The Procurement Act – Key Changes The New Legislation Has Implemented

By Danielle McGrath | Forbes Solicitors

The Procurement Act 2023 marks one of the most significant changes to public procurement law in recent years. Now in force, it reshapes the way contracting authorities run procurement processes, bringing a new legal framework, streamlined procedures and greater focus on value beyond cost. For public bodies, this means new opportunities but also new compliance risks. For suppliers, it opens doors to greater transparency and access.

In this article, our Forbes Solicitors Commercial team explores the key changes introduced by the Act and what they mean in practice, helping you navigate the new regime with confidence.

Some of the key changes

Legal framework – Previously, the procurement process was governed by multiple sets of regulations. Now, everything sits within the Act and the Procurement Regulations 2024. In theory, this makes the process easier to follow for public bodies.

Procedures – Under the Public Contract Regulations 2015 (“PCR”), there are numerous, rigid, pre-defined procedures (Open, Restricted, Competitive, Dialogue, Negotiated etc.). Now, under the Act, for tenders which begun after February 2025 there are only 2:

1. Open Procedure – a single stage process whereby the public body advertises the contract opportunity with all relevant associated documentation available from the start, invites tenders and evaluates them all against award criteria (after checking for any excluded or excludable suppliers). The tender notice and documentation must provide enough information that suppliers know what is expected and how they will be evaluated. This procedure can be used when requirements are straightforward and well-defined and when the contracting authority wants maximum competition.
2. Competitive Flexible Procedure – this covers any competitive process other than the open procedure, which the contracting authority deems more suitable given the nature, complexity, cost etc of the contract. This procedure may be multi-stage, allowing for a participation stage and multiple rounds of bidding / evaluation, negotiation, dialogue or enquiries, demonstrations, refining award criteria and “best and final offers”. The tender notice has to set out the process the contracting authority intends to follow, e.g. whether there will be a participation stage, how many rounds there will be, whether negotiation or dialogue is allowed etc. The procedure must be proportionate to the contract – meaning the complexity and cost of the procurement should match that of the contract. This procedure is good to use for complex procurements.

Award Criteria – The award criteria for procurements used to be “Most Economically Advantageous Tender”. This meant that there was a strong focus on price. Contracting authorities under the new legislation use an award criteria of “Most Advantageous Tender” – which cuts the word “Economically” and means that wider factors can be used to assess value. Of course, price is still a relevant factor, but contracting authorities can also consider other things such as social value, local sourcing etc. when making their decision.

Frameworks – Under the PCR it offered two main commercial vehicles for repeated purchasing – closed frameworks and dynamic purchasing systems. Framework agreements were fixed term, limited supplier arrangements and dynamic purchasing systems were continuously open electronic systems where suppliers could join at any time. The Act has replaced these with open frameworks and dynamic markets. The intention of this was to modernise, simplify and make it easier for SMEs and new entrants to the market to compete throughout the contract lifecycle. Open frameworks are framework agreements that can be reopened to new suppliers at specified intervals during its lifetime (as opposed to the previously locked closed frameworks) and dynamic markets are an electronic system through which contracting authorities can buy goods, services or works from suppliers who have been admitted to the market and remain eligible to participate (this replaces and expands on the dynamic purchasing system model).

Notices – There are significantly more compulsory notices that contracting authorities must publish under the Act as opposed to the PCR(26 different ones!). This increases transparency, but it also increases the administrative burden on contracting authorities and a higher compliance risk.

SME’s and local businesses – Under the PCR, SME’s and local businesses often struggled to access procurement tenders, as the application burden was high and frameworks were often closed. Under the Act, however, these businesses are able to be considered more by contracting authorities, and hurdles to them accessing tenders have been reduced. Contracting authorities are encouraged to do what they can to make procurements more accessible for these businesses.

The Procurement Review Unit (the “Unit”) – This is a new unit within the Cabinet Office which has oversight over public procurement. The Unit comprises 3 services:

1. A Public Procurement Review Service – this already  existed prior to the Act and continues to deal with suppliers’ complaints about specific procurements and late payments.
2. A Procurement Compliance Service – this is a new service which formally investigates contracting authorities’ broader compliance with the Act. It has more powers to investigate and issue recommendations.
3. A Debarment Review Service – this is also a new service which determines whether suppliers should be added to the public debarment list as excluded or excludable.

Debarment and Exclusion – Previously, exclusion decisions were up to the contracting authority only. Now, as stated above, there is a debarment list managed by the Debarment Review Service and it is mandatory that contracting authorities check it for any potential contractors who may be listed. Contracting authorities are able to report any contractors they believe should be excluded to the government for them to decide whether the contractor should be added to the debarment list or not.

Contract modifications – Under the PCR, there was a strict modifications test. The Act, however, is much more flexible if a new ground for modification can be identified and referenced. The contracting authority must publish a Contract Change Notice if a contract is to be modified. It is important to anticipate any potential changes in the contract period if possible and to address them in the documents.

Thresholds – Under the PCR, the estimated contract value was determinative if reasonable. Now, contracting authorities apply schedule 3 of the Act instead, which has a simpler mechanism. However, contracting authorities should be careful with aggregated valuation and need to watch out for VAT – as the thresholds are now VAT inclusive.

Contract management – Previously, there were no obligations for performance monitoring. Now, the publication of KPIs is mandatory for higher value contracts, and KPIs must be published as part of the contract details notice when the contract  awarded is over £5m. Contracting authorities must assess supplier performance against the KPIs at least once every 12 months and on termination of the contract, and must also publish results via a Contract Performance Notice.

Transition – The PCR apply to procurement processes that were begun before 24 February 2025. The Act applies to procurement processes begun after 24 February 2025. Contracting authorities should always check which legislation applies when tendering to avoid any potential challenges.

Challenges and Risks

Since the change in legislation, we have seen public bodies struggle to ensure compliance with the new rules. Highlighted below are some of the problems we have seen so far:

1. Lack of awareness of when to use the old processes and when to use the new. Existing contracts procured under old rules will continue under those rules until they end, but public bodies must ensure that they are using the correct set of rules or set themselves up to be challenged on their procedure.
2. Due to the new thresholds and the fact that VAT is now included in the valuation of contracts, some contracts that weren’t regulated before now will be. This is a massive consideration for public authorities who need to make sure that they’re valuing contracts correctly so that they follow the correct procedure and therefore don’t leave themselves open to challenge.
3. Not publishing all the required notices for that particular procurement.
4. Suppliers being more willing to challenge procurement processes and go to the Procurement Review Unit if unhappy.

Contracting authorities who use the incorrect procurement process, we have seen, are at risk of being challenged, so it is crucial that things are being done correctly from the outset. Our specialised Commercial team can offer support with procurement processes and challenges under the PCR and the Act.