The Public Procurement Act 2023, which officially came into force on 24 February 2025, is a landmark piece of legislation aimed at transforming how public sector contracts are awarded in the UK. Designed to simplify processes, enhance transparency, and level the playing field for small and medium-sized enterprises (SMEs), the Act is expected to unlock significant opportunities for businesses across the country.

Why was the Public Procurement Act introduced?

The UK Government introduced the legislation as part of its post-Brexit efforts to overhaul procurement rules that were previously restricted by our EU membership. The government’s goal is to ‘create a more flexible and efficient system that prioritises value for money, transparency, and inclusivity’. With public sector spending exceeding £400 billion annually, these changes aim to ensure that smaller businesses have a fair chance to compete for lucrative contracts.

Key changes under the Public Procurement Act

1. Central Digital Platform

One of the most significant updates is the introduction of a Central Digital Platform. This online hub consolidates all public procurement opportunities in one place, making it easier for businesses to find and bid on contracts. Suppliers can register their details, store core business information for multiple bids, and even set up alerts for tenders of interest – without incurring costs.

2. Mandatory 30-Day Payment Terms

Late payments have been an ongoing challenge for small businesses working with the public sector, as many just didn’t have the ability to offer such generous credit terms.

The Public Procurement Act mandates 30-day payment terms for all public sector contracts, providing cash flow stability for SMEs. This change alone should make a significant difference to the businesses who feel able to supply to government bodies.

3. Enhanced Supplier Oversight

The Public Procurement Act introduces new powers to address poorly performing suppliers or those posing security risks. The Procurement Review Unit (PRU) and National Security Unit for Procurement (NSUP) will oversee investigations into such suppliers.

Consequences could include exclusion from future contracts or even debarment from all public tenders via a centralised debarment list.

4. Support for SMEs

Contracting authorities now have to assess possible barriers faced by SMEs during procurement processes and take steps to mitigate them.

Measures such as breaking large projects into smaller lots allow specialist SMEs to bid directly, while simplified procedures make it easier to submit tenders across different organisations.

How SMEs can prepare

To take full advantage of the changes under the Act, small business owners should consider the following steps:

• Register on the Central Digital Platform: Ensure your business details are up-to-date and complete your registration early to access opportunities as they arise.
• Review Payment Terms: Familiarise yourself with the new payment requirements and ensure your internal processes can handle quicker invoicing cycles.
• Understand Exclusion Risks: Conduct due diligence on your supply chain to avoid falling foul of new exclusion criteria related to poor performance or security risks.
• Engage with Pre-Market Consultations: Many contracting authorities now conduct pre-market engagement sessions tailored to SMEs. Participating in these can provide valuable insights into upcoming opportunities.
• Monitor Opportunities: Set up alerts on the Central Digital Platform to stay informed about tenders relevant to your industry.

What might this mean for small businesses?

The Public Procurement Act 2023 represents a significant shift in how government contracts are awarded and should open doors that were previously difficult to access.

For small business owners looking to grow through public sector work, it could make a big difference. You can find more information about registering on the Gov.uk website.