Out-Law Guide 18 min. read

Public procurement law: the basics

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Public procurement law regulates the purchasing by public sector bodies and certain utility sector bodies of contracts for goods, works and services.

This guide provides a brief overview of the main provisions applicable to public procurement in the UK.

How is public procurement regulated in the UK?

The relevant UK public procurement legislation is:

  • the Public Contracts Regulations 2015 (PCRs), which apply to public sector procurements
  • the Utilities Contracts Regulations 2016 (UCRs), which apply to procurements by certain regulated utility companies;
  • the Concessions Contracts Regulations 2016 (CCRs), which apply to the procurement of works and services concession contracts; and
  • the Defence and Security Public Contracts Regulations 2011 (DSPCRs), which apply to the procurement of certain defence and security contracts.

With the exception of the DSPCRs, which apply on a UK-wide basis, this legislation applies only to England, Wales and Northern Ireland. Scotland has its own procurement legislation, although this is substantively similar to the procurement rules that apply to the rest of the UK.

These regulations, as well as the Scottish procurement legislation, implement in the UK EU procurement directives. Despite the UK’s exit from the EU, they continue to constitute good law, with relevant amendments as introduced by the Public Procurement (Amendment etc.) (EU Exit) Regulations 2020 (EU Exit Regulations). The primary aim of this amending legislation was to correct any deficiencies in the regulations so as to reflect the UK’s new status outside the EU. However, in terms of substantive obligations, in most respects, the law has remained unchanged.  The amendments do not affect any ongoing procurement procedure that commenced before the end of the Brexit transition period, which continue to be subject to the EU procurement directives and EU law more generally. EU procurement directives continue to apply to projects which receive EU funding from the European Structural Investment Fund (ESIF) and European Regional Development Fund (ERDF).

The UK government published its ‘green paper’ consultation on transforming public procurement in December 2020, inviting comments on proposed reforms following the UK’s exit from the EU. The objectives of these reforms include simplifying and speeding up procurement processes and facilitating further access to public contracts by small and medium-sized businesses (SMEs). Ultimately, any new legislation will have to be compliant with the World Trade Organization’s (WTO's) plurilateral Agreement on Government Procurement (GPA) to which the UK is now a signatory in its own right. Equally, the new rules will need to be consistent with the  EU–UK Trade and Cooperation Agreement (TCA) and any other trade agreements to which the UK enters into that incorporate commitments relating to public procurement.

Separately, as the EU treaties no longer have direct effect in the UK, ‘below-threshold’ procurements no longer need to comply with “general EU treaty principles”, irrespective of whether these contracts would be of cross-border interest to suppliers in an EU member state. The only exception relates to Northern Ireland where, by virtue of the Northern Ireland Protocol to the Withdrawal Agreement, general EU treaty principles arguably continue to apply to below-threshold procurements that are of cross-border interest and that involve the provision of goods into Northern Ireland.

Unless otherwise specified, this guide relates to the application of the PCRs, on the basis of which the majority of regulated contracts are awarded. Any reference in this guide to “the legislation” should be construed as a reference to the PCRs, whilst any reference to “the Regulations” should be construed as a collective reference to the procurement legislation listed above.

Who does public procurement law apply to?

The Regulations apply primarily to the award of certain contracts by “contracting authorities” – a broad term that captures the overwhelming majority of public bodies including government departments, local authorities, National Health Service (NHS) trusts and police authorities.

A smaller group of entities that are not “contracting authorities” may also be subject to procurement regulation if they operate in the water, energy, transport or postal services sectors and carry out a regulated utility activity on the basis of “special or exclusive rights” or under the “dominant influence” of a contracting authority. This type of regulated body includes private sector water utility companies, electricity network and distribution operators and ports.

In the interest of simplicity, this guide will use the term “contracting authority” to refer to any entity that has an obligation to carry out a procurement process under the Regulations.

Which contracts are caught?

The Regulations apply in principle to the award of contracts for pecuniary interest that are concluded in writing between one or more contracting authorities and one or more economic operators, and that have as their object the execution of works, the supply of goods or the provision of services.

