25 Mar New UK Procurement Act: What It Means for Construction Suppliers

The UK’s new Procurement Act, which came into effect on 24 February 2025, marks a significant shift in public procurement practices. This legislation aims to drive greater efficiency, transparency, and fairness in public sector procurement, introducing key changes that will impact construction suppliers and contractors across the industry.

Key Changes in the Procurement Act

1. Enhanced Supplier Accountability

The Act introduces stricter rules on excluding suppliers with particular risks to public procurement. A central debarment list has been established, where suppliers barred from tendering for public contracts are listed. A minister manages this list, and this can result from investigations establishing that a supplier meets one of the Act’s exclusion grounds or is guilty of a serious failure to comply with an investigation.

2. New Exclusion Grounds

The Act expands the grounds for supplier exclusion, both mandatory and discretionary. New grounds include:

• Involvement in cartel activity
• Abuse of market dominance
• Aiding and abetting certain offences
• Posing a threat to national security

Importantly, these exclusion grounds can also be triggered by “connected persons,” including those who control or are controlled by the supplier.

3. Poor Performance Assessments

The threshold for disqualifying a supplier due to poor performance has been lowered. Contracting authorities can now issue a “Contract Performance Notice” when a breach of contract leads to termination, damages, or a settlement agreement. This notice will be publicly available, potentially impacting a supplier’s reputation and future bidding prospects.

4. Central Digital Platform

A new free-to-use central digital platform (CDP) will be the hub for all UK contracting authorities to publish procurement information. Suppliers must register on this platform to bid for opportunities above the public procurement thresholds, although registration is only required when bidding for a contract after 24 February 2025.

5. Implied Right to Terminate

The Act introduces an implied right for contracting authorities to terminate contracts under certain circumstances. This includes situations where:

• The contract was awarded or modified unlawfully
• The supplier becomes an excluded or excludable supplier after the contract award
• A subcontractor performing part of the contract is an excluded or excludable supplier

Implications for Construction Suppliers

1. Increased Due Diligence

Construction suppliers must now be more vigilant about their own compliance and that of their associated persons and subcontractors. Regular internal audits and robust compliance programs are crucial to avoid exclusion or debarment.

2. Enhanced Competition Law Compliance

With cartel activity now a mandatory exclusion ground, construction firms must prioritise competition law compliance. This includes implementing comprehensive training programs and internal reporting mechanisms to detect and prevent anti-competitive behaviour.

3. Performance Monitoring

The lowered threshold for poor performance exclusions means suppliers must closely monitor their contract performance. Implementing robust project management systems and maintaining clear communication with contracting authorities is essential to avoid breaches that could lead to a Contract Performance Notice.

4. Supply Chain Management

Construction suppliers need to carefully vet and monitor their subcontractors and associated persons, as their actions could lead to the main contractor’s exclusion. This may require more stringent pre-qualification processes and ongoing performance assessments for the entire supply chain.

5. Reputation Management

With increased transparency and the public nature of Contract Performance Notices, managing reputation becomes crucial. Suppliers should be prepared to address any performance issues promptly and effectively to mitigate potential damage to their public image.

6. Strategic Bidding

The new CDP will provide suppliers with better visibility of upcoming opportunities. Construction firms should develop strategies to effectively use this platform, ensuring they are well-positioned to bid for suitable contracts.

Opportunities and Challenges

While the new Act presents challenges, it also offers opportunities for well-prepared construction suppliers:

1. Levelling the Playing Field: The increased transparency and stricter exclusion rules may help reduce unfair competition from non-compliant suppliers.
2. Rewarding Good Performance: Suppliers with strong compliance and performance track records may find themselves at an advantage in future bids.
3. Encouraging Innovation: The Act’s focus on value beyond just cost may allow suppliers to showcase innovative solutions and sustainable practices.
4. Improved Planning: Better visibility of upcoming opportunities through the CDP can help suppliers plan their resources and bidding strategies more effectively.

However, suppliers must also be prepared for:

1. Increased Scrutiny: The expanded exclusion grounds and lower thresholds for poor performance mean suppliers will be under more intense scrutiny.
2. Compliance Costs: Implementing robust compliance programs and supply chain management systems may increase operational costs.
3. Reputational Risks: The public nature of performance notices and the debarment list increases the potential for reputational damage.

Conclusion

The new UK Procurement Act represents a significant shift in the public procurement landscape. For construction suppliers, it brings both challenges and opportunities. Success in this new environment will require a proactive approach to compliance, performance management, and reputation building. By embracing these changes and adapting their practices accordingly, construction suppliers can position themselves to thrive under the new procurement regime, delivering value to public sector clients while maintaining their competitive edge.