Public procurement policy
Directives, regulations, policies and guidance relating to the procurement of supplies, services and works for the public sector.
As a buyer or commissioner of supplies, services and works for the public sector you need to understand and be able to readily access the regulations and policies relating to procurement.
The Crown Commercial Service (CCS) is responsible for the legal framework for public sector procurement and leads on the development and implementation of procurement policies for government.
Introduction
The over-riding procurement policy requirement is that all public procurement must be based on value for money, defined as “the best mix of quality and effectiveness for the least outlay over the period of use of the goods or services bought”. This should be achieved through competition, unless there are compelling reasons to the contrary.
Public sector procurement is subject to a legal framework which encourages free and open competition and value for money, in line with internationally and nationally agreed obligations and regulations. As part of its strategy, the government aligns procurement policies with this legal framework, as well as with its wider policy objectives.
The legal framework - international obligations
Treaty obligations
Public procurement is subject to the EU Treaty principles of:
- non-discrimination
- free movement of goods
- freedom to provide services
- freedom of establishment
In addition to these fundamental treaty principles, some general principles of law have emerged from the case law of the European Court of Justice. The most important of these general principles of law for you to be aware of in the procurement context are:
- equality of treatment
- transparency
- mutual recognition
- proportionality
EU procurement directives
Since the 1970s, the EU has adopted legislation to ensure that the EU public procurement market is open and competitive and that suppliers are treated equally and fairly. The rules cover aspects such as advertising of contracts, procedures for assessing company credentials, awarding the contracts and remedies (penalties) when these rules are breached.
The EU rules are contained in a series of directives that are updated from time to time. Member states have to make national legislation (regulations) to implement the EU rules in domestic law by certain deadlines. The most recent update of the EU procurement directives was in April 2014. This followed a successful lobbying campaign by the UK government and our EU partners to negotiate a simpler, more flexible regime of procurement rules. Member states then had 2 years to implement these in national law i.e. by April 2016.
These directives are:
- Public Sector: Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on public procurement and repealing Directive 2004/18/EC
- Concessions: Directive 2014/23/EU of the European Parliament and of the Council of 26 February 2014 on the award of concession contracts
- Utilities: Directive 2014/25/EU of the European Parliament and of the Council of 26 February 2014 on procurement by entities operating in the water, energy, transport and postal services sectors and repealing Directive 2004/17/EC
Public procurement is also subject to the World Trade Organisation Government Procurement Agreement
Public Contracts Regulations 2015
Once the 2014 EU Procurement Directives came into force, the government prioritised the Public Contracts Directive for early implementation because it would deregulate and simplify the rules for where most procurement spend and activity takes place.
The changes enable buyers to run procurements faster, with less red tape, and with a greater focus on getting the right supplier and best tender in accordance with sound commercial practice. The implementation of the Public Contracts Regulations 2015 took effect from 26 February 2015.
Above set financial thresholds, if you are buying supplies, services or works for central government, a non-ministerial department, executive agency, or non-departmental public body, you must follow the procedures laid down in the Public Contracts Regulations before awarding a contract to suppliers.
There are exceptions if you are buying for the defence and security sector, where requirements may be covered by the Defence and Security Public Contracts Regulations (DSPCR) 2011.
Procurement for wider public sector bodies, such as local government, health and education, is also subject to the Public Contracts Regulations. However, the threshold contract values for goods and services is higher as explained in Procurement Policy Note 04/17.
The UK regulations include some specific UK rules to support growth by improving suppliers’ access to public contracts below the EU thresholds (“sub-threshold contracts”). These rules include requirements for publishing advertised public contract opportunities and contract awards below the EU thresholds, but over certain other threshold values, on Contracts Finder. Guidance on these regulations can be found online.
Local authority buyers need to also be aware of The Local Government (Transparency Requirements) (England) Regulations 2015- set out under “Domestic Legislation below” as these regulations require additional contracting information to be published beyond the legislative requirements of the Public Contracts Regulations 2015.
