The UK’s new Procurement Act – the end of an era and beginning of a new journey

Today (24 February 2025) marks the start of the application of the UK’s Procurement Act 2023 (the Act). 

The new regime has come about post-Brexit, in light of a desire from the UK Government to simplify the public procurement regime stemming from the EU Directives, and to provide for more flexibility and less “red tape” around the award of public contracts. As the regime is only now starting to bed in, it remains to be seen how it will be applied in practice and whether it will truly deliver more efficient and less burdensome procurement processes and outcomes. As with all new legislation, there will be an initial period of adjustment – trying and testing new concepts and requirements – and until we have clarity from the courts on such interpretation, there will be a degree of uncertainty for authorities and suppliers alike.

In this article we consider the key changes to the rules, but in a nutshell, the key takeaways from the new regime¹ are: 

• While in substance, the approach to procurement will largely remain “business as usual” (as many of the provisions are similar to the previous rules), the Act introduces some material changes, in particular relating to (i) how processes are run (simplifying award procedures), (ii) exclusion of potential bidders (with more grounds for exclusion and a new “debarment list” concept) and (iii) publication requirements (increasing transparency both before and during the award process, as well as during the contract term).
• Designed to improve efficiency in procurement processes, the rules provide for more flexibility, but this is counterbalanced with enhanced transparency to keep authorities (and suppliers) accountable. As contracting authorities and suppliers learn to operate within the new rules, there is a risk that these much-anticipated procedural efficiencies might be undermined by the burden of compliance with new, extensive transparency requirements.

It is not clear whether these publication requirements, particularly in respect of in-life contract management, will lead to a more contentious procurement landscape or a more burdensome process for contracting authorities and suppliers. It is notable that private utilities subject to the rules also benefit from equivalent flexibility but less transparency requirements. In time, we may see lobbying attempts by contracting authorities and public undertakings to allow them to benefit from the lighter transparency regime applicable to private utilities.

Background to the Act

Following Brexit, the Government wanted to create a simpler and more effective public procurement framework, within the context of the UK’s international obligations (including the WTO Agreement on Government Procurement and UK-EU Trade and Cooperation Agreement). 

The Act introduces a single, unified framework for public procurement, consolidating the rules previously governed by various separate pieces of UK procurement legislation, which were derived from EU Directives. Each of the Public Contracts Regulations 2015, the Utilities Contracts Regulations 2016, the Defence and Security Public Contracts Regulations 2011 and the Concession Contracts Regulations 2016 have been repealed by the Act (although certain saving provisions have been implemented to ensure a smooth transition).

While much of the content under the Act remains similar to the previous EU-derived rules, some key changes have been introduced. These are intended to speed up and simplify public procurement procedures. In particular, the Act aims to improve transparency in procurement processes and provide greater opportunities for smaller enterprises to participate in such processes. Key terminology has also been refreshed to move away from the previous EU-derived language, which will need to be reflected in contracting authorities’ tender documents. 

The Act is not, however, self-sufficient. The Procurement Regulations 2024 supplement the Act, setting out further detail in respect of various transparency and publication requirements. The Cabinet Office has also set out detailed technical guidance to help facilitate contracting authorities’ and suppliers’ understanding of the new regime. 

Importantly, the Act does not have retrospective effect. It will not affect procurements commenced before 24 February 2025. These will continue to be governed by the previous rules (including in relation to in-life contract modifications) until the relevant contract comes to an end. 

1. Simplified contract award processes and a change in award criteria

The new regime allows contracting authorities to choose between two competitive award procedures: 

• the open (single stage) award procedure – which is akin to the open procedure under the previous rules); and
• the new “competitive flexible” (multi-stage) award procedure – which replaces many of the previous, more prescriptive, procedures including the negotiated procedure with prior call for competition and competitive dialogue.

The “competitive flexible” procedure provides greater flexibility for contracting authorities to design their own bespoke award processes for complex procurements, compared to the more prescriptive procedures under the previous regulations. The Act also introduces “open frameworks”, which allow contracting authorities to create a scheme of frameworks (i.e. arrangements that provide for the future award of contracts to suppliers) on substantially the same terms. Such schemes will allow new suppliers to be added when a new framework is opened under the scheme, with the shorter length of individual frameworks under an open framework scheme intended to minimise the risk of some suppliers being locked out for extended periods of time.

The Act now also allows contracting authorities to amend their tender process during a procurement (including after the receipt of initial tenders under a competitive flexible procedure), subject to certain conditions. Amendments to the award criteria during a competitive flexible procedure will also be possible, provided that these refinements are catered for in the tender documents and the change proposed by the contracting authority would not have allowed (i) suppliers previously excluded (at the initial request to participate or the first tender submission stage) to progress in the procurement or (ii) prevented suppliers that were invited to progress to the next tender stage from doing so.

Beyond the competitive award procedures, the grounds for direct awards under the Act remain broadly the same, with two new justifications for “user choice” services (light touch contracts usually related to care services) and certain defence and security contracts (e.g. where a direct award is necessary to enhance/maintain the operational capability and safety of the armed forces). However, a transparency notice setting out that the contracting authority intends to award a contract directly will now become mandatory for direct awards, unlike the voluntary transparency notice under the previous regime. In addition – a change no doubt largely precipitated by the Covid-19 pandemic – the Government can now make regulations for the direct award of certain categories of contracts which are deemed necessary to protect human, animal or plant life or health or to protect public order or safety on a temporary basis.

The Act also introduces a shift in award criteria compared to the previous regime, with contracting authorities now able to award public contracts to suppliers that submit the “most advantageous tender”, rather than the “most economically advantageous tender”. In practice, this should enable contracting authorities to take into account a wider range of non-price factors when assessing value for money, and confirms that price need not be the primary award criteria.

2. Expanded exclusion grounds and a new “debarment” process

The mandatory and discretionary grounds for exclusion under the Act are broadly similar to the previous regime, but have been expanded to include:

• New mandatory grounds such as corporate homicide/manslaughter, certain theft, fraud or burglary offences, competition law infringements as well as threats to national security in relation to a specific public contract; and
• New discretionary grounds such as environmental misconduct, labour market misconduct, breach of contract and poor performance of contracts with public authorities or the supplier posing a threat to national security.

These exclusion grounds are subject to varying lookback periods depending on the offence/misconduct. Suppliers may also be excluded by reference to the conduct of their associated suppliers, connected persons (e.g. parent company or subsidiaries) and subcontractors. As a result, bidders will need to ensure they diligence the companies they rely on in their bids to identify potential exclusion risks early. 

The most significant change is the creation of a central public debarment list, which will have serious consequences for excluded suppliers. While, under the previous regime, suppliers could be excluded from specific tenders (on either mandatory or discretionary grounds) by contracting authorities, the Act creates a more centralised process that could lead to debarment from all public tenders. Contracting authorities (including utilities) must notify a Government Minister whenever they conclude that a supplier is excluded or excludable. The Minister may then carry out an investigation before deciding whether to add the supplier to the debarment list. While suppliers will have the ability to make submissions as part of this process, the ultimate decision is for the relevant Minister (although such decision is capable of being challenged before the courts on the ground that the Minister made a material mistake of law in making such decision). 

“Excluded” suppliers that have been added to the debarment list based on a mandatory exclusion ground will be barred from bidding for/ being awarded public contracts for up to five years. Contracting authorities will have discretion to exclude “excludable” suppliers, who are on the debarment list as a result of a discretionary exclusion ground, although it remains to be seen if contracting authorities will feel comfortable exercising such discretion, and what requirements they may impose in order to do so (e.g. in respect of self-cleaning, evidence of compliance programmes, etc.). 

A supplier can at any time apply to a Minister for removal or revision of their entry on the debarment list, although the Minister is only required to consider such an application where there has been a material change of circumstances since the entry was made or significant new information has come to light. It is possible to be removed from the debarment list if (i) the Minister considers that the exclusion ground no longer applies; or (ii) the debarment decision is set aside by the court following a successful challenge by the supplier, who must demonstrate that the Minister made a material mistake of law in putting the supplier on the debarment list. Overall, we expect this element of the new rules to attract considerable attention and potential legal challenges, and it will be interesting to see how widely used the debarment list becomes in practice.

3. Contract modifications

The Act follows broadly a similar approach to contract modifications as the previous regime but with some changes to language, a couple of new modification grounds and enhanced notice requirements. 

The two new grounds for “permitted modifications” relate to (i) extreme and unavoidable urgency and the protection of life and (ii) materialisation of a known risk. The extreme and unavoidable urgency ground expands the more general “unforeseen circumstances” modification ground under the old regime (and which has been retained under the new rules).

On substantial modifications, whilst the Act now helpfully clarifies that a modification will be “substantial” where (i) the contract duration is increased or decreased by more than 10% of the maximum term provided for on award (which is not something the old rules expressly allowed for) or (ii) if it materially changes the balance of the contract in favour of the supplier, there is still no brightline threshold with respect to the latter test, which will continue to require self-assessment.