“Pecuniary interest” means, broadly, consideration, whatever its nature. The courts have clarified that the provision of goods, works or services in exchange for the full, or even partial, reimbursement of costs can be sufficient for pecuniary interest to arise.

The award of works and services concession contracts is also subject to regulation. Concession contracts involve consideration that consists, either solely or partly, in the right to exploit the works or services that are the subject of the contract with operating risk transferring to the concessionaire.

Where the legislation applies, contracting authorities must, in general, meet their contractual requirements for goods, works and services by means of an advertised competitive contract award process that is based on objective, relevant and proportionate criteria

The Regulations apply only where the estimated value of the regulated contract meets or exceeds certain thresholds, which are reviewed every two years by the Cabinet Office to ensure that they align with the thresholds set out in the GPA. The current thresholds noted below are applicable from the 1st January 2022.These figures are all inclusive of value added tax (VAT).

The PCR value thresholds are:

  • works contracts -£5,336,937;
  • supplies and most services contracts - £138,760 for central government bodies and £213,477 for other contracting authorities; and
  • contracts for social and certain other types of services - £663,540.

The UCR value thresholds are:

  • works contracts - £5,336,937;
  • supplies and most services contracts - £426,955; and
  • contracts for social and certain other types of services £884,720.

The value threshold for concession contracts under the CCR is £5,336,937.

The DSPCR value thresholds are:

  • works contracts - £5,336,937; and
  • supplies or services contracts - £426,955.

What does the law require?

Access to contract award procedures is guaranteed, with remedies for breaches available, to economic operators from:

  • the UK;
  • EU member states, for procurements covered by the TCA;
  • a non-EU GPA state, for procurements covered by the GPA; and
  • other countries with which the UK has a bilateral agreement, for procurements covered by those agreements.

Where the legislation applies, contracting authorities must, in general, meet their contractual requirements for goods, works and services by means of an advertised competitive contract award process that is based on objective, relevant and proportionate criteria. They must treat bidders equally and without discrimination, and act in a transparent and proportionate manner.

Generally, the contracting authority must:

  • advertise the contract by means of the publication of a contract notice on Find a Tender (FTS), describing the requirements and inviting expressions of interest within given timescales;
  • determine whether an economic operator that has expressed an interest has the necessary legal and financial standing and the relevant technical and professional ability to perform the contract;
  • invite a shortlist of qualified economic operators, selected on the basis of objective and non-discriminatory rules and criteria, to submit tenders or carry out negotiations before submitting tenders;
  • evaluate the tenders submitted on the basis of pre-disclosed objective award criteria that must be linked to the subject matter of the contract, so as to determine the most economically advantageous tender (MEAT);
  • notify the contract award decision to all economic operators that have submitted a tender, as well as those that have participated in earlier stages of the competition in certain cases;
  • observe the standstill period of a minimum of ten clear calendar days, during which time the contract cannot be concluded;
  • conclude the contract only after the expiry of the standstill period (if there is no legal challenge to the contract award decision before then); and
  • advertise the contract award on FTS.

Contracting authorities are also subject to an express obligation not to design procurements with the intention of excluding operators from the scope of the legislation, or of artificially narrowing competition.

How are contracts awarded?

Advertising requirements

Contract award procedures launched after the end of the UK’s EU-withdrawal transition period must be advertised on FTS and on Contracts Finder, the national online portal for public contracts in England. For public contracts in Scotland, Wales and Northern Ireland, these must be advertised on the respective national online portal, in addition to FTS. National publication can only take place following publication of the contract notice on FTS. However, if 48 hours elapse after the notice was submitted to FTS and the notice has not yet been published, contracting authorities are entitled to publish at national level.

Contracting authorities must publish the notice on Contracts Finder (or the relevant devolved national online portal) within 24 hours of them becoming entitled to do so.

