Procurement act ushers in tougher exclusions

The Procurement Act 2023 (PA23) marked a transformative moment in the UK’s approach to public procurement. It introduced a streamlined and more rigorous framework for assessing supplier suitability, with a strong emphasis on corporate responsibility, ethical conduct, and national security. This legislative overhaul followed a series of high-profile procurement controversies, particularly those linked to the construction industry (as seen during the Grenfell Tower inquiry), and the awarding of public contracts during the Covid-19 pandemic, which brought unprecedented public scrutiny to the ethics, transparency and accountability of public procurement in the UK. 

At the core of the new regime (which was implemented in February 2025) are the concepts of exclusion and debarment. Under the oversight of the government's Procurement Review Unit (PRU), exclusion allows a contracting authority to prevent a supplier from participating in a specific procurement process, whereas debarment involves a Minister placing a supplier on a central list, barring them from all public contracts for up to five years. 

This draconian element of the new regime is yet to be tested in the courts but will inevitably lead to legal challenges as procurers and businesses attempt to navigate the complex and often largely subjective nature of the new rules. 

Expanded Grounds for Exclusion

Mandatory exclusion grounds continue to apply where a supplier or any “connected person” has been convicted of serious offences such as fraud, bribery, terrorism, tax evasion, cartel activity, corporate manslaughter, modern slavery, or immigration offences. The definition of a connected person is deliberately broad, encompassing directors, parent or subsidiary companies, and individuals with significant control or influence over the supplier. Offences committed outside the UK may also be considered.

Crucially, many exclusion decisions no longer require a criminal conviction, allowing for the exclusion of suppliers whose behaviour - though not necessarily unlawful - raises serious concerns about their integrity or reliability. This could include unethical business practices, environmental violations, or repeated regulatory breaches.

Suppliers involved in anti-competitive practices - such as bid-rigging or price-fixing - may be excluded unless they can demonstrate effective “self-cleaning” measures, showing that the misconduct has been addressed and is unlikely to recur. 

New mandatory grounds also include national security threats, serious tax misconduct (such as VAT fraud), and failure to cooperate with investigations. 

While most exclusion grounds are limited to a five-year period, certain serious offences—such as some terrorism and bribery offences - must be taken into account regardless of when they occurred.

Discretionary Exclusion Grounds

The expanded discretionary exclusion grounds introduce potentially considerable discretion to supplier assessment. These grounds allow authorities to exclude suppliers for a broader range of misconduct, even in the absence of a conviction. Grounds include labour market and environmental offences, insolvency, professional misconduct, poor contract performance, and improper behaviour during procurement processes. A discretionary exclusion may also apply where a supplier or connected person is deemed to pose a threat to national security, with such cases being the responsibility of a separate National Security Unit for Procurement (NSUP).

While these provisions support a more holistic and risk-based approach, they also raise concerns about consistency and legal certainty. The broad discretion afforded to contracting authorities means that exclusion decisions could be open to challenge, particularly where the criteria are interpreted subjectively. 

For contracting authorities, the reforms mean that decisions around exclusion, whether to exclude or not, will carry greater legal and strategic significance, as those determinations may influence a supplier’s eligibility across multiple future procurements. This elevates the likelihood of challenge and places exclusion decisions firmly under the spotlight, with authorities’ reasoning, evidence base and consistency likely to be scrutinised more intensely than before.

Debarment: Who’s on the List?

At the time of writing, no suppliers have yet been added to the debarment list. The list remains blank, leaving open the question of which company will be the first to receive the unwelcome distinction of being the first to be listed - and how the PRU’s expanded powers will be exercised in practice. It also remains to be seen how such decisions will stand up to legal scrutiny.

However, given the broad and often subjective nature of the exclusion and debarment regime, it seems highly likely that legal challenges will emerge once the first decisions are made. The process for reporting concerns to the PRU is straightforward: anyone can submit a referral via a simple online form. While this accessibility supports transparency and accountability, it also opens the door to potential misuse. There is a risk that competitors could exploit the system by submitting spurious or strategic reports to tie up rivals in lengthy investigations. Notably, failure to cooperate with a PRU investigation can itself be grounds for exclusion - raising the stakes even further.

This new environment may deter some businesses from participating in public procurement altogether. Companies that are unprepared for the intense scrutiny that comes with public sector work - or that fear reputational damage from even unfounded allegations - may decide the risks outweigh the benefits. If that happens, the result could be a less competitive procurement landscape, which could ultimately undermine the goals of the PA2023.

Conclusion

The introduction of the debarment list and the expanded powers of the PRU represent a major shift in UK procurement law. While these tools enhance accountability and risk management, they also introduce broader discretion and the potential for legal challenge - particularly where decisions are based on subjective or opaque criteria.

For companies that rely heavily on public contracts, exclusion or debarment could be commercially devastating. Moreover, the ability for competitors to report one another to the PRU may intensify competition and lead to complex legal disputes. As the regime matures, businesses and legal professionals alike will be watching closely to see how these powers are exercised in practice.

These changes will put pressure on companies who bid for public contracts to be more vigilant than ever in monitoring their own conduct, as well as that of connected individuals and their supply chains. 

It also means that businesses face heightened exposure if any conduct emerges that could trigger exclusion or debarment, with contracting authorities now more likely to scrutinise past behaviour, assess organisational culture and governance, and question whether the incident indicates a broader compliance risk within the company or its supply chain.

Equally, public sector procurers, whether operating under the general procurement framework or the specialised regimes for defence, health or utilities. will face greater scrutiny over the robustness of their decision-making, with any missteps in applying the exclusion and debarment rules exposing them to challenge and potentially undermining the delivery of their wider policy objectives.

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