The UK Government has opened a consultation on further reforms to the public procurement regime, following the introduction of the Procurement Act 2023 and the new National Procurement Policy Statement (NPPS). The consultation seeks feedback on proposals aimed at strengthening national security, supporting small businesses, and promoting local employment and skills.
Key measures under consideration include mandatory targets for spending with small and medium-sized enterprises (SMEs) and voluntary community and social enterprises (VCSEs), stricter prompt payment requirements, greater flexibility in procuring people-focused services, and new obligations for contracting authorities to consider social value and local economic impact in major contracts.
Large contracting authorities with annual spending over £100 million would be required to set three-year targets for direct spend with SMEs and VCSEs, reporting progress annually. The government aims to increase SME and VCSE participation in public procurement through these targets. Authorities will also need to publish all spend data centrally, with lower thresholds for reporting payments under public contracts to improve transparency regarding SME and VCSE involvement.
To encourage timely payments within supply chains, suppliers bidding on major contracts valued above £5 million must demonstrate prompt payment of invoices—averaging within 60 days—or risk exclusion from the process. If a supplier is not excluded despite failing these requirements, authorities must provide an explanation.
For people-focused services such as adult or children’s social care, proposed changes would clarify when contracts can be awarded without full competitive procedures. This is intended to better address the needs of vulnerable groups while reducing unnecessary bureaucracy where complex procurement processes are inefficient.
Contracting authorities will also have to conduct a standard public interest test before awarding major contracts above £5 million. This test will evaluate value for money, service quality impact, as well as economic and social value goals. Results must be published for transparency.
Ministers may receive powers to designate certain goods or services as critical to economic security. Under this proposal, ministers could establish rules via secondary legislation on how these items are identified. When designated as critical, contracting authorities would need to review purchasing plans for risks associated with reliance on international suppliers and consider national security exemptions if necessary.
In addition, at least one award criterion in major procurements over £5 million must relate to job creation or skills development—with a minimum weighting of 10% in evaluation scoring. Authorities will need at least one key performance indicator (KPI) related to skills or job creation reported in contract performance notices.
Social value criteria are set to become more standardized: contracting authorities would choose from a streamlined list of metrics when procuring public contracts so that requirements remain consistent across tenders—particularly benefiting SMEs navigating the process. Authorities may specify desired social value outcomes by area of responsibility or location tied either to contract performance or supplier base.
The proposed reforms mark a shift toward embedding support for SMEs alongside broader economic, social, and national security objectives within public procurement practices.
“In anticipation of the adoption of the proposed reforms, contracting authorities should take steps to ensure that their internal processes are sufficient to ensure compliance with the proposed changes to reporting, transparency and social value requirements,” according to the statement issued by Ashurst LLP. “Suppliers should also review their internal payment and supply chain management practices and policies to ensure they are compliant with the proposed new requirements to mitigate the risk of being disqualified from future procurements.”
The consultation remains open until 5 September 2025; after its conclusion new legislation is expected amending the Procurement Act 2023.