Back to the blocks: UK Government’s second attempt to launch public procurement reforms

After a delay in its original October 2024 go-live date, the UK’s new legal framework for public procurement – the Procurement Act 2023 (the “Act”) – is now set to come into force on 24 February 2025.

The Act promises to usher in “major reform” of the UK's current EU law-based public procurement regime and “speed up and simplify” UK procurement processes. But what will these reforms mean for businesses, and will the Act deliver on its promises?

Market access

Broadly speaking, the Act is intended to maintain the status quo on covered entities, contracts, and exemptions. Consequently, arrangements covered under the existing regime should still be covered, and businesses should not see changes in market opportunities due to the Act itself.

The Act does, however, strengthen the powers of authorities to restrict supplier access to procurements. In particular, the grounds for exclusion have been expanded on a number of fronts. For example:

• Poor performance: a reduced threshold for excluding bidders due to previous poor performance. Previously, authorities needed to establish poor performance subjectively, such as through contract termination. Now, the criteria are more objective, and bidders can face exclusion if they have not performed a contract to an authority’s satisfaction;
• National security: a new mandatory exclusion for suppliers deemed to pose a risk to national security; and
• Connected persons: a broader range of entities and persons connected to a bidder will be considered when determining whether any of the grounds for exclusion apply such as predecessor companies and parents and subsidiaries.

Furthermore, a centralised debarment list will be established as a public register of suppliers who have been 'blacklisted'.

Publicising supplier performance

The Act also strengthens transparency requirements:

• Key Performance Indicators (KPIs): for contracts valued above £5 million, authorities must publish a description of the three key performance indicators which they deem as most material to the performance of the contract. Performance against these KPIs must be publicly reported at least annually and upon contract completion; and
• Other performance failures and breaches: authorities must also routinely report failures to perform contracts satisfactorily and certain contract breaches.

Consequently, suppliers face increased public accountability risks, with their performance and any failures being subject to greater scrutiny.

Streamlined competitive award procedures

The Act reduces the number of competitive procedures to two: (i) open procedure and (ii) competitive flexible procedure. It also provides authorities with broad discretion to design and structure the competitive flexible procedure.

A simplified regulatory regime?

Central to the UK Government’s simplification plans was the consolidation of the four main procurement regulations (the Public Contracts Regulations 2015, Utilities Contracts Regulations 2016, Concession Contracts Regulations 2016, and Defence and Security Public Contracts Regulations 2011) into a single act.

Despite attempts to simplify the existing regime, the Act remains substantial and complex, relying on secondary legislation and government policy. The Act also retains special rules for defence, utilities, and concession contracts but integrates them clause by clause, making it harder to pinpoint sector-specific provisions.

Adieu to EU law and principles? 

To remove all vestiges of EU Law from the UK statute book, the Act reframes well-established and understood EU-derived procurement provisions. This includes the EU procurement principles (e.g. transparency, equal treatment and non-discrimination), which are referred to as “objectives” under the Act. The UK procurement objectives broadly appear to reflect the EU procurement principles (e.g. “equal” treatment switches to “same” treatment under the Act). One notable difference is that the duty to consider “value for money” has been placed on a statutory footing.

However, it is unclear whether the reframing exercise will materially change authorities’ procurement practices (e.g. authorities currently place significant emphasis on value for money in their procurement exercises). At the same time, the shift results in a loss of understanding and precedent developed by courts under the existing EU-derived regime, introducing uncertainty in the interpretation and application of the Act.

2025 outlook: plus ça change?

From both a substantive and procedural perspective, it is arguable that the Act introduces relatively modest changes for suppliers compared to the extent of the reform.

We also expect suppliers to continue to face a complex and fragmented regime and anticipate an increase in legal challenges towards the end of 2025 as the first procurement processes under the new Act conclude, with unsuccessful bidders using the new and untested provisions as a basis to challenge.