The Procurement Act explained: What construction subcontractors need to know

The Procurement Act 2023 is set to reshape the UK’s public sector procurement landscape, coming into force in February 2025 – delayed from October 2024. With its aim to simplify and enhance transparency in public sector procurement, the Act will significantly impact subcontractors working on public sector projects.

If you’re a subcontractor in the construction industry, this blog will help you understand the key changes, how they will affect your business and what steps you can take to ensure compliance and readiness, in order to help you win more public sector contracts.

What is the Procurement Act? The Procurement Act 2023 is designed to make public sector procurement simpler, more transparent and more accessible to businesses of all sizes. It focuses on ensuring public sector contracts deliver value for money while promoting economic growth and social value. For subcontractors, the Act introduces new provisions and responsibilities, particularly around subcontracting, due diligence and compliance For more information, check out our Procurement Act Hub.

 

What are its key intentions and objectives?

The Act is built around a few core goals:

	Transparency: To create a more open and accountable public sector procurement process.
	Efficiency: Simplifying procedures to make it easier for businesses to engage with public sector contracts.
	Value for money: Ensuring public sector funds are used effectively by selecting the best suppliers.
	Social value: Encouraging projects that deliver positive social and environmental outcomes.

For subcontractors, this all means a more structured and clear approach to winning public sector contracts, with higher standards for compliance.

 

Four key changes for subcontractors

1)	Subcontracting specifications: Contracting authorities can now require a primary supplier to subcontract part of the work to another supplier. This could open new opportunities for subcontractors to secure roles within larger projects.
2)	Legally-binding agreements: Authorities can mandate legally binding contracts between suppliers and subcontractors to ensure clarity on roles and responsibilities. Subcontractors will need to pay close attention to the terms they agree to.
3)	Debarment list: Subcontractors will need to be mindful of the debarment list. Any subcontractor found on this list will be prohibited from working on public sector contracts, meaning maintaining compliance is more critical than ever.
4)	Supplier exclusion: If a subcontractor falls foul of exclusion grounds (e.g. for failing due diligence checks), the main contractor could be excluded from progressing in the tender process. That’s why ensuring your business meets the required standards is essential.

What are the benefits to subcontractors?

The Procurement Act offers several key benefits to subcontractors. This includes increasing opportunities for subcontractors to be involved in public sector projects. It allows contracting authorities to require prime contractors to subcontract certain works, goods or services to other suppliers. This opens up more opportunities for subcontractors to participate in larger public sector contracts they might not have had direct access to previously.

Furthermore, the Act prompts better protection for subcontractors by enabling legally binding agreements between themselves and suppliers. This formalises the relationship, ensuring clearer terms of engagement, payment timelines and responsibilities.

The Act also introduces performance monitoring through key performance indicators (KPIs), giving subcontractors clearer visibility on how their performance will be assessed. We’ll cover this in more detail below.

In addition, the Procurement Act aims to build a stronger and more reliable construction supply chain, by focusing on due diligence and anti-corruption standards. Subcontractors with strong track records and compliance can build trust and long-term partnerships with public sector buyers.

More public sector opportunities for subcontractors	Protection for subcontractors	Introduction of KPIs	Be part of a trusted supply chain

 

How does the debarment list affect you – and how can you avoid it?

As touched upon, the debarment list is one of the most significant new provisions in the Procurement Act. So what is it?

Put simply: subcontractors on this list will be excluded from all public sector contracts.

Reasons for debarment could include failing to meet due diligence requirements, corruption or breaches of ethical standards.

To avoid debarment, subcontractors should:

	Maintain high standards of compliance, particularly around anti-corruption policies.
	Ensure all due diligence requirements are met, including health and safety, financial stability and workforce standards.
	Stay informed about public sector procurement regulations and update processes accordingly.

Related persons: What does this mean for subcontractors?

The Act introduces the term “related persons”, referring to individuals or entities closely associated with a subcontractor (such as key personnel or affiliates).

If a related person is deemed to meet exclusion grounds – for example they have been involved in corruption – it can affect your eligibility for contracts. subcontractors therefore must ensure that anyone linked to their organisation complies with all legal and ethical standards.

 

What are KPIs? A subcontractor’s perspective

Under the Act, contracting authorities must set at least three KPIs for each contract. These are measurable criteria that track a subcontractor’s performance.

Examples might include on-time delivery, so completing work according to the project schedule. Meeting health and safety regulations on-site, and ensuring the quality of workmanship meets agreed specifications, are other examples.

Understanding the KPIs for each contract will help you align your work with the client’s expectations, and avoid penalties or disputes.

 

What subcontractors need to do

To prepare for the Procurement Act coming into force next year, you must now:

• Review compliance: Ensure your business meets all due diligence and anti-corruption standards.
• Understand the debarment risks:  Familiarise yourself with the debarment list criteria and make sure your business and related persons comply.
• Stay informed: Keep up-to-date with the latest procurement news and changes in public sector procurement regulations.

We also recommend securing a Constructionline membership or logging into your account, to access more construction work opportunities sooner.

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.

Gold and Platinum memberships come with our industry-leading BSA Assessments to ensure you meet compliance requirements set by the Building Safety Act and required by public sector buyers.

And with supply chain management tools such as Marketplace Find and Track, we can help you identify and secure public sector contracts while staying compliant with evolving regulations.

Don’t let the Procurement Act catch you off guard. Constructionline can help you stay ahead and succeed in the public sector procurement market. Discover our sub-contractor memberships or log in to your account, now.

 

Want to learn more about how the Procurement Act could affect you? Check out our Hub resources: