Government to change procurement rules for contracts

In a significant move, the UK Government is set to revise the assessment criteria for public sector procurement, aiming to enhance the emphasis on job creation and investment in local communities. With the government contracts market valued at £90bn annually, businesses competing for these contracts will now be evaluated on their commitment to creating jobs and addressing skills shortages. The updated criteria will particularly focus on supporting young people through apprenticeships and work placements within their localities.

For contracts valued over £5m, the scoring system will see the local community benefits component increase from 10% to 20%. Bidders will also gain extra credit for providing local jobs that offer wages above the minimum threshold, as well as for initiatives that bridge local skills gaps through training opportunities, including a minimum of 45 days of work experience. Detailed guidance on these changes is expected to be released in the autumn, with the new rules set to take effect from January 1, 2027, specifically for central government procurements.

Peter Ware, Partner in procurement and Head of Government at Browne Jacobson, a leading UK and Ireland law firm, commented on these changes saying: “This intervention reflects the significant weight that public sector procurement carries in the national and local economy, and the new Prime Minister’s commitment to leveraging greater social value from government contracts.” He noted that this shift continues a trajectory established by the Procurement Act 2023 and fortified by recent guidance from the Cabinet Office.

Ware further remarked: “What is different, though, is the government’s eagerness to give procurement such prominence in its policy agenda under Andy Burnham, who has made tackling the youth unemployment and economic inactivity crisis one of his defining missions.” This renewed focus is poised to encourage both contracting authorities and businesses aiming for high-value public sector work to demonstrate clear, actionable pathways in creating jobs, offering work experience, and enhancing the skills of the local workforce.

Moreover, he highlighted the importance of Whitehall’s dedication to deeper devolution, with skills budgets becoming increasingly centralised under strategic authorities. Ware stated: “This provides a great opportunity for employers to work closely with mayors on to access skills funding when rolling out new training initiatives.” As these changes unfold, both businesses and local authorities will need to adapt to this new framework, ensuring that they meet the heightened expectations surrounding social responsibility in procurement.