Regulation 47 of the Procurement Act 2023 restricts most public frameworks and contracts to a maximum duration of four years, unless a clear justification exists to extend beyond a four-year term. This ensures regular re-tendering, resets prices to current market levels, and prevents prolonged RPI compounding. Longer durations must be exceptional, evidence-based, and transparently approved. Adhering to this principle upholds competition, supports value-for-money obligations under HM Treasury’s Managing Public Money, and reinforces public accountability across all contracting authorities.
UK public spending in 2024–25 is projected at £1,278.6 billion, with £434 billion allocated to the procurement of goods, works, and services. Many public sector contracts and frameworks permit annual Retail Prices Index cost uplifts, currently 4.5%, adding about £19.5 billion annually to expenditure. However, suppliers’ input costs increased by only 0.8%, meaning RPI-linked clauses overstate real cost pressures. This 3.7-point discrepancy results in substantial and unjustified contractual and framework overpayments, highlighting the inefficiency of automatic indexation mechanisms in long-term public contracts and frameworks that fail to reflect genuine market movements.
If annual uplifts were limited to the
0.8% Producer Price Inflation rate rather than the 4.5% RPI, the public sector
could save approximately £16.1 billion each year. This figure equates to around
0.56% of the UK’s GDP, offering significant fiscal headroom. Such savings could
be redirected towards essential services or deficit reduction, providing both
economic and social value while strengthening public confidence in the
efficiency and accountability of government spending.
Reducing reliance on RPI-linked clauses
would also moderate national inflation. With the CPI at 3.8% in September 2025,
removing £16 billion of RPI-driven upward cost pressure could shave 0.6 percentage
points off the headline CPI rate. This would ease the cost-of-living burden,
support monetary stability, and improve public sector credibility by
demonstrating alignment between procurement policy, fiscal discipline, and
real-world economic conditions.
The Procurement Act
2023 does not impose a universal rule on the duration of contracts awarded by
public contracting authorities. However, Regulation 47 – “Frameworks: Maximum
Term” – stipulates that most framework agreements are limited to a maximum of four
years. Contracts awarded directly or through frameworks must adhere to this
policy unless a longer term is clearly justified under UK procurement
legislation and policy.
This approach reflects
a longstanding principle designed to preserve market competitiveness and
promote supplier diversity. It aligns with earlier Cabinet Office guidance,
particularly the Cross-Government Long-Term Contracting Guidance, which
cautions that excessively long contracts can restrict competition and deter new
entrants. Authorities are therefore expected to demonstrate that any departure
from the four-year norm is supported by sound commercial reasoning and remains
consistent with the principles of value for money.
Lengthy contracts risk
curtailing competitive tension and discouraging emerging suppliers.
Nonetheless, the legislation itself acknowledges that projects entailing
substantial capital investment or innovation may reasonably warrant extended
terms. Contract reviews should be documented to
demonstrate compliance with value-for-money obligations under HM Treasury’s
Managing Public Money guidance.
Where
such justification exists, contracting authorities may adopt longer durations,
provided they maintain competitiveness and deliver demonstrable value for money
throughout the term. Guidance emphasises that any deviation from standard
durations should be justified by sound economic rationale, underpinned by
market analysis, operational risk assessment and documented transparency. In
the absence of such evidence, authorities risk legal challenge or public
scrutiny.
A
persistent worry is that some authorities may deliberately exceed the recognised
benchmark of a four-year duration to evade procedural obligations under the
Act. Although not inherently unlawful, such practices may contradict the Act’s
underlying principle of competitive procurement, effectively entrenching
existing suppliers and delaying re-tendering. The enforcement framework intends
to identify and contest such strategies when they lack objective justification.
Overview of the UK Procurement Act 2023
The
UK Procurement Act 2023 brings together and reforms the laws governing how
public bodies and certain utilities procure goods, services, and works. It
includes provisions on limiting contract durations, reflecting the principle
that regular competition safeguards value for money, drives innovation, and
avoids over-reliance on incumbent suppliers. These measures aim to ensure
markets remain open and competitive.
