This is the second in our series of cross-sector articles considering the impact of the Procurement Act 2023 (the Procurement Act), which came into force on 24 February 2025 and introduces changes to how public procurements are awarded, managed and investigated. This article examines the impact of the Procurement Act on the life sciences sector.
Whilst the provision of healthcare services by the NHS is subject to its own separate procurement regime, known as the Provider Selection Regime, procurements for non-clinical health care services and medical devices fall within the scope of the Procurement Act.
What has changed?
First, the introduction of the new competitive flexible award procedure is designed to enable contracting authorities to have more input over the design of the relevant award procedure. Government guidance suggests that the new regime "allows the contracting authority the freedom to design its own procedure. The contracting authority may choose to incorporate numerous processes into the procedure, such as negotiation, dialogue or a demonstration stage." Suppliers will need to be aware that the form of procurement they may be used to could be changing and adapting, with the contracting authority choosing to use more or different steps than before.
Second, there is arguably a shift in the way in which technical specifications can be assessed. The previous regime included significant detail about the way in which technical characteristics may be defined and gave some scope to formulate technical specifications by reference to either: performance or functional requirements; or specific technical specifications. The new regime appears to emphasise the former, ie what the contracting authority wants to achieve rather than the adoption of specific specification. For instance, government guidance notes that a particular design, a particular licensing model or descriptive characteristics can only be used where it is not otherwise possible to refer to functionality. This may mean in the first instance requirements could be more opaque and suppliers should think carefully about the specific performance and functional requirements that the contracting authority is seeking to ensure the supplier addresses in its responses.
Third, the requirement for contracting authorities to have regard to the barriers to participation that SMEs may face, and to consider whether such barriers can be removed or reduced could create opportunities for smaller start-ups or biotech firms to compete more equally with larger pharmaceutical companies. This was at the heart of the government's National Procurement Policy Statement, which put as a key plank driving economic growth by giving SMEs a "fair chance".
Mandatory consideration of social value as part of the contract award criteria may also provide opportunities to broadcast how medicinal products and equipment would provide societal benefits.
The ability to award direct contracts remains but with some additional changes such as the ability to award contracts when necessary to protect life in emergencies. This justification can be relied on even if the urgency is foreseeable. The direct award justification where the contract is for the production of a prototype or otherwise novel goods/services remains. This justification relates to research and development contracts, where the production or development concerns a specific prototype, or novel goods and services which the contracting authority has commissioned for development. The contract must be aimed at testing the suitability of the goods or services concerned, understanding the viability of production at scale, or any other research, experiment, study, or development.
Where the procurement is made by way of a competitive process, the contracting authority must publish a contract award notice, including details of the successful supplier and the contract's value. Where the contracting authority intends to make a direct award, it must instead publish a 'transparency notice'. The effect is that parties will have a greater opportunity to scrutinise such awards during the notice period.
What does this mean for suppliers?
Suppliers will likely be well versed in NHS' specific procurement practices and rules, but the new regime means that there are new processes to follow and different policy emphasis. The Procurement Act is designed to open up new opportunities for SMEs and there is now a much greater emphasis on contract management.
If you would like to hear more, please join us at our Procurement Act 2023 webinar which forms part of our webinar series: Regulation for innovation.
Our public procurement article series also explores other considerations in more detail. Please contact Matt Evans, Nicholas Vollers or a member of our team if you want to discuss this or any other issue.
