How can main contractors get ready for the Procurement Act?

As a main contractor, what steps are you taking to get prepared for the Procurement Act?

While the Procurement Act may have been delayed from October 2024 to February 2025, if you’re not starting to get ready for its changes then you’re in danger of falling behind.

But there’s no need to panic. Here, we’ll explain everything main contractors need to know about the new Procurement Act and how it affects them.

What is the Procurement Act?

The new Procurement Act is causing major waves in public sector procurement. Coming into force on 24 February 2025, this critical procurement reform will impact every organisation buying from or selling to the public.

Imagine a public sector procurement process that’s more innovative, which delivers better value and total transparency. That’s the aim of the Procurement Act 2023.

And the best part? For main contractors, it encourages a more holistic and value-driven approach.

Check out our blog, ‘What is the Procurement Act 2023?’, for an introduction to this important piece of legislation that’s transforming public sector procurement.

The scale of public spending In 2023/24, gross spending on public sector procurement was £407 billion across the UK. This represents an increase of £19 billion (5%) compared to the previous year. UK Parliament, Procurement statistics: a short guide.

 

What are the key changes for main contractors?

The top change to public sector procurement that main contractors need to know about is the move towards evaluating contracts based on the ‘Most Advantageous Tender’.

Traditionally, public sector contracts have been awarded based on which bid represents the ‘Most Economically Advantageous Tender’. This shift from the lowest price welcomes an approach that looks beyond cost.

So, what other qualities will main contractors want to emphasise when responding to a public sector tender?

	Quality – Demonstrate that you deliver construction projects through exceptional construction capabilities, careful material selection and effective project management.
	Innovation – Showcase how you’re pioneering forward-thinking construction methods, technologies and solutions.
	Sustainability – Highlight your commitment to environmentally-friendly practices and materials, both in how you operate and your wider supply chain.
	Social value – Evidence how you’re championing stronger communities, a more resilient local workforce and creating new opportunities for skills development.

This renewed focus on value means contracting authorities and communities get more than just a good price. It’s about better quality, innovation, and social impact, leading to more successful public sector projects.

The new Procurement Act introduces 5 other significant changes that main contractors need to know about.

1) Greater transparency and accountability Meticulous record-keeping is now expected as a matter of course. From capturing all communications and decision-making throughout a project’s lifecycle, records need to be accurate and easily accessible. This is similar to the expectation for a golden thread of information as part of the Building Safety Act. With the Procurement Act also advocating for enhanced transparency, you should expect increased scrutiny over how you manage public sector tender bids. For instance, for public sector contracts with an estimated value above £5 million, contract KPIs have been introduced. These let public bodies assess how their suppliers are faring on projects at least once a year – with these findings then made public.

2) Increased procurement flexibility The Procurement Act introduces the Competitive Flexible Procedure. This allows contracting authorities to design procurement processes that work best for them. As a result, public sector contracting authorities and organisations can create procedures that best meet their needs. A public sector tender might have multiple stages, for example, giving rise to more opportunities for bids that nurture greater dialogue, negotiation and refinement. For main contractors, this gives you the chance to play a pivotal role in shaping a public procurement strategy right from the start. From fostering a more collaborative approach, to providing a better insight into project requirements, main contractors should welcome this shift.

3) More subcontractor due diligence The new Procurement Act has brought in a new debarment list for suppliers. This excludes certain suppliers from bidding for public sector contracts, because of poor performance or ethical breaches. Main contractors are responsible for making sure their construction supply chain does not include any subcontractors on this centralised debarment list. This shift will impact your supply chain decisions in a significant way, so consider how you intend to monitor your network of suppliers.

4) Prompt new payment terms In an effort to improve cash flow and fairness throughout the supply chain, the Procurement Act 2023 has made some considerable changes to payment terms. Firstly, the Act makes it mandatory for contracting authorities to pay undisputed invoices from main contractors within 30 days of receiving a valid invoice. This 30-day payment term also applies to your subcontractors – so be sure to pay your supply chain within this timeframe too. Secondly, should a contracting authority decide to pay less than the invoiced amount, a Pay Less Notice should be issued. This must clearly state the amount being withheld and the reasons why, and it must be submitted ahead of the 30-day payment deadline. This gives you ample time to review and, if necessary, challenge this decision. Finally, contracting authorities must publish Payment Compliance Notices every six months. These will detail their ability to meet the legislated 30-day payment terms – a good one for you to keep your eye on when choosing which public sector contracts to bid for.

5) One centralised tender platform The arrival of a single, digital platform for tenders that exceed a certain threshold should be good news for main contractors. Any procurement for goods and services exceeding £213,477, or for works above £5,336,937, must be advertised on this platform going forward. Instead of using numerous sites like Contracts Finder and Find a Tender, this approach gives you easier access to public procurement tenders, minimising administrative burden and improving visibility for public projects, so you don’t miss out on any opportunities.

Why does the Procurement Act stress KPIs?

To manage the success of public procurement contracts, the Procurement Act places a big emphasis on KPIs.

Main contractors will have KPIs set by the contracting authority, and you can choose to establish your own internal KPIs as well, to monitor performance against the contract’s requirements.

What kind of KPIs might you be expected to measure?

 

Example KPIs for main contractors

		Subcontractor performance
		Are your suppliers meeting deadlines, quality standards, and health and safety regulations?
		Material management
		Are you efficiently managing construction materials, avoiding delays and costly overruns?
		Workforce culture
		Is your workforce championing the traits you want your company to be known for, while meeting productivity targets and deadlines?
		Communication and reporting
		Are you regularly communicating and reporting to the contracting authority?

 

---

 

What main contractors need to do

To prepare for the Procurement Act, you must:

• Understand these changes: Familiarise yourself with the core new principles of the Act, and consider how these changes will affect bidding strategies, internal processes and your working relationship with subcontractors.
• Review business processes: From documentation and record-keeping, to checking a subcontractor’s credentials and making sure you comply with the new payment term practices, get ahead of the Procurement Act now.
• Stay informed: Remember to stay one step ahead on all the latest procurement news and changes in public sector procurement regulations, so you can hit the ground running in February 2025.

 

How Constructionline can help

We’re here to support you with resources, guidance and tools to ensure your business is ready for the changes ahead.

The Building Safety Act (BSA) Radar is a monitoring tool that gives you a one-click view of your supply chain’s compliance – critical for public building in a post-Grenfell era. Meanwhile, our multi-tier supply chain management feature can help you take control of your entire supply chain at an individual project level.

Marketplace lets you find the right project partners, as well as publish tender opportunities and manage this process with ease.

And with tools like Risk Radar, you can understand the financial health of your subcontractors, so as to mitigate any potential supply chain risks before they happen, potentially saving you thousands.

The public procurement revolution is here. Constructionline can help you get prepared for the demands of the Procurement Act, and turn these changes to your advantage for upcoming contracts.

 

Contact us for more information

Want to learn more about how the Procurement Act could affect you? Find out more.