The Procurement Act 2023: What Subcontractors Need to Know in 2026

The Procurement Act 2023 has reshaped how public sector contracts are advertised, evaluated and awarded, and 2026 is the year subcontractors start to feel it. The Act itself came into force in February 2025, but several of its most significant provisions, including new payment reporting and performance notices, have only just come into effect.

For subcontractors bidding for public sector contracts, whether directly or as part of a main contractor’s supply chain, that means real, practical change is arriving now, not in theory. Here, Michael Hicks, Commercial Director of Onetrace, shares what he thinks it means for subcontractors.

One of the Act’s central aims is to remove barriers that have historically kept smaller specialist subcontractors out of public sector contracts. Buyers are now required to assess bids on quality, social value, environmental impact, innovation and long-term public benefit, not simply on who submits the lowest price.

Contracts on Merit, not Solely Price

For subcontractors, that’s a genuine shift. Work you may have lost on cost alone in the past can now be judged on merit: the quality of what you deliver, the evidence behind it, and the broader value you bring to a project.

Payment Protections

Late payment has been one of the construction supply chain’s longest-running problems, and the Act has placed an emphasis on fixing it. Public bodies must now pay invoices within 30 days, and for the first time, that performance is being made public.

The UK17 Payments Compliance Notice is now in effect and requires public bodies to report the average time taken to pay invoices, offering subcontractors a clear, public record of who actually pays on time.

Alongside this, for contracts over £30,000, payment data must be reported to enhance transparency, published as a UK8 contract payment notice, covering payments made to subcontractors as well as main contractors. For the first time, subcontractors have a public paper trail showing whether payment terms further up the chain are actually being honoured.

New Cost of Underperformance

Underperformance now carries consequences that last well beyond a single project. The Act introduces a debarment list, a formal record of suppliers who have significantly underperformed on previous public sector contracts. Subcontractors placed on this list will be excluded from bidding on future public sector contracts.

This isn’t a minor administrative footnote. A poor track record on one project can genuinely lock a subcontractor out of public sector work going forward, making clean compliance records and consistent performance a commercial necessity rather than a box-ticking exercise.

Transparency and KPI Reporting

For larger contracts, buyers must now publish notices detailing how well a contract is being performed, including specified key performance indicators. These contract performance notices apply to public sector contracts worth over £5 million, giving other buyers, and competitors, visibility into how a subcontractor has actually delivered.

Reliable, well-evidenced performance data works in a subcontractor’s favour here. But the reverse is also true: a public record of underperformance can shift a buyer’s attention toward a competitor before a conversation even starts.

Compliance Through the Chain

Main contractors now carry direct responsibility for checking the debarment status of their subcontractors, and for ensuring the compliance obligations set out in the head contract are properly reflected in every subcontract beneath it.

In practice, this means main contractors will be more rigorous, and more cautious, when selecting who they work with. Subcontractors who can demonstrate clean compliance records and strong governance will find themselves genuinely easier to work with, while those who can’t may find themselves screened out earlier in the process.

How it Affects Subcontractors

Taken together, the Act shifts power meaningfully towards subcontractors on payment rights and access, but it simultaneously raises the compliance bar considerably. The debarment list and public KPI reporting mean underperformance now carries lasting commercial consequences, not just a difficult conversation on one project.

Subcontractors who invest in governance, in quality credentials like the Common Assessment Standard, and in articulating their social value, are the ones I expect to benefit disproportionately from this Act. Those who don’t will find themselves increasingly locked out of public sector work altogether.

Performance, compliance and evidence are no longer background admin.

They’re now a matter of public record, and increasingly, the difference between winning the next contract and being quietly excluded from it. Subcontractors who can evidence their compliance, quality and performance consistently, without scrambling to reconstruct it after the fact, are the ones best placed to benefit.

Talk to Onetrace about how to keep your compliance records audit-ready for public sector work.

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