Central Government buyers also need to refer to the policy commitments set out below under the heading “Procurement policies for promoting greater transparency” as these set out the additional requirements for publishing tender and contract documents.
The Public Contract Regulations 2015 also include a requirement for contracting authorities to have regard to CCS guidance on the selection of suppliers and the award of contracts, and to ensure that suppliers pay their subcontractors within 30 days as is already required of contracting authorities.
CCS has published a handbook and policy specific guidance to help public sector buyers understand the new public contracts regulations.
There is also a free eLearning package available to public sector buyers which covers the main changes in the new directive.
To help raise awareness of the new EU Procurement Directives, CCS also arranged more than 200 face-to-face training sessions on the main changes in the directives for people working in the public sector. Read the training materials from these sessions.
Utilities Contracts Regulations 2016
The implementation of the Utilities Contracts Regulations 2016 took effect from 18 April 2016.
These regulations provide modernised rules for the procurement of goods, services and works above certain financial thresholds as explained in Procurement Policy Note 18/15 by contracting entities (“utilities”) operating in the water, energy, transport and postal services sectors.
CCS has published guidance on the utilities procurement rules within the policy specific guidance.
To help raise awareness of these new procurement rules, CCS also arranged face-to-face training sessions on the main changes in this directive for people working in the utilities sector. Read the training materials from the utilities sessions.
Concession Contracts Regulations 2016
The implementation of the Concession Contracts Regulations took effect from 18 April 2016.
These regulations provide rules for the award of concession contracts above certain financial thresholds by public authorities and utilities. The thresholds for Concessions are different to the Public and Utilities thresholds, further information on Concession thresholds can be found in Procurement Policy Note 04/16.
CCS has published guidance on the Concession Contracts Regulations within the policy specific guidance.
The Public Procurement (Amendments, Repeals and Revocations) Regulations 2016
The Public Procurement (Amendments, Repeals and Revocations) Regulations 2016 make consequential amendments to other legislation, including the Public Services (Social Value) Act 2012. This should be read together with The Public Contracts Regulations 2015, The Utilities Contracts Regulations 2016 and The Concession Contracts Regulations 2016.
Handbooks and guidance
All handbooks, guidance documents and training materials for the Public Contracts Regulations, Utilities Contracts Regulations and Concession Contracts Regulations can be found on the EU procurement directives and the UK regulations guidance page.
Tenders not covered by the Public Contracts Regulations 2015
When a tender process is not subject to the Public Contracts Regulations (or Defence and Security Public Contracts Regulations) because the estimated value of a contract falls below the relevant threshold, you must continue to apply the principles of non-discrimination, equal treatment, transparency, mutual recognition and proportionality.
Where you consider that a contract is likely to attract cross-border interest you must publish a sufficiently accessible advertisement to ensure that suppliers in other member states can have access to appropriate information before awarding the contract. This is in line with the UK objective of achieving value for money in all public procurements, not just those covered by the Public Contracts Regulations.
Part 4 of the Public Contracts Regulations 2015 introduced some key reforms of which you must be aware:
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abolition of a pre-qualification stage for procurements below the EU thresholds, and a requirement to have regard to guidance on qualitative selection issued by Cabinet Office for above EU threshold procurements
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requirement for contracting authorities to insert provisions in all public contracts to ensure prompt payment through the supply chain
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requirement to advertise public sector opportunities in one place, Contracts Finder, and to publish award notices for contracts and call-offs from framework agreements.
The legal framework - domestic legislation
You must adhere to the following domestic legal requirements:
Small Business Enterprise and Employment (SBEE) Act 2015: you should be aware of section 39 of the act which gives the Minister for the Cabinet Office (MCO) the ability to implement secondary legislation imposing duties on public procurers in relation to procurement matters. Under Section 40 in-scope public contracting authorities must co-operate with any investigation of their procurement practises carried out on behalf of MCO.