Advertisement must be made using standard online forms and generally requires publication of:

  • the identity, address and other relevant details of the contracting authority;
  • details of how to access the procurement documents;
  • a description of the procurement and the contracting authority’s requirements including the nature and quantity of works, supplies or services and the estimated value and duration of the contract;
  • the award criteria;
  • conditions for participation including any legal, economic and financial, technical and professional requirements; and
  • details of the procedure including type and time limits.
Preliminary consultation

The legislation expressly permits contracting authorities to carry out preliminary market consultations with a view to preparing the procurement and informing the market of their plans and requirements. When doing so, contracting authorities are permitted to seek or accept advice from independent experts or authorities, and from market participants. The advice may be used in the planning and conduct of the procurement procedure, provided this does not distort competition or violate the principles of non-discrimination and transparency.

The contracting authority must take appropriate measures to ensure that competition is not distorted as a result of the participation in the procurement process of an economic operator involved in its preparation. This must include communicating any relevant information exchanged with that economic operator in the context of preparing the procurement process with all other participants, and setting adequate time limits for receipt of tenders.

Where there are no means of ensuring the equal treatment of all participants, the economic operator who was involved pre-procurement must be excluded from the procedure after being given the opportunity to prove that its prior involvement is not capable of distorting competition.

Tender procedure

There are six procedures that may be used to award a contract:

  • Open procedure – the contracting authority invites interested parties to submit tenders by a specified date. The process does not involve a separate selection stage. All tenders that meet the qualitative criteria must be evaluated and the contract awarded to the bidder with the most economically advantageous tender. Negotiations are not permitted.
  • Restricted procedure – the contracting authority considers applications from interested parties and invites a minimum of five qualified applicants to submit tenders, determined based on objective and non-discriminatory rules and criteria. The contract is awarded to the bidder who has submitted the most economically advantageous tender. Negotiations are not permitted.
  • Competitive procedure with negotiation – the contracting authority considers applications from interested parties and invites a minimum of three qualified applicants to negotiate the contract with the contracting authority. Two may be permissible in specific circumstances. Negotiations may involve successive bidding rounds, to reduce the number of tenders to be negotiated. Final tenders cannot be negotiated.
  • Competitive dialogue – the contracting authority considers applications from interested parties and invites a minimum of three qualified applicants to enter into discussions with a view to identifying the solution(s) capable of meeting its needs. Again, two may be permissible in specific circumstances. A competitive dialogue may take place in successive stages to reduce the number of solutions to be discussed. There can be no substantive discussions following the submission of final tenders, although these may be clarified, specified and optimised at the contracting authority’s request. Limited non-substantive negotiations may also take place after the bidder with the most economically advantageous offer has been identified, with a view to finalising the terms of the contract.
  • Innovation partnership – the aim here is to set up a partnership between a contracting authority and one or more economic operators for the development of an innovative product, service or works meeting the contracting authority’s minimum requirements. The contracting authority can purchase the outputs without the need for a new procurement process, provided that these meet the performance levels and maximum costs agreed between the contracting authority and the participants. The process for setting up an innovation partnership is based on the procedural rules that apply to the competitive procedure with negotiation.
  • Competitive procedure without prior publication – permitted in certain limited and narrowly defined circumstances. These include where there is extreme urgency not attributable to the contracting authority, and where the requirement can only be met by a particular economic operator due to technical reasons or the existence of exclusive rights.

In line with all other aspects of the procurement process, any negotiations are subject to the obligation to treat economic operators equally and without discrimination. This means, among other things, that the contracting authority cannot disclose the confidential information of one bidder to the others without agreement. This agreement must be specific, with reference to the intended disclosure of specific information, and not a general waiver.

The legislation permits the use of the open or restricted procedures at the discretion of the contracting authority. The other procedures are only permissible where specific conditions are met.

Timing for publication of documents

Contracting authorities must generally offer unrestricted direct access to the procurement documents online with effect from the date of the publication of the contract notice on FTS. The definition of “procurement documents” is broad and essentially captures all documents relevant to the carrying out of a procurement process including contract notice, technical specifications, an invitation to tender or negotiate, any document that describes the requirements of the rules of the competition and the proposed conditions of contract.

It is arguable that this obligation applies only in relation to documents that are capable of publication at the start of the process. However, the legislation does not clarify this, and this interpretation is yet to be confirmed by the courts. For this reason, it is not unusual for contracting authorities to issue some of the procurement documents as drafts at the start of the process, and reissue them in a final form at a later stage.

