Passed in 2023 by the last Conservative government, the Procurement Act – which came into force in February – is part of a series of legal and regulatory overhauls aimed at establishing an independent, streamlined, and more accountable framework in public procurement.
According to the UK government’s own accounts, public service procurement contracts are worth hundreds of billions annually – reaching £407 billion in 2023/24. Given the lucrative nature of procurement, both the Labour government and its predecessor have committed to a more transparent, flexible, and risk-conscious approach to how public money is spent. This shift has profound implications for those companies in public sector supply chains.
At the heart of this new legislation lies a powerful and potentially game-changing tool: the debarment regime. For suppliers, both existing and prospective who are looking to win or retain public contracts, it signals a clear message: integrity and compliance are no longer optional.
The new procurement landscape – who can be excluded, and why
Brexit brought with it the end of the Public Contracts Regulations 2015, a regime inherited from EU directives. While these rules aimed to ensure fairness and competition across member states, they were rigid, complex, and ill-suited to the UK’s specific needs.
The new act, and its debarment regime specifically, gives ministers the authority to investigate suppliers and determine whether they meet the right standards for ethical conduct, reliability, and risk management.
The government can bar suppliers based on serious concerns about professional conduct, performance history, or even potential threats to national security, which is where the supply chain industry faces a particularly high risk, as we saw in the case of the Carillion Collapse in 2018.
Carillion – a construction and facilities management company – collapsed after failing to deliver on numerous government contracts. The company’s poor performance and mismanagement of its supply chain led to substantial delays in critical infrastructure projects. Its downfall caused a ripple effect across its suppliers, and many went bankrupt.
The failures of Carillion highlight the need for supplier accountability, and under the new regime, even companies that have performed poorly on previous contracts, failed to meet ethical standards in their labour practices, or breached environmental or tax obligations could all find themselves under scrutiny.
And now, ministers have the power to initiate these investigations. Once the investigation has concluded, the decision to debar a supplier (while not taken lightly) must be based on credible evidence and take into account any remedial steps made.
If the ivestigators deem the concerns to be both substantial and ongoing, the government can place the company on the debarment list for a period of several years. While being debarred does not prohibit a company from operating in the private sector, it effectively bars them from bidding for or delivering public contracts.
The risk associated with supplier failure
For many suppliers, particularly those who specialise in public infrastructure, healthcare, or defense, this can be commercially devastating.
But this isn’t just theoretical.
In 2020, the NHS faced significant disruptions during the pandemic due to its reliance on a small number of suppliers for key medical equipment. Some suppliers failed to meet quality standards, causing delays and shortages. This lack of oversight in supply chain management led to costly inefficiencies and, in some cases, dangerous delays in the delivery of essential goods.
It serves as a stark reminder of why reform, though potentially unpopular, was necessary.
There is, however, a path to challenge or reverse a debarment decision. Suppliers can seek judicial review if they believe the process was flawed or unfair, and they may also be able to submit evidence that they’ve taken meaningful corrective actions – a process known as self-cleaning. For businesses in the supply chain, this means it’s vital to demonstrate how they have improved internal processes, addressed previous failures, and become more compliant with government expectations.
The long term outlook for government suppliers
For businesses hoping to secure public contracts, the message is clear: compliance, accountability, and transparency are now essential parts of doing business.
It is no longer enough to simply deliver a service – suppliers must be able to demonstrate that they are responsible corporate citizens, capable of managing ethical risks and delivering consistently high standards across their operations.
This means companies will need to invest in stronger internal compliance systems, and keep clear documentation to show how they manage issues such as tax compliance, labour practices, and environmental responsibilities.
Businesses will also need to carefully vet their supply chains and sub-contractors and ensure that they also meet the highest standards – particularly as any failures further down the chain can have serious consequences for the entire supply network.
It also means fostering a culture that takes whistleblowing seriously. It means developing an environment where people feel that they can escalate issues and see them dealt with early. Also, suppliers need to feel as though they can quickly show that they are learning from past mistakes. Supply chain transparency and risk management will become more critical than ever in ensuring continued eligibility for public contracts.
This new regime may feel daunting, particularly for smaller businesses or those with less experience in dealing with government procurement processes. But there’s an opportunity here too.
Risk comes with new opportunities
By raising the bar, the government is also leveling the playing field. Those who can meet these higher standards – and prove themselves trustworthy and capable – may find it easier to win contracts in a more risk-conscious market.
So too the emphasis on social value, sustainability, and innovation – it gives well-run businesses a chance to stand out, especially those who can align their operations with broader government priorities like green procurement and ethical sourcing.
The introduction of the debarment regime marks a significant shift in how the UK government interacts with the supplier community. It reflects a growing public and political expectation that companies benefiting from public money must meet the highest standards of integrity and responsibility. The impact of this is magnified within the supply chain industry, where the interconnectedness of suppliers means that the actions of one company can have far-reaching consequences for the rest of the chain.
For businesses, this means the rules of engagement have changed. The risks of non-compliance – whether through poor performance, ethical failings, or simply a lack of transparency – are greater than ever. But so too are the rewards for those who get it right. Businesses that can demonstrate risk management, sustainability, and ethical leadership are well-positioned to thrive in this new era of procurement.
The coming years will test how this regime is implemented and enforced, and whether it delivers on its promise of a fairer, safer, and more efficient procurement system. For now, companies would be wise to treat the Procurement Act as more than just a new set of rules – it is a statement of intent. One that places values, not just value for money, at the centre of public spending.
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