Under
the Procurement Act 2023, Regulation 47 - “Frameworks: Maximum Term”, most
framework agreements are capped at four years, with specific sectors, such as
defence, security, and utilities, permitted to extend up to eight years,
subject to justification. This unified approach replaces the previous patchwork
of regulations, simplifying compliance and improving consistency across the UK.
Transparency requirements oblige authorities to disclose both the length of
contracts and the reasons for longer terms, enabling greater scrutiny.
The legislation applies to contracting authorities across the UK,
including central government departments, local authorities, NHS bodies, and
certain public corporations. The intention is to create a consistent
procurement landscape, replacing the previous patchwork of rules under the
Public Contracts Regulations 2015, the Utilities Contracts Regulations 2016,
the Concessions Contracts Regulations 2016, and the Defence and Security Public
Contracts Regulations 2011. This uniformity is designed to simplify processes
and enhance compliance rates across all sectors.
Crucially, the Procurement Act 2023 also introduces enhanced
transparency requirements for contract awards, ensuring that both the duration
and rationale for the chosen term are disclosed in procurement notices. These
obligations make it more challenging for contracting authorities to utilise
extended contract durations without a clear justification. They also create a
public record, enabling scrutiny from competitors, oversight bodies, and the
general public.
The Procurement Act 2023 represents a decisive shift from the EU-derived
Public Contracts Regulations 2015, which closely mirrored the 2014 EU
Procurement Directives. Whereas the PCR 2015 imposed more rigid procedural
requirements and harmonised thresholds across member states, the new Act grants
UK authorities greater flexibility over contract duration and justification.
This divergence reflects the government’s post-Brexit objective of simplifying
procurement, promoting innovation, and tailoring rules to domestic market
conditions while retaining core principles of transparency and fairness.
In contrast, the EU’s 2014 Procurement Directive (Directive 2014/24/EU)
established a far more prescriptive framework, mandating uniform thresholds and
procedural harmonisation across Member States. This rigidity ensured
consistency but limited national discretion to tailor rules to specific market
conditions. The UK’s Procurement Act 2023 departs from this model by
introducing a principles-based system that prioritises flexibility, allowing
contracting authorities to justify longer terms based on operational or
economic rationale rather than strict procedural constraints.
Key Provisions Regarding Contract Length
The UK Procurement Act 2023 establishes that the maximum permitted
length of a contract should be determined by its subject matter, operational
requirements, and market conditions. The general ceiling for contracts within
the public sector is not prescribed within the Procurement Act 2023. The
operational length of all supplier contracts must be relevant and justified by
the complexity and subject matter of the products, services or works being
procured.
Contracting authorities must incorporate compliance measures into their
internal procurement procedures, ensuring that the duration of contracts is
considered at the planning stage. These measures should include mechanisms for
monitoring contract performance against intended benefits, as well as assessing
whether early termination or retendering might offer better value. Failing to
fulfil these obligations can expose authorities to legal and reputational
risks.
The Act does allow for exceptions where longer terms are demonstrably in
the public interest. Examples include situations where a more extended contract
is necessary to justify a significant upfront investment by the supplier, or
where operational continuity is critical, such as in emergency services,
defence, or essential utilities. In these cases, the contracting authority must
publish a detailed justification, supported by evidence of market testing and
financial analysis.
Under the EU’s 2014 Procurement Directives, framework agreements were
capped at a maximum of four years except in justified cases, mirroring the UK’s
current benchmark. However, the EU regime provided less explicit flexibility
for extended terms justified by innovation or investment recovery. The
Procurement Act 2023 preserves the four-year norm but introduces more
transparent accountability through transparency notices and justification
requirements. This marks a refinement rather than a departure, maintaining
competition while affording contracting authorities practical discretion.
