Procurement Act 2023

The Procurement Act 2023 (the Act) came into force on 24th February 2025. It will be supported by additional Regulations and Cabinet Office guidance/systems but the wording of the Act itself will form the basis of procurement regulation from this date. The CPC will continue to support you with these changes and further updates can be expected in the coming months.

We recommend that you consider the contents of this guidance and consider how the matters discussed may impact on your institution/way of working.

Background information

As an institution, you are currently governed by the Public Contracts Regulations 2015. These regulations imported the EU Procurement Directive into UK law and when we left the EU, those regulations were tweaked to remain in force as a stand-alone fix whilst the Government consulted on and finalised the Act. Key pillars of public procurement promoted through the 2015 regulations -- transparency, equal treatment and proportionality are reflected and amplified in the new Act.

Alongside the Act sit several 'exemptions', one of which is the Schools Exemption, covering schools, MATs, FE and certain HE establishments. This exemption means that some of the more onerous reporting regimes in the Act do not apply to our members, but transparency requirements will increase. In the below guidance, we have taken the Schools Exemption into account, so we are not detailing processes that our members and clients will be exempted from following. If you are not certain whether your institution is covered by this exemption, the list of exempted entities is given at the start of the official Schools Exemption guidance.

For information, the Schools Exemption relieves those covered from the following areas of compliance with the Procurement Act:

1. Sub-threshold contracts (those valued £30,000 to relevant Threshold). Essentially, below threshold, exempted institutions simply need to follow their own internal financial regulations and procurement policies

2. Publication of payment compliance notices for third party expenditure, demonstrating payment of valid invoices within 30 days of receipt

3. Publication of details of payment of each and every third-party supplier invoice of £30,000 or greater in value

4. Requirement to build 30-day payment terms into all contracts and supply chain sub-contracts

A reminder about thresholds

Both the current 2015 Regulations and the new Act set thresholds above and below which procurement / contracting activity is regulated.  These thresholds are updated biannually on 1st January of even dated years. The current thresholds are therefore in place until 31st December 2025 and for non-central Government contracting authorities, are:

Supplies and Services: £214,904 (incl. VAT)

Light Touch Regime: £663,540 (incl. VAT)

Works: £5,372,609 (incl. VAT)

Above these thresholds, full compliance with the current Regulations and the future Act are mandatory and cannot be avoided using an exemption/waiver process.

Added to the above is a much lower threshold of £30,000. Any contract above this much lower threshold requires a more limited compliance regime, including the publication of a contract award notice and (under the new Act) a contract termination notice. Guidance now published by the Government confirms that those institutions covered by the Schools Exemption need not comply with ss. 84 to 88 of the Act (Below Threshold Contracts), so our members need only concentrate on compliance for above-threshold contracts.

Something which our members often overlook, however, is the aggregation rule; both the current Regulations and the new Act prevent the disaggregation of spend to avoid the rules. In simple terms, this means that for matters of ongoing spend (i.e. not individual, one-off purchases), institution spend over a minimum four-year period needs to be estimated, and if that spend is greater than one of the relevant thresholds, then the procurement process to follow needs to be that which is mandated by the Regulations/the Act.

Procurement Act objectives

The Cabinet Office has set out an agenda for reform of wider public sector expenditure, seeking to achieve better value for money and to maximise the benefit of public sector third party spend to the UK economy. Key to this agenda is a perception that transparency of expenditure will serve to demonstrate the degree of equal treatment and proportionality that removes barriers to tendering for public contracts.  Access to this market by SMEs is key, as is obtaining better value through public sector spend targeting strategic priorities.

The UK's economic strategic priorities are set out in its National Procurement Policy Statement (NPPS). This encompasses all aspects of Social Value but whereas the 2012 Social Value Act was not prescriptive in how such value was to be achieved, the NPPS offers clearer guidance on what public sector bodies should be mindful of, when spending public money. The NPPS sets out the Government’s strategic policy priorities for public procurement and is an essential element of the Procurement Act. The Government wants the new regime to commence with a statutory NPPS that meets the challenge of applying the full potential of public procurement to deliver value for money, economic growth, and social value.

What happened on 24th February 2025?

Any procurement activity commenced up to and including 23rd February 2025 (by commenced, essentially think 'invitation to tender issued') continues to follow the 2015 Public Contracts Regulations, including post-contract management of those arrangements.  Any call-off contracts from existing framework agreements established prior to 24th February 2025 will equally be governed by the 2015 rules.

