Procurement Reform: Key Points To Know About The Procurement Act

How will the Procurement Act change public procurement?

The Act represents the biggest shake-up of our procurement laws for over thirty years. Until now, the existing procurement regime in the UK has been derived from EU rules on public procurement, dating from 2014; before that we also had a procurement rulebook derived from the previous EU law. The Act will consolidate various existing public procurement rules into one regime based on national priorities and certain objectives seen as key by the Government – for example, overcoming the barriers faced by smaller businesses to taking part in public procurement.

Some of the changes are significant, will open up new opportunities for greater competition, and provide scope for a much more flexible procurement process and approach to contract management. And with certain sector-specific provisions made and exclusions applied, it will be important for organisations to determine how the Act will apply to them and ensure they are well prepared.

Procurement Act delayed: new implementation date

On 24 February 2025, a new public procurement regime will be brought into effect by the Procurement Act 2023. Originally planned to commence on 28 October 2024, this short delay in the Act's introduction is to allow time for the National Procurement Policy Statement to be adapted in line with the new government's priorities.

While the extended time will mean anyone operating in or with the public sector has more time to prepare,further regulations have now been made to implement the revised date of the Act's implementation. Once in place, the Act will mark a radical change in procurement regulations for England, Wales and Northern Ireland – introducing a completely new set of rules for both public bodies and private companies supplying into the public sector.

Get prepared for the Procurement Act

How will the new regime differ from the old? What are the key changes and points for organisations to consider? And how can procurers and suppliers best navigate the new regime? To answer these questions our procurement and sector experts have compiled a summary of the key points to note about the new Act, including:

Be sure to bookmark this page as we will continue to provide updates with our latest insights and resources when new developments occur so that you are fully equipped when the changes come into force.

1) Four regimes brought into one new Act

The four existing pieces of legislation – comprising the Public Contracts Regulations 2015, Utilities Contracts Regulations 2016, Defence and Security Public Contracts Regulations 2011 and Concession Contracts Regulations 2016 – will be revoked and these separate regimes brought together into one new Act.

The Act introduces a radical overhaul of the law governing public procurement in England, Wales and Northern Ireland, with a host of new rules, procedures and processes. Building on the key principles and objectives discussed inthe first article in our 'changing landscape' series on the Act, it will answer to a range of aims around equality, value for money, public benefit and transparency. The aim here is to make it easier for procurers and suppliers to determine what parts of the legislation apply to them, in their situation and sector. Notably, some areas will also now fall outside of the Act i.e. delivery of healthcare services is now covered by separate legislation.

2) New procedures will see procurements completed in a more agile way

The range of new procedures and transparency measures the Act brings in will haveimplications for procurers as they look to let new contracts. The legislation will require authorities to publish various types of notice to make public the decisions they have made in procurement procedures, as well as show how effectively contracts are being performed and managed. In all, the Act will bring in fourteen new forms of notice; the result is likely to mean that an average procurement run under the Act will require about five notice publications in all, as opposed to the two or three that are typical at present. This excludes notices published during the period of the contract to show performance and payment information.

Both authorities and suppliers may find some of the new notices radically different from the types of notices used in procurement to date and, in some cases, unsettling. For example, authorities will eventually be required to publish data on payment under large public contracts, so that there is visibility on how promptly suppliers are being paid.

3) There will be a duty on authorities to consider carving up contracts into smaller 'lots'

This is an important change in line with the principles the Act seeks to establish around increasing fairness, greater competition and more value for money. It should help open up more competition in public sector procurement and see greater involvement from SME suppliers, as well as larger organisations getting involved in multiple tenders.

Under the existing regime, authorities are encouraged to consider dividing large contracts into smaller lots (and have to explain any decision not to), but are not under any duty to consider doing so. The Act changes this, placing on authorities a legal duty to consider lotting as part of the wider objective of considering the barriers faced by SMEs to participating in public procurement, with a view to those barriers being reduced or removed.

