Tim Barrett shares his thought on the impact of the new Procurement Act

As we head into mid-2025, have we seen any impact from the new Procurement Act in the construction industry?

Brought in late 2024, the Act was going to aid in simplifying bidding for public contracts, ensuring prompt payments, improved social value outcomes, greater transparency and, most importantly, support for SMEs and local business. All of these, ultimately, ensuring public funds are utilised more efficiently.

The benefits to SMEs should be noticeable long term, as we know bureaucracy can stranglehold small business and this should make it easier for them to take part. It introduces a new, ‘competitive flexible’ procedure and simplifies the registration process through the central digital platform, Find a Tender. SMEs can now store and reuse their core business details across multiple bids, saving time and reducing these administrative burdens.

Another key area to small business is always cashflow. The Act aims to improve cash flow,  mandating that public sector buyers pay SMEs within 30 days of invoice submission. This provision extends to subcontractors, ensuring timely payments throughout the supply chain and, although we have these processes in place already, more enforcement would really help SMEs.

SMEs dedicate significant time and money to the process of procurement and struggle to find out how to improve their submissions. The new Act requires contracting authorities to provide specific, informative and timely feedback to all suppliers, including SMEs. This transparency will help understand how their bids compare and where improvements can be made for future tenders. Although not a direct financial benefit to contractors, it will, long term, significantly reduce administration on costs of future bids.

Alongside this, the Act wants to improve focus on social value, which is always seen as difficult to achieve by SMEs. It shifts the evaluation criteria from solely cost to a ‘Most Advantageous Tender’ approach, incorporating factors like environmental sustainability, community impact and ethical practices. This change allows SMEs to compete by highlighting their contributions to social value, even if they cannot match larger competitors on price, alone. However, there is also a downside, as larger organisations have entire departments dedicated to social value and, therefore, this could be a negative to the smaller contractor.

Additionally, the act allows SMEs access to framework agreements and introduces ‘open’ frameworks, allowing firms to participate more readily and reducing long-term exclusivity of contracts. Also, the insurance and financial requirements SMEs have to provide may no longer be required to provide audited accounts or insurance before bidding, lowering the entry barriers.

So, will this benefit small business, the simple answer is nobody knows. The intentions behind the Act are well meaning but could be cumbersome for those implementing, causing delays in projects and tendering, meaning work may be a bit thin on the ground until new systems are implemented and are up-and-running.

For the SME contractor, until the Act has been running for some time, we won’t find out what the outcomes will be. Hopefully, utilised in the right manner, the Act will allow SMEs access to projects that would not have been available to them. We need to monitor this and see if things will change in year one of the Act.