Securing government contracts can be a valuable growth opportunity for your small business. However, with the new UK Procurement Act 2023 - effective from February 2025 - there are fresh legal and compliance requirements you’ll need to meet before you can successfully tender.
This article gives you a step-by-step guide on the policies, documents, and procedures you should have. You’ll learn what’s changed under the new Act, how to ensure your business is ready to bid, and how to stay compliant throughout the process.
If you need tailored advice on navigating these new rules, our commercial law solicitors are here to help you get contract-ready and seize the public sector opportunities available under the Act.
Contents:
What must you have in place to participate in public procurement?
To join the public procurement game, SMEs need to have specific documents and policies in place, as outlined below:
- Company registration and financial stability: Ensure your business is properly registered and financially stable. Public sector clients will check your financial health to ensure you can deliver the contract without risking insolvency.
- Compliance with relevant legislation: Get to know and comply with relevant legislation such as the General Data Protection Regulation (GDPR), Health and Safety at Work Act, and the Equality Act. Serious non-compliance can disqualify you from the bidding process.
- Anti-bribery and corruption policies: Establish strong anti-bribery and corruption policies. Public sector contracts require strict adherence to ethical standards.
- Environmental and sustainability policies: Many public sector contracts now require businesses to show their commitment to sustainability. Develop and document your environmental policies to stay ahead of the game.
- Insurance: Ensure you have the necessary coverage, such as public liability insurance, professional indemnity insurance, and employer’s liability insurance.
- Quality management systems: Establish quality management systems like ISO 9001 to demonstrate your commitment to quality and continuous improvement.
What commercial contracts do you need in place?
The right commercial contracts are crucial for SMEs tendering public sector contracts. Here are the key contracts you should consider:
- Supplier Agreements: Establish agreements with suppliers to ensure a reliable supply chain. This is crucial for showing your ability to deliver on time and within budget, which is essential.
- Non-Disclosure Agreements (NDAs): Protect your intellectual property and confidential information by having NDAs in place with partners, suppliers, and sub-contractors. This adds a critical layer of protection, which helps underpin your relationships with public sector bodies.
- Service Level Agreements (SLAs): Define the level of service you will provide to your public sector clients. SLAs should include performance metrics, reporting requirements, and relevant penalties for non-compliance. This will give your clients the peace of mind to contract with you.
- Employment contracts: Ensure your employment contracts are up-to-date and compliant with current employment law. This includes clauses related to business protection, such as confidentiality and non-compete clauses.
Practical steps to prepare for the new Procurement Act
To enable your business to unlock government contract opportunities, key team members must be on board with the changes set out in the Act. This includes your contract managers, sales and finance departments, and legal, audit and reporting functions.
There are a few practical steps you can take across your business to ensure that it is ready:
- Which contracts apply? The Act applies to procurements started on or after 24 February 2025, so your first step is to identify which contracts you will need to deal with under the new rules and which you will continue to handle under the previous system if you have any. You will need to run a two-tier approach whilst these older contracts subsist.
- Is your business registered? The Act introduces a central digital platform called ‘Find a Tender’, which is free to access and will make it easier to find and bid for contracts. Find a Tender will also enable your business to store, manage and update its core business information quickly, and to share it easily with contracting authorities and across multiple bids. Public procurement opportunities will be visible to users, making it easy for SMEs to search and set up alerts for tenders which may be of interest to them. You will need to register with the platform if you have not already done so. If you were registered prior to February 2025, you will need to re-register. You will also need to allocate resources to keep your business information updated regularly and continuously.
- What policies and procedures do you need in place? Review your current policies and procedures to ensure they meet the requirements for public procurement. Identify any gaps and take corrective action. Where you are unsure, speak to your legal team.
- Is your business MAT fit? Contracting authorities must have regard to ‘most advantageous tender’ (MAT) principles when deciding which business to award a public contract to. Instead of simply going with the cheapest tender, they must look at broader criteria such as creating social value (providing employment opportunities) or environmental benefits like reducing waste or addressing net zero or carbon reduction outcomes. For instance, if a catering company creates additional jobs and teaches new skills to young unemployed people in its locality and bids successfully, it is more likely to satisfy MAT considerations. Start reviewing your business policies with this in mind, as tenders that offer broader advantages than just a ‘good deal’ will help give you a competitive edge.
- Are your quality assurance procedures robust? For contracts worth more than £5 million, a minimum of three key performance indicators (KPIs) will be agreed between the public authority and the supplier. These will be published at least annually as part of the government’s move towards greater transparency in public procurement. Review your existing quality assurance procedures now so that you can agree on measurable and achievable KPIs with a contracting authority on your larger contracts.
- Are you happy with your subcontractors and suppliers? Contracting authorities will check whether a business should be excluded from the procurement process and added to a debarment list, precluding them from further opportunities. This includes the subcontractors and suppliers your business intends to use for the work it bids for. The potential grounds for exclusion are wide. Examples include conviction of various criminal offences, misconduct in relation to tax or environmental matters, competition law breaches, and breach of contract or poor performance in previous government contracts. A builder tendering for a public contract could be excluded if its electrical subcontractors have failed to pay their VAT. By auditing your third-party relationships now for potential risks and carefully checking the terms of your contracts with them, you could avoid difficult issues further down the line.
- Do you have a robust bid library? Create a repository of documents and templates that you can use for future bids. This should include case studies, references, and standard responses to frequently asked questions.
- Are your team aware of the new rules? Ensure your team is well-versed in the new procurement rules and understands the bidding process. Consider training sessions or workshops to build their skills, and perhaps introduce a regular refresh and testing regime.
- What legal support do you need? Consult with lawyers to review your contracts and policies, ensuring they comply with the Act. They can provide valuable insights and help you navigate the complexities of public procurement.
- How to keep abreast of opportunities? Keep an eye on public sector procurement portals and sign up for alerts. This will help you stay informed about new opportunities and relevant deadlines as soon as they crop up.
Final check: Are you contract-ready?
The UK Procurement Act offers SMEs a great opportunity to access public procurement contracts. However, to take advantage of this, you must ensure you are contract-ready by meeting legal compliance requirements, having the right commercial contracts, and preparing strategically to increase your chances of success in the public sector market.
An example would be a small groundworks contractor eager to tender for local council road resurfacing contracts. To be 'contract ready,' this contractor must ensure compliance with relevant legislation (particularly with regard to Health and safety and PPE), develop robust anti-bribery and corruption policies, demonstrate strong financial stability, and have all relevant insurance policies, including Contractors All-Risks, Public Liability, and Employer Liability insurance. The contractor should be ready, willing, and able to demonstrate and evidence all of the above.
Contract readiness is crucial for SMEs aiming to secure public sector work. Without proper preparation, SMEs risk missing out on valuable opportunities due to non-compliance or inadequate documentation,
says Kevin Manship, a Commercial Partner at Harper James.
Being contract-ready not only demonstrates your capability and reliability but also ensures you meet all legal and procedural requirements, giving your business a competitive edge.
There is a lot that goes into being contract-ready. Our commercial law solicitors are here to help you navigate the complexities of public procurement. Contact us today to ensure your business is ready to secure public contracts in this new public sector procurement landscape.