A particular focus of policy discussions has been the deliberate use of
contracts exceeding four years to avoid triggering the procedural requirements
of the Act. While the legislation does not outright prohibit such agreements,
it does require that they withstand a test of objective necessity. Where a more
prolonged duration cannot be justified on operational, financial, or strategic
grounds, it may be deemed contrary to the spirit of the legislation, even if
technically compliant.
Best Practices for Compliance
Contracting authorities seeking to comply with the Procurement Act 2023
should adopt structured approaches to contract planning, ensuring that duration
decisions are supported by clear, documented reasoning. This includes assessing
operational needs, market conditions, and investment requirements before
determining the appropriate term. By embedding these assessments early in the
procurement process, authorities reduce the risk of inadvertently breaching
limits based on commercial best practice and strengthen their ability to
justify any departure from the default four-year term.
One key best practice is the inclusion of well-defined early termination
provisions. Such clauses enable authorities to respond flexibly to changes in
demand, technology, or supplier performance without being tied to outdated
arrangements. Termination rights should be carefully balanced to protect the
authority’s interests while avoiding overly onerous conditions that could deter
market participation. Clarity on post-termination obligations, such as asset
transfer or knowledge handover, can further protect service continuity.
Where long-term service continuity is necessary, authorities may include
carefully drafted extension options. These should be subject to the same
scrutiny as the original term and should only be exercised where doing so
demonstrably offers better value than re-tendering. This approach is
particularly relevant in situations such as emergencies or significant market
disruption, where re-procurement would not be practical within the original
term limits. However, reliance on such extensions without a valid justification
risks undermining the policy intent of the Act.
To counter the temptation to structure contracts over more than four
years to reduce re-tendering frequency, authorities should treat any term
beyond this threshold as an exception rather than the norm. Internal governance
should require senior approval, accompanied by evidence demonstrating that
operational needs cannot be reasonably met within a shorter period. This
ensures that longer terms are reserved for genuinely strategic contracts, not
as a means of bypassing competitive procurement requirements.
Stakeholder Perspectives
Government departments, private-sector suppliers, and legal advisors
each hold distinct views on the Act’s provisions regarding the maximum contract
length. Many welcome the increased certainty provided by the benchmark of a
four-year duration, as it reduces ambiguity and promotes
fairness in the tendering process. Others, however, express concern that the policy standard of
a four-year maximum term can constrain complex
projects where the commercial logic favours longer commitments, particularly in
infrastructure, defence, or large-scale IT deployments.
From a supplier perspective, fixed maximum contract durations based on the general principle
of a four-year threshold encourage opportunities for
market entry by reducing the dominance of incumbent suppliers. This supports
innovation and potentially enhances value for money. However, suppliers engaged
in capital-intensive projects may regard shorter terms as financially unviable,
particularly where investment recovery requires extended delivery periods. In such
cases, the Act’s exception mechanisms become critical in maintaining commercial
feasibility.
Legal experts note that the Act’s provisions impose both procedural and
evidentiary burdens on contracting authorities. The requirement to justify
longer contract terms in procurement notices introduces a higher standard of
transparency, which in turn may increase the likelihood of challenges from
competitors. Contracting authorities must therefore balance the operational
case for extended contract terms against the litigation risk associated with
perceived non-compliance.
There is also recognition that some authorities have historically relied
on contracts of more than four years duration to avoid triggering
re-procurement obligations. The Act’s new transparency measures, combined with
the risk of public and parliamentary scrutiny, make such practices more
difficult to sustain. Stakeholders broadly support this tightening, viewing it
as a necessary measure to ensure procurement remains open, competitive, and
aligned with public interest.
Government Agencies
For government agencies, the recognised benchmark of a four-year
duration requires significant adaptation of
procurement processes. Many departments previously accustomed to awarding
contracts well beyond the policy standard of a four-year maximum term must now reassess their approach to contract structuring. This includes
considering phased delivery models, shorter framework agreements, and more
frequent market engagement to comply with the Act’s requirements.
