On 22 December 2022 the Cabinet office released an update on the proposed changes to procurement legislation in the UK by e-mail to subscribers of their website.
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The update confirmed that the legislation has now passed through the Lords1. Since then update the bill has passed 1st and 2nd readings in the House and now sits at committee stage. Whilst there is still no date set for implementation the update does indicate the bill is likely to be put forward for Royal assent by the spring. A Six month “go live” buffer will still be maintained to allow time for Contracting Authorities to prepare for the change.

On the face of it no significant changes to the proposed draft have been made but of relevance to those procuring insurance and risk management service are:

  • A specific duty on contracting authorities to have regard to small and Medium Enterprises (SMEs) now enshrined in the legislation.

    In the context of Insurance procurement this remains largely irrelevant as there are no SME insurers. However, claims handling, Risk management and engineering inspection contracts may need to be consider in light of this change.

  • Provisions to ensure that contracting authorities may not require insurance relating to the performance of the contract to be in place before the award of the contract - SMEs do not need to incur unnecessary bidding costs in taking out insurance cover without the guarantee of winning the contract.

    Whilst this is understandable and may encourage more SME bidders to become involved, it does mean a contract authority may be nearing award when a preferred bidder then advises that they cannot procure the necessary insurance. Whilst guidance on how to manage this risk is likely to follow it would be prudent for contracting authorities to ask for evidence that cover is available (not in place) during the appropriate part of the procedure. A Suggested approach would be to ask bidders to self-certificate that a valid quotation for the required cover is in existence at the time of bidding and is open for the publicised length of the award process.

  • Contracting authorities will now be required to share with all participants a redacted assessment summary of the winning bid only and send the unsuccessful bidders their own summary privately.

    How far will the redaction go? Few if any insurers will be willing for commercially sensitive data to be shared and to avoid unnecessary issues contracting authorities may be asked to agree with the winning bidder what can be shared un-redacted. Some less willing bidders may choose to redact all but their name. Time will tell how this is implemented in reality.

Gallagher will continue to keep you up to date with any further developments of the bill and will be working with clients throughout to ensure a suitable outcome in the market as and when new rules are implemented.

Sources

1. It’s time to give smaller companies a bigger slice of the procurement pie - GOV.UK (www.gov.uk)

Disclaimer

The sole purpose of this article is to provide guidance on the issues covered. This article is not intended to give legal advice, and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. We make no claims as to the completeness or accuracy of the information contained herein or in the links which were live at the date of publication. You should not act upon (or should refrain from acting upon) information in this publication without first seeking specific legal and/or specialist advice. Arthur J. Gallagher Insurance Brokers Limited accepts no liability for any inaccuracy, omission or mistake in this publication, nor will we be responsible for any loss which may be suffered as a result of any person relying on the information contained herein.