 January 2020, tenderers might have scratched their heads for a while before finding UK-based opportunities in a different part of the website, nestled between Ukraine and Zambia amongst other non-EU states.

With the transition period now complete, no new contract notices in the UK are to be posted on TED, which might leave some bidders wondering where to look for relevant opportunities.

At the same time that TED became no longer available to UK buyers, a new service, Find a Tender, was launched. Find a Tender functions in much the same way as Contracts Finder: another GOV.UK service which provides information on opportunities below the statutory contract value. As this threshold was set in UK law and is lower than the statutory OJEU threshold for EU public procurement in any case, we are not anticipating any notable change to the profile of opportunities presented on Find a Tender compared to TED.

Our advice would nonetheless be for tenderers to familiarise themselves with the functionality of Find a Tender early, so that they are confident that they can identify and pursue opportunities that might be relevant to them as they arise.

Brexit

With many of the rules previously in place having been defined in UK law rather than EU law in any case, and with others being either unchanged or otherwise continuing to reflect the same rules regardless, the formal process of Brexit itself isn’t expected to have any immediate impact on public-sector tendering.

Although many conversations during the referendum focused on sovereignty in trade, leading some people and businesses to speculate that UK buyers will be freer to award contracts to UK-based businesses, it is important to note that the UK is now a member in its own right of the World Trade Organization’s (WTO) Agreement on Government Procurement (GPA). The terms of this agreement mean that UK businesses will continue to have equal right to bid for circa £1.3trillion of overseas public-sector contracts each year; similarly, tenderers based overseas within other states that are party to the GPA will continue to have equal right to bid for UK public-sector contracts.

Crucially, the EU itself continues to be party to this agreement – meaning that, in essence, there is no change expected to international competition in UK public-sector procurement above the defined thresholds (circa £122,976 for supplies and services at the time of publication) as a direct result of the UK’s departure from the European Union. Overseas suppliers within EU member states and other states party to the GPA will continue to be able to bid freely and fairly for public sector contracts in the UK, just as UK-based businesses will continue to bid for contracts in the EU and other signatory states.

The exception to this will be below-threshold procurements, for which the Cabinet Office’s Procurement Policy Note PPN 11/20 provides options for buyers to reserve opportunities below the WTO-defined thresholds. Opportunities ‘reserved’ in this way would be accessible only to SMEs and/or bidders in the county of service delivery. These options are particularly interesting, and could mean that smaller bidders have more confidence to bid for low-value works, safe in the knowledge that large national organisations based outside of the local area can’t swoop in during the tender process and out-compete local firms.

While the immediate, direct impact of Brexit on UK public procurement might therefore be minimal from a regulatory perspective, it would be naïve to assume that the wider implications of Brexit won’t filter through to significant and notable changes. Key considerations for many bidders will include changing exchange rates and resultant impacts on competitiveness and supply chains and potential logistical challenges at borders.

In markets where labour supply is often dependent on foreign nationals, such as nursing and other relevant health and social care services, Brexit could have a significant impact, so bidders will need to carefully weight up opportunities through strategic bid/no bid processes and potentially rethink their approach to both pricing and service delivery – ensuring they can deliver contracts on a basis that works for them, as well as convincing buyers that their service delivery model is fit for purpose.

At the same time, Brexit’s direct impact on local authorities and other buyers might necessitate changing their purchasing habits, in turn resulting in the need for more tender exercises to be run.

COVID-19

Wherever there is uncertainty, there is risk. Nowhere is this truer than the ongoing COVID-19 crisis, and buyers’ uncertainty around future rates of infection and government policy will likely continue to impact on buyers’ procurement cycles.

In 2020, bidders saw many contracts being extended and procurement exercises being delayed, postponed or cancelled, and the Cabinet Office issued new guidance in a Procurement Policy Note (PPN 01/20) in March, granting public-sector buyers new powers and instruments to procure goods, services and works with urgency. These instruments remain available to buyers in 2021, and further increases in the infection rate will make it more and more likely that buyers have need to modify contracts and normal procurement processes – where there is demonstrable need to do so.

