Early bird catches the worm: how to pre-market test under the Procurement Act 2023

This article was updated on 12 September 2024 to reflect the revised date of the Procurement Act 2023 coming into force – 24 February 2025. This was previously 28 October 2024. 

Continuing our series on the new Procurement Act 2023 (Act), which will come into force in February 2025, we turn our focus to market testing and answer some frequently asked questions. 

Can a contracting authority carry out prior market testing with suppliers before starting a process? 

Yes. Under the new Act, a contracting authority can engage with suppliers (and other persons) before starting a tender process: 

1. Developing the authority’s requirements and approach to the procurement;
2. Designing a procedure, conditions of participation or award criteria;
3. Preparing the tender notice and associated tender documents;
4. Identifying suppliers that may be able to supply the goods, services or works required;
5. Identifying likely contractual terms;
6. Building capacity among suppliers in relation to the contract being awarded.

This type of market testing is known as “pre-market engagement”.

There is a clear risk with pre-market engagement; the fairness of a process could be severely jeopardised if one of the suppliers has been involved in market testing, assisted with the design or specification for the procurement or has otherwise had an influence on the design of the process or its documents.

The Act recognises this and puts the onus on the contracting authority to ensure that it does not put suppliers at an unfair advantage, or otherwise distort the competition, in relation to the award of the contract during a tender process.  

The authority must do all that it can to level the playing field and take steps such as disseminating additional information to tenderers which means that every supplier has had equal access to that information, and giving additional time to consider specifications. 

The results of not doing this could be catastrophic for the supplier under the Act as, if any advantage gained cannot be “neutralised”, the contracting authority must exclude the supplier which engaged in the pre-market engagement from the tender process, but only as a last resort where there is no viable alternative of making the process fair.

What are the publication requirements?

One of the new notices that authorities can publish under the Act will be the Preliminary Market Engagement (PME) Notice. If you would like further information on the other notices introduced under the Act, see our previous article on this topic here.

A PME notice should be published when an authority chooses to carry out market engagement before starting a procurement (or can be published after the event, stating it has undertaken such engagement). 

A PME notice should specify:

• The name of the contracting authority
• The name of the procurement
• The subject matter of the contract
• An estimated date for publication of the tender notice
• The estimated date for contract award
• The date when the pre-market engagement will close, or when it closed
• A description of the pre-market engagement undertaken or to be undertaken

Use of the notice is not mandatory, but if on commencement of a procurement, pre-market testing has taken place and a PME notice was not issued, the Tender Notice must include reasons the authority decided not to publish one.

What does this mean for contracting authorities?

Pre-market engagement is something which is increasingly encouraged by the Cabinet Office and the market alike. It is no longer something to be shied away from for fear of it creating risk in the procurement process.  

Provided it is designed and carried out with a view to ensuring a fair and transparent process, it is something to be welcomed:

• For contracting authorities - it is very likely to make the procurement process more efficient and shorter in the long run (and more likely to result in procuring something which meets the authority’s needs)
• For suppliers - authorities are likely to have much more realistic and deliverable requirements after consulting with the market about what will be possible and acceptable to suppliers.

 If you want to discuss any of the changes made by the Procurement Act 2023 or to discuss your training requirements before they come into force, please contact Alison Walton at [email protected] or call 0191 211 7829.