The Late Payment of Commercial Debts Regulations 2013: amended late payment legislation came into force on 16 March 2013, implementing European Directive 2011/7/EU on combating late payment in commercial transactions. It aims to make pursuing payment a simpler process across the EU, reducing the culture of paying late and making payment on time the norm.
Energy Efficiency Directive Article 6: article 6 of the directive requires central government departments in EU member states to purchase highly energy efficient products, services and buildings, as set out in Annex III of the directive. This is a qualified duty and you do not have to buy the default product, service or building where this is not cost effective or does not allow effective competition. There is a secondary requirement to encourage other public bodies including local and regional government to follow the example of central government.
Equality Act 2010: in accordance with the Equality Act 2010 you are required to comply with the Public Sector Equality Duty when conducting public procurement.
Public Services (Social Value) Act 2012: the act requires that at the pre-procurement stage you consider how what is to be procured may improve the social, environmental and economic well-being of the area in which the contract will be applied, how it might secure any such improvement and to consider the need to consult.
The Local Government (Transparency Requirements) (England) Regulations 2015 This legislation requires the information, including information about public contracts, in Part 2 of the Local Government Transparency Code 2015 to be published in the manner and form and on the occasions specified. Responsibility for this legislation and Code lies with the Department for Communities and Local Government.
The procurement policy framework
If you are a central government buyer you must implement the procurement policies set out in the following sections.
Procurement policies for value for money and savings
Value for money
As a public sector buyer, value for money is fundamental to the procurement activity you carry out.
Centralised procurement
In 2010 central government moved to a system which buys common goods and services once on behalf of the whole of government, and not in individual departments.
To support this, CCS was established to provide end-to-end purchasing services and departments were to transition spend on common goods and services to these arrangements. If your department has not yet transitioned to the CCS managed service, you can use the self service options to buy a variety of commonly used goods and services.
If you can’t find what you want in the self service area, or would like to combine your needs with those of other organisations to get best value, CCS can provide you with advice and support, either through another CCS service or via the wider marketplace. Government departments may be eligible to use the CCS fully managed service, with advice on what to buy, and help with procuring it and managing the delivery of the contract.
Spending controls
You are required to comply with central government spending controls in relation to:
- Advertising, marketing and communications
- Commercial (strategic supplier management, disputes and commercial models)
- Technology
- Digital service delivery
- Consultancy
- Civil service learning
- Property (facilities management)
Procurement policies for conduct of procurements
Lean sourcing
As a central government buyer you are required to adopt the Lean Sourcing principles
Your authority must complete all but the most complex procurements within 120 working days from publication of contract notice to award. A complex procurement is defined as “one where the specification is difficult to define or is complex or innovative, the procurement is high risk, the competition is restricted to a limited market, the contract will be based on unusual commercial models (e.g. Private Finance Initiative or a Private Public Partnership variant) or where the procurement involves spend in a number of categories”.
Procurement processes
Central government buyers must follow the policy on selection of procurement processes that accompany the Procurement Route Decision Tree. There is a strong preference for the Open Procedure and this should be the normal default choice for government procurement. The Restricted Procedure should only be used where there is a genuine need to pre-qualify bidders or where there is evidence that (after effective pre-procurement market engagement) the market, and therefore the number of potential bidders, is very large.
The Decision Tree notes some distinction between the suitability of the two procedures for more complex procurements. In particular, the Competitive Procedure with Negotiation offers an attractive new choice for those procurements where although some element of negotiation is needed, it is possible to specify a minimum requirement from the outset. However, the Competitive Dialogue now provides for clarification and optimisation after the final call for tenders and has no minimum requirement at the outset, making it much better for highly complex outcome based procurements.
Early market engagement
Central government buyers are required to operate an open door for current and potential providers to discuss upcoming procurement opportunities, by making greater use of Prior Information Notices (OJEU) or speculative notices if they relate to a specific procurement or industry sector-specific market engagement activity, to promote early market engagement. All contracting authorities can make use of the following notices on Contracts Finder to advertise early engagement activities:
- Future Opportunity Notices (PIN equivalent) and
- Early Market Engagement notices which can be used to announce engagements such as meet the buyer events etc.