That said, even with the new instruments as defined in PPN 01/20, buyers cannot extend contracts indefinitely; nor can they change the scope of contracts beyond what is reasonable and proportionate. Similarly, they cannot bypass the tender process unless there is a real, demonstrable and urgent need to do so.

In 2021, we would therefore expect to see many of the competitions that were delayed, postponed or cancelled in 2020 continuing to re-emerge in much they same way that many did in the latter half of last year. While local authorities’ attention may need to be redirected to urgent procurement of PPE and similar supplies, the net effect on the number of tenders issued may therefore be positive, rather than negative. Add to this the fact that COVID has resulted in new requirements for goods, supplies and works, and the pandemic will continue to present opportunities for bidders to support vaccination rollout programmes, schemes to combat isolation and other activities, all procured via competitive tender procedures.

UK Government

It was announced on 15 January 2021 by the Office for National Statistics that the UK economy again shrank in November last year. While the 2.6% reduction in gross domestic profit is dwarfed by negative growth of close to 20% in April 2020, this is still significant, and with most of the UK again in lockdown is likely to continue.

Various options will be available to the Government to reignite growth in the UK economy, with increased investment and spending guaranteed to play some role.

For UK businesses, this will translate to more tenders and more opportunities to secure lucrative contracts – supporting COVID-19 recovery in their local communities, while also safeguarding their own stability and growth.

Although COVID-19 recovery will be the focus, UK Government is also continuing to look at other ways in which public-sector procurement can be improved, with a view to unlocking efficiencies and driving innovation. An ongoing consultation – the Cabinet Office’s Green Paper: Transforming Public Procurement – was published in mid-December with buyers, suppliers and anyone else with an interest in public procurement invited to share their feedback until 10 March 2021.

While the proposals in the Green Paper are, at this stage, just that – proposals – they still serve as a signal of intent. Ideas presented within the paper include, amongst others, proposals to further standardise the qualification/selection process within tenders. In 2016, the Crown Commercial Service released a standardised selection questionnaire (SSQ) to be used by all in-scope buyers in England and Wales. This has simplified the initial stages of the tender process for bidders and buyers alike, removing many of the inconsistencies and uncertainty that might have been prohibitive to SMEs and other bidders.

The proposals within the Green Paper suggest that this will be taken further, with a centralised portal, accessible to all in-scope buyers, storing bidders’ responses to selection and qualification criteria. While this will be complex and likely very difficult to implement, it would streamline the process across the board – although many buyers will look to add to the ‘standard’ question set with additional questions that are key to their unique requirements on each occasion.

Another challenge for buyers and bidders alike is navigating the various complex regulations around public procurement, with uncertainty around which regulations apply in each situation. Proposals to consolidate all guidance and legislation into a single set of regulations will give all parties a greater sense of clarity, with increased confidence again likely to lead to increased competition as well as more seamless tender processes.

One of the bigger changes that, if put into practice, would have an impact for bidders is the proposed overhaul of the menu of tender processes available to buyers. At present, more than 90% of opportunities are tendered under either the open or the restricted procedure. The proposed changes would see the restricted procedure falling under a new competitive, flexible procedure, designed to give buyers ‘maximum freedom to negotiate and innovate’. What this means in practice – if, indeed, the proposals do become reality – is to be seen, but the expectation is that buyers will communicate with bidders more, and specifications might be less rigidly defined at the start of tender processes so that suppliers are freer to propose innovative approaches to service delivery.

With so many factors to take into account, it is difficult to predict the net effect on each aspect of public procurement. We are nonetheless confident that all the challenges that we are currently facing will give rise to opportunities in one form or another.

To discuss any of the above, or your organisation’s procurement plans for the forthcoming year, please do not hesitate to contact our team of bid professionals.