4) More information will need to be shared publicly about procurements and suppliers

This brings new reporting requirements both in terms of the procurement process, but also from an ongoing contract management perspective. In line with the aim around ensuring value for money, there will be more responsibilities on suppliers to publicly share details of the key performance indicators (KPIs) related to public contracts and supplier performance against those measures.

Among the new notices introduced by the Act, there are a number that explain how well contracts are being performed (including against specified KPIs), and also when contracts are terminated – as well as when a procurement exercise is terminated without ever getting as far as contract award. These notices could make uncomfortable reading – not only for authorities but also for suppliers, whose breach of their contractual obligations could be laid bare to their competitors, resulting in reputational fall-out and possibly impacting on their prospects of winning future public contracts.

5) Provisions to ensure prompt payment across the supply chain

The Act is focused on ensuring suppliers get paid quickly, from the lead contractor right through to each sub-contractor in the supply chain.

To achieve this, the Act implies into every public contract (with certain specific exceptions) a term requiring that any sum due to be paid by the authority must be paid within 30 days from the day the authority receives an invoice in respect of the sum, or, if later, the day on which the payment falls due in accordance with the invoice.

Terms mirroring this are also implied into every public subcontract, to ensure that suppliers right down the supply chain are also paid promptly.

6) Introduction of a new oversight body

The Act sets up a new body tasked with overseeing public procurement practice. The role of this body will be to identify any areas of systemic failure within public bodies and procurement procedures in reference to the new legislation.

The new body will be able to conduct investigations into poor procurement practices, and to make recommendations following procurement investigation. The body will also be able to publish guidance following an investigation. It will have the power to require an authority to provide relevant documents for the purposes of the procurement investigation and otherwise to provide reasonable assistance in connection with the investigation.

The oversight body's recommendations may include the action the authority should take with a view to ensuring that it complies with the Act's requirements, together with timings. The authority may then be required to follow up the recommendations by providing progress reports to the oversight body to show how it is complying with them. If the action taken by the authority differs from the recommendations, the authority must explain why.

7) New 'remedies regime' to deal with procurement challenges

The provisions here ensure that legal tests are more developed than under the existing regime – so if a claim is brought before the courts, then a new set of tests will be applied under the Act to determine whether the grounds for the claim are justified.

As in the current regime, suppliers have a right to challenge decisions made in public procurement. They will be able to do this by bringing a claim in the High Court for breach of an authority's statutory duty.

The range of redress available includes pre-contractual and post-contractual remedies. Pre-contractual remedies include automatic suspension of the authority's award decision (if the challenge is made during a standstill period), or interim remedies of various kinds – for example, an order suspending an authority's decision or action taken in the course of a procurement; an order suspending the procurement or any part of it; or an order suspending entry into a contract. Damages can also be awarded. As in the current regime, an authority can apply to the court to lift an automatic suspension.

Post-contractual remedies include set-aside of a contract, as well as damages.

The time limit for bringing most procurement claims (other than set-aside) is 30 days beginning with the day on which the supplier first knew, or ought to have known, about the circumstances giving rise to the claim.

8) Increased data collection, with a wide range of notices required

In line with the move towards greater transparency, authorities will be required to publish notices not only of new contracts awarded, but also in relation to modifications to existing contracts, termination of contracts and abandonment of procurement exercises.

The Act will regulate key aspects of the management of public contracts to an extent not seen before in a UK public procurement rulebook. The new notices that authorities will have to publish include contract performance notices (detailing how well suppliers are performing contracts and any breaches being committed), contract termination notices (showing when and why contracts are being terminated), procurement termination notices (giving notice of procurement procedures that have ended without an award), and payment compliance notices (giving data about prompt payment).

All of these notices will make it easier for government to harvest much more real-time data about procurement activity, which will increase visibility of public spending – not just for suppliers interested in what opportunities are being advertised, but also for authorities who will have more visibility of what their counterparts in other authorities are procuring; and for anyone interested in seeing how well suppliers are performing, and how quickly they are getting paid.

