Significant change, or a question of semantics?
The Procurement Bill continues to make its way through the legislative process and was last debated in the House of Lords at the end of last month. The aim continues, we understand, that royal assent will be obtained sometime in 2023, with a minimum period of six months’ notice before ‘going-live’.
In this series of articles, we have previously looked at the possible changes (or lack of them) to the remedies regimes, should the wording of the Bill be maintained (article 1: Procurement Bill 2022 – new procurements, same old challenges).
The Proposed Change from MEAT to MAT
Another change proposed by the Bill is to shift the basis of the evaluation of tenders from Most Economically Advantageous Tender (MEAT), as set out in the Public Contracts Regulations 2015, to Most Advantageous Tender (MAT).
Our Takeaway Conclusion
Although this may seem significant at first glance, this could, in fact, merely be semantics and/or nothing more than a reinforcement of the status quo and a continuation of the existing direction of travel in Government policy.
The Current Position: MEAT
MEAT is currently addressed in Regulation 67 of the Public Contracts Regulations 2015, with Regulation 67(2) stating that the MEAT should be identified on the basis of the price or cost, using a cost-effectiveness approach (such as life cycling, as per Regulation 68) and may include the best price/quality ratio, which shall be assessed on criteria linked to the subject matter of the contract.
This does not necessarily have to mean that the lowest price wins. As procurement professionals will know, most procurements are evaluated adopting a mix of price and quality, with the split between them reflecting the importance of each to the contracting authority in the particular circumstances. Whilst price remains a real driver, particularly when the public purse is under such pressure, most contracting authorities wish to assess quality and often seek to award scores for “added value” or “innovation” (although this can cause problems at evaluation stage and is often the subject of complaint from aggrieved bidders (a subject for another article)).
The Potential New Position under the Procurement Bill: MAT
The proposed wording for MAT within the Procurement Bill 2022 is set out in section 18. It proposes that contracting authorities may award a public contract to a supplier that submits the MAT in a competitive tendering procedure. Section 18(2) defines “most advantageous tender” as the tender that the contracting authority considers best satisfies the award criteria when assessed by reference to the assessment methodology (under section 22(3)(a)) and the relative importance of the criteria (under section 22(3)(b)).
Based upon the wording of section 18, it appears:
at first sight that there has been a shift so that award criteria no longer need to be linked to the subject matter of the contract, as per the current Regulation 67. However, section 22(2)(a) makes it clear that no such shift has occurred, stating that in setting the award criteria, a contracting authority must be satisfied that they relate to the subject-matter of the contract; and that because the word “Economically” has been dropped from the formulation that price need not be evaluated. Section 22(5) provides a non-exhaustive list of what may constitute the subject matter of a contract and includes in that list “price, other costs or value for money in all the circumstances”. Price, therefore, would not have to be taken into consideration under the new “MAT” approach. However, this is only likely in practice to be relevant in exceptional circumstances. Price in some form is very likely to form part of the award criteria in most procurement processes.
The Government’s intentions
The Government considered the current MEAT requirements (as outlined in Regulation 67 and referred to above) within its Green Paper: “Transforming Public Procurement”, published in December 2020. That paper outlined the disadvantages of MEAT, in that the methodology could restrict the assessment of social and environmental considerations. It stated that the Government wanted to send the clear message that commercial teams do not have to accept the cheapest bid and that they can design evaluation criteria to include wider economic, social, or environmental benefits. It made clear that adopting MAT (together with accompanying guidance) should provide greater reassurance to contracting authorities that they can take a broader view of what can be included in the evaluation of tenders in assessing value for money including social value as part of the quality assessment. Noticeably, it pointed out that “this approach is already provided for in the current regulations under MEAT, so this change would be about reinforcing and adding clarity rather than changing scope.”
The Green Paper also stated that MEAT can “be mistaken as the need to deliver the lowest price when actually there may be scope to deliver greater value through a contract in broader qualitative (including social and environmental) terms.”
Although the Government concern may be overstating matters (our experience is that procurement professionals fully understand that MEAT provides a flexible framework in which lowest price does not have to be delivered and indeed quality (including social value), more often than not, receives the higher weighting)), 77% of the respondents to the Green Paper agreed with the proposed switch, believing that it would further encourage contracting authorities to take account of social value in the award of public contracts.
It was made clear in the Government’s response to the consultation leading from the Green Paper, published in December 2021, that the proposal to move from “MEAT” to “MAT” would be taken forward. However, the driver for this “change” seemed to have its foundation in messaging, rather than substance, the reasoning for it stated as being “to reinforce the message to contracting authorities that they can take a broader view of that can be included in the evaluation of tenders when assessing MAT”.
The Government’s response maintained the tone and messaging from the Green Paper, stating that the change in terminology (rather than approach or regime) will “provide further clarity for contracting authorities that when determining evaluation criteria, they are able to take a broader view of what can be included. It will support levelling up by encouraging contracting authorities to give more consideration to social value when procuring public contracts.”
The use of language, such as “reinforce the message” and “reinforcing and adding clarity rather than changing scope” indicates that little, if anything, will change if the wording of the Bill is adopted.
Therefore, in summary, while on its face MEAT to MAT represents a change to the approach to be taken to the creation of evaluation criteria, in real terms it appears that the removal of the word “economically” is envisaged to do no more than promote the widening of the criteria that contracting authorities use when evaluating tenders and the incorporation of social value, environmental and community-based considerations within their procurement strategies. It is worth remembering that the Government has already developed policy under the present legal framework to introduce the new social value model for central government so that social value benefits are explicitly “evaluated in all central government procurement, where the requirements are related and proportionate to the subject-matter of the contract, rather than just ‘considered’ as currently required under the Public Services (Social Value) Act 2012” (PPN06/20 September 2020). The fact is that contracting authorities can be, should be, and/or are, doing this already. The change in language in the Bill may encourage such an approach further, which is clearly welcomed, and perhaps importantly will provide reassurance that contracting authorities can adopt such an approach with the confidence that doing so will not, in itself, cause compliance issues and will not be subject to successful challenge.
If you have any questions please contact the team.
Date: 14 June