Public Procurement Reform – What should contractors be aware of?

The new public procurement regime for England, Wales and Northern Ireland went live on 24 February 2025. While many of the fundamentals remain unchanged – generally the same entities and contracts will be subject to the regime – the Procurement Act 2023 (the Act) introduces some significant changes from the existing, EU derived procurement rules, both in substance and terminology.

The aim of the new procurement regime is to simplify and streamline procurement processes, bring public, utilities, defence and concession contracts together under a single regime, and ultimately provide a greater public benefit for every pound spent. While change has been cautiously welcomed by suppliers and contractors, whether the new regime will achieve those aims remains to be seen.

So, what do contractors and suppliers need to know, and are there traps for the unwary?

Overriding objectives to focus on benefits not just value

The overriding objective of public procurement has changed from achieving “value for money” (i.e. the most economically advantageous tender) under the current regime to “delivering value for money” and “maximising the public benefit”.¹

This shift will most likely be seen in the evaluation criteria, with greater importance being placed on the wider benefits from any public contract, including the Government’s priorities set out in the National Procurement Policy Statement (the NPPS),² beyond the balance of price and quality, as contracting authorities can shape procurements to suit broader objectives that go further than achieving the core aim of supplying goods for the lowest price. For contractors and suppliers, this may necessitate a different approach to tendering, giving greater attention to new and innovative issues. Contractors and suppliers should pay attention to the NPPS when considering the award criteria in any procurement, in particular, the Government’s following objectives:

• maximising procurement spend with SMEs and voluntary, community and social enterprises;
• creating high quality jobs;
• tackling bribery and corruption, fraud, modern slavery and human rights and reducing environmental impact (both emissions and waste production).

Procurement procedures will be more flexible and diverse

While competitive tendering will be required for most public contracts (including ‘special regime’ contracts, namely concession, defence and security and light touch contracts)³, contracting authorities can now choose between two approaches:

• a single open ‘competitive tendering procedure’ (similar to the previous open procedure); or
• a ‘competitive flexible procedure’.

The ‘competitive flexible procedure’ replaces the ‘restricted procedure’, ‘competitive dialogue procedure’ and ‘competitive procedure with negotiation’. Contracting authorities now have freedom to design a procedure which best fits their needs, provided it complies with the requirements set out in the Act.⁴

Bidders may therefore see unfamiliar, innovative and alternative procurement structures being implemented, with the potential benefit of reducing the complexity of tender submissions. However, the greater the divergence from the established procedures, the greater the risk of breach of the underpinning principles, in particular the obligation to “treat all suppliers the same unless a difference between suppliers justifies different treatment“.⁵

Introduction of dynamic markets

The Act introduces a new tool – dynamic markets. In essence these will operate in a similar way to a framework, under which contractors and suppliers will pre-qualify for the supply of certain goods and services, from which authorities can call-off, subject to a further competitive tendering process amongst members. However, unlike frameworks, dynamic markets will remain open to new members throughout.

Depending on how widely they are used, dynamic markets present a significant opportunity for suppliers to enter into new markets without needing to await the establishment of new frameworks.

Increased transparency requirements

A key aim of the Act is to increase transparency in public procurement, through the introduction of a significant number of mandatory notices, in particular:

• Greater number of compulsory notices at each stage of the tender process
  • Pipeline notices needed for contracts over £100m (s93)
  • Preliminary market engagement notices (s17)
  • Transparency notices for direct awards (s44)
  • Contract award notice (s50)
  • Contract details notice (s53)
  • Procurement termination notice (s55)
• Contract change notice for 10% change in value for goods / services, and 15% change for works (s75)
• Contract modification notice (s77)
• Contracts over £5m need to be published within 90 days (subject to exceptions) (s53)

Failure to issue such notices could give rise to a ground for challenge, however, contractors and suppliers will likely be unable to assert that they were unaware of key decisions where a notice has been published. Care will be required on both sides to adhere to the requirements and to monitor the notices issued.

Mandatory KPIs and performance reporting

Contracts with a value of over £5m will now be required to have, and publish, at least 3 KPIs.⁶ Every 12 months, a contract notice will need to be publicly published rating the supplier performance against such KPIs.⁷

Aside from reputational risks of poor performance, there is now a discretionary right to exclude a contractor or supplier where it has not “performed a relevant contract to the regulated authority’s satisfaction“.⁸ In addition to other new discretionary exclusion grounds, such as labour and environmental violations and national security concerns, the application of these rules is currently unclear and awaits detailed guidance. The interpretation may vary depending on the relevant authority.

A new debarment list has been introduced

A new mechanism has been introduced under which a Minister of the Crown may enter the name of a contractor or supplier on a centrally maintained ‘debarment list’. Inclusion on the debarment list may arise from either a mandatory exclusion ground, or a discretionary exclusion ground. Contracting authorities are required to check the debarment list in each procurement and consider excluding any supplier on the list.

The mandatory grounds include convictions for offences such as fraud, bribery and corruption, tax offences and participation in a cartel. Such grounds apply irrespective of the jurisdiction of the conviction, provided that had the offence been carried out in the UK it would have amounted to an offence. Other mandatory exclusion grounds include national security, competition law infringement and tax misconduct.

In considering whether to exercise discretion to exclude a supplier, the contracting authority must consider the risk of the circumstances which led to the exclusion ground being triggered.⁹ Key to making such a decision will be the extent of ‘self-cleaning’ measures which have been implemented, for instance:

• whether the matter has been taken seriously, such as the payment of compensation or fines; and
• steps taken to prevent the conduct from occurring again, including the removal of relevant members, management or staff and implementation of policies, procedures and training to prevent future occurrences.

It should be noted that while a supplier must be given an opportunity to make a representation before a decision on exclusion is made, in order to challenge inclusion on the debarment list, a supplier would need to demonstrate that the Minister erred in law, potentially requiring judicial review of the decision.

For any contractor or supplier, inclusion on the debarment list could clearly have a material impact on its ability to bid for public contracts and, we anticipate, will be an area of close scrutiny as the regime is implemented.

Final thoughts

There will inevitably be a turbulent period as both suppliers and contracting authorities get to grips with the new rules and procedures, potentially leading to an increase in claims and challenges. The courts are gearing up to address such challenges and judicial interpretation of the Act will be closely monitored as all parties get to grips with their rights and obligations under the new regime.

Footnotes

1. Section 12 of the Act.
2. The UK government announced the National Procurement Policy Statement on 13 February 2025 setting out its priorities for public procurement.
3. These are defined in Section 10 of the Act.
4. See Section 20 of the Act and the objectives in Section 12.
5. Section 12 (3)
6. Section 52
7. Section 72
8. Schedule 7, Section 12 (3)
9. Section 58