The Cabinet Office’s cross-Government Commercial Function plays a
central role in ensuring that agencies understand and apply the new rules
consistently. This includes issuing guidance, providing training, and
monitoring compliance across departments. The emphasis is on avoiding supplier
entrenchment and ensuring that public contracts remain contestable over time.
The reforms are also intended to address historic shortcomings in
oversight, where contracts, particularly in sectors such as emergency services
and social care, were allowed to run for extended periods without meaningful
review. By imposing stricter limits and setting a benchmark of four years, the
Act aims to prevent outdated service models from persisting simply because re-procurement was deferred for administrative
convenience.
Where agencies seek to exceed four-year terms, internal governance
should require ministerial or senior-level approval supported by a robust
business case. This reduces the scope for agencies to use longer terms than the criterion, setting
a four-year upper limit as a shortcut to avoid
compliance with the Procurement Act’s competitive procedures. The approach
reinforces accountability, ensuring that such departures are the exception
rather than the rule.
Private Sector
For private-sector suppliers, the recognised benchmark of a four-year
duration presents both challenges and opportunities. On
the one hand, shorter contract cycles create more frequent bidding
opportunities, enabling new entrants to compete for contracts that might
otherwise remain locked to incumbent suppliers. This fosters a more dynamic
marketplace and can reward innovation.
Conversely, suppliers undertaking significant upfront investment may be
deterred from bidding for contracts if the maximum term is insufficient to
recoup costs. The Act mitigates this by allowing extensions in cases where
capital recovery or operational viability cannot be achieved within the policy standard of
a four-year maximum term. Such exceptions require
evidence and formal approval to ensure they are used appropriately.
From a contractual negotiation standpoint, suppliers may seek to build
greater flexibility into pricing models and performance metrics to accommodate
shorter contract terms. This may include structuring payment schedules to
accelerate cost recovery or adopting a modular service delivery approach that
can be scaled over successive contract periods.
The private sector is also alert to the risk that authorities may still
attempt to circumvent the spirit of the Act by issuing long contracts,
sometimes exceeding the four-year threshold, under the
guise of operational necessity. Where such justifications appear weak,
suppliers excluded from these contracts may be more willing to pursue legal
remedies, knowing that the Act strengthens their grounds for challenge.
Legal Experts
Legal practitioners emphasise that compliance with the general principle
of the four-year threshold provision
is not purely a contractual matter but a government policy requirement.
Breaching the
general rule of a four-year threshold without
proper justification can render a contract void or expose the authority to
damages claims from aggrieved suppliers. The potential for judicial review underscores
the importance of robust decision-making and thorough documentation.
The Act allows exceptions for specific services, including research and
development, defence, and security, where the operational case for a longer contract
term is clear. However, these exceptions are narrowly drawn and must be
interpreted in line with the Act’s overarching objectives of fairness and
transparency. Authorities cannot rely on them as a blanket exemption.
Legal advisors also caution against “evergreen” contract extension
clauses that effectively bypass the benchmark of a four-year duration limit. While such clauses may appear to comply on paper, their
cumulative effect can contravene the Act if they prevent meaningful competition
for extended periods. Authorities must therefore consider both the individual
term and the aggregate duration resulting from such contract extensions.
When contracting authorities adopt contract terms that exceed the general principle
of a four-year threshold, legal scrutiny is
heightened. Advisors typically recommend that authorities conduct market
testing, risk assessments, and economic evaluations to justify the decision.
This reduces the risk of challenge and ensures alignment with the Act’s
compliance framework.
The Inappropriate Use of Third-Party Framework Agreement Providers
Third-party framework agreement providers have become a prevalent
mechanism within UK public procurement. These organisations act as
intermediaries, offering pre-established contractual arrangements that public
sector bodies can access without having to undertake a direct competitive
tender process. Their appeal lies in perceived convenience, reduced
administrative effort, and the assurance of pre-vetted suppliers. However, this
arrangement often raises questions about transparency, compliance, and adherence
to the statutory duties imposed upon contracting authorities under the
Procurement Act, particularly regarding open and competitive procurement
principles.
