Regulated procurement | UK Regulatory Outlook June 2026

Government publishes Procurement Policy Note on public interest test and insourcing strategy 

The Cabinet Office has published Procurement Policy Note 024, requiring central government departments, executive agencies and non-departmental public bodies to conduct a "Public Interest Test" before commencing any planned procurement or re-procurement of services worth more than £1 million. The test is designed to encourage government departments to consider the viability of delivering a service in-house before going to market.

In-scope organisations with annual contract spend of £100 million or more will also be required to develop and publish a five-year Insourcing Strategy by 1 April 2027. Quarterly reporting of Public Interest Test outcomes to the Government Commercial Agency will be required from the same date. A number of exemptions apply, including direct award contracts, defence and security contracts and contracts governed by the NHS Provider Selection Regime.

For suppliers to public sector, the PPN signals the government's desire from a policy perspective to choose insourcing. However, the Public Interest Test only requires the public sector to consider insourcing, and does not mandate it where insourcing is not practical or feasible. Businesses with significant public sector contract revenue should therefore be alive to the risk of some contracts being brought in-house, but should weigh this risk against the likelihood of such a move being feasible for the public sector.

Debarment Review Service publishes its operational protocol 

The Debarment Review Service (DRS) has published its operational protocol: a guide to how it will manage investigations to decide whether to enter suppliers onto the debarment list on the basis of the exclusion grounds listed in Schedules 6 and 7 of the Procurement Act 2023. 

With the Act having been in force for over a year and the debarment list still empty, the publication of this protocol represents the first detailed public account of how the DRS will exercise its investigatory powers. This includes a three-stage triage process with the most important element being whether the DRS should investigate. 

In this stage, the DRS will consider if there are any compelling reasons not to investigate. If no such reasons apply, the DRS will assess the case as high, medium or low risk against the four criteria in the Triage Risk Assessment Framework. At the time of writing, the threshold at which the DRS will investigate is where at least one criterion is assessed as being high risk. This appears to be a somewhat asymmetric test, and it will be interesting to observe how it operates in practice.

Small and medium-sized enterprises (SMEs) with limited public sector exposure are unlikely to score highly against any of the four triage criteria, even where the underlying exclusion ground is a serious one (a criminal conviction, for example). Unless the SME happens to deliver goods or services that are critical to essential services, the referral is likely to fall below the investigation threshold. In such cases, the DRS would only investigate if there is a compelling public interest reason to justify an investigation (that is, the DRS might consider that the severity of the exclusion ground is itself a compelling reason to investigate). This would place the case at the bottom of the priority list, which should offer a degree of comfort to smaller suppliers who may be anxious about the prospect of debarment.

The position for major strategic suppliers is very different. A supplier with significant public procurement exposure, and especially the Crown's named strategic suppliers, will always score highly on the first criterion alone. This means that any referral, regardless of the severity of the exclusion ground, is likely to clear the investigation threshold. For those suppliers, the only way to avoid investigation is for the DRS to identify a compelling reason not to investigate, such as ongoing legal proceedings or imminent commercial negotiations, or perhaps the comparative insignificance of the exclusion ground.

If you would like to discuss the debarment process further, please contact your usual Osborne Clarke contact or a member of our procurement team. 

Cabinet Office redraws national security exemption to cover four critical sectors

The Cabinet Office has published Procurement Policy Note 025. It requires central government departments, executive agencies and non-departmental public bodies to engage with senior government policymakers before procuring high value contracts in four key sectors and decide on a case-by-case basis whether to procure that contract outside UK procurement legislation on grounds of national security.

The four key sectors deemed critical to the UK's economic security are: steel, shipbuilding, AI and energy infrastructure, each with a nominated sector lead. 

• Steel: contracts of £10 million or more, or requiring more than 500 tonnes of steel, are in scope.
• Shipbuilding: contracts over £1 million, covering the full lifecycle of ships and marine systems including design, construction, maintenance and disposal, as well as related technologies such as autonomy, digitalisation and AI, are in scope.
• AI: contracts of £5 million or more where they relate substantially to AI hardware, AI embedded in critical national infrastructure, or AI tools processing sensitive personal data.
• Energy infrastructure: no fixed financial threshold, with scope defined by the sector lead on a case-by-case basis.

Where a contract is taken outside procurement legislation, the PPN does not prescribe how those contracts must then be awarded, giving contracting authorities a wide discretion to decide how and to whom to award the contract.  It does, however, state by way of example that one option is for the procuring authority to "restrict potential suppliers to UK based suppliers only, while still complying with other obligations under the Act".  The PPN also states that (a) the UK must comply with international trade agreements, and (b) suppliers from the UK's "close trading partners" remain valuable delivery partners for UK public sector contracts.

For suppliers operating in the above sectors, particularly non-UK-based suppliers, there may be both risks and opportunities in those contracts being awarded outside the Procurement Act 2023. Suppliers should assess any upcoming contracts in these areas and consider the impact, seeking advice where necessary.

Welsh government publishes guidance on socially responsible procurement reporting

The Welsh government has published an information document setting out the content requirements for annual socially responsible procurement reports that certain contracting authorities in Wales must prepare and publish under section 39 of the Social Partnership and Public Procurement (Wales) Act 2023.

Contracting authorities that have awarded any prescribed contracts in a financial year must publish an annual report including:

• a summary of public procurement exercises during the year that led to, or were intended to lead to, the award of a prescribed contract; 
• a review of the extent to which all reasonable steps were taken to meet socially responsible procurement objectives;
• a statement of any reasonable intended future steps to meet those objectives;  
• a summary of the public procurement the authority expects to carry out in the next two financial years; and  
• information specified in regulation 6 of the Social Partnership and Public Procurement (Wales) Regulations 2026.

Welsh ministers are separately required to publish an annual report on public procurement in Wales, which must include information about contracting authorities' annual reports and the results of any investigations.

DHSC publishes national standard guidance on value based procurement for medical technology

The Department of Health and Social Care, working with NHS England and NHS Supply Chain, has published national standard guidance on value based procurement for medical technology, covering consumables, implantables, capital equipment, digital products and AI products across primary and secondary care. The guidance is directed at NHS buyers and should be used to evaluate tenders in procurements for those contracts.

For suppliers, the guidance sets out in detail the questions they will be required to respond to across five value domains: social value, efficiency, patient and staff, supply chain and purpose. Together these domains must account for at least 60% of the overall evaluation weighting, with social value carrying a mandatory minimum of 10%. Whole life cost accounts for the remaining maximum of 40%. Within each domain, the guidance sets out the evidence and supporting information that suppliers will be expected to provide, covering areas such as pathway simplification, productivity improvements, patient outcomes, supply chain resilience, circular economy approaches and implementation support. Responses are assessed on a scored basis from zero to five.

Suppliers bidding for NHS medical technology contracts should familiarise themselves with the guidance to understand what evidence they will need to demonstrate and how it will be evaluated.