Outcome based specifications
You should use outcome based specifications as much as possible. An output (or outcome) based specification focuses on the desired outputs of a service in business terms, rather than a detailed technical specification of how the service is to be provided. This allows providers scope to propose innovative solutions.
Once a requirement has been identified it is natural to try to imagine the solution. The problem with this is that you are limited by what is currently known or available to you. By specifying outcomes rather than a solution you allow room for innovation to create new and better options.
The standard selection questionnaire
Procurement Policy Note 08/16 provides the standard selection questionnaire, statutory guidance on how and when to use it and a list of frequently asked questions. The questionnaire asks suppliers to self-declare against the set out in the Public Contract Regulations 2015. The in PPN 08/16 also provides the standard questions to help buyers decide if a supplier has the capability and capacity to carry out a contract. These questions are designed to give information about a supplier’s financial strength and experience in delivering the required goods and services along with other issues relevant to the contract.
Supplier past performance
Procurement Policy Note 04/15 sets out government policy to ensure that bidders’ past performance is taken account of in major government procurements. If your authority intends to buy goods or services in respect of technology, facilities management or business processing outsourcing with a total anticipated contract value of £20 million or over (excluding VAT), you must notify and engage CCS. You must also ensure that for these contracts the minimum standards of performance are taken into account during the selection stage.
References
References are important for suppliers, especially for small businesses seeking to grow their business. It is recommended that you accept requests for references, especially if the supplier has performed well and/or has exceeded expectations, noting that there is no legal impediment to providing references but any opinions offered must be backed by records.
Before giving a reference it should be established whether the request is being made as part of the policy on taking account of bidders’ past performance set out in Procurement Policy Note 04/15, in which case the procedures set out in the relevant policy note would apply.
Terms and conditions of contract
You should use the model terms and conditions, as follows:
The Model Services Contract was introduced in March 2014 on the basis that all departments should use it for IT and Business Process Outsourcing contracts with a through life contract value of £10 million or more.
The Short Form Terms and Conditions were issued in April 2014 for low value (below OJEU threshold) procurement of goods and services.
Procurement policies in support of enterprise and growth
Government exceeded its aspiration for 25% of government spend going to SMEs by 2015. In 2014 to 2015, 27.1% of central government buying was with small businesses, either directly (10.9%) or through the supply chain (16.2%).
The government has set a new target for a third of central government buying to be with small businesses by 2020. Achieving this target will mean an extra £3 billion per year (in 2013 to 2014 terms) going to small firms directly or through the supply chain.
Government has taken major steps to ensure business gets the most out of procurement opportunities, whilst still securing value for money by implementing the following reforms:
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simplifying processes by abolishing Pre-Qualification Questionnaires (PQQs) for contracts below the EU threshold and mandating the use of a above threshold contracts
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making contract opportunities easier to find by having them accessible on an improved single online portal – Contracts Finder
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ensuring small firms are treated fairly by mandating prompt payment terms throughout a public procurement supply chain
Prompt payment and performance reporting
Following the 2015 budget all departments must publish the percentage of their invoices paid within 5 days and 30 days on a quarterly basis. Since April 2016, if your organisation is within scope, you need to publish all interest liable under the late payment legislation on a quarterly basis. Procurement Policy Note 05/15 restated the policy announced in May 2010 that departments should aim to pay 80% of undisputed invoices within 5 working days.
Acceptance of unstructured e-Invoices by central government authorities
Procurement Policy Note 11/15 set out requirements for central government bodies to be ready to accept “unstructured” electronic invoices from 30 June 2015 and to make their suppliers aware of this.
Supporting apprenticeships and skills through public procurement
Public procurement of contracts worth £10million or more, which last 12 months or longer, should support skills development and the government’s commitment to create 3 million new apprenticeships by 2020. Procurement Policy Note 14/15 provides further details.
