Government procurement in the United Kingdom is the purchase of goods, works (construction) or services by government agencies at the national and local levels. In 2023-24, £341 billion was spent on procurement from the private sector, 32% of public spending.
The Procurement Act 2023, which received royal assent on 26 October 2023, took effect from 24 February 2025 and governs the conduct of government procurement. Before the United Kingdom joined the European Communities in 1973 there was no significant legislation governing public procurement.Arrowsmith, S. (2016), The implications of Brexit for the law on public and utilities procurement, Achilles, p. 4 In the intervening period, government procurement was subject to European Union procurement legislation.
Value of public expenditure In 2021, the government estimated the value of public sector expenditure on goods and services at around £290 billion per year, an increase of around £70 billion from a National Audit Office estimate for 2008–09.National Audit Office, A review of collaborative procurement across the public sector, published May 2010, accessed 4 March 2022 Both estimates suggest that one third of all public sector spending was devoted to the acquisition of goods and services.
Central government expenditure on third party goods and services was estimated at £54 billion in 2009-10 and £45 billion in 2011–12.National Audit Office, Improving government procurement, Report by the Comptroller and Auditor General, HC 996, Session 2012-13, published 27 February 2013, accessed 29 April 2022
HM Treasury excludes public corporations from its estimates of the value of public procurement.econ, for the Office of Fair Trading, Assessing the impact of public sector procurement on competition: Summary, p.1 (footnote), published in September 2004, accessed on 17 January 2025
Historical overview The UK Government's first major statement on procurement strategy was published in 1984.Hansard, Procurement Strategy, Volume 260: debated on Monday 22 May 1995, accessed 26 January 2023
In local government, a policy of compulsory competitive tendering (CCT) was first applied to construction, maintenance and highways work under Part III of the Local Government, Planning and Land Act 1980. CCT was then extended to "blue-collar" services such as refuse collection by the Local Government Act 1988, sports and leisure management in 1989, and to "white-collar" services such as housing management in 1994/95.Gilman, M., Government acts to relax compulsory competitive tendering, European Foundation for the Improvement of Living and Working Conditions, published 27 December 1997, accessed 18 August 2023
Kenneth Clarke, then Chancellor of the Exchequer, published a Government procurement strategy White Paper in 1995 called Setting New Standards: A Strategy for Government Procurement (Cm 2840). In his statement to the House of Commons, Clarke observed that
Peter Gershon, in his 1999 Review of Civil Procurement in Central Government, referred to and followed the White Paper's definition of procurement as inclusive of "conventionally funded projects" and also those supported by "more innovative types" of funding such as PFI. Gershon noted in his findings that previous governments had decentralised procurement and delegated expenditure decisions to Departments without creating a framework for controlling how they spent public funds.Gershon, P., Review of Civil Procurement in Central Government, published April 1999, accessed 26 January 2023
The Office of Government Commerce (OGC) set up a "Collaborative Procurement Programme" in 2007, managing over £18 billion of expenditure falling within eight categories of goods and services frequently purchased across the public sector, namely energy, vehicle fleet, travel, office solutions, information and communications technology, professional services, food and construction. A further category, facilities management, was added at a later date. The National Audit Office (NAO) argues that collaborative procurement begins with standardising specifications, which
In the light of the economic downturn of 2008 onwards, sometimes referred to as the "Great Recession", the UK government adopted a series of ten "procurement for growth" principles, intended to ensure that UK government procurement would "take account of supply chain opportunities for UK companies in policy and delivery planning" and "analyse markets to assess where growth is achievable".Office of Government Commerce, available from the United Nations Procurement Capacity Development Centre, The ten key procurement for growth principles, archived on 24 June 2021, accessed on 28 July 2024 In the March 2008 budget statement, the government announced that it wanted to see small and medium-sized enterprises (SMEs) "compete more effectively for public sector contracts". A review of progress with this initiative published in 2013 found that "against a backdrop of falling procurement spend", there had been a slight increase in direct expenditure with SMEs between 2011/12 (£4.4bn) and 2012/13 (£4.5bn). The 2008 budget statement also announced that businesses supplying services to Government would be able to sell their public sector invoices to debt specialists, a change which was expected to be "particularly advantageous to SMEs in managing their cash flow".H M Treasury, Budget 2008. Stability and opportunity: building a strong, sustainable future, paragraph 3.50, published 12 March 2008, accessed 28 August 2021 This was a reversal of previous government contracting practice in model contract documents, where assignment of debts was allowed only with the prior consent of the relevant public body.Office of Government Commerce, Procurement Policy Information Note 07/08, Assignment of Debts Arising Under Public Contracts, 16 June 2008 Government suppliers who act as prime contractors for major contracts should also engage with SME's in their supply chains to ensure opportunities are available and fairly awarded.Office of Government Commerce/Department for Business, Innovation and Skills, Small supplier big opportunity: Levelling the playing field for SMEs as sub-contractors - Suppliers' guide, 2010 The government noted in 2013 that it did not yet have a full understanding of the role played by SMEs in the supply chains for their purchasing, especially their contribution to supplying the Ministry of Defence and the Department for Work and Pensions.