Time limits

The legislation sets certain minimum time limits for receipt of expressions of interest or submission of tenders. These vary depending on which procedure is used and whether certain conditions are met.

  • Open procedure – 35 days from the date on which the contract notice was submitted to FTS for publication. May be shortened to 30 days where the contracting authority accepts submissions electronically, and to a minimum of 15 days where the requirement is urgent;
  • Restricted procedure and competitive procedure with negotiation – for receipt of requests to participate in the process, 30 days from date on which the contract notice was submitted to FTS for publication, or a minimum of 15 days if the requirement is urgent. For receipt of tenders/initial tenders – 30 days from the date on which the invitation is sent, may be shortened to between 10 and 25 days in certain circumstances, include where the requirement is urgent;
  • Competitive dialogue procedure and innovation partnership – 30 days from the date on which the contract notice is submitted to FTS for publication.

Where a prior information notice (PIN) is submitted for publication between 35 days and 12 months before the publication of the contract notice, and provided also that the PIN is not used as a call for competition, certain timescales can be reduced under the open and restricted procedures or the competitive procedure with negotiation.

Contracting authorities also have an obligation to take into account the complexity of the contract and the time required for drawing up tenders when fixing time limits.


In determining whether interested parties are eligible to participate in a procurement process, a contracting authority may only take into account its suitability to pursue a professional activity, its economic and financial standing, and its technical and professional ability. The legislation sets out detailed rules on how these criteria may be taken into consideration at the selection stage of a procurement process and the type of evidence that contracting authorities may ask applicants to provide.

Contracting authorities are also required to consider whether applicants have committed certain offences that would normally require their exclusion from the competition (“mandatory exclusions” and may also exclude interested parties that find themselves in certain situations (“discretionary exclusions”). The exclusion period is five years from the date of the operator’s conviction for mandatory exclusions, and three years from the date of the relevant event for discretionary exclusions. Operators may avoid disqualification if they can demonstrate that they have taken appropriate “self-cleaning” measures.

When using one of the competitive procedures other than the open procedure, contracting authorities may restrict participation to only a small number of qualified applicants. The decision as to which applicants should be shortlisted must be made on the basis of objective and non-discriminatory criteria or rules that must be disclosed at the start of the process.

A minimum of five applicants must be shortlisted when using the restricted procedure and a minimum of three when using the competitive procedure with negotiation, competitive dialogue and innovation partnership. However, where the number of applicants meeting the relevant requirements is below the legal minimum, the contracting authority may continue with the procedure provided that there is a sufficient number of qualifying applicants to ensure genuine competition.

Evaluation criteria

The contracting authority must award the contract to the bidder with, in its view, the most economically advantageous tender. This must be determined by reference to price or cost alone, or the best price-quality ratio assessed on the basis of criteria that are linked to the subject matter of the contract. These may include qualitative, environmental or social aspects.

The criteria must not have the effect of conferring unrestricted freedom of choice on the contracting authority – this would be the case if, for example, the criteria are not clearly defined. The criteria must also ensure the possibility of effective competition, enabling an objective comparison of the relative merits of the tenders; and must be accompanied by specifications that allow the information provided by the tenderers to be effectively verified.

Transparency obligations

Selection criteria, including grounds for exclusion and the rules on the basis of which the contracting authority will determine qualified applicants that will be invited to participate in the competition, must be disclosed at the start of the process. Award criteria and their weightings must also be disclosed in the procurement documents.

There is no explicit obligation for contracting authorities to inform unsuccessful applicants, in a timely manner, of the decision to reject their application. However, it must do so, and provide the reasons for that decision, before commencing the ‘standstill period’ that must precede the award of the contract if it has not already done so. In practice, contracting authorities choose to inform unsuccessful applicants of their rejection and the reasons for this without undue delay, not least so as to limit the risk of a challenge against that decision at a later stage in the process. The contracting authority is also required to provide an unsuccessful applicant with information about the reasons for its rejection within 15 days of receipt of a written request.

