What do businesses need to know about the Procurement Act?

If your business currently, or intends to, work with the public sector, it is crucial that you familiarise yourself with the UK Procurement Act.

The Procurement Act was introduced on 24 February 2025, changing how the UK government, and wider public sector, buys goods and services. The following overview highlights the most significant aspects of the Act, and what they mean for your business.

A Redefined Tender Portal

The functionality of Find a Tender has now been expanded, making it the UK’s Central Digital Platform (CDP) for public sector procurement. It is now an integrated platform where suppliers can view Public Contracts, bid for tenders, and store their standardised business details.

The updated Find a Tender site is still in Beta testing, meaning not all features are final, and users should expect bugs and ongoing refinement. Even after further updates, the portal will still suffer from numerous limitations, such as the reliance on CPV codes and minimal tender alert features.

Simplified Procedures

Rather than having several procedures each with their own sets of rules and processes, there are now only two:

Open Procedure – For basic tenders, with no pre-qualifying stages, allowing business to freely access associated documents and bid for the contract.

Competitive Flexible Procedure – Gives authorities the flexibility to design processes tailored to their specific procurement need. Contracting authorities can utilise multiple stages, negotiations, and a range of other processes to identify the best solution or supplier.

More Opportunities For SMEs

The Procurement Act has introduced a range of changes to make it easier for small, micro, and medium-sized enterprises (SMEs) to bid for public sector contracts.

Reducing Barriers To Entry – The Act emphasises that contracting authorities need to encourage SME engagement, and with the new flexible procedures, procurements should be designed to avoid unnecessary barriers to entry.

Smaller More Specific Lots – By breaking larger contracts into smaller lots, the Act aims to create more opportunities for SMEs. Rather than look for suppliers who can deliver a range of solutions, contracts can be broken down into components (lots), allowing SMEs to bid for part of the contract.

Faster Payments

The UK government aims to support business sustainability and growth by ensuring faster payments to all suppliers involved in public sector procurements.

Prompt Payments For Suppliers – While 30-day payment periods are not new, the Procurement Act has introduced additional processes to strengthen this requirement. Payments from contracting authorities should be made within 30-days of receiving invoices, and this is implied for all contracts, even if not written explicitly.

Prompt Payments For Subcontracts – The requirement for 30-day payments also applies to subcontracts which are wholly or significantly tied to the delivery of Public Contracts. Suppliers should consider this when bidding for tenders, and be able to demonstrate they have effective payment systems in place.

Updated Procurement Models

To help government agencies and other public bodies develop efficient arrangements with supply chains, they can avoid repeatedly publishing new tenders by using the following procurement models:

Framework Agreements – are arrangements with a limited number of qualified suppliers. They run for 4 years and can only be joined during the initial tendering process. While these are not new, they will still be utilised under the Procurement Act.

Dynamic Markets – are arrangements for an unlimited number of qualified suppliers. There is no limit on how long these arrangements may run for, and they remain open to new suppliers throughout their duration. This model replaces Dynamic Purchasing Systems (DPS).

Open Framework Agreements – are arrangements for a limited number of qualified suppliers. They can run for 8 years and be reopened for entry, allowing new suppliers to be added to the arrangement. This is a new model, offering more flexibility than frameworks, and more restrictions than Dynamic Markets.

New Procurement Priorities

Under the Procurement Act, the UK government has identified key priorities which should be taken into consideration whenever contracting authorities are making procurement decisions.

Most Advantageous Tenders (MAT) – This is the new approach for deciding which suppliers should be awarded contracts. Rather than focus on the right balance of price and quality, this approach allows for the consideration of wider factors, such as social value, sustainability.
This approach replaces the previous approach of Most Economically Advantageous Tender (MEAT), which was seen to focus too heavily on cost.

National Procurement Policy Statement (NPPS) – Outlines the key goals for public procurement, which contracting authorities should consider when conducting procurements. Suppliers can use this document to support their tendering activity by aligning their bids with these key goals. The latest NPPS is currently being reviewed, and we will publish a summary once it has been published.

Focus On Performance

The UK government has introduced measures which hold suppliers accountable for their actions. While this may sound intimidating, it is there to make things better for the overall marketplace by preventing work going to suppliers who are unfit to deliver the requirements.

Central Debarment List – A new central debarment list has been created to identify suppliers which should be excluded from public contracts. There are ‘Mandatory Exclusions’, for serious criminal convictions and breaches of competition law, and ‘Discretionary Exclusions’, for misconduct and continual poor performance.

Extended Due-Diligence – Suppliers will have to ensure they are not connected to any suppliers on the debarment list to avoid repercussions. Any businesses within your supply-chain on the debarment list cannot be used to fulfil public sector contracts. The ‘Connected Persons’ rule means parent companies, subsidiaries, and directors on the debarment list will result in the exclusion of your company from bidding for contracts.

Key Performance Indicators (KPIs) – Contracting authorities must set at least 3 supplier KPIs on contracts worth over £5m. Supplier performance on such contracts will be monitored, with the publication of a Contract Performance Notice at least once a year.

Greater Transparency

The level of information available to suppliers for public procurements has been greatly improved. This information can be used by suppliers to analyse the market and develop robust strategies.

Mandatory Feedback – Contracting authorities must provide suppliers with specific, informative, and timely feedback for all public contracts. This requirement is for all bids, regardless of their success, and is intended to help suppliers identify areas for improvement and enhance their competitiveness for future bids.

New Notice Types – A range of new notices have been created to give businesses enhanced visibility of developments within the market. These include notices for: Planned procurements, Contract performance, Contract terminations, Market engagement, Direct awards and Spend data.

New Conflict Of Interest Processes – To ensure procurements are awarded fairly and without bias, contracting authorities are required to resolve potential and actual conflicts of interest. This involves assessing the potential impact and taking appropriate actions to mitigate any impartiality.

Earlier Supplier Engagement – Contracting Authorities are encouraged to share details of upcoming procurements through Pipeline Notices, which outline their projects for the next 18 months. This requirement is mandatory for authorities expecting to spend £100m or more on goods or services within the coming financial year.

Replaces The Old Regulations

The Public Procurement Act 2023 will completely replace the Public Contract Regulations 2015.

Tenders Published Before 24 February 2025 – and those concluding after this date, will still be managed under the Public Contract Regulations 2015.

Tenders Published From 24 February 2025 – will follow the new regulations under the Public Procurement Act 2023.

Frameworks And Dynamic Purchasing Systems (DPS) – typically last for several years and could continue using the Public Contract Regulations until 2028.