Procurement Act 2023
Procurement Act 2023
The Procurement Act 2023 establishes a new statutory framework governing public sector procurement in the United Kingdom. It applies to procurements commenced on or after 24 February 2025 and replaces the Public Contracts Regulations 2015 for new procedures. The Act introduces increased transparency and enhanced accountability of procurement and contract performance across the full lifecycle, with particular implications for complex construction and development activity, including areas of Procurement Act 2023 insurance procurement where risk protection and governance intersect.
Relevance for construction procurement
Construction, infrastructure and mixed‑use development projects are typically high value, long term and subject to sustained public, funder and regulatory scrutiny. Under the Procurement Act 2023, procurement decisions relating to route selection, evaluation criteria and contract structure are more visible and more readily subject to audit or challenge. For senior decision makers, this increases the importance of defensible procurement strategies that can be clearly justified against project risk, value objectives and long‑term asset considerations.
The Act also reinforces the connection between procurement decisions and downstream delivery performance. Contract management, supplier performance and risk allocation are now more clearly linked to procurement compliance expectations. For asset owners and developers, early decisions taken at procurement stage can have lasting implications for delivery certainty and long‑term asset performance. As a result, procurement, contractual and risk protection arrangements must be aligned and proportionate within a heightened governance and transparency environment.
What is the Procurement Act 2023?
The Procurement Act 2023 is the principal legislation governing public sector procurement in the UK for new procurements. Its stated objective is to simplify procurement processes while strengthening transparency, integrity and value assessment. The Act applies to a broad range of contracting authorities and covered procurements, including works contracts commonly used in construction and development.
Rather than focusing solely on tender award, the Act places greater emphasis on the full procurement lifecycle. This includes planning, award, contract management and performance reporting. The Act is supported by secondary regulations and statutory guidance which provide further detail on process and compliance expectations.
For organisations operating in regulated construction environments, the Act represents a shift in how procurement decisions are documented, justified and scrutinised over time.
When the Procurement Act 2023 applies
The Procurement Act 2023 applies to procurements that are formally commenced on or after 24 February 2025. Procurements started before that date continue to be governed by the Public Contracts Regulations 2015 and are not retrospectively affected by the new legislation.
In practice, this creates a transitional period during which both regimes may operate in parallel across different projects or programmes. Clear identification of the applicable regime at project outset is therefore essential, particularly for long‑running construction developments with extended procurement and delivery timelines.
Understanding which legislative framework applies informs procurement strategy, documentation, governance arrangements and downstream contractual decisions.
Key changes introduced by the Procurement Act 2023
The Procurement Act 2023 introduces a number of structural changes that affect how public sector procurements are planned, awarded and managed. While the detailed requirements vary by procurement route and authority, several themes are particularly relevant to construction and development projects, including increased transparency, changes to tender evaluation and greater emphasis on contract performance.
Increased transparency and publication requirements
The Act significantly expands the use of notices and publication requirements across the procurement lifecycle. Information is now more visible and accessible in relation to:
Procurement planning
Contract award
Contract modfication
Contract peformance
This increased transparency heightens auditability and external scrutiny. Contracting authorities must be able to demonstrate that procurement decisions are proportionate, justified and aligned with stated objectives. For construction projects, this places greater importance on robust record keeping and clear articulation of risk‑based decisions.
Transparency requirements also increase reputational exposure where procurement or delivery outcomes are poorly managed.
Most Advantageous Tender and quality‑led procurement
The Act replaces the concept of Most Economically Advantageous Tender with Most Advantageous Tender. This change supports broader assessment of tenders beyond lowest price, allowing greater weight to be placed on delivery approach and long‑term outcomes.
For complex construction projects, this reflects the reality that whole‑life performance, build quality and risk management are critical to value. Evaluation criteria must, however, be clearly defined and capable of objective assessment to remain defensible under scrutiny. Procurement strategies should therefore be aligned with project risk profile and long‑term asset objectives.
Contract performance monitoring and reporting
The Procurement Act 2023 places increased emphasis on contract performance and supplier accountability after award. Performance data, including key performance indicators, may be published and subject to review as part of the ongoing procurement lifecycle.
This shift reinforces the importance of effective contract management arrangements. For construction projects, delivery performance, quality outcomes and defect management are no longer solely operational concerns but form part of the wider procurement compliance landscape. Poor performance can have governance, reputational and future procurement implications.
Transitional arrangements and existing frameworks
The introduction of the Procurement Act 2023 includes transitional arrangements to provide certainty for procurements already in progress. Understanding which legislative regime applies is essential for governance, audit and contractual consistency across construction programmes.
Procurements commenced before 24 February 2025
Procurements formally commenced before 24 February 2025 remain governed by the Public Contracts Regulations 2015. Existing contracts awarded under those regulations continue on their original terms and are not affected by the new Act.