Public procurement and steel
In October 2015, government published Procurement Policy Note 16/15: procuring steel in major projects, which sets out how government buyers should source steel for major projects in a more strategic and transparent way. This is underpinned by more detailed guidance explaining how departments should take into account the social impacts of competing suppliers as well as environmental factors for certain procurements involving steel.
In April 2016, government announced that the guidance on procuring steel would be extended to the wider public sector and that government would establish a list of approved steel suppliers. Work is currently underway to achieve this.
These measures will help to create a more level playing field for suppliers who bid for public contracts, both directly and through the supply chain, contributing to economic growth.
Procurement policies for promoting greater transparency
Government policy is to adopt and encourage greater transparency in its commercial activity. All in-scope bodies must, as a minimum, follow the legal requirements to publish advertised opportunities and awards on Contracts Finder covered by the Public Contracts Regulations 2015. In addition, the government has made the following policy commitments relating to transparency of public contracting data.
Central Government transparency and publication of contracts
Central Government buyers must publish all tender documents and contracts with a contract value of over £12,000 on Contracts Finder. Guidance is available online.
The Transparency Principles were updated on 16 February 2017. These require central government departments to proactively release information in line with the above commitments during the life of the contract.
You should establish at the start of a contract what information can be published with exemptions following the provisions of the Freedom of Information Act, for example on national security or commercial confidentiality grounds. Only genuinely commercially sensitive information should be withheld. Further guidance on exemptions can be found online.
The Local Government Transparency Code 2015
As a Local Government buyer, in addition to the legal requirements to publish covered by both the Public Contracts Regulations 2015 and the The Local Government (Transparency Requirements) (England) Regulations 2015 legislation, there are additional recommended requirements for greater disclosure in the Local Government Transparency Code.
For procurement information this includes monthly (or preferably real time) publication on Contracts Finder of every invitation to tender or invitation to quote for contracts to provide goods and/or services with a value that exceeds £10,000 (and a lower thresholds of £500 is recommended), details of ITTs that have not been formerly advertised and all contracts in their entirety where the value of the contract exceeds £5,000. Responsibility for this legislation and Code lies with the Department for Communities and Local Government, who conducted a consultation on strengthening the code, details of which can be found online.
Contracts Finder
A redeveloped Contracts Finder website was launched in February 2015 alongside the Public Contracts Regulations 2015. The Regulations require in-scope bodies to publish all advertised UK public sector procurement opportunities and contract awards above certain thresholds on Contracts Finder:
- £10,000 for central government bodies and
- £25,000 for wider public sector bodies
As the single publishing portal for all public sector procurement opportunities, Contracts Finder is a critical part of delivering the government’s commitments for transparency in procurement and for making it easier and more accessible for smaller businesses and voluntary or charitable organisations to do business with the public sector. Contracts Finder allows users to view and search for early market engagement notices and future opportunities, used by buyers to engage with suppliers to check interest in and define future procurement needs, opportunities that are currently open to tender and awarded contracts.
User Guides for buyers on how to use Contracts Finder is available from our service support team at [email protected]
Subcontracting
Building on the measures the government has already taken to open up its procurement frameworks to small and innovative businesses, we also extended Contracts Finder to the subcontracting market in 2016, offering wider access to procurement opportunities.
Contractors to the Public Sector can now register directly on Contracts Finder to advertise opportunities in their supply chains. Further details are available in the Contracts Finder user guide.
Contracting authorities are requested to encourage their key suppliers to make use of this service. Further detail can be obtained by contacting our service support team at [email protected].
Open contracting
The UK Open Government National Action Plan 2016-18 was published on 12 May 2016. It committed to implement the Open Contracting Data Standard (OCDS) in CCS operations by October 2016 and to begin applying this approach to major infrastructure projects, starting with High Speed Two (HS2), and rolling out OCDS across government thereafter. OCDS has been implemented for all data published on Contracts Finder and can be accessed online.
Procurement policies for supporting wider government policy
Tax arrangements of public appointees
On 31 January 2012 the Treasury announced a review of the tax arrangements of public appointees. The results were published on 23 May 2012. Central government bodies must put in place the recommendations from the review by including appropriate clauses in relevant contracts.
