The Procurement Act 2023: what are the implications for Scotland?

Background

The UK Government published a Green Paper titled 'Transforming public procurement' on 15 December 2020, announcing its intention to reform the existing procurement regime following its exit from the European Union. The Procurement Act 2023 received royal assent on 26 October 2023 and although its substantive provisions have yet to be fully commenced, the UK Cabinet Office has indicated that it will go live from 28 October 2024.  But how will it affect public procurements carried out in Scotland?

Public procurement is not a matter expressly reserved under the Scotland Act 1998 and is generally regarded as being a devolved matter and within the legislative competence of the Scottish Parliament. Like the regime currently applying in England and Wales, the existing regime in Scotland in relation to public procurement is largely derived from EU public procurement Directives.  These have been transposed into Scots law through three Scottish Statutory Instruments: the Public Contracts (Scotland) Regulations 2015; the Utilities Contracts (Scotland) Regulations 2016; and the Concession Contracts (Scotland) Regulations 2016 (together "the Scottish Procurement Regulations"). The Scottish Procurement Regulations apply on a territorial basis and apply to the procurement of public contracts in Scotland and apply to a contracting authority (regardless of whether they are regarded as a devolved on reserved body).

Will the Procurement Act 2023 apply to Scotland?

Once in force, the Procurement Act 2023 will change the way in which public procurements are required to be conducted in Scotland. The full provisions of the 2023 Act will extend to Scotland (see section 126) and will, therefore, form part of Scots law. However, its application is limited, and there will effectively be dual regulation of public procurements in Scotland.

Section 2(5) of the 2023 Act makes express provision to exclude the application of its provisions to a "devolved Scottish authority". Section 2(6) defines a devolved Scottish authority as an authority which has functions which are "exercisable only in or as regards to Scotland and (a) none of its functions relate to reserved matters; or (b) some of its functions relate to reserved matters and some do not."

As such, the Procurement Act 2023 will not apply to devolved Scottish authorities, which instead will continue to be governed, in relation to the procurement of public contracts, by the Scottish Procurement Regulations. In practice, this is likely to mean that the Scottish Government and its agencies, local authorities, Scottish public authorities (including those with mixed (both devolved and reserved functions) but with no cross border functions), universities and colleges and registered social landlords will all continue to be regulated by the Scottish Procurement Regulations but the UK Government, UK-wide or public bodies with cross-border functions and Scottish public authorities with reserved functions only will be subject to the Procurement Act 2023 in relation to procurements in Scotland.

Considering that there will effectively be two public procurement regimes operating in Scotland, and the regime relating to devolved Scottish authorities is different to that applying in England and Wales, this could give rise to difficulties in cross-border procurements or where there is more than one awarding body (which are subject to the different regimes).

Section 115 of the Procurement Act 2023, therefore, enables both the UK Government and the Scottish Government to make regulations amending the application of those regimes to enable the use of such framework agreements or other arrangements in relation to cross-border procurements and draft Regulations have already been prepared by the UK Government.

If you wish any further advice on how the Procurement Act 2023 will affect procurement in Scotland then please get in touch with our commercial team based in Scotland.