9) Implied terms to promote compliance with the Act

The introduction of these implied terms seeks to promote compliance with the Act across the supply chain involved in delivering a contractual arrangement – it addresses issues around prompt payment and fosters a commitment to best practice in a number of areas. In relation to payment of suppliers, for example, the new rules make it clear that any sum a contracting authority is due to pay under a public contract must be paid within 30 days of receiving an undisputed, valid notice; as long as the invoice doesn't stipulate a later payment date.

In addition, this condition doesn't just relate to contracting authorities: if a sub-contractor is employed, then the very same term is also implied into these sub-contracts. This goes further than the existing regime being replaced, as discussed inissue 10 of our 'changing landscape' series on the Act, which also looks at the grounds for terminating contracts.

The Act also introduces an implied right to terminate a contract in certain circumstances. There are three termination grounds implied into every public contract. Contracts can be terminated if: (a) the authority considers that the contract was awarded or modified unlawfully; (b) a supplier has, since the award of the contract, become an excluded supplier or excludable supplier (the same goes for a supplier's "associated person"); and (c) a sub-contractor, who is performing all or part of the contract, is an excluded or excludable supplier. This goes significantly further than the current regime, which contains no equivalent provisions.

10) Exclusion and debarment

In a radical new move,the Act will see the introduction of a public debarment list. This list will contain the names of suppliers who are barred out of tendering for public contracts.

Suppliers can end up on the debarment list if their name is added to the list by a Minister, as a result of either: (a) an investigation which establishes that the supplier meets one of the Act's exclusion grounds; or (b) a supplier is guilty of a serious failure to comply with investigation (thereby placing it within the mandatory exclusion grounds).

Suppliers will be given notice ahead of their names being added to the list, and they can make representations by way of appeal. There is provision for a debarment standstill period (eight working days) following that notice. In addition, suppliers can apply to a court for "interim relief" (whereby the court suspends the Minister's decision to include the supplier on the list) until the matter is resolved.

The list is to be kept under review – suppliers can appeal decisions and apply to be removed from the list (with supporting evidence e.g. changed circumstances, or new information).

11) Greater transparency in relation to contract modifications (variations)

The Act introduces a new regime governing contract variations – again, to inject greater transparency around changes to public contracts. This is an area that has long been fraught with questions over the legitimacy of some contract changes, and the new regime attempts to provide better clarity on when variations can lawfully be implemented without it triggering a requirement for a new procurement. The range of situations in which this can be done is also expanded under the Act, to ten in total.

Before varying a contract, authorities must first be transparent about it – by publishing a contract change notice. After that, there is an opportunity to observe an eight-day standstill, just in case any suppliers wish to question or challenge the decision to vary the contract without a new procurement exercise. For the more valuable contract variations (that is, those valued at £5m+), the Act will require authorities to publish the contract as varied, or the variation itself.

Situations where variations are allowed without a new procurement include: (i) where there are unambiguous clauses already in the contract which allow the variation to be made; (ii) the situation where economic or technical reasons compel additional work or services (but with a 50% limit on contract value increase); (iii) unforeseeable circumstances (ditto); (iv) new suppliers acceding to the contract in particular circumstances, for example a corporate restructuring; (v) urgency and the protection of life (where direct award grounds are established); and (vi) a situation involving the materialisation of a known risk (but with a limit of 50% increase in contract value).

What does this mean for suppliers?

Suppliers will start to see significant changes in the look and feel of public procurement once the new Act is in force. For a start, SME suppliers may notice that they have more possibilities of winning contracts, thanks to the duty the Act will place on authorities to consider how they can reduce barriers to participation for smaller suppliers – notably by considering whether a larger contract requirement can be divided into small "lots".

With its measures aimed at opening up procurement markets to smaller suppliers, the Act should help break down barriers to entry into those markets for many suppliers. The new objectives enshrined in the Act – and notably the duty to have regard to the fact that SMEs may face particular barriers to participation, and to consider whether such barriers can be removed or reduced – place this on a statutory footing, and suppliers should be free to ask questions of authorities if contract award notices reveal a preponderance of awards to large enterprises.

