The Procurement Act 2023 represents the most significant overhaul of public procurement in the UK since leaving the European Union.
Coming into effect on 24 February 2025, the Act introduces substantial changes that will affect how suppliers engage with public sector procurement across England, Wales, and Northern Ireland.
The Act unifies various procurement regimes under a single framework, encompassing public contracts, utilities, concessions, and defence and security procurement.
It introduces a shift in procurement objectives, moving beyond the traditional focus on equal treatment and non-discrimination. Now, contracting authorities are mandated to deliver value for money, maximise public benefit and act with integrity throughout the procurement process.
A significant change is in how contracts are awarded. The “most advantageous tender” (MAT) criterion replaces the previous “most economically advantageous tender” (MEAT) approach.
This shift allows for a broader consideration of factors beyond price, including quality, innovation and environmental impact. In some cases, non-financial criteria can be the deciding factor in contract awards.
Greater flexibility and transparency among key changes in Procurement Act 2023
A new digital platform will serve as the central hub for contract notices and supplier registration, streamlining the process for businesses seeking public sector opportunities.
This single registration system will grant suppliers access to opportunities across multiple contracting authorities, significantly reducing administrative burden.
The procurement procedures themselves have been dramatically simplified, moving from seven procedures to three:
- Open: A single-stage procedure, similar to that in the current procurement regime
- Direct award: Allows authorities to award contracts without competition. Again, similar to the process in the current procurement regime but will require publication of a transparency notice before the contract is executed.
- Competitive flexible: A “build-your-own” procedure that allows contracting authorities to design the procurement process to suit the specific needs of a contract.
The introduction of the competitive flexible procedure particularly stands out as it offers greater flexibility in procurement design, allowing for more innovative approaches to tendering.
Transparency requirements have been substantially enhanced under the Act. For contracts exceeding £5m in England (but not in Wales), there’s a new obligation to publish at least three key performance indicators (KPIs) and regularly assess supplier performance against these metrics.
How can suppliers adapt?
Suppliers will need to adapt to new requirements for publishing procurement documentation and contract performance data. There will be mandatory disclosure requirements for contract changes and modifications. Along with this, the Act also increases the emphasis on supply chain transparency throughout the procurement process.
The Act places particular emphasis on improving access for small businesses. The UK government has designed the simplified procedures to reduce barriers to entry. At the same time, the Act requires contracting authorities to consider breaking contracts into lots where appropriate.
The reforms streamline the pre-qualification process, and new prompt payment provisions will ensure better cashflow throughout the supply chain.
A new exclusion framework has also been established, updating both mandatory and discretionary exclusion grounds. This includes the introduction of a centralised debarment list, alongside a clear process for self-cleaning and removal from exclusion lists.
Enhanced due diligence requirements will affect how suppliers demonstrate their eligibility for public contracts.
How suppliers can prepare for implementation of the Procurement Act 2023
While contracts executed before this date are subject to existing rules under the Public Contracts Regulations 2015, full compliance with the Procurement Act 2023 will be required from 24 February 2025.
Implementation preparation requires significant attention from suppliers. Organisations will need to thoroughly review and update their internal processes to align with the new procedures.
This includes preparing for registration on new digital platforms, developing enhanced reporting capabilities to meet transparency requirements and updating document management systems to handle new requirements.
Training and pre-market engagement
Training and development will be crucial during the preparation phase. Staff will need comprehensive training on the new procurement procedures, transparency requirements and digital platform usage. Bid writing and tender response processes should be updated to reflect the new requirements and opportunities presented by the Act.
Understanding the potential for multiple nuances and variations with the competitive flexible procedure is particularly important. The act encourages pre-market engagement. Therefore, suppliers should take advantage of the opportunity to provide input on how these procedures can better reflect local business practices.
Measuring performance and contract management
There is an increased onus on contracting authorities to hit key performance indicators (KPIs), which means suppliers must also ensure they can realistically meet these, especially when linked to regional social or environmental priorities. The new regime will punish failure to meet KPIs, which could potentially damage future business prospects.
Taking advantage of the detailed performance information published about competitors can assist with improving bid and performance strategies.
Supply chain checks
The central debarment list places greater attention on compliance considerations. Suppliers should conduct due diligence not only on their corporate structure, but also on their supply chains to ensure compliance with exclusion grounds. The act may result in buyers exclusing those that fail to meet environmental or specified standards from future procurement activities.
Having a team or process in place to quickly challenge or appeal any debarment decisions will be key, as exclusion from public procurement will have a long-term business impact.
Challenging decisions
The challenge process under the Act remains similar to the current regime, with suppliers required to issue challenges within 30 days of being aware of grounds to issue a claim.
However, the Act introduces more stringent requirements for contracting authorities to provide feedback to unsuccessful bidders, giving them an opportunity to identify inconsistencies or errors.
Companies should flag commercially sensitive information in their bids to ensure they do not inadvertently disclose confidential business or bidding strategies.
Opportunities and risks for businesses arising from procurement reform
The Act creates significant opportunities for suppliers to the public sector. Market access will be simplified through reduced administrative requirements and improved visibility of opportunities.
The new flexible procurement procedure enables more innovative solutions and increases the opportunity for dialogue with buyers. Suppliers will have greater scope to demonstrate value beyond price considerations.
Commercial benefits include reduced bid costs through simplified procedures and better visibility of pipeline opportunities. The Act also introduces improved payment terms and conditions, along with enhanced supply chain opportunities for businesses of all sizes.
Compliance risks stem from new exclusion grounds and criteria, enhanced transparency requirements and increased supply chain due diligence obligations.
Contract performance reporting will require robust systems and processes. Operational risks include managing system and process changes, meeting training requirements, allocating resources effectively and adopting new technologies.
Suppliers should begin preparing immediately by reviewing their current procurement processes and assessing training needs.
Organisations should prioritise planning for digital platform adoption and reviewing compliance procedures.
Over the medium term, focus should shift to updating systems and processes, training staff and registering on new platforms.
Long-term considerations include developing a strategic approach to public sector business development, building capabilities for new procedures, and strengthening supply chain and contract management capabilities.