Bidders must be informed about the contract award decision as soon as possible after the decision has been made. When doing so, the contracting authority must specify:

  • the criteria for the award of the contract;
  • the reasons for the decision, including the characteristics and relative advantages of the successful tender;
  • the scores, if any, obtained by the tenderer receiving the notice and of the successful tenderer;
  • the name of the successful tenderer; and
  • confirmation of when the standstill period will expire.

The notice communicating the contract award decision is normally sent electronically, although “other means” are also permissible in principle. In some circumstances, the contracting authority must also notify the contract award decision to rejected applicants and bidders eliminated at earlier stages of the competition.

Standstill period

The contracting authority must not conclude the contract with the successful bidder before the expiry of a ‘standstill period’ following the notification of the contract award decision to bidders. The length of this period depends on the means of communication used to notify the contract award decision, but must be a minimum of 10 clear calendar days where all bidders have been notified electronically. The first day of the standstill period is the day after sending the last of the standstill letters and the final day must be a working day – if not, the period has to be extended to the end of the next available working day.

Challenging an award

Applications for review of a contracting authority’s decision are heard by the UK’s national courts (for example, the High Court in England and Wales). Decisions may be appealed to the relevant appellate court. In matters of public interest, or those involving a point of law of general importance, further appeal may be permitted to the UK Supreme Court.

Complaints may also be made directly to the European Commission in relation to alleged breaches that occur in procurements launched before the end of the transition period. Under the terms of the Withdrawal Agreement, the European Commission may pursue such complaints within four years following the end of the transition period.

Issuing a claim in the courts against the award decision automatically suspends the procurement process, preventing conclusion of the contract, provided the contracting authority is made aware of the claim before the contract is concluded.

Where the contract has not been concluded, the court may order the setting aside of the unlawful decision or action, or order the contracting authority to amend any document. Where the contract has been concluded, the court may award damages to an economic operator who has suffered loss or damage due to the breach. The UK Supreme Court has clarified that damages will only be available if the breach is “sufficiently serious”, meaning that it has an impact on the outcome of the procurement process.

The court must also make a declaration of “ineffectiveness”, unless there are general interest reasons for not doing so, in certain circumstances including:

  • the contract was awarded without prior publication of a contract notice, in circumstances where one was required; or
  • there has been a breach of the automatic suspension or standstill obligations, depriving the claimant of the possibility of pursuing pre-contractual remedies, and this is combined with a breach of the Regulations that has affected the chances of the claimant obtaining the contract.

Where a declaration of ineffectiveness is granted, the contract is prospectively ineffective as from the time when the declaration is made. The court must also impose a civil financial penalty on the contracting authority of an amount that it considers to be “effective, proportionate and dissuasive”. Declarations of ineffectiveness are rare, with only two examples granted in the UK to date.

A claim seeking the remedy of “ineffectiveness” must be made within a period of six months starting from the day following the date of the conclusion of the contract; or within 30 days of the contracting authority publishing a relevant contract award notice on FTS or informing the relevant economic operator of the conclusion of the contract along with a summary of the reasons for the award.

Claims seeking a remedy other than ineffectiveness must be brought within 30 days, beginning with the date on which the claimant first knew or ought to have known that grounds for starting the proceedings had arisen. The court has the power to extend this period to up to three months where it considers that there is a good reason for doing so.

After the award

With the exception of the DSPCRs, the Regulations incorporate provisions prohibiting “substantial” modifications to contracts following their award. Modifications will generally be deemed substantial if they:

  • render a contract materially different in character from the one initially concluded;
  • introduce conditions that would have allowed or attracted additional bidders to the procurement exercise;
  • change the economic balance of the contract in favour of the contractor in a manner that was not provided for in the initial contract;
  • extend the scope of the contract considerably; or
  • involve the replacement of the original contractor.

“Safe harbour” provisions in the Regulations specify the conditions that, if met, would mean a modification would not be deemed substantive and would therefore be permissible. Some of these also require the publication of a “modification of contract” notice on FTS.

A version of this guide was previously published by Chambers & Partners.

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