Effective Date: 24 February 2025
Link to Act: U.K. Procurement Act 2023

The Procurement Act 2023 introduces significant reforms in public procurement to promote transparency, efficiency, and alignment with broader social and economic goals. This guide outlines best practices to support contracting authorities in complying with the Act, with a strong emphasis on ensuring value for money through the most advantageous tender approach and life cycle costings. By considering the full cost of goods and services over their entire life cycle, authorities can make procurement decisions that maximise economic, social, and environmental benefits.

1.0 VBSL Key Findings

• The Procurement Act prioritises the most advantageous tender throughout a goods, services or works lifecycle, not just the cheapest option.
• Authorities must address and reduce barriers faced by SMEs to ensure fair competition.
• Direct awards are justified if switching suppliers causes technical issues, disruptions, or incompatibilities.
  
  

2.0 Procurement Objectives (Section 12)
1 When conducting a covered procurement, contracting authorities must consider the importance of: (a) Delivering Value for Money – Procurement decisions should account for the entire lifecycle cost of goods and services, including maintenance, operation, and disposal, rather than just the initial purchase cost.
(b) Maximising public benefit - Authorities should evaluate procurement decisions based on their wider social, environmental, and economic impact, ensuring they deliver the greatest benefit to the public.

4 In carrying out a covered procurement, a contracting authority must:
(a) Have regard to the fact that small and medium-sized enterprises may face barriers to participation.
(b) Consider whether such barriers can be removed or reduced.
Recognise the challenges small and medium-sized enterprises (SMEs) may face and take proactive steps to reduce any barriers to their participation. This can include simplifying requirements, offering support during the procurement process, and ensuring that the procurement process is accessible to all potential suppliers.

3.0 Direct Award Justifications (Schedule 5)
A direct award of a public contract may be justified when it involves the supply of goods, services, or works by an existing supplier, in cases where:
(a) A change in supplier would result in the contracting authority receiving goods, services or works that are different from, or incompatible with, the existing goods, services or works, and (b) the difference or incompatibility would result in disproportionate technical difficulties in operation or maintenance.

Existing Supplier Continuity: A direct award may be justified if the contract involves supplying goods, services, or works that are an extension or partial replacement of existing provisions where changing suppliers would introduce significant incompatibility or technical difficulties in operation or maintenance.

Ensure that any decision to directly award a contract is well-documented and based on clear, justifiable reasons related to the operational needs and technical compatibility of the goods or services.

4.0 Switching to direct award (Section 43)
1 A contracting authority may award a public contract directly to a supplier that is not excluded if: (a) A competitive tendering process was conducted, but no suitable tenders or requests to participate were received.
(b) The authority determines that awarding a contract under Section 19 is not possible under the circumstances.
(c) It considers that an award under section 19 is not possible in the circumstances.
2 A tender or request is not suitable if the contracting authority considers that: (a) It would be disregarded in an assessment of tenders under section 19(3)(a), (b) or (c)
(b) It does not satisfy the contracting authority’s requirements or the award criteria when assessed by reference to the assessment methodology and the relative importance of the criteria indicated under section 23.

5.0 Award Criteria (Section 23)
1 In this Act, “award criteria” means criteria set in accordance with this section against which tenders may be assessed to award a public contract under section 19 (award following competitive tendering procedure).

2 In setting award criteria, a contracting authority must be satisfied that they: (a) Relate directly to the subject matter of the contract.
(b) Be clear, measurable, and specific to enable fair assessment.
(c) Comply with the technical specification rules in Section 56.
(d) Be proportionate to the nature, complexity, and cost of the contract.

3 In setting award criteria, a contracting authority must: (a) describe how tenders are to be assessed by reference to them and, in particular, specify whether failure to meet one or more criteria would disqualify a tender (the “assessment methodology”), and (b) if there is more than one criterion, indicate their relative importance by: (i) weighting each as representing a percentage of total importance,
(ii) ranking them in order of importance, or
(iii) describing it in another way.

4 In setting award criteria for the assessment of tenders by reference to lots, a contracting authority: (a) May limit the number of lots that may be awarded to any one supplier, and (b) in doing so, must provide an objective mechanism for supplier selection in circumstances where a supplier would otherwise exceed the limit.

5 In subsection (2), the reference to the subject matter of a contract includes a reference to: (a) the goods, services or works to be supplied under the contract, including in respect of any aspect of their production, trading or other stage in their life cycle; (d) price, other costs or value for money in all the circumstances.

6.0 Award of public contracts following a competitive tendering procedure
1 Contracts may be awarded to the supplier submitting the most advantageous tender, defined as the tender that:

(a) Meets the contracting authority’s requirements.
(b) Best satisfies the award criteria when assessed under:

• Section 23(3)(a) – using the defined assessment methodology.
• Section 23(3)(b) – considering the relative importance of each criterion.

7.0 Conclusion
The Procurement Act 2023 introduces reforms to enhance value for money, transparency, and social benefit. The most advantageous tender approach ensures procurement decisions go beyond price considerations to encompass quality, sustainability, and economic impact. Contracting authorities can optimise public expenditure and long-term benefits by emphasising life cycle costing.

To comply with the Act, authorities must:

1. Prioritise whole-life cost analysis in procurement evaluations.

1. Ensure award criteria are transparent, measurable, and aligned with strategic objectives.

1. Justify direct awards with clear, documented reasoning.

1. Promote fair competition and SME participation.

By integrating these best practices, public procurement can achieve greater efficiency, fairness, and long-term value for society.