Regulated procurement | UK Regulatory Outlook April 2025

Spring Statement 2025 – modernisation of public services

In the Spring Statement given at the end of last month, Rachel Reeves made several announcements in regards to modernising public services. This involves the creation of the £3.25 billion Transformation Fund to support the modernisation of public services through AI and digital technology. The first allocations from the Transformation Fund include:

• £150m for government employee exit schemes;
• £42m for three pioneering Frontier AI Exemplars;
• £25m for the fostering system, including funding for 400 new fostering households; and
• £8m for new technology for probation officers.

Suppliers should keep an eye on the Central Digital Platform for any relevant upcoming procurements in relation to these areas.

In addition to this, announcements were also made in regards to defence procurement, notably driving faster innovative procurement. This includes an increase in the proportion of Ministry of Defence’s equipment procurement spent on novel technologies such as dual use technologies, uncrewed and autonomous systems and AI‑enabled capabilities, aiming to spend at least 10% from next year.

New guidance on pipeline notices

The Government Commercial Function has published new guidance for both contracting authorities and suppliers on UK1 pipeline notices which went live as of 1 April 2025. In scope contracting authorities, that is, those with a spend above £100 million in relevant contracts in the coming financial year, have until 26 May 2025 to publish their pipeline notices on the Find a Tender Service (FTS). These notices should include details of procurements they have planned in the next 18 months with an estimated value above £2 million. These must then be updated annually.

For suppliers the guidance outlines how they can see use the FTS to search for these notices which will be helpful for procurement teams to understand what procurements they may wish to bid for.

Court rules damages adequate remedy even if 'sufficiently serious' point not accepted

In Millbrook Healthcare Limited v Devon County Council  [2025] EWHC 744, the court ruled in favour of the council's application to lift the automatic suspension, finding that damages would be an adequate remedy for the claimant, Millbrook. The judge also dismissed the claimant’s application for an expedited trial.

This judgment adds to the growing list of examples of claimants finding it difficult to hang on to the automatic suspension. In this judgment, the court was unpersuaded that damages would be an inadequate remedy for the claimant for matters such as significant financial losses, staff exodus, damage to reputation and competitive disadvantage. In particular, the court noted that the new contract represented a relatively small share of Millbrook's overall business turnover and the loss of one contract would not undermine Millbrook's ability to compete or its business model.

The most interesting aspect of the judgment relates to the court's consideration of how the decision in Braceurself that a breach must be "sufficiently serious" to warrant damages interplays with the adequacy of damages for the claimant. The claimant in Millbrook argued that damages were inadequate because, even if it succeeded at trial in proving that a breach had occurred, it might receive no damages if the breach was not deemed "sufficiently serious" by the court. It therefore argued that lifting the suspension would potentially leave the claimant with no substantive remedy at all.

The court rejected this argument, stating that the "sufficiently serious" breach criterion is irrelevant to the assessment of the adequacy of damages as a remedy. The court chose not to follow a recent decision of the High Court of Northern Ireland that went the other way. Instead the judge stated: "I take comfort in my conclusion to the opposite from a consistent host of eminent High Court judges endorsing the exclusion of the sufficiently serious criterion as part of the adequacy assessment, including in cases where the Defendant has not conceded the Francovich criterion."

The court granted the council's application to lift the suspension, finding that damages would be an adequate remedy for Millbrook, finding that maintaining the suspension would cause significant harm to the council and its service users, outweighing the harms claimed by Millbrook.

The judgment shows yet again just how difficult it is for a commercial claimant to maintain the automatic suspension. The test that will be applied by the court in deciding whether to lift the automatic suspension in relation to procurements governed by the Procurement Act 2023 will be difficult, although whether it will lead to more suspensions being maintained remains to be seen.

Payment spot checks in public subcontracts

The government has published a new Procurement Policy Note (PPN) addressing the issue of payment spot checks in public subcontracts. This new guidance is binding on central government entities, including the NHS, and is recommended for voluntary adoption by other public sector organisations.

It applies to contracts with a total value exceeding £5 million that are advertised from 1 October 2025. The subcontracts affected are those which substantially contribute to the performance of the main public contract. Authorities are instructed to include an additional contractual term that enables them to conduct spot checks on compliance with the 30-day payment requirement for subcontracts. These checks are to be conducted randomly, with a particular focus on cases where there is an assessed increased risk of poor performance. The PPN mandates that such checks occur at least every six months from the contract award date.

Non-compliance with these checks would constitute a breach of contract, although it is unlikely to be serious enough to warrant termination on its own. The Public Procurement Review Service may investigate specific complaints against suppliers, subcontractors, or authorities, reinforcing the government's commitment to prompt payment measures. This new PPN does not therefore add significant further 'teeth' to the regime, but does serve to underline the importance the government places on prompt payment measures.

Guidance on data protection legislation

The government has published a PPN which sets out guidance for contracting authorities on data protection requirements under UK GDPR, and the UK International Data Transfer Agreement governing the export of personal data from the UK. This replaces and updates PPN 03/22. The PPN notes that this does not reflect a change in policy or a new call for action, but in-scope organisations should continue to apply any ongoing obligations set out in the provisions of this PPN.