Procurement pipelines should also become much easier for suppliers to navigate. Without good advance publicity from authorities about procurements that are planned, it can be very difficult for many suppliers (large or small) to mobilise properly in good time to be able to place their best foot forward and bid for an opportunity they are interested in. With the Act's introduction of pipeline notices, this should no longer be an issue.

And the shift in emphasis from "the most economically advantageous tender" to just "the most advantageous tender" should help shine the spotlight on factors authorities should be considering and which go beyond merely price. Prominent among these non-economic factors (and especially right now) are the social and environmental benefits many suppliers can offer in real and imaginative ways, above the financial. Yes, a proposition might not be the cheapest, but the environmental, social and governance (ESG) and non-price benefits offered might be enormous.

From a sector perspective, there are a number of areas where there are important changes for suppliers to consider. We've identified a few key sectors below where there are notable points to highlight:

Construction, real estate development, housebuilding and other infrastructure

The Act will particularly impact companies involved in construction projects to deliver public buildings, development projects and, in some cases, housebuilding schemes – for example, large-scale urban extension projects where public infrastructure (upgrades to roads, new roads, schools or healthcare facilities) is also required to be delivered as part of a scheme.

Development projects going through the local authority planning process may be impacted where, for example, permission is granted subject to the delivery of certain infrastructure or public facilities being put in place that will then need to follow the new procurement rules.

Utilities sector

Companies in this sector could be impacted either as a procurer or supplier.The Act will apply to the awarding of "utilities contracts" by public authorities, public undertakings or private utilities.

A "public authority" is a body wholly or mainly funded out of public funds, or subject to public authority oversight, and does not operate on a commercial basis. A "public undertaking" is a body that is subject to public authority oversight, and operates on a commercial basis. A "private utility" is any organisation that is not a public authority or public undertaking, and carries out a utility activity.

A "utility contract" is a contract for the supply of goods, services or works wholly or mainly for the purpose of a "utility activity".

A "utility activity" includes: the provision and operation of a network for the supply of gas, electricity, water; the provision and operation of a public transport network; the provision of ports and airports; the extraction of oil and gas; and exploration for (and extraction of) coal and other solid fuels.

If a utility activity is carried out by an organisation that is not a public authority or public undertaking, it has to be carried out pursuant to a "special or exclusive right" in order for the Act to catch it. This will be the case if: (a) the organisation has been granted a right to carry out the activity pursuant to any statutory, regulatory or administrative provision; and (b) that provision also substantially limits the ability of anyone not granted the right to carry on the activity.

A right to carry out a utility activity will not be a "special or exclusive right" if it is granted following a competitive award, or pursuant to a procedure in which: (i) the opportunity to be granted the right was publicised widely enough to avoid an artificial narrowing of competition; and (ii) the grant of the right was based on criteria that did not favour or disadvantage certain organisations.

The Act's changes to the current utilities procurement regime are fairly limited, but the Act sets out the regime more clearly and should help clarify which contracts are in the regime, and which are out.

Various utilities contracts are exempt from the new regime. The exemptions include:

a utilities contract between a utility and a relevant joint venture for the purpose of carrying out a utility activity for at least three years;
a utility contract awarded by a utility to an affiliate; and
certain contracts awarded for the supply of goods, services or works, including for the supply of water and the supply of energy or fuel to a utility.

Aerospace, aviation and defence

The Act sets out a number of exemptions and exclusions from its coverage. Here's a summary of some of the exemptions from the main requirements of the Act for defence and security contracts – which we cover in more detail inissue four of our 'changing landscape' article series.