Any existing framework agreements put in place by CPC, from which you can call off your own contracts will continue to operate until their planned expiry date. When our existing framework agreements expire, they will be replaced in the normal manner, and your ability to access to them under the new Act will not change.

It is only brand-new procurement activity started from 24th February 2025 that will be regulated by the Act. This means that for several years, your institution and procurement colleagues will be governed by two slightly conflicting sets of procurement rules/regulations and thought will need to be given as to how this is reflected in your Finance Regulations and/or Procurement Policies.

What are the key changes?

Routes to Market

There will be only two tender processes, an Open Procedure akin to the current open procedure under the 2015 Regulations and a Competitive Flexible Procedure (CFP), which allows for the design of any non-open tender process. We suggest that this second process will be used infrequently, perhaps to design a process akin to the current restricted procedure, used when an open procedure may be expected to return too many tender submissions, or when your institution isn’t sure what outcome it wants, and wishes to encourage innovation.

For all above-threshold requirements, you will continue to be best served by seeking established routes to markets through framework agreements, such as those put in place by the CPC. There are changes to the way in which these framework agreements are established, but that will not concern you, other than to know that there will be a continuation of this provision to make your access to supplies & services as simple and as straightforward as possible.

Demonstrating Value

Evaluation of tenders, whether through an open process or call-off from a framework is currently referred to as MEAT -- most economically advantageous tender. Under the Act, this becomes MAT -- most advantageous tender. Don't be fooled by the deletion of 'economically', tenders will still need to be evaluated based on both price and technical quality, but MAT provides for a broadening of what could be considered as value for money, including emphasis on the objectives of the NPPS mentioned above.

Transparency

This is probably the biggest change from our members' perspective. The Act heralds a new 'Notices' regime which requires publication of notices from initial procurement planning, through active procurement and then throughout the life of active contract management. Alongside the publication of new/different notices, will be a requirement to publish redacted copies of any contract with an award value exceeding £5million.

Note that this value is VAT-inclusive, as indeed are any values now discussed in terms of the Act.  For any such contract, there will also be a requirement to publish at least annually, compliance with a minimum of three KPIs that will be obliged to be set and reported on (see Contract Management, below).

Finally, another change comes in the form of publishing a Termination Notice each time one of your contracts comes to an end, even those that end through expiry of time, and which are simply replaced.

Contract Management

The second biggest change that the Act heralds, is the requirement to demonstrate a more active contract management regime. This includes mandatory disclosure of all contracts with a value exceeding £5million and a requirement to set a minimum of three KPIs for such contracts and then actively report on the management and achievement of those KPIs by your suppliers/contractors.

For any contract exceeding its threshold value, the increase in notices publication and transparency requirements means that third-party above-threshold contracts will require an active approach to the management of their delivery. This will place additional burdens on your budget holders / those for whom the contracts have been put in place and those colleagues will need to be afforded the time and expertise to actively manage the requirements.

This links to achieving Value for Money. It is recognised that active contract management can contribute c.10% in savings either in-life or in feeding into the next iteration of your contract requirements, so investing in contract management can pay dividends.

Centralised Platforms

Previously, there were are two reporting platforms; Contracts Finder (for below-Threshold contracts) and Find a Tender (for above-Threshold contracts). These are now merged into a new enhanced Find a Tender Service, which links into a new Supplier information Central Digital Platform. The aim is to create a single repository for all public sector contracts and suppliers.

Previously, you may only have needed to register on the old Contracts Finder/Find a Tender portals if you wanted to manually post notices about your tendering activity. If you currently use an eSender portal such as MultiQuote / Sourcing Cloud, it manages the automated process of publishing notices without your need to interact with the central platform itself. The new Find a Tender Service operates differently and each of our members and clients will need to register their institutions on this new platform. Once registered, your institution will be able to obtain an access code called an API Key, which you then supply to your eSender portal to enable them to then post notices on your behalf. You will not be able to tender for contracts awarded under the Procurement Act 2023 until your institution has registered itself on the new platform.

To assist you further, we have developed a page to provide further information on the new central digital platform plus a downloadable pdf guide to registration. This includes the links you will need to be able to register.