Greening government commitments
You must ensure that you buy more sustainable and efficient products and engage with your suppliers to understand and reduce the impacts of their supply chains, including:
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embed the Government Buying Standards (GBS) in departmental and centralised procurement contracts, within the context of government’s overarching priorities of value for money and streamlining procurement processes
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improve and publish data on our supply chain impacts, initially focusing on carbon, but also water and waste, setting detailed baselines for reducing these impacts
Plan for the public procurement of food and catering services
Using the food procurement toolkit central government departments, their executive agencies and non-departmental public bodies should commit to procuring food using the balanced scorecard method and revised Government Buying Standards for food and catering services.
You will find suppliers that can help you achieve this via the procurement portal. You should also manage your contracts proactively, and work with suppliers to source responsibly and comply with the balanced scorecard approach.
Procurement policies for technology
Government’s technology strategy
As a central government buyer you should refer to the guidance contained in the Government Service Design Manual, particularly the Resources for Chief Technology Officers.
The Government Digital Service has a mandate to review and approve/reject all tech-related spending including:
- all digital projects utilising identity assurance for the general public, domain name registration, and any external facing digital transaction, websites or mobile apps
- digital expenditure over £100,000
- expenditure over £1 million for services delivered by independent shared service centres
- expenditure over £5 million for everything else
In May 2013 the government published the ‘Cloud First’ policy, which states that when procuring new or existing services, you should consider and fully evaluate potential cloud solutions first - before you consider any other option.
In January 2014 the government published ‘red lines’ for IT contracts. These rules apply to all central government, and should encourage competition whilst delivering value for money for the taxpayer. The ‘red lines’ are:
- no IT contract will be allowed over £100 million in value – unless there is an exceptional reason to do so, smaller contracts mean competition from the widest possible range of suppliers
- companies with a contract for service provision will not be allowed to provide system integration in the same part of government
- there will be no automatic contract extensions; the government won’t extend existing contracts unless there is a compelling case
- new hosting contracts will not last for more than 2 years
Open standards
The Open Standards Principles are government’s policy on open standards to make government IT more open, cheaper and better connected. When specifying IT requirements for software interoperability, data and document formats, you must:
- request that open standards adhering to the definition described in the open standards principles are adopted, subject to the principles of equivalence
- use compulsory open standards profiles that have been adopted for use in government, subject to a comply or explain process, e.g. through spending controls.
Cyber essentials
When buying technology products and services for central government contracts which involve handling personal information you must ensure that the Cyber Essentials scheme, or Cyber Essentials Plus, is in place. The scheme is the result of government taking steps to reduce levels of cyber security risk, working in consultation with industry to define a set of controls which when properly implemented will provide organisations with basic protection against the prevalent form of internet threats.
The CCS Cyber Security Services agreement.
Procurement policies for improving construction procurement
Government’s construction strategy
You should follow the measures set out in Government’s Construction Strategy when procuring construction across all categories.
Common minimum standards
You should comply with the Common Minimum Standards for the procurement of built environments in the public sector.
Procurement Policy Notes
Access the full set of Procurement Policy Notes.
Updates to this page
Published 1 October 2015Last updated 3 April 2023 + show all updates
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Amendments to current content relating to changing legislation. Updated the links to some guidance under the Procurement policies for promoting greater transparency and updated the value of contracts from £10,000 to £12,000
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Updated list of mandatory and discretionary exclusions document.
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new guide uploaded
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Contracts Finder user guide uploaded
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link amended
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text updated
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Mention of frequently asked questions document included in section on Procurement Policy Note 8/16.
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Added links to and information about the standard selection questionnaire.
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Added links to and information about the standard selection questionnaire.
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Added link to Concession Contracts Regulations guide.
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Added information about the Utilities Contracts Regulation, Concession Contracts Regulations and Public Procurement (Amendments, Repeals and Revocations) Regulations along with link to guidance and training materials.
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First published.