Impact of the new Procurement Act on tech suppliers to the public sector

The Procurement Act 2023 (PA23) came into force on 24 February 2025, extending the reach of procurement law beyond the procurement process itself into the management of the contract.

The two headline impacts are: 

1. Far greater transparency of contracting activity.
2. Greater supplier accountability for contract performance (including via supply chain). 

Does the new PA23 apply to my contract?

It applies to all contracts where the procurement for the contract was started on or after 24 February 2025. This includes any variations made to the contract (even if the variation itself is made after 24 February 2025).

In relation to contracts called off from frameworks, if the procurement for the framework was started before 24 February 2025, then then framework and all contracts called off from it remain regulated by the old rules.

What opportunities does the PA23 bring for tech suppliers?

Market monitoring

The expanded “Find a Tender” service will be a repository for a whole range of new notices under the PA23, providing detail on (for example): 

• Upcoming procurements.
• Pre-market engagement and its outcomes.
• Contracts awarded (including a copy of the contract itself where the value is over £5m).
• Annual reporting against statutory KPIs for larger contracts over £5m.
• Details of poor performance by competitors and notice of termination of competitor contracts.

Strategic use of published information can assist a technology supplier in positioning itself in the market and also provide visibility of upcoming opportunities and competitor performance.

Flexible procurement processes

Where the new “competitive flexible procedure” is used there may be more opportunities to include demos and presentations of technological solutions, and more potential to negotiate contract terms and conditions at preferred bidder stage.

Open frameworks

The PA23 introduces open frameworks with a maximum overall term of 8 years. Tech suppliers will potentially be able to stay on a framework for the whole 8 year period, but there is also the possibility of joining a framework at one of the “refresh” points.

What risks does the PA23 hold for tech suppliers?

The core risk is that contract management is no longer a private matter between the supplier and the public sector customer (the Contracting Authority). Instead, it is taking place in the context of the expanded Find a Tender service, with far more contract management detail being made public. Some of the contract management provisions, eg around requirements to make prompt payment, will also affect subcontractors.

Setting, publishing, and reporting on KPIs for contracts over £5m

Where the contract is valued at over £5m, the Contracting Authority must set at least three key performance indicators to measure performance of the contract. There will also be a requirement to publish all KPIs as part of the tender process. 

There is also an obligation (not yet in force but expected to become a requirement later in 2025) to publish performance metrics against the three most relevant KPIs at least annually via a Contract Performance Notice. The report must use a standard reporting scale. This provides visibility to the wider market of performance under technology contracts. 

Reporting poor performance

If a technology supplier commits a serious breach of a contract which leads to termination, damages, or settlement, or otherwise is not performing the contract satisfactorily and has failed to remedy this despite being put on notice to do so, the Contracting Authority will be required to report this via the Find a Tender Service. This obligation is not yet in force but expected to become a requirement later in 2025. 

The question of whether the contract is being performed satisfactorily is ultimately one for the customer to decide. The wording in the PA23 is very high level and potentially difficult to link to the reality of a performance dispute, where both parties may contribute to the issue, and it may be unclear at what point poor performance by the supplier crystalises. 

The consequences of this notice being published go far beyond simple embarrassment that poor performance has been made public. The publication of the notice renders the supplier an “excludable” supplier. This triggers an implied termination right for all the supplier’s public customers under contracts regulated by the PA23. It also opens the door for the supplier, or its subcontractors, to be excluded from taking part in future procurements for a different Contracting Authority.

Technology suppliers will need to take the risk of poor performance much more seriously than previously under the PA23. The risk can be mitigated by using pre-market engagement to encourage customers to set achievable and realistic KPIs and (in the absence of these) being selective about opportunities tendered for. Contract management should be proactive, and suppliers will need to call to account customers who are not “keeping their side of the bargain”. If there is a deterioration into potential or actual poor performance, suppliers will want to manage the situation carefully to avoid triggering the requirement for the customer to publish a poor performance notice.

If a poor performance notice is published, given the potentially draconian consequences (as noted above), suppliers should seek prompt legal advice around how to challenge the notice. This will need to be done within the short limitation period which is 30 days from the date the supplier has knowledge that the poor performance notice has been published. 

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