What’s next for procurement?

It’s all change again for public procurement as the Cabinet Office launches a new consultation on reforms to the Procurement Act 2023 to support the Government's overarching missions. Public procurement has seen a great deal of change over the last 12 months, with the eagerly anticipated Procurement Act finally coming into force in February 2025.

Our partner and head of procurement, Alison Walton takes a look at the proposed reforms to the Procurement Act.

Using procurement to deliver change

The proposed reforms centre around the Government's desire to use procurement to help deliver the overarching missions through the Plan for Change and align with those stated in the National Procurement Policy Statement.

These aim to:

·        Kickstart economic growth

·        Make Britain a clean energy superpower

·        Take back our streets

·        Break down barriers to opportunity

·        Build an NHS fit for the future

What is covered by the proposals in the consultation?

·        Supporting small businesses and social enterprise:

Published SME target spend - Requiring authorities with a spend of over £100m per annum to publish a 3-year target for direct spend with SMEs and VCSEs and report against it annually. Authorities will be aware that this is already a requirement for central government departments following PPN 01/25 issued in February 2025. 

Prompt payment exclusions - Allowing a supplier to be excluded from a tender process for high-value contracts where it is unable to demonstrate prompt payment practices for its supply chain. Again, this is already mandatory in some circumstances for central government departments following PPN 018/25.

Direct awards - Direct award exemptions for contracts for services to vulnerable groups to allow decisions to be driven by their needs.

·        Supporting national capability

Critical contracts to be directly awarded - The Cabinet Office has suggested that there may be a threat to national security where authorities use international suppliers for critical services, works or supplies. Authorities will be encouraged to consider the national security exemption where specially designated critical services, works or goods are being procured; this would allow a direct award to be undertaken without a tender process. Please note that the Cabinet Office is not inviting consultation on this point.

Public interest test before services can be outsourced - Authorities may be required to undertake a “make or buy” assessment before procuring high-value services contracts to test whether the service should be provided in-house or outsourced.

This would be known as the public interest test and underpins a desire to end the widespread outsourcing of public services following concerns about quality, accountability and resilience. Often, this can outweigh the perceived advantages in efficiency and cost brought about by private sector suppliers.

Authorities will be encouraged to prepare a sourcing strategy to identify any gaps in their capability, capacity, skills or culture needed to make in-sourcing a success. Before outsourcing or re-contracting for a service, the authority must carry out this public interest test to understand whether that work could be done more effectively in-house. Authorities would need to publish the results of the test.

·        Supporting local jobs and skills

Minimum skills social value criteria - For major procurements (over £5m), authorities must set at least one award criterion relating to the quality of the suppliers’ contribution to jobs, opportunities and skills and apply a minimum weighting of 10% to social value criteria in the evaluation.

Mandatory KPI relating to skills - Set at least one social value KPI to apply over the life of the contract ratings to jobs, skills and opportunities and report on progress in contract performance notices at least annually.

Standard social value model - Require the use of standardised social value criteria and metrics from a streamlined list. Authorities will be aware that there is already a new mandatory social value model for central government, which is likely to be the basis for this requirement if brought in; further information and the standardised model, which contains criteria, example questions and evaluation criteria, can be found here.

Having your say

The above are all proposals which may never make it into the Act but are there for discussion and consultation at present. Do not miss out on having your say: responses to the proposals are invited until the closing date of 5 September 2025 and you can have your say here.

For further information or procurement advice, please contact Alison Walton via 0191 2117850 or [email protected].