New Frameworks to Drive Growth and Value

The Procurement Act 2023 has officially come into force as of February 24, 2025. This landmark legislation is set to revolutionise public procurement by focusing on three key areas:

1: Driving Economic Growth: The new Frameworks are designed to stimulate economic activity and create opportunities for businesses of all sizes.

2: Delivering Social and Economic Value: Emphasis is placed on ensuring that public procurement delivers tangible benefits to society and the economy.

3: Building Commercial Capability: Enhancing the skills and capabilities of procurement professionals to ensure effective and efficient procurement processes.

Implications for Suppliers

The new Frameworks bring significant changes for suppliers:

Increased Opportunities for SMEs and VCSEs: The Government has set ambitious targets to increase spending with Small and Medium-sized Enterprises (SMEs) and Voluntary, Community, and Social Enterprises (VCSEs). This opens up more opportunities for smaller businesses to secure Government contracts.

Stricter Compliance Requirements: Suppliers must adhere to new rules on exclusion and debarment, particularly concerning competition law. Suppliers involved in illegal activities such as bid-rigging or price-fixing risk being excluded from public procurement unless they demonstrate corrective measures.

Transparency and Accountability: A new Central Digital Platform will allow the public to scrutinise procurement decisions, ensuring transparency and accountability in the procurement process.

Harnessing the Power of AI

The Cabinet Office has released a comprehensive AI Opportunities Action Plan, encouraging Contracting Authorities to leverage AI technologies through existing Frameworks and Dynamic Purchasing Systems.

Key initiatives include:

AI Growth Zones: Dedicated zones to speed up planning for AI infrastructure, ensuring the necessary energy connections and support for AI development.

AI in Public Services: AI is being integrated into public services to improve efficiency and service delivery. Examples include using AI to diagnose medical conditions faster, streamline administrative tasks, and enhance road maintenance.

Economic Impact: The AI initiatives are expected to boost productivity and economic growth, with potential gains of up to £47 billion annually

Increased Spending Figures

The latest public spending statistics reveal significant investments:

Total Managed Expenditure (TME): For the fiscal year 2023-24, TME was £1,229.9 billion, marking a 6.1% increase from the previous year.

Total Expenditure on Services (TES): TES reached £1,111.3 billion in 2023-24, a 3.3% increase from the previous year,

Departmental Expenditure Limits (DEL): DEL for 2023-24 was £558.5 billion, up by £17.1 billion or 3.2% from the previous year

Impact on Local Businesses

The increased Government spending and new Frameworks are expected to have a positive impact on local businesses:

Boost to Local Economies: Increased spending with SMEs and VCSEs will stimulate local economies, creating jobs and fostering community development.

Enhanced Business Opportunities: Local businesses will have more opportunities to bid for and secure Government contracts, leading to growth and expansion.

Support for Innovation: The focus on AI and technology will encourage local businesses to innovate and adopt new technologies, enhancing their competitiveness.

Financial Stability: The Government’s commitment to transparency and accountability ensures that local businesses can rely on fair and timely payments, contributing to their financial stability.

Sectors Set to Benefit

Specific sectors poised to benefit from the increased spending and new Frameworks include:

Healthcare: Significant investments in health and social care will enhance services and infrastructure.

Education: Increased funding will support educational institutions and initiatives.

Technology: The AI initiatives will drive growth and innovation in the tech sector.

Transport: Investments in transport infrastructure will improve connectivity and efficiency.

Defence: Enhanced funding will bolster national security and defence capabilities.

Stay tuned for more updates as the UK Government continues to implement these transformative changes, driving growth, innovation, and value for all stakeholders.