[co-author: John Cleverly]
The UK's new public procurement regime has been in force for almost 12 months. Whilst much purchasing activity continues to be governed by the old EU derived regime (because of an increased use of existing framework agreements and contracts), the rules are becoming embedded and there are reports of numerous claims issued under the Procurement Act 2023 (“the Act”).
A number of the provisions of the Act did not take effect on Royal Assent. The latest changes are made in the Procurement Act 2023 (Commencement No. 4) Regulations 2025 (the “No. 4 Regulations”) which bring into force:
- the section 69 obligations relating to payments compliance notices and section 71 (assessment of contract performance) rules for procurements under the Act into force from 1 January 2026; and
- section 70 (information about payments under public contracts) for procurements under the Act from 1 April 2026.
Payments compliance notices must be published on the Central Digital Platform within 30 days of the end of a ‘reporting period’, where payments are made under a public contract or where a sum became payable under a public contract during the reporting period. This is, effectively, a requirement to publish every 6 months. The Government guidance confirms that the “first reporting period started 1 October 2025 and ends on 31 March 2026 and the second reporting period is 1 April 2026 until 30 September 2026. Each successive six months is a new reporting period”.
Whilst the Act creates this obligation in relation to “a public contract” (section 69(1) of the Act), the Government guidance explains that the intention is that the obligations apply to procurements run under the Act. The guidance states that “The Act does not require payments compliance notices relating to payments made under contracts awarded under procurement regimes other than [the Act] to be published. However, it is permissible to publish a payments compliance notice relating to these payments”. The guidance similarly permits payment compliance notices for below-threshold contracts although this is not a legal obligation. The application to materially changed public contracts let under the old regime and application to new framework call-offs will need to be settled in case law.
Assessment of contract performance firstly means publishing information about performance assessed at least annually against the key performance indicators which are required in most cases for contracts worth more than £5m. Again, the contract performance notices are to be published on the Central Digital Platform.
The assessment regime is the bigger issue for suppliers because section 71 of the Act also requires the contracting authority to publish information relating to particular breaches of contract or failure to perform a public contract. This applies to every public contract including framework call-offs.
The reporting can arise in four cases: (a) partial termination of the contract (b) the award of damages (c) a settlement agreement between the supplier and the contracting authority or (d) where the supplier is not performing a public contract to the authority’s satisfaction, has been given proper opportunity to improve performance, and has failed to do so.
It is the last of these provisions which is broadest and likely to cause most concern to suppliers because of the relative subjectivity of the assessment of performance “to the authority’s satisfaction “. This will be a case-by-case assessment and close relationship management between the contracting authority and supplier is going to be essential to deal with issues quickly and before these escalate.
There is an implied right to fully terminate the public contract for the contracting authority in certain cases under section 78 of the Act. Termination of the contract will instead trigger a Contract Termination Notice under section 80 of the Act.
This will all mean that poor performance and early contract termination is in the public domain which is likely to be a commercial risk concern to those involved in delivering public goods, works and services. Poor performance is a discretionary ground of exclusion from any public procurement exercise and results in the exclusion ground being reported to the Procurement Review Unit, which could lead to a debarment investigation and potential to be added to the Debarment List. For discretionary exclusion in this case, the event must be within the last 5 years and is subject to the self-cleaning regime such that “the contracting authority must consider that the circumstances giving rise to the application of the exclusion ground are continuing or likely to occur again”
For contracting authorities: the No. 4 Regulations introduce increased transparency on payments compliance which creates an extra administrative burden on contracting authorities in relation to public contracts. It will be important to have resources and systems in place as this is an area where the Public Procurement Review Service could be interested in compliance levels. As procurement law is now focused on the management of the contract as well as the process to award, officers will need to be ready to manage supplier performance proactively. Authorities will want to look closely at performance standards in contracts to ensure that these are deliverable and measurable. This will require more proactive contract management.
For suppliers: now is the time to get contract management and performance reporting systems in place for procurements being let under the Act. Look carefully at the key performance indicators and service standards in the contracts that are being entered into and be clear that you can deliver before you commit. The future risk of exclusion from future opportunities and/or debarment on a discretionary exclusion ground means that these provisions are going to go up the corporate risk radar for those involved in public contracting in the UK.
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