Implications for the NHSof the Procurement Act

As the UK separated from the EU, it was no longer subject to the obligations of the EU Public Contract Regulations 2015. A new piece of legislation, the Procurement Act 2023, was therefore drafted, with the hope of overhauling previous policies. The Procurement Act 2023 was made law on 27 October 2023, but pending a change in government, its coming into force was postponed to 24 February this year, alongside the publication of the National Procurement Policy Statement.

The new bill has the aim of ‘improving and streamlining the way procurement is done’, and ‘benefiting prospective suppliers of all sizes, particularly small businesses, start-ups, and social enterprises’,1 by changing how public bodies buy goods and services. While these changes will without doubts pose challenges to NHS bodies, by leveraging technology and automation, procurement teams can integrate the bill’s requirements into existing procedures, minimising setbacks or delays.

Then vs. now — what is going to change?

Previously, NHS procurement was regulated by the Public Procurement Contracts Regulation (PCR) 2015, and the Health Care Services (Provider Selection Regime) Regulations 2023 (PSR 2023), a set of bespoke regulations covering procurement of certain healthcare services in England (excluding Wales). The scope of these services covers those delivered to patients and users by relevant authorities. The PSR 2023 is applicable to NHS England, Integrated Care Boards (ICBs), NHS Trusts and NHS Foundation Trusts, local authorities, and combined authorities.

The new Procurement Act will apply to the procurement of all goods and services outside the scope of PSR 2023, delivered by relevant authorities that are out of scope for the PSR, such as facilities management and estates services including cleaning, catering, consultancy, and more. An exception are services that are part of a mixed procurement covered by the PSR. The Procurement Act also applies to the procurement of healthcare services when purchased by public bodies and organisations not listed as authorities under the PSR,2 such as Trusts. Contracting authorities will need to clearly understand whether their purchases fall under the Procurement Act or the PSR 2023.

The new bill aims to promote transparency, competition, and sustainable procurement, broadening the supplier pool for the NHS to include SMEs, and ‘local, diverse, and sustainable businesses’. This focus means shifting from the Most Economically Advantageous Tender (MEAT) principle to the Most Advantageous Tender (MAT) one for assessing suppliers and their values.

Now, procurement teams will need to take into account value-enhancing factors such as carbon footprint, diversity, contribution to local communities, and overall social values, as well as the financial cost-based element, when faced with otherwise equal proposals.

A ‘more open and inclusive’ procurement process

This ‘more open and inclusive’ procurement process requires increasing the number of reporting of results to the Cabinet Office, and making underlying performance data public, thus increasing transparency. In addition, the bill requires all additional notices — from planning through to contract expiry — to be published, mandating that procurement teams continuously monitor and track performance to reveal how suppliers are delivering against contractual obligations over the period of their engagement.

This way, contracting authorities will have access to a more complete picture, and will be able to analyse suppliers’ performance in greater detail. In turn, suppliers will be able to access tender opportunities more openly, while taxpayers will have access to information on how exactly their money is being spent over a period of time. Additionally, to ensure transparency and keep suppliers accountable, a Public Disbarment List has been established. This will include companies that fail to honour their obligations to the British public, who will risk being excluded from future tenders, or even be disbarred indefinitely.

Opportunities for smaller businesses

To foster competition and local communities, the bill opens the NHS doors to smaller businesses with less history on the market and no track record of public sector tendering, often regarded as too time- and resource-consuming for companies with fewer resources. However, these suppliers come with more potential risk, which NHS buyers will need to carefully manage. To ensure compliance with the new regulation’s objective to open up the market to new businesses, while managing taxpayers’ funds carefully, they will need to leverage more data sources than ever before, calling for more in-depth and predictive analysis tools.

Digitalisation and automation will play a key role in managing the larger volumes of data from diverse sources, and automated real-time information retrieval and analysis will prove invaluable in supporting decision-making and value assessments based on the MAT rather than the MEAT principle.

Growing pains and potential challenges

As the market opens up to more players, and thus more factors need to be taken into account, buyers may be queried on an increasing number of points, leading to possible litigation. As the bill requires increased transparency on both the buyer’s and supplier’s side, no doubts should be left unchecked. In fact, the new system introduces a more complex evaluation, eradicating the idea that the cheapest choice is the optimum solution, as it could even lead to limited access to medication, increase waiting time for patients in need of surgery, check-ups, or consultation, and worsen overcrowding in under-staffed healthcare facilities.