The UK public sector relies heavily on the use of framework agreements: the NAO found that 93% of the public bodies they surveyed had used a framework agreement during the financial year 2008–09. However, in a 2010 review of the use of framework agreements and other forms of collaboration, they noted that there was a "wide variation" among public bodies in the extent to which they were being used.
The Public Contracts (Amendment) Regulations 2009 came into effect on 20 December 2009,UK Legislation, Public Contracts (Amendment) Regulations 2009 (revoked), accessed 4 October 2023 implementing the EU's Remedies Directive published on 20 December 2007. These regulations introduced the possibility of a contract being declared "ineffective" if it has been awarded by a contracting authority "in serious breach of the procurement rules", along with civil financial penalties and contract shortening, two alternative remedies available to the courts.Office of Government Commerce, EXPLANATORY MEMORANDUM TO THE PUBLIC CONTRACTS (AMENDMENT) REGULATIONS 2009, 2009 No. 2992, accessed 4 October 2023
In August 2010, David Cameron, then recently elected as prime minister, invited businessman Sir Philip Green to carry out a review of UK government spending and procurement. Green's summary report, Efficiency Review by Sir Philip Green, published in October 2010, alleged significant failings in government procurement processes. The government published the review identifying its main finding as "the Government is failing to leverage both its credit rating and its scale". Green argued that the report gave "a fair reflection" of government waste and inefficiency in practice, for which "very poor data and process" were seen as the main causes.Efficiency review by Sir Philip Green: key findings and recommendations, published 11 October 2010. Retrieved 22 September 2016 Cameron welcomed the report, saying "I think it's a good report, it will save a lot of money and it's important we do it."Government Efficiency Review published, published 11 October 2010; retrieved 22 September 2016
Landline telephones offered the "best example" of where different government departments had separate contracts in place with different suppliers, so that overall government scale could not be levered effectively. Green suggested that an "urgent review" could lead to savings of 30-40% in this category of expenditure. "Poor negotiation" was further identified as a cause of inflexibility in contracts.
The coalition government of 2010 also made a "commitment to promote small business procurement", in particular by aiming to award 25% of government contracts (by value) to small and medium sized enterprises. At the same time a policy presumption was made that individual ICT contracts and projects "should be less than £100m lifetime costs". The government promoted and welcomed reform during the period from 2010 onwards, especially the development and implementation of European Commission's proposals to modernise procurement legislation published in 2011. A "strategic supplier summit" held in February 2011 promoted the government's intention to introduce more openness in relation to "the contracts it signs, the goods and services it purchases and the way it purchases them". The Cabinet Office was responsible for leading on UK engagement with the EU. In research undertaken by the Local Government Association (LGA) in 2010 to inform the LGA's views on the proposed modernisation legislation, 36% of local government officers responding to a survey stated that the 2006 directives had led to more efficient and effective procurement practice, but 54% felt that "the simplicity of the procurement process" had deteriorated. The 2006 directives had created greater legal uncertainty within the local government procurement community. Several responses highlighted the need for better guidance and support from the EU and from the Office of Government Commerce (OGC), which was then responsible for procurement policy.Local Government Association (2010), The impact of EU procurement legislation on councils, published December 2010, accessed 23 July 2021 In February 2011 the UK Government stated its view that "the public procurement regime needs to be radically simplified to reduce red tape and improve value for money".Cabinet Office, Procurement Policy Note: Two Consultations: Modernising the Public Procurement Rules, Implementing the Defence and Security Review, Information Note 4/11, published 4 February 2011, accessed 28 July 2021
Part 3 of the Small Business, Enterprise and Employment Act 2015 allowed the Minister for the Cabinet Office or the relevant Secretary of State to impose further regulations on public bodies regarding how they undertake procurement,Small Business, Enterprise and Employment Act 2015, Reg. 39 until this provision was replaced by the regulatory provisions in section 122 of the Procurement Act 2023.UK Legislation, Procurement Act 2023, Section 122, accessed on 14 October 2025 The Minister for the Cabinet Office is the minister with overall responsibility for procurement policy, which is delivered through the Government Commercial Agency, formerly the Crown Commercial Service, an executive agency sponsored by the Cabinet Office.Crown Commercial Service, accessed 18 September 2016
Procurement policies