In exchange for increased flexibility, the Act introduces additional notice requirements in respect of certain modifications:

• A contract change notice (CCN) must be published by contracting authorities prior to modifying certain contracts, indicating their intention to modify it.
• For public contracts which exceed £5 million in estimated contract value, the authority must publish a copy of the modified contract (or the modification itself).

The new regime also creates a new category of contracts described as “convertible contracts”. These are contracts which are below the current thresholds, but will fall within the Act’s scope post-modification because they then exceed the value thresholds, without having been tendered or procured under the Act. These contracts, which become subject to the Act from modification onwards, will also require a CCN if modified. 

4. Increased transparency obligations

One of the key aims of the Act was to create a “fully transparent public procurement system”, such that everyone could understand “what the UK public sector wants to buy, how much it is spending and with whom”.²

The result is an increase in the number of mandatory notice requirements applicable to contracting authorities throughout the procurement lifecycle - from contract pipeline notices, through assessment summaries (which replace the “standstill” or “Alcatel” letters under the previous regime), to contract award, contract details and contract change notices. All notices will be published on a central digital platform, aimed at facilitating the receipt of key information by suppliers who previously dealt with multiple different registration systems.

Contracts with an estimated value exceeding £5 million will need to be published by the contracting authority on the central digital platform (subject to exceptions for private utilities or directly awarded for user choice services). Contracts with an estimated value exceeding £5 million (save for frameworks, light touch contracts, concessions and contracts awarded by a private utility) will also require the publication of key performance indicators, with an annual assessment against them. Authorities will also need to publish data regarding supplier performance. 

The transparency requirements in general are limited by an exemption based on commercial sensitivity (i.e. trade secrets or information that could prejudice commercial interests if published can be withheld from publication) and for information necessary to protect national security. But the reality is that the expectation and the norm will be for certain contracts to be published, and suppliers will need to be mindful of these new requirements, particularly given it is not yet clear how the boundaries of the relevant exemption will be interpreted by contracting authorities and the courts.

5. Standstill period and remedies

The Act largely replicates remedies available under the previous regime – although there are certain differences in terminology, with “declarations of ineffectiveness” renamed as “set aside proceedings”. Key changes in relation to remedies include the following:

• The standstill or “Alcatel” period for new contracts has been changed to 8 working days rather than 10 calendar days. For contract modifications, there may be a voluntary standstill period of at least 8 working days. This is a new concept for modifications and the Government guidance provides that such a period will be “best practice in most circumstances”.
• The automatic suspension for a challenge to an award decision will only be available if the claim is issued and notified to the contracting authority during the standstill period. Accordingly, unlike the old rules, if court proceedings are launched after the standstill period but before the contract or modification has been entered into, no automatic suspension will apply. Additionally, unlike the previous rules, an automatic suspension will now apply if a claim is launched and notified during the voluntary standstill period for a modification.
• The test for lifting a suspension is now codified in the Act, as opposed to the application of the common law test under American Cyanamid. In particular, the test will require the court to take account of (i) the public interest; (ii) the interests of suppliers (including whether damages are an adequate remedy for the claimant); and (iii) any other matters that the court considers appropriate. Although these “new” factors are already considered by courts as part of the application of American Cyanamid, the new regime means that courts cannot simply stop their analysis after consideration of the adequacy of damages (the reason for the suspension being lifted in multiple previous cases); they must instead consider the factors as a whole.
• The period for bringing claims remains effectively the same, i.e. 30 days from when the supplier knew or ought to have known of circumstances giving rise to the claim.
• When it comes to remedies available once the contract has been entered into, these will include damages and “set aside” of the contract (equivalent to the “declaration of ineffectiveness” under the old rules). The grounds for “set aside” have been reframed to include the following: failure to comply with notice or standstill requirements; or the breach only becoming apparent post-signature or modification of the contract. The Government guidance says that it has adopted these grounds on the basis of “the increased transparency provisions under the Act which provide more information and at more stages to suppliers before the contract is awarded or entered into”.
• In terms of grounds for challenge, the Act specifically provides that the duties under the Act are enforceable by way of tortious claims for breach of statutory duty. This means that any claims will be grounded in specific failings under the Act, for example the contracting authority failing to award the contract to the “most advantageous tender”.
   

¹ This update focuses on the key changes under the Act which will impact public contracts generally, but it should be noted that specific rules still apply to utilities contracts.

 ² Cabinet Office, Transforming Public Procurement - our transparency ambition, 30 June 2022.