Procurement in the United Kingdom plays a pivotal role in the efficient delivery of public services, encompassing the acquisition of goods, services, and works by public sector entities. With the UK Procurement Act coming into effect this week, the process is designed to ensure that public funds are utilised effectively, transparently, and in a manner that delivers value for money to taxpayers.
Overview of Public Sector Procurement
As of the 2023/24 financial year, the UK’s public sector procurement expenditure reached approximately £407 billion, marking a £19 billion (5%) increase from the previous year. This spending accounts for about a third of all public sector expenditure, underscoring the significant role procurement plays in the UK’s economy.
Regulatory Framework
The procurement landscape in the UK is governed by a comprehensive legal framework designed to promote fairness, transparency, and competitiveness. The Public Contracts Regulations 2015, along with the Utilities Contracts Regulations 2016 and the Concession Contracts Regulations 2016, have historically provided the foundation for procurement practices. However, with the enactment of the Procurement Act 2023, significant reforms are set to take effect from 24 February 2025. This new legislation aims to simplify procurement procedures, reduce bureaucracy, and make it more accessible for small and medium-sized enterprises (SMEs) to engage in public sector contracts.
Key Features of the Procurement Act 2023
Simplified Procedures: The Act introduces a single, flexible procedure that replaces multiple existing processes. This change allows contracting authorities to tailor procurement activities to specific needs, enhancing efficiency and clarity.
Central Digital Platform (CDP): Replacing the ‘Find a Tender’ service, the CDP will serve as a comprehensive portal for publishing tenders and storing supplier information. All suppliers must register with the CDP to participate in public sector procurements, streamlining access to opportunities.
Support for SMEs: Recognising the vital role of SMEs in economic growth, the Act includes measures to reduce barriers to entry, encouraging greater SME participation in public contracts. This initiative aligns with the government’s objective to increase the proportion of procurement spend directed towards SMEs.
Current Trends and Statistics
SME Participation: In 2023, SMEs accounted for 20% of direct public sector procurement spend, equating to £39.7 billion. While this represents a 77% increase over six years, the proportion relative to total procurement spend has remained consistent, indicating room for improvement in SME engagement.
Sector-Specific Spending: The Ministry of Defence (MOD) allocated nearly 39% of its procurement expenditure to its top ten suppliers in 2023/24, with BAE Systems PLC receiving the largest share at £5.7 billion. This concentration highlights the MOD’s reliance on key industry players for defence-related contracts.
Future Outlook
The implementation of the Procurement Act 2023 is poised to transform the UK’s procurement landscape by fostering a more inclusive and efficient system. By streamlining processes and promoting SME participation, the Act aims to enhance competition, drive innovation, and ensure that public sector procurement delivers optimal value for money. As these reforms take effect, continuous monitoring and adaptation will be essential to address emerging challenges and maximise the benefits of a reformed procurement framework.
Sources:
Procurement statistics: a short guide – House of Commons Library
Understanding the UK’s New Procurement Regime in 2025 – Crowell
What do businesses need to know about the Procurement Act? – Tenders Direct
SME Procurement Tracker (2024) – Tussell
MOD trade, industry and contracts: 2024 – GOV.UK
More insightful articles in our Procurement Information Center.
