The Procurement Act 2023: an updated regime for direct awards

What you need to know if contracting with the UK Government post-24 February 2025

On 14 January 2025, Freshfields and Monckton Chambers co-hosted an event on how the Procurement Act 2023 will reform public procurement law in the UK when it comes into force on 24 February. 

We are now publishing a series of briefings to provide a summary of the key changes likely to be of particular interest to our clients. In this briefing – the second of the series – we discuss the changes to the direct awards regime introduced by the Act. 

For information about what the Act would mean for exclusion and debarment, see: The Procurement Act 2023: a new regime for exclusion and debarment

Overview: a more transparent approach to direct awards

The starting position under both the previous regime (principally, the Public Contracts Regulations 2015 (PCR 2015)) and the Act is that public contracts must only be awarded following a competitive tendering procedure. However, in certain circumstances, it is permissible for a contracting authority to award a contract to a supplier without such a procedure – this is known as a direct award.

It is worth noting that, in certain scenarios, a contracting authority might be able to make a modification to an existing contract without following a competitive tendering procedure, the effect of which can be similar to the making of a direct award. The changes proposed in relation to modifications will be considered in more detail in a subsequent briefing.

Direct awards have their own chapter in the Act (Chapter 3) and the changes in the Act aim to make direct awards more straightforward and transparent.

The circumstances in which a direct award may be made are largely the same under the Act as under the previous regime. However, and as considered in more detail below, the Act introduces two key changes:

• Ministers are empowered to designate specific contracts or categories of contracts which can be awarded directly in certain cases, such as where necessary to protect life or public safety; and
• contracting authorities are obliged to publish a transparency notice in advance of making a direct award.

When can a direct award be made?

The circumstances under which a contracting authority may award a contract without a competitive tendering procedure are broadly the same under the Act as they were under the previous regime. 

Under the Act, a direct award may be made including where:

• a direct award justification applies (s 41 and Schedule 5), e.g.:
  • the contract concerns a prototype for research or similar purposes (Schedule 5, paras 2-3);
  • there is only one suitable supplier (Schedule 5, paras 4-6);
  • the contract concerns additional or repeat goods, services or works (Schedule 5, paras 7-9);
  • there is extreme and unavoidable urgency (Schedule 5, paras 13-14); or
• the authority did not receive any suitable tenders or requests to participate in response to a competitive tendering procedure (s 43).

The Act has some relaxations compared to the previous regime, with Schedule 5 including two new justifications for a direct award under s 41, namely for user choice services (paras 15-17) and certain defence and security contracts (paras 18-20). However, a direct award under s 43 is similar to the approach under reg 32(2)(a) of the PCR 2015 so there is no substantial change here. 

Direct awards for the protection of life, public order and public safety

A key change is that s 42 of the Act introduces an express right for Ministers to issue regulations that specify contracts or categories of contracts which can be awarded directly under s 41 as if a direct award justification applied. The Minister must consider it “necessary” to do so in order to protect:

• human, animal or plant life or health; or
• public order or safety.

This is a new justification driven by the learning from the COVID-19 pandemic. How widely this provision is interpreted and how frequently it will be used remains to be seen. 

Regulations must be laid before Parliament by Ministers after being made and will cease to have effect after 28 days unless they are approved by a resolution of each House of Parliament, although this will not affect the validity of anything previously done under the regulations (s 122). There are safeguards, as Ministers must keep the regulations under review and revoke them when they are no longer needed, but there is no detail on how that duty is to be discharged.

In practice, given the broad discretion afforded to Ministers, it may be difficult to challenge direct awards made pursuant to such regulations or to challenge the regulations themselves (or their continued existence). However, in principle the making of regulations and their review and revocation are matters that would be subject to the normal obligations arising in public law and to judicial review.

The introduction of transparency notices

Another key change in the Act is that, subject to a few exceptions, in advance of making a direct award under ss 41 or 43, an authority must publish a transparency notice setting out its intention to award a contract directly (s 44). This also applies where a direct award has been made under s 41 where a s 42 justification applies.  

The transparency notice should be published before the contract is awarded. If the procurement proceeds, and unless an exemption applies, authorities must then publish a contract award notice before the contract is entered into (s 50). This can be published at any point after the transparency notice has been issued and generally triggers a mandatory standstill period of 8 working days (s 51). The mandatory standstill period applies except where direct awards are made under: (a) s 41 where the justification is extreme and unavoidable urgency; (b) s 42; or (c) under ss 41 or 43 by a private utility (s 51(3)(a)-(c)). However, in these instances an authority may choose to set a voluntary standstill period (s 51(4)). 

Finally, the contract award notice should be followed by a contract details notice after the contract has been entered into (s 53).

Previously, an authority was not required to notify suppliers of its decision to directly award a contract (reg 86(5) of the PCR 2015). However, an authority could issue a voluntary transparency notice expressing its intention to enter into a contract procured as a direct award and observe a 10-day standstill period to remove the possibility of a claim for ineffectiveness (reg 99(3)(b) of the PCR 2015). In addition, an authority could choose to issue a contract award notice after the award of the contract to shorten the period for bringing a claim from 6 months to 30 days (reg 93 of the PCR 2015). This meant that authorities had broad discretion as to whether to publish notices for direct awards, which resulted in significant variation in approach.

The introduction of a mandatory transparency notice is therefore one of the key mechanisms adopted by the Act to increase the transparency of public procurements.  The Act’s notice regime should increase scrutiny of direct awards, particularly at an early, pre-contractual stage. This means challenges may be more likely to arise before the contract has been entered into, when they would be less disruptive to the procurement process and to contract performance.  

Conclusion

The changes proposed by the Act in relation to direct awards and exempted contracts are not radical, and the use of a designated chapter and schedules makes things more straightforward.

The inclusion of several new justifications for direct awards represents a moderate expansion of the provisions, with greater ability for authorities and Ministers to issue direct awards in cases of urgency or where necessary for the public good. However, the impact of Ministers designating specific contracts or categories of contracts which can be awarded directly will largely depend on how, and how widely, that power is used in practice.

Further, the introduction of a requirement for a contracting authority to give a transparency notice introduces more scrutiny into the process. Whereas previously the market would not always be aware of a direct award, now authorities must publish a series of notifications throughout the procurement, leading to increased opportunities to challenge direct awards and to hold authorities accountable. 

The Procurement Bill: direct awards | Freshfields

With thanks to Monckton Chambers