To integrate the new bill into the existing NHS’s procurement system, it’s important to acknowledge the need to support all involved parties that have now to deal with new requirements, giving them a chance to understand and learn to operate within the bill’s framework. Learning on the job, however, even with the best possible intentions, can put a lot of pressure on procurement teams, aware that suppliers may look for any possible reason to challenge their decision.

A ‘comprehensive learning programme’

To ease this transition, the Cabinet Office has put into place a comprehensive programme of learning and development for procurement and commercial teams, that will be also open to staff whose work is just adjacent to procurement. This programme will cover different commercial strategies, including planning, governance, assurance, and resources.

Another critical consideration is that the current global market is very different to the one for which the bill was developed. The new protectionist climate, with tariffs and counter-tariffs potentially impacting the cost of materials, and consequentially products and services that rely on those materials, is a global situation that could, for example, impact the 2020 NHS Hospital Build Programme, with its aim of delivering 40 new hospitals by 2030. The Programme was reviewed in January 2025, with the confirmation of funding with £15 bn of new investment over consecutive five-year ‘waves’.3

The current state of procurement and supply chain

Commercial procurement teams have been under an increasing amount of pressure over the last decade, and things show no signs of slowing down. From unexpected sourcing needs driven by the COVID-19 pandemic, to a steep decline in pharmaceutical clinical trial populations caused by the Russian invasion of the Ukraine (both significant contributors to clinical trials for several years), to Houthi attacks on vessels transporting goods on the Red Sea, the global supply chain has been rocked repeatedly. On top of that, the latest shift in the geopolitical environment is changing the logic of free markets, and re-drawing the global supply chain map with concepts such as ‘nearshoring’ and ‘friendshoring’, posing yet another critical challenge for procurement and supply chains worldwide.

The new UK Procurement Act adds another layer of complication to this already uncertain landscape, requiring commercial procurement teams to fully understand the new legislation, and to carefully manage potential risks posed by introducing new players — such as smaller, younger businesses. In fact, reports show that 60% of small businesses in the UK fail within the first three years, an indication that smaller players could struggle to deliver on large contracts.

Efficient data management can help NHS buyers identify businesses that could pose a risk in the long 
term. Additionally, automated real-time information retrieval and analysis can lead to better informed, more efficient, decision making, while due diligence in vetting suppliers against multiple criteria can be streamlined with tools that help rapidly interpret multiple data sources ranging from certifications to financial reports, and even news articles.

Technology can also prove instrumental to comply with the new requirement of continuously monitoring supplier performance and ethical behaviour throughout a contract’s lifecycle, automatically creating periodic reports based on real-time data, as well as automating requests when additional information is needed. Implementing AI and MLL models able to streamline otherwise complex and time-consuming processes such as performance and contract fulfilment tracking can prove instrumental in ensuring compliance with the new bill, reducing the risk of human error at the same time.

However, compliance will also strongly rely on interdepartmental collaboration, as commercial procurement teams need to be able to access data from a wide range of systems to reap the new bill’s benefits without disrupting their existing procurement and supply cycles. As this data may be stored in systems that are not integrated or compatible, overcoming technical challenges to make sure that all systems within the NHS ‘speak the same language’ is essential.

An ‘integrated end-to-end approach’

Similarly, the new framework requires an integrated 
end-to-end approach, and that all departments communicate and work as a team, instead of focusing on a single phase of the procurement cycle. Contract managers, finance teams, service commissioners, legal advisers, and reporting teams, will need to be consulted at each stage to ensure that evaluations meet the social value and technical criteria. Procurement solutions that enable a cohesive and centralised approach to the whole contract lifecycle have already been specifically developed for the public sector, ensuring end-to end-visibility into all elements of the new evaluation process, and that NHS bodies are compliant with the new reform.

References

1 The Procurement Act 2023: A short guide for suppliers. Updated 24 February 2025. https://tinyurl.com/4t6et3b8

2 NHS England. Provider Selection Regime frequently asked questions. https://tinyurl.com/3d24k633

3 New Hospital Programme: plan for implementation. Department of Health & Social Care. 20 January 2025. https://tinyurl.com/k25xk5tj

4 Ukraine was pharma’s clinical trial ‘darling.’ As war drags on, will the industry return? Biopharma Dive. 16 April 2024.

5 UK Business Death Rate. UK Money. Updated 23 January 2025. https://tinyurl.com/2r6urh9u