Compliance

A mix of the above will generate more transparent public sector spend, with suppliers and other interested parties being able to quickly access tender and contract information. This is being formalised by the creation of a Procurement Review Unit within the Cabinet Office, which builds on the current mystery shopper service, to have more formal oversight of compliance with the Act and its provisions. One prediction is a rise in the number of Freedom of Information requests linked to procurement and contracting activities as the wider supply market become aware of the increase in transparency and compliance obligations.

Notices

Transparency will be achieved through a new regime of published notices. For members who use the services of the CPC, whether calling off our frameworks or clients using our consultancy services, the systems provided by the CPC facilitate most of the current regulations requirements and we expect that this will be enhanced by improvement to MultiQuote, our in-house eProcurement portal for the new Act.

With the longstanding requirement to conduct procurement activity electronically, our members should be using eSender (electronic procurement) platforms for their above-threshold tendering activities, such as MultiQuote (used by the CPC). It has been promised by the Government, working with UK eSenders, that all commercial platforms will provide the functionality you require, though they will not be automated and will need your intervention to process and issue the required notices.

In the table below and overleaf is a summary of the new notices' regime, with notes where the CPC considers that requirements for compliance may be more limited for most of our members. The table is divided into the 'thirds' of the procurement lifecycle -- procurement planning, procurement, and contract management. We have flagged where the notice is mandatory or optional for below-Threshold contracts; otherwise, the notices only apply to above-Threshold procurement/contracting activity.

For members based in either Wales or Northern Ireland, certain notices will not be required but will be replaced by a similar internal reporting mechanism to the devolved assemblies and so preparation for the issue of notices is still required in practice.

What does this mean for our members and clients?

The education sector will come under closer scrutiny from both central Government and the wider supply market.  Systems and procedures, rules and regulations will need to be reviewed and those in a procurement role, finance colleagues and budget holders will need to be briefed and trained.

The Cabinet Office has a dedicated webpage -- Transforming Public Procurement -- which provides further information and links to resources. Members who access our framework agreements or use our consultancy services will be supported through this process, but the emphasis must be on ownership from the leadership team down, if you are to successfully transition to the provisions of the new Act.

The key resources available to you now, comprise:

1. Knowledge Drops for senior leadership and heads of service, providing an overview of the new Act.  It includes overviews of the Act for suppliers, so can be shared with your supplier base.

2. Practitioner eLearning comprising a series of ten modules for those on the procurement coalface and which provides more in-depth knowledge of the provisions of the new Act.

3. Guidance which is being drip-fed from the Cabinet Office to support the transition to the new Act.

4. Transforming Public Procurement Learning Manual published in August 2024 by the Cabinet Office and forming a comprehensive guide to the Act, associated Regulations and taking you through each stage of the process in some detail.

What is the CPC be doing?

Colleagues within CPC's Contracting Team ensure that the Framework Agreements and new Dynamic Markets that we put in place to support Members with compliant, value-for-money and less time-consuming access to the markets are fit for purpose.  Colleagues within CPC's Consultancy Service (formerly Tenet Education Services) will be able to support our clients with their procurement function under the act.

Guidance notes such as this will be issued as and when there is sufficient further information to share.

Finally, Crescent Learning is being expanded and updated to provide a one-stop-shop resource for members to access templates and guidance notes for the key areas of the procurement function.

Your next steps - top tips

We recommend that you begin to prepare for transition to the new Act. Some top tips currently are:

1. Get a grip on your contracts with third party suppliers. Spend analysis is the starting point and this will feed your contracts register, which in turn will give you a pipeline of work.

2. Make sure your Finance System is capable of reporting for the new requirements to assist our procurement function in succeeding.

3. Encourage procurement colleagues within your teams to undertake the Practitioner eLearning.

4. Review your Finance Regulations & Procurement Policies to ensure they are compliant with the new Procurement Act.

5. Begin to understand how to properly manage your contracts and how to use learning from them to feed into future requirements. If a contract is £5m+, be prepared to publish them and the KPIs that you will need to establish. Consider what software you may need to permanently redact sensitive commercial information prior to their publication.

6. Think about how your institution can incorporate National Procurement Policy Strategy requirements (including wider social value) into your third-party spend and consider creating a NPPS-orientated social value policy.

7. Cascade this briefing note to your budget holders and finance/procurement colleagues.

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