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How the Procurement Act impacts the Construction industry and Public Procurement

In 2023, the Procurement Bill was passed to become the Procurement Act (2023), effective from 24th February 2025 (previously 28th October 2024*), which is set to transform public procurement – for the better.

At first, understanding public sector procurement regulations and the changes to come with the new Procurement Act can seem quite daunting and overwhelming when you are trying to figure out what you need to know, or get the assurance that your actions won’t implicate you at a later date.

Illustration of a construction worker announcing the Procurement Act launching on the 24th of February 2024

We’re here to help break it down so you can understand how it affects you and make sure you’re ready for 24th February 2025.

This blog provides a snapshot of the Procurement Act, plus how it affects the Construction industry and its stakeholders such as Main Contractors and Subcontractors. We’ll also look at how you can prepare for the Procurement Act and make the Act work for you.

What is the Procurement Act (2023)?

The Procurement Act (2023) seeks to revolutionise the way public procurement is governed, by encouraging greater transparency, giving more power to Contracting Authorities when issuing Tenders, and levelling the playing fields for smaller suppliers and subcontractors. Furthermore, the new Procurement Act is set to move towards transforming public procurement processes and regulations across the industry, so it’s important to understand what these new regulations could mean for you and your businesses.

One key change will see the introduction of a Debarment list, where Subcontractors who have underperformed on previous work will be prevented from applying to contracts: viewable to all Contractors.

Did you know?

Over £400 billion of public money was spent on public sector procurement in 2023/24**.

How the Procurement Act affects Construction Main Contractors and Buyers

The Procurement Act will provide greater commercial freedom to Construction Main Contractors. Instead of opting for the cheapest tender (or Most Economically Advantageous Tender, MEAT), the Procurement Act looks to encourage choosing smaller suppliers for the ‘Most Advantageous Tender’ (MAT), where they may complete a contract sooner, or work more locally to reduce carbon emissions for example.

Illustration showing how the Most Economically Advantageous Tender has turned into the Most Advantageous Tender

Our Risk Radar and Supply Chain Management features help scan your construction supply chain for financial risk and find suitable subcontractors based on their compliance level, location, work category and more.

How the Procurement Act affects Subcontractors and Suppliers

It’s not just about price anymore: the Procurement Act seeks to work in SMEs’ favour and encourage Main Contractors to prioritise working with smaller construction subcontractors. Not only does this boost their social value credentials, but means a more diverse supply chain and demonstrates adhering to the Procurement Act’s aim to level up the playing field across public procurement sector.

As a result, more Contractors will look to work with subcontractors aligned to the Common Assessment Standard, especially for public sector tenders above the £5.337m threshold. This is covered by our Gold membership, where subcontractors can easily demonstrate their compliance to Construction Contractors and boost their opportunities to win more work.

How the Procurement Act affects the Construction industry

With over £400 billion spent on public sector procurement in 2023/24, it’s unsurprising that the government wants to streamline its public procurement processes and find efficiencies. Whilst it impacts the way all public sector procurement is done, this is a welcome move for the Construction industry which continues to fall behind through messy, bureaucratic processes whilst also adhering to health, safety and compliance needs.

Overall, abiding by the Procurement Act should see construction tendering processes speed up within Public Procurement. Also, an improved focus on working with subcontractors to secure ‘Advantageous Tenders’ as opposed to the best price, and greater transparency to encourage better safety practices and avoid working with insufficient subcontractors.