**London**: The Procurement Act 2023, effective from 24 February 2025, consolidates procurement laws, imposing new contract management requirements and performance measures for public contracts, with a particular focus on the construction sector’s compliance and transparency expectations.
The Procurement Act 2023 (PA 2023), set to come into force on 24 February 2025, aims to consolidate existing procurement regulations into a single legal framework while enhancing focus on supplier performance and contract management. The implications of Part 4 of the PA 2023 are particularly significant for those engaged in the construction sector, as it establishes new contract management requirements and several implied terms for public contracts.
Defined under section 3 of the PA 2023, a “public contract” relates to any contract for the supply of goods, services, or works to a contracting authority that exceeds a specified monetary threshold and is not exempted from the legislation. The specific threshold amounts are detailed in Schedule 1 of the act, while Schedule 2 outlines exempted contracts.
One critical aspect of the PA 2023 is that it is not retrospective; contracts awarded under any previous procurement regime prior to 24 February 2025 will not be affected by these new provisions. Therefore, procurement processes initiated before this date remain valid and unchanged.
Part 4 introduces several implied terms related to payment, termination, and performance measurement. For instance, sections 67 and 68 outline payment requirements for public contracts, ensuring that valid, undisputed invoices are paid within 30 days, in line with existing regulations under the Housing Grants, Construction and Regeneration Act 1996. New provisions regarding the publication of payment information stipulate that contracting authorities must disclose payment compliance notices as well as information regarding payments exceeding £30,000.
The requirements regarding contract termination have been expanded in the PA 2023 as outlined in sections 78 to 80. Contracting authorities now have greater authority to terminate contracts for reasons such as material breaches of the act or the status of the supplier. Section 80 requires the issuance of a contract termination notice within 30 days of termination, again reinforcing the emphasis on transparency.
The act also mandates that for certain public contracts valued over £5 million, key performance indicators (KPIs) must be established to gauge supplier performance. Parties must publish these KPIs in the contract details notice and provide annual performance updates, including post-termination performance summaries.
Modifications to contracts are governed by sections 74 to 77, which clarify the circumstances under which modifications can be made and introduce the concept of a “convertible contract” that becomes subject to public contract rules upon modification. Enhanced transparency is required with stipulations for notification and publication of contract changes, particularly for modifications exceeding £5 million.
In conclusion, while many elements of the terms outlined in the PA 2023 may be familiar to those in the construction industry, the act expands and clarifies existing provisions. Companies engaged in public contracts are advised to review their contractual frameworks in light of the new requirements stipulated in the PA 2023 to ensure compliance and understanding of their obligations. A version of this article was originally published in PLC Construction on 23 February 2025.
Source: Noah Wire Services
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