New Public Procurement Reforms Announced

A package of new measures to shape how the £400 billion spent annually by the public sector has been announced.

Cabinet Office Parliamentary Secretary Chris Ward MP said the measures will help ensure public spending plays its full role in delivering the modern Industrial Strategy and fostering a resilient economy.

The announcement follows last year’s public consultation Growing British industry, jobs and skills and follows on from the introduction of the Procurement Act 2023 in February 2025. The official Government consultation response on public procurement was also published.

Public Procurement Rules

In summary, the package comprises a series of measures to bolster the UK’s sovereign resilience:

• National Security: The Government will publish new guidance for central government organisations procuring from the steel, shipbuilding, AI and energy infrastructure sectors regarding the appropriate use of national security exemptions to secure supply chains.
• Steel: There will be new transparency requirements to confirm the use of UK steel at the point of contract award or provide a robust justification if the steel is to be sourced from overseas.
• Shipbuilding: The Government is working with the Government’s National Shipbuilding Office to explore a new commercial framework for shipbuilding with a predictable pipeline of work for domestic shipyards.

Public Interest Test

The minister also announced the Government’s intention to introduce a new Public Interest Test for central government organisations to assess whether outsourced service contracts over £1 million could be delivered more effectively in-house.

Secondary legislation will reinstate the ‘Two-Tier Code’ to protect the pay and conditions of workers on outsourced contracts and ensure the public sector remains an exemplar of fair work.

Social Value Redefined

Lastly, the measures redefine the definition of social value to ensure commercial practitioners put meaningful, community-led benefits at the heart of procurement and deliver jobs, skills and opportunities to those facing barriers to employment.

Community impact will now be placed at the heart of buying decisions, with companies encouraged to integrate national and regional schemes into their bids, creating local jobs and apprenticeships.

To ensure accountability, departments will publish and annually report on a specific social value goal for all contracts valued over £5 million. This will cover over 90% of central government contracts by value.

AI Procurement Tools

Government will also introduce AI tools which it says will streamline procurement and reduce the burden on commercial practitioners and suppliers. The tools will quality assure and generate commercial documents, streamline terms and conditions, and enhance integration for bidding platforms to ensure SMEs won’t need to provide the same data twice.

Guidance to support practitioners and suppliers in implementing these measures will be published in summer on the Transforming Public Procurement gov.uk site page.

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