Such providers often operate as independent commercial entities,
separate from the contracting authority. They compile frameworks with a panel
of suppliers, offering services or goods under pre-agreed terms and conditions.
While this approach may reduce procurement lead times, it may also reduce the
level of competition and innovation available in the market. The extent to
which these arrangements achieve genuine cost savings and deliver value for
money has been the subject of debate within both the public and private
procurement sectors.
The growing reliance on such providers has prompted increased scrutiny
from auditors and regulatory bodies. Concerns have been raised about whether
the use of these frameworks aligns with the statutory requirement for
contracting authorities to act transparently, treat suppliers equally, and
avoid distorting competition. In some cases, the use of third-party frameworks
has been perceived as a means to circumvent legislative safeguards designed to
protect public funds and ensure fair market access for suppliers.
Critics argue that, while the frameworks are lawful in principle, their
application can sometimes result in outcomes that are contrary to the spirit of
UK procurement law. This includes instances where contracting authorities
bypass competitive processes entirely, awarding high-value, long-term contracts
via frameworks without rigorous challenge, thus potentially undermining the
open market and the equitable treatment of suppliers, particularly smaller
enterprises seeking fair access to public sector opportunities.
Consumer Price Index (CPI) Annual Pricing Clauses
One notable feature in many third-party framework agreements, as in the
vast majority of public contracts and framework agreements, is the inclusion of
Consumer Price Index (CPI) annual pricing clauses. These clauses allow
suppliers to adjust their prices annually in line with inflation, as measured
by the CPI, or in the worst-case scenario, the Retail Price Index (RPI), which
is generally the higher of the two pricing mechanisms. While this provides
suppliers with financial stability and protection from cost fluctuations, it
can significantly impact the total expenditure of the contracting authority
over the contract’s life, especially when frameworks extend for multiple years
without competitive re-tendering.
The automatic application of CPI uplifts may reduce incentives for
suppliers to improve efficiency or deliver cost savings. Unlike competitive
tendering processes, which drive price competition, such clauses can create a
‘cost ratchet’ effect, where prices only move upward regardless of market
conditions. This effect can be particularly problematic in markets where
technological advancements or economies of scale might otherwise lead to cost
reductions over time.
From a fiscal oversight perspective, these clauses can undermine
value-for-money principles in HM Treasury’s Managing Public Money guidance.
Contracting authorities should challenge cost increases and ensure adjustments
are justified by market conditions or supplier performance. Automatic CPI
uplifts without benchmarking risk breach this obligation. Relying on CPI or RPI-linked
pricing in long-term agreements can lead to inflated public spending,
complicate budgeting, and invite scrutiny from auditors and oversight bodies.
It also raises broader questions about allocating inflation risk between the
public and private sectors in publicly funded contracts.
Circumvention of Competitive Procurement Requirements
A central criticism of specific third-party framework arrangements is
that they are used to circumvent the requirement for contracting authorities to
undertake competitive procurement in compliance with the Procurement Act. By
joining an existing framework, an authority can directly award a contract to a
supplier without issuing an open tender, thus avoiding the time and scrutiny
associated with a regulated procurement process.
While third-party framework usage is permitted under UK procurement law,
it aims to streamline procurement in genuinely repetitive and standardised
areas, rather than bypassing competition entirely. Misuse occurs when
authorities select frameworks primarily to avoid the administrative effort,
oversight, or challenge that comes with full tendering. This can lead to
anti-competitive outcomes and reduce opportunities for new market entrants to
win public contracts.
