The Procurement Act 2023 represents a significant shift in how public sector bodies and publicly funded developers approach decision making. For housing associations, local authorities and mixed-use developers operating within regulated environments, the emphasis is no longer simply on obtaining a competitive quote. It is on demonstrating that the right decision has been made, based on overall value, risk alignment and transparent process.
Particular emphasis is placed on the impact of the new regime on structural warranties, latent defects insurance and bonding for complex developments. It reflects the increasing expectation that decisions are documented, defensible and aligned with project risk rather than driven by price alone.
What the Procurement Act 2023 Is Designed to Achieve
The Procurement Act 2023 replaces earlier EU-based procurement rules and reshapes UK public procurement following Brexit. It is intended to simplify procedures while strengthening transparency, accountability and value assessment across public contracts.
At its core, the Act tightens how decisions are made and evidenced. There is a clear move away from defaulting to the cheapest option towards demonstrating that a chosen provider delivers the most appropriate balance of quality, scope and risk management.
For construction risk transfer products such as structural warranties and latent defects insurance, this shift has practical implications. Insurance selection must now be capable of withstanding scrutiny not only on price but on technical robustness and alignment with contractual risk.
Impact on Developers and Housing Associations
For developers operating with public funding or under public scrutiny, the Procurement Act 2023 changes how insurance decisions are expected to be justified.
Decisions Must Be Properly Documented
It is no longer sufficient to state that multiple quotations were obtained. Authorities and regulated developers must demonstrate how the market was tested, how providers were assessed and why a particular solution was selected.
This includes documenting underwriting appetite, policy wording differences, financial strength and inspection regimes where relevant. A structured audit trail reduces exposure to challenge and supports board-level governance.
Price Alone Is Not Enough
The Act reinforces that price should not be the sole determining factor. Quality, scope of cover, exclusions, claims handling framework and financial stability must form part of the evaluation.
In the warranty space, two 12-year policies may differ materially in scope or insolvency protection mechanics. Selecting the lowest premium without explaining why it represents overall value creates governance risk.
Earlier Engagement with Insurers
The new regime encourages earlier and more structured market engagement. For higher risk or complex schemes, leaving warranty or insurance placement to a late stage increases programme risk and reduces flexibility.
Early engagement allows underwriting appetite to be tested against height, construction methodology and procurement route. It also ensures that insurance requirements align with build contract obligations.
Increased Risk of Challenge
Where the procurement process lacks clarity or consistency, the risk of challenge increases. Inconsistent evaluation criteria or undocumented rationale can expose authorities to scrutiny.
Clear records of market testing, comparative analysis and decision making are therefore essential under the Procurement Act 2023.
What This Means for Structural Warranties and Latent Defects Insurance
In practice, Procurement Act 2023 guidance in the warranty space pushes developers to look beyond a small group of familiar providers. Reliance on historic relationships alone is unlikely to satisfy expectations of transparent market engagement.
A structured, whole of market approach enables developers to demonstrate competitive tension and informed comparison. This includes assessing:
- Scope of cover and defined structural elements
- Exclusions and consequential loss treatment
- Insolvency protection triggers
- Inspection regimes and technical audit standards
- Insurer financial strength and market acceptance
For housing associations and publicly funded projects, this structured comparison forms part of the broader procurement narrative. It demonstrates that risk transfer decisions have been tested and evaluated against defined criteria.
How the Focus Has Shifted in Practice
Across the market, several consistent themes are emerging:
There is greater focus on how decisions are made rather than simply the outcome. Documentation quality and process clarity are increasingly scrutinised.
There is reduced reliance on existing relationships. Known providers may still be appropriate, but their selection must be justified against wider market testing.
There is a stronger emphasis on evidencing market engagement. Competitive tension must be demonstrable, particularly on high-value or publicly funded schemes.
Insurers are being brought into discussions earlier to avoid later disruption. This is particularly important where technical review interacts with design development and programme sequencing.
Where Things Tend to Go Wrong
Despite the clearer framework, common weaknesses remain:
Defaulting to the cheapest option without articulating why it represents overall value is a frequent issue. Where policy wording, inspection regimes or financial strength differ, those differences must be explained.
Leaving insurance procurement too late in the programme can create pressure, reduce choice and lead to reactive decision making. Early engagement reduces this risk.
Failure to maintain a clear record of decisions undermines governance. Without documented rationale, even well-founded choices may be difficult to defend.
Warranty terms that do not align with the build contract can also create exposure. Liability caps, design responsibility and inspection obligations should be coherent across contractual and insurance frameworks.
Building a Defensible Process
The Procurement Act 2023 does not prescribe a single method of market testing. However, it clearly expects transparency, consistency and proportionality.
In the warranty and insurance context, this means:
- Defining evaluation criteria in advance
- Engaging an appropriate range of providers
- Comparing like for like submissions
- Recording underwriting feedback and policy distinctions
- Articulating a reasoned recommendation
Running a structured process through a specialist consultancy such as LBB can support this approach. Independent analysis, formalised comparison and documented reporting help capture the necessary information and reduce internal pressure. This is particularly relevant where housing associations or public funding are involved.
Aligning Insurance Decisions with Procurement Reform
Procurement Act 2023 guidance ultimately reinforces a simple principle: decisions must be defensible. For structural warranties, latent defects insurance and bonds, this means aligning price with quality, scope and risk.
Developers and housing associations must be able to show not only that they obtained competitive quotations, but how they evaluated them and why the chosen solution best reflects project risk and long-term asset protection.
For complex developments operating under public scrutiny, structured market testing and clear documentation are no longer optional. They are integral to compliant and resilient procurement practice.
Contact LBB for technical guidance on structuring warranty and insurance procurement processes aligned with the Procurement Act 2023.
