Procurement Act 2023 — Direct award: what has changed?

While the new Procurement Act brings few changes to the concept of direct award, it’s important to understand the four sections within it that explain how direct awards are made. 

Here, Michael Winder and Sam Thompson from our procurement team examine the direct award of public contracts and what has changed under the Act ahead of its implementation in February 2025.

Current regime — Public Contracts Regulations 2015

Direct award is a familiar concept to contracting authorities under the Public Contracts Regulations 2015. It’s intended by the existing regime and established case law that the grounds for direct award are limited and should only be considered where there’s particular justification for doing so. 

The direct award of a public contract comes via Regulation 32 — the Negotiated Procedure without Prior Publication. This regulation sets out the tightly drawn grounds for its use — the most frequently used of which (in our experience) are ‘genuine urgency’ and on the basis of ‘exclusive rights’. 

This route to direct award remains a procurement procedure and is therefore still subject to the obligation to issue a contract award notice. Contracting authorities will need to justify their use of this procedure. 

New regime — Procurement Act 2023

The good news for contracting authorities is that the direct award regime under the Act remains largely the same as the current regime.

The Act sets out four sections around how direct awards are made.

1. Direct award in special cases — section 41

Contracting authorities may make a direct award in circumstances that meet one of the justifications listed in Schedule 5 of the Act, such as ‘urgency’, ‘necessary for defence and security’ or ‘required for novel prototypes and development’. As such, the justifications in Schedule 5 of the Act are tightly drawn to avoid contracting authorities using them over a compliant procurement process.

Since these largely reflect the existing regime, they should be familiar to contracting authorities.

Section 41 also sets out provisions for awarding contracts to ‘excluded suppliers’ — those who would normally fail the mandatory and discretionary exclusion criteria required by both the current Regulations and the new Act — where there’s an overriding public interest. Such public interest includes managing critical national infrastructure, defence security and economic stability and where there’s an extreme and unavoidable urgency but the contract can’t be performed within the necessary timeframe by a supplier that isn’t excluded. 

2. Direct award to protect life — section 42

This permits a Minister of the Crown to provide — through the use of regulations — that specified public contracts may be directly awarded where it’s considered necessary to: 

• protect human, animal or plant life or health
• protect public order or safety. 

While the wording provides discretion to the Minister, it also imposes an obligation on them to keep regulations made under this section under review. If a direct award is no longer necessary, the regulations will be revoked. Given the COVID-19 pandemic, it’s understandable that a provision of this nature has been included in the Act. It reflects learning where the use of ‘general urgency’ as a ground for direct award during the pandemic wasn’t always straightforward.

3. Direct award due to market failure — section 43

This section permits contracting authorities to switch to a direct award where there are no suitable responses in a competitive procedure. This mirrors an existing ground for the use of regulation 32 under the current Regulations.

4. Transparency notices — section 44

Contracting authorities are now required to publish a specific transparency notice in respect of any direct award. This sets out that the contracting authority intends to directly award a contract pursuant to the provisions of the Act. The specific information to be inserted into the notice is detailed in the Procurement Regulations 2024, which come into effect at the same time as the Act. 

As noted above, contracting authorities are supposed to issue a contract award notice for permitted direct awards under the current Regulations. The new Act is merely clearer in this regard and now has a dedicated notice to use. 

How do these changes impact you? 

As noted above, the overall premise of direct award under the Act aligns largely with the existing regime. The grounds for making a direct award continue to be tightly drawn, with the intention that the use of direct award is saved for exceptional circumstances. 

It’s unlikely that the changes set out above will cause contracting authorities much confusion or concern. In fact, the provisions are likely to be clearer than under the current regime. However, it would be prudent for contracting authorities to become familiar with — or refresh their understanding of — the justifications for making a direct award under the Act. 

Talk to us

All contracting authorities are currently in the same position and need to better understand the Act in order to comply with it. 

Our experienced public procurement lawyers are on-hand to assist with the preparation for the new Procurement Act.

Talk to us by completing our contact form below.