Such practices can also undermine the policy objectives underpinning
procurement legislation, which aim to promote innovation, enhance supplier
diversity, and deliver improved public outcomes through fair competition. When
frameworks are repeatedly used for bespoke or high-value requirements, this can
distort the market, favour incumbent suppliers, and reduce incentives for
suppliers to offer competitive pricing or improved service quality.
Regulatory bodies, including the National Audit Office, have highlighted
the risk that over-reliance on such frameworks may erode public trust in the
procurement process. If suppliers and the public perceive that contract awards
are predetermined or lack transparency, confidence in public sector procurement
diminishes, potentially deterring capable suppliers from participating in
future tenders.
Non-Compliance with HM Treasury’s ‘Managing Public Money’ Guidance
HM Treasury’s Managing Public Money sets out the value-for-money
obligations for all public expenditure, emphasising the need for efficiency,
effectiveness, and economy. One area of concern is that some third-party
frameworks permit contracts of more than four years without clear
justification, contrary to best practice recommendations. Extended durations,
especially where they are non-competitive, can lock the public sector into
unfavourable terms and restrict flexibility to adapt to changing needs or
market innovations.
Long-term commitments without market testing risk embedding outdated
technology, service models, or pricing structures. Over time, this can erode
service quality and value, as suppliers may have little incentive to innovate
or remain cost-competitive. The Treasury’s guidance emphasises the importance
of periodic review and re-procurement to ensure ongoing alignment with public
interest objectives and market developments.
The issue is compounded when frameworks are structured to allow
‘call-off’ contracts with lengthy durations that extend well beyond the
original framework term. In such cases, the authority may be bound to suppliers
under conditions that have not been tested against current market offerings,
undermining both value for money and the fairness of competition.
Failure to comply with the principles of Managing Public Money can have
significant consequences, including audit criticism, reputational damage, and
potential legal challenge. Contracting authorities must be able to demonstrate
that any departure from competitive procurement or standard contract durations
is objectively justified and consistent with their fiduciary duty to safeguard
public funds.
Future Trends in Procurement Practices
The Procurement Act 2023 is expected to drive a cultural shift towards
shorter, more agile procurement cycles. Contracting authorities will
increasingly design contracts with modular or phased delivery, enabling
competitive re-tendering of discrete project stages. This approach aligns with
market trends favouring flexibility and rapid adaptation to technological
change. Compared with the EU framework, the UK’s Procurement Act 2023 signals a
broader policy shift towards “commercial agility.”
While both systems retain the principles of equal treatment and open
competition, the UK model now favours outcome-based governance rather than
prescriptive process control. This approach aligns with global trends in
procurement reform, emphasising accountability through data transparency and
post-award scrutiny, rather than rigid procedural uniformity.
The result is a system designed for flexibility without sacrificing
probity. There is likely to be increased use of framework agreements with
shorter call-off periods, ensuring that suppliers remain incentivised to
perform well throughout the term. Frameworks may also be structured to allow
new suppliers to enter at defined intervals, further enhancing competition.
The Act’s emphasis on review mechanisms means that maximum term limits
will not remain static. Ministers retain the power to extend or reduce limits
in specific sectors, and ongoing consultation with stakeholders is expected to
refine the rules. This could result in more nuanced contractual term structures
tailored to particular industries or project types.
Over time, it is anticipated that the deliberate use of contracts
exceeding four years without robust justification will become less common, both
due to increased scrutiny and the availability of more flexible contracting
models. Authorities that embrace this shift are likely to benefit from improved
value for money and stronger supplier engagement.
Monitoring and Evaluation Mechanisms
Effective enforcement of the Act’s principle of a four-year threshold
depends on robust monitoring and evaluation.
Contracting authorities should maintain detailed records of contract durations,
including the rationale for any term exceeding four years. These records
support internal audit processes and demonstrate compliance with oversight
bodies.
Data collection is significant for contracts that exceed the standard four-year
maximum. Authorities must provide evidence to demonstrate why such terms were
necessary, citing market conditions, operational requirements, and investment
recovery considerations. Failure to maintain adequate records can undermine the
authority’s position in the event of a challenge.
