New public procurement rules to drive growth, opportunities for small businesses and exclude suppliers that fail to deliver
Source: gov.uk (2025-02-25)

A new public procurement regime under the Procurement Act 2023 is now in force

Procurement Act 2023 now in force, delivering growth, driving value for money, and giving small businesses greater access to nearly £400billion of yearly spend.

Strong new powers to exclude and debar suppliers from contracts on grounds of national security or poor performance.

Public can scrutinise procurement decisions on new Central Digital Platform.

New laws putting growth, small businesses and transparency at the heart of public contract awards are now in force, as part of a transformation of the government’s commercial landscape that delivers on the Plan for Change.

A more open public procurement regime driving value for money is now in place through the Procurement Act 2023, which sets rules that all public bodies must follow when they buy goods and services.

The Act will boost growth by slashing red tape for small and medium sized businesses applying for government contracts - combining multiple regulations into one simple set, and publishing procurement data in a standard, open format on a Central Digital Platform.

It is bolstered by a new National Procurement Policy Statement (https://www.gov.uk/government/publications/national-procurement-policy-statement) (NPPS) that sets out this government’s Mission-led priorities which the public sector must have regard to in its procurement activity.

The changes open up opportunities for small businesses to bid for public sector contracts, helping deliver growth and opportunity across the UK. It ends late payments that put small businesses at risk, introducing a mandate of 30-day payment terms for all public sector contracts.

Costs for both business and the public sector will be reduced through simple new processes that drive innovation, offering greater flexibility for buyers to tailor procurement to their exact needs. For example, providing public bodies more opportunities to negotiate with suppliers, and using built-in stages to procurement cycles such as demonstrations and testing prototypes.

Cabinet Office Minister Georgia Gould said:

Public sector procurement can now fully deliver on the Plan for Change - unleashing local growth, opening up opportunities and embedding transparency and accountability.

The Procurement Act, supported by our new National Procurement Policy Statement, will tear down barriers that stop small businesses from winning government work, giving them greater opportunity to access the £400 billion spent on public procurement every year, investing in home-grown talent and driving innovation and growth.

Shirley Cooper, Crown Representative for Small Businesses, said:

This once–in-a-generation change to public procurement laws will provide enormous opportunities for small businesses to take a greater share of contracts.

The Act, which goes live alongside our bold new National Procurement Policy Statement, will drive economic growth and deliver on the Government’s Missions and the Plan for Change.

I thank the public sector for the considerable amount of work done to prepare for and understand these new rules, and how they can fully benefit both businesses and the taxpayer.

To deliver on this, a Central Digital Platform is now in operation which will streamline processes and cut red tape, allowing suppliers to register their details and see all bidding opportunities in one place. This will encourage more suppliers to bid for government work, increasing competition and in turn supporting economic growth.

Citizens can also scrutinise public procurement data published on this platform, as part of the Act’s rules for greater transparency.

The Government will also use tough new powers to investigate supplier misconduct, including underperforming suppliers and those that pose security risks to supply chains, with the ability to debar or exclude them from contracts.

The Procurement Review Unit (PRU) and National Security Unit for Procurement (NSUP), now operational as dedicated resources in the Cabinet Office, will carry out this work. The NSUP will take robust action against any organisation, actor or entity which presents a national security threat.

ADDITIONAL QUOTES

Emma Jones CBE, founder of Enterprise Nation, said:

Accessing public sector work can act like a growth accelerator for SMEs. Government contracts are solid and reliable and pay within 30 days. They help SMEs develop and invest in new processes, products and efficiencies, as well as take on more staff in their local community.

By seeing Government procurement through this lens, opening up contracts to more diverse and community-based businesses will be a powerful way to deliver economic growth.

My organisation has already been busy readying SMEs for this moment. This legislation is the beginning of the next step in the journey to increasing government spend with SMEs and boosting the economy.

Terry Corby, founder and CEO of Good Business Pays, said:

The public sector spends around £300 billion every year and represents a huge opportunity to drive growth in the UK. Buying more from SMEs, making it easier for them to tender for work and get paid faster will help drive growth in our communities across the UK.

The commitment to pay all suppliers through the supply chain in under 30 days is important. If implemented well, the new Procurement Act will represent the biggest step-change towards best practice payment culture. I founded Good Business Pays five years ago, and provide a great example for all commercial organisations to follow.

ENDS