Navigating the new procurement landscape: what the Procurement Act means for public sector bodies

The UK’s most significant procurement overhaul in a decade has now come into effect, reshaping how public sector organisations source goods, services and works. Peter Ware, head of government and specialist in public procurement at UK and Ireland law firm Browne Jacobson, explains the substantial changes in the Procurement Act 2023 and what they mean for government bodies

The Procurement Act 2023 – which came into force on 24 February this year, some 16 months after receiving royal assent – marks a decisive break from EU-derived regulations.     

It establishes a unified framework encompassing public contracts, utilities, concessions and defence procurement across England, Wales and Northern Ireland.     

This consolidated approach aims to enhance efficiency, transparency and accountability in public sector procurement while fundamentally shifting procurement objectives.     

Contracting authorities are now mandated to deliver value for money, maximise public benefit and act with integrity throughout the procurement process. They must also consider how procurement can increase participation from SMEs and support broader social, economic and environmental objectives.     

For public sector organisations, this requires a recalibration of procurement strategies to balance cost-effectiveness with these wider considerations.

National Procurement Policy Statement: a strategic framework

To guide implementation of the Act, the government has published the revised National Procurement Policy Statement (NPPS), outlining strategic priorities for public procurement. Public sector bodies must have regard to the NPPS and will need to demonstrate this consideration during procurement exercises.     

The NPPS establishes several key priorities that directly affect public sector procurement:     

Economic growth and innovation: government bodies are expected to create opportunities for small businesses and social enterprises while supporting high-quality employment with fair wages. There is a strong focus on fostering innovation and emerging technologies, aligning with the government’s Industrial Strategy and drive towards digital transformation.     

Environmental sustainability: a central focus is how goods and services procured by public bodies can support the acceleration towards net zero. Local authorities and other public sector organisations must prioritise green technologies and implement rigorous environmental standards in their procurement activities, contributing to the nation’s ambition to become a clean energy leader.     

Community development: the NPPS emphasises strengthening community cohesion through procurement practices. Government organisations should structure their procurement to facilitate employment opportunities for disadvantaged groups, supporting safer and more inclusive communities. This includes ensuring procurement practices harness diverse talent pools and promote inclusive growth.     

Opportunity and access: addressing skills gaps and removing barriers for young people and under-represented groups forms a crucial component of the policy. Public sector bodies must ensure their procurement practices tap into diverse talent pools and promote inclusive growth across all communities.     

Supporting the NHS: the statement explicitly recognises the role of procurement in supporting physical and mental wellbeing through high-quality employment. Public sector organisations must consider the health impacts of their procurement decisions on both their workforce and the broader community, reinforcing the connection between employment practices and public health outcomes.

Practical implementation for public sector organisations

The government has updated the Sourcing Playbook alongside the NPPS, introducing a new public interest test to enhance procurement effectiveness and value for money. Public sector organisations must carefully evaluate whether services should be outsourced or delivered in-house, ensuring optimal use of public resources.     

The framework places increased emphasis on supporting small and medium-sized enterprises (SMEs) and voluntary, community and social enterprises (VCSEs) while building robust commercial capabilities, particularly in contract management.

Enhanced transparency and reporting

Transparency requirements have been substantially enhanced under the Procurement Act. For contracts exceeding £5m in England, there’s a new obligation to publish at least three key performance indicators (KPIs) and regularly assess supplier performance against these metrics.     

Public sector organisations will need to adapt to new requirements for publishing procurement documentation and contract performance data. Mandatory disclosure requirements for contract changes and modifications, along with increased emphasis on supply chain transparency throughout the procurement process, will create additional administrative responsibilities.     

Supplier performance should also be regularly assessed against these benchmarks, and those that perform poorly – as well as those whose associated suppliers and subcontractors are not up to standard – may be placed on a central debarment list.     

This makes them excludable on a discretionary ground from future public tenders and can lead to the termination of other public contracts.

Implications for suppliers to government organisations

For suppliers to public sector organisations, the Act creates significant opportunities while introducing new compliance requirements. Market access should be simplified through reduced administrative requirements and improved visibility of opportunities.     

A new competitive flexible procedure – part of a simplification that moves from seven procurement procedures to three – enables more innovation within a procurement exercise.     

This increases the opportunity for dialogue with buyers, giving suppliers greater scope to demonstrate value beyond price considerations, which is particularly relevant for complex solutions.     

The threat of being placed on a central debarment list means suppliers must ensure they can realistically meet KPIs, conduct due diligence on their corporate structure and those of supply chains to ensure compliance, and take advantage of feedback that contracting authorities are mandated to provide in order to challenge decisions.

Ongoing considerations for public sector organisations

With the new procurement regime now in force, government bodies should take several key steps: develop procurement strategies that align with the national priorities outlined in the NPPS; embed social value considerations into decision-making processes; support local economic growth through engagement with SMEs; prioritise environmental sustainability in procurement practices; and build internal capabilities for effective procurement management.     

They should review and update internal processes to align with the new procedures; prepare for registration on new digital platforms; develop enhanced reporting capabilities to meet transparency requirements; update document management systems to handle new requirements; and provide comprehensive training to procurement staff on the new procedures and digital platform usage.     

The NPPS challenges public sector organisations to adopt a more holistic approach to procurement, balancing cost-effectiveness with broader social, economic and environmental impacts.     

By thoughtfully implementing these priorities, government bodies can contribute significantly to national objectives while ensuring sustainable and inclusive growth in their communities.     

While the new procurement regime may bring short-term disruption, it also provides a real opportunity for public sector organisations and their supply chains to drive efficiency, innovation and value for money. To maximise benefits, everyone involved should familiarise themselves with the Act and accompanying guidance.

Further Information:

Procurement Act

Browne Jacbonson