Regular internal reviews should be conducted to assess whether long-term
contracts of above four years remain aligned with strategic objectives. This
includes evaluating whether market changes, technological advances, or shifts
in demand justify early termination or re-procurement. These reviews help
ensure that contracts do not become misaligned with public interest over time.
Authorities should also establish governance procedures requiring
senior-level sign-off for any contract exceeding four years. This creates an
additional safeguard against using extended terms to avoid re-tendering
obligations and reinforces the principle that such durations are exceptional
rather than standard practice.
Recommendations for Policy Improvement
While the Procurement Act 2023 strengthens governance over contract
durations, there is scope for refinement. One recommendation is the development
of sector-specific guidance on what constitutes acceptable justification for
exceeding the four-year term limit. This would help authorities make consistent
decisions and reduce uncertainty for suppliers.
Another improvement could involve mandatory periodic reviews for
contracts exceeding four years, ensuring that authorities remain accountable
for the continued necessity of the extended term. Such reviews could be tied to
reporting obligations to Parliament or an independent oversight body.
Consideration might also be given to greater alignment between contract
duration rules and broader government policy objectives, such as
sustainability, innovation, and resilience. Where longer-term objectives are
supported, exceptions could be framed in a way that safeguards competition
while enabling strategic outcomes.
Finally, enforcement mechanisms could be strengthened by introducing
proportionate penalties for authorities found to have used extended contractual
terms without adequate justification. This would further deter attempts to use
contracts exceeding four years as a means of avoiding competitive procurement
procedures.
Summary – Framework Agreement Call-Off Contracts
The UK Procurement Act 2023 introduces significant changes to how public
sector bodies manage framework agreements and call-off contracts. One of its
most notable features is the strict limitation on contract durations,
particularly those exceeding four years. Under the new regime, any extension
beyond this period must be fully justified and documented. This approach aims
to strengthen competition, transparency, and accountability in public
procurement, ensuring that contracting authorities avoid complacency and
continually seek the best value for taxpayers’ money.
The legislation encourages authorities to plan their procurement
activities with greater foresight. Contracting entities must now ensure that the
duration of each agreement aligns directly with its operational purpose and
risk profile. HM Treasury’s Managing Public Money guidance remains a critical
reference, requiring clear evidence that contract terms are proportionate and
justified. Authorities must demonstrate that longer durations serve genuine
practical needs, such as the delivery of complex projects or maintaining
essential services, rather than simply avoiding the administrative burden of
re-tendering.
Although the Act allows some flexibility for exceptional cases, the
threshold for justification is considerably higher. Longer-term contracts may
still be approved where there are compelling reasons, such as substantial
upfront investment, specialised supply chains, or the need for continuity in
public safety or healthcare services. However, these exceptions must be
thoroughly evidenced and approved through proper governance channels. The clear
message is that contract duration should be dictated by necessity, not
convenience, ensuring alignment with principles of fair competition and
responsible stewardship.
Compliance with the Act requires procurement professionals to integrate
these new standards into every stage of the contracting process. This includes
embedding duration considerations within strategy development, tender
documentation, evaluation criteria, and contract management frameworks.
Authorities that adopt proactive governance and transparent reporting will be
better equipped to strike a balance between efficiency and legal compliance.
Conversely, those that fail to adapt may face legal scrutiny, audit findings,
or reputational damage, particularly where contracts appear to circumvent the
spirit of competitive procurement.
Ultimately, the policy on maximum contract length is not merely
procedural but serves as an essential safeguard for public value. By mandating
regular competition, the Act fosters innovation, market diversity, and
continuous improvement among suppliers. These reforms help ensure that public
procurement remains dynamic and accountable, reinforcing public confidence in
how taxpayer funds are spent. The emphasis on fairness, openness, and periodic
renewal underscores the UK government’s broader commitment to modernising
procurement in the public interest.
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