Procurement by the security service organisations will be specifically exempt from the Act. A number of contract types are also exempt. Specifically, these include defence and security contracts where:

the supplier is the Government of another state;
the supplier is located in an area outside of the UK where the armed forces are deployed, and the operational needs require the contract to be awarded to that supplier;
the supplier is located in a state outside of the UK where the armed forces maintain a military presence, and that state requires that the supplier supplies the goods to which the contract relates;
the contract was awarded under a procedure adopted by an international organisation of which the UK is a member; and
it was awarded under an arrangement between the UK and other states where the purpose of the arrangement is regarding:
- the joint development of a new product; or
- the exploitation of that product once developed.

Also exempt are contracts that the contracting authority determines should be excluded in the interests of national security, and contracts for intelligence activities. "National security" is not defined by the Act: this is intentional, so that the concept of national security (and the ability to have recourse to the Act's provisions which deal with it) is kept flexible and adaptable.

Nuclear

The new regime will impact the nuclear sector as both a sector that supplies into public contracting authorities, but also as an area engaged in large-scale public projects. As contracts in this sector can be procured as public contracts and also, sometimes, as utilities contracts, the considerations relevant to construction and infrastructure – as well as those relevant to utilities procurement – can apply equally in the nuclear sector and affect suppliers in the same way.

What's the role of the secondary legislation?

A number of pieces of secondary legislation (Regulations) are now in place to deal with particular aspects of the Act and its implementation.

These principally concern commencement and transition, and also deal extensively with the "machinery" around the Act – providing the detail on matters such as the precise contents of the numerous transparency notices that authorities must publish in connection with procurements and procured contracts.

Other aspects covered by the secondary legislation include: the governance of the new central digital platform (including what happens if a supplier can't register details because the platform is not working); the sharing of core supplier information through the central digital platform; the contents of assessment summaries; the list of light-touch and reservable light-touch service types; the list of central government contracting authorities; and the disapplication of the Act in relation to regulated health procurement in England (which, since 1 January 2024, has been covered by the NHS Provider Selection regime – a separate code of rules tailored specifically for NHS purchasing).

How will you navigate the new procurement regime?

The Act brings with it a significant number of new rules, some of which apply even before a procurement gets underway, and others during the lifecycle of a procured public contract. As such, the Act's reach extends well beyond that of the existing procurement regime in a number of ways.

Authorities will need to be fully geared up for the Act to bite, beginning at the very earliest stages of their pre-procurement planning. The enhanced transparency requirements, fulfilled through the publication of the numerous new types of notice, will represent a new normal. However, thequid pro quois the significantly greater flexibility that the Act will afford them in terms of how procurements can be conducted – notably, through the introduction of the new competitive flexible procedure. That will allow authorities to build into their procurement features such as benchmarking and competitive R&D, and to test and evaluate innovation.

The best approach for authorities, therefore, is to embrace the Act, and not be intimidated by it – instead, to take advantage of the flexibility and to accept that with it comes the need for accountability, good decision-making, and proper record-keeping.

The new Central Digital Platform will give suppliers, other stakeholders and, indeed, the public much more data on: how public money is spent; what it is being spent on; who is spending it; how much contracts are costing; how they are being performed and whether there are quality issues; whether contracts are undergoing mid-life changes and, if so, how; what contracts are being directly awarded without competition; whether suppliers are being paid promptly; whether procurements are being terminated without any contract awarded and, if so, why; and more. Authorities will be able to observe voluntary standstill periods in some situations (as well as having to observe mandatory standstills in others) to manage and mitigate any risk of challenge.

It is worth reminding ourselves that the Act's transparency requirements will, over time, start to reap rewards for authorities too. Yes, the machinery of the Act will surely underline accountability by forcing authorities to be transparent about what they are doing. Equally, the Central Digital Platform should ultimately play host to a significant body of data about current and past procurements, allowing authorities to see what other authorities are doing. If a particular authority wants to procure something which is perhaps a little niche, it could find that another authority is procuring something similar elsewhere – and thereby share ideas and learnings. Potentially, this could save them much time, resource and cost. These incoming changes are set to have a significant impact on the procurement regime.

How to keep up with public procurement law in the UK?

We'll be monitoring developments closely and updating this summary as new details emerge.

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