For construction programmes spanning several years, it is important to document procurement commencement clearly. This provides certainty for audit, funding and internal governance purposes and avoids ambiguity where multiple regulatory regimes apply across a portfolio.
Frameworks and call‑off contracts
Frameworks established under previous regulations remain valid for their full duration. Contracting authorities may continue to award compliant call‑off contracts under those frameworks.
However, the introduction of the Procurement Act 2023 increases focus on transparency, justification and governance across all procurement routes. Framework use, including common routes such as public sector construction frameworks, must be supported by clear rationale and documented decision making.
Frameworks do not remove the need for proportionate risk management or alignment between procurement route and project‑specific contractual arrangements.
What the Procurement Act 2023 means for construction and development projects
The Procurement Act 2023 increases the level of scrutiny applied to how procurement decisions are made and documented on construction and development projects. This places greater emphasis on early, well‑reasoned procurement strategies that can be clearly justified against project risk, value objectives and long‑term asset considerations.
Procurement strategy and defensible decision making
The Act reinforces the importance of early and considered procurement strategy selection. In particular, decisions that must be capable of clear justification include:
Procurement route selection
Framework use
Evaluation criteria
Contract form
For construction and development projects, these decisions have direct implications for risk allocation, delivery certainty and long‑term asset performance. A defensible procurement strategy supports resilience to audit, challenge and funding review.
Early alignment between procurement, technical and commercial disciplines is therefore increasingly important.
Governance, audit and regulatory scrutiny
The Act increases governance expectations around procurement activity. Decisions may be subject to review by auditors, regulators, funders and other stakeholders over the life of a project.
Construction projects often sit alongside other regulatory regimes, increasing cumulative scrutiny. Clear documentation, consistent decision making and alignment between procurement and delivery arrangements are essential to managing this environment.
Governance considerations extend beyond compliance into reputational and organisational risk.
Long‑term asset performance and lifecycle risk
Procurement decisions influence asset performance well beyond practical completion. Contractor capability, quality assurance and risk transfer mechanisms affect exposure to defects, remediation costs and operational disruption.
The Act’s focus on value and performance highlights the importance of considering lifecycle risk at procurement stage. For asset owners and developers, this includes how long‑term protection and performance security are structured and justified.
A procurement strategy that overlooks lifecycle considerations may create avoidable exposure over the asset’s operational life.
Implications for warranties, insurance and bonding
While the legislation does not prescribe specific risk protection measures, it increases the importance of ensuring that insurance, warranty and bonding arrangements are proportionate and aligned with the chosen procurement approach. This is particularly relevant in the context of Procurement Act 2023 insurance procurement.
Structural warranties and latent defects insurance
Structural warranties and commercial latent defects insurance remain key mechanisms for managing long‑term construction risk. Under the Procurement Act 2023, the selection and structure of such protection should align with procurement route, contract form and asset strategy.
Funder and asset owner expectations continue to drive requirements for independent technical review and appropriate coverage periods. These arrangements support long‑term asset protection but do not replace the need for compliant procurement processes.
Careful alignment helps ensure that risk protection arrangements withstand audit and funding scrutiny.
Contractual security under public sector procurement
Performance, retention and advance payment bonds are critical for managing delivery and financial risk on construction projects. The Act’s emphasis on transparency and performance places greater focus on how these instruments are structured and triggered.
Bond terms should be consistent with procurement documentation and underlying contracts. Misalignment can create governance issues, delay recovery or undermine intended protections.
Proportionality and clarity are essential, particularly on complex or phased developments.
Alignment with procurement route and contract structure
Coherence between procurement strategy, contract structure and risk protection arrangements is increasingly important under the new regime. Disconnected decisions across these areas can expose contracting authorities to challenge or operational difficulty.
Early advisory input helps identify potential misalignments and supports informed, defensible decision making. This is particularly relevant where frameworks, alternative delivery models or complex funding structures are involved.
LBB’s advisory role under the Procurement Act 2023
LBB does not provide legal advice and does not control procurement outcomes or regulatory approvals. Instead, we act as an independent insurance and risk advisory broker, supporting clients operating in complex and regulated construction environments.
Under the Procurement Act 2023, LBB advises on how warranties, latent defects insurance and bonding arrangements can be aligned with procurement strategy, contract structure and governance expectations. This support is focused on helping clients make informed and defensible decisions.
LBB’s experience spans high‑value developments subject to significant funder and regulatory scrutiny.
Discuss Procurement Act 2023 considerations with LBB
Procurement strategy, risk allocation and long‑term asset protection are increasingly interconnected under the Procurement Act 2023. Project‑specific circumstances will influence how these considerations should be addressed in practice.
Contact LBB for technical guidance on aligning insurance, warranty and bonding arrangements with procurement and governance requirements.
