On 19 June 2026, the Cabinet Office published new guidance on how public procurement should support national security and resilience in four key sectors: AI, shipbuilding, energy infrastructure and steel.
The new Procurement Policy Note (PPN 025) asks Central Departments and other authorities to take a more direct role in shaping strategic markets, rather than simply buying from the strongest or cheapest bidder.
This quick article explains what PPN 025 is, what it requires in-scope procurement teams to do, and what this 'major cultural shift' means for the public sector market and suppliers.
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Released in June 2026, PPN 025 (Protecting the UK’s national security
through public procurement) sets out new requirements for in-scope procurement teams to:
Identify upcoming procurements relevant to protecting the UK’s national security in shipbuilding, steel, AI and energy infrastructure.
Engage early with the relevant Sector Leads to ensure their commercial approach will protect the UK’s national security interests.
In some instances, PPN 025 also enables procurement teams to deploy the national security exemption in the Procurement Act 2023.
Procurement Policy Notes, or PPNs, are issued by the Cabinet Office to update public sector procurement teams on new policies, rules and practices they need to apply.
PPN 025 applies to Central Government departments, their Executive Agencies and Non-departmental Public Bodies.
The PPN does not apply to other public sector buyers. However, the policy note does strongly urge private utilities buyers and other public buyers to consider applying the PPN and accompanying guidance across energy infrastructure and other critical sectors.
AI, geopolitical conflict and energy insecurity are pushing the UK into what the Cabinet Office calls a “new era of radical uncertainty”.
To respond, it says public procurement needs a “major cultural shift”.
PPN 025 asks government to use its purchasing power more strategically - protecting national security, strengthening resilience, and reducing exposure to supply chain shocks.
That means treating foundational assets such as steel and shipbuilding, alongside emerging essentials like AI and energy infrastructure, as central to the UK’s future security and prosperity.
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The Policy Note is not without precedent. Government is already looking to use procurement to support wider national priorities - from buying from local suppliers to departmental SME and VCSE spending targets.
PPN 025 extends that logic into national security: using procurement not just to buy goods and services, but to shape the markets the UK depends on.
The sector leads under PPN 025 are as follows:
Artificial Intelligence: Department for Science, Innovation & Technology (DSIT) - reachable at: commercialandpipeline@mod.gov.uk
Energy infrastructure: Department of Energy Security & Net Zero (DESNZ) - reachable at: energyinfrastructuresectorlead@energysecurity.gov.uk
Shipbuilding: National Shipbuilding Office (MOD) - reachable at: commercialdir@dsit.gov.uk
Steel: Department for Business & Trade (DBT) - reachable at: steelstrategy@businessandtrade.gov.uk
In-scope organisations should regularly review their procurement pipelines and assess them against the requirements set by the relevant sector leads.
PPN 025 also instructs in-scope procurement teams to engage early with those leads on relevant procurements, as government moves towards a “more interventionist, market-shaping approach” across these key categories.
Out-of-scope organisations are also encouraged to contact the sector leads, particularly for large-scale strategic procurements. However, this is entirely voluntary.
According to the Cabinet Office, in-scope buyers should consider PPN 025 where a procurement meets any of the following criteria:
A) Procurements substantially related to AI in the following subcategories, with a value of £5 million or more; or
B) Procurements in which an element (or elements) of the overall requirement, for which the value is £5m or more, pertains to the following subcategories:
i. AI hardware - The physical equipment (chips, data centres, networking, power, cooling) that trains and runs AI models and services.
ii. AI related to Critical National Infrastructure - AI embedded in essential national services (energy, water, transport, finance, health), where failure could cause serious harm.
iii. AI involving sensitive or personal information - AI tools or services processing data like health, financial, or biometric records, where misuse could cause harm.
* Values should include estimates of fragmented or consumption-based spend over the procured contract’s expected life.
Any procurements in the following sub-sectors:
A) Electrical equipment - including but not limited to cables, protection and control system (including software), transformers, switchgear, and other substation subcomponents.
B) Other energy infrastructure such as generation assets, including but not limited to offshore wind infrastructure, nuclear infrastructure, solar, CCUS, hydrogen and heat pumps, as defined by the sector lead on a case-by-case basis.
All procurements for shipbuilding of over £1 million related to:
A) Shipbuilding and maritime technology, covering the multidisciplinary field concerned with the research and development, design, construction, integration, test and evaluation, operation, maintenance, and refurbishment of ships, boats, barges and other marine systems, along with the technologies and services that support maritime operations. (Maritime technology includes the equipment, systems, and innovations used for safe, efficient, and sustainable operations in the marine environment; and shipbuilding focuses on the engineering and construction of vessels, from initial design to final delivery, subsequent repair and sustainment through to disposal).
B) Technologies and skills in naval architecture, ship design, marine engineering, autonomy, digitalisation, data analytics, and artificial intelligence and their application covering a comprehensive range of surface vessels.
* Contracting authorities are also encouraged to engage with the National Shipbuilding Office (NSO) for contracts lower than £1 million.
A) All procurements with a value of £10 million or more.
B) All procurements where it is anticipated that the project will require in excess of 500 tonnes of steel.
These guidelines come directly from the sector leads and are subject to change.
The Procurement Act 2023 includes a national security exemption, which allows contracting authorities to disapply some or all of the Act’s rules where they consider this necessary in the interests of national security.
This does not give authorities a blanket right to avoid competition or transparency. The exemption has to be justified on a case-by-case basis, with a clear evidence base showing why normal procurement rules would create national security risks.
Access Tussell's online Defence Procurement Tracker
PPN 025 explains how this should work in practice across shipbuilding, steel, artificial intelligence and energy infrastructure. In-scope Central Government bodies are expected to review their procurement pipelines, identify relevant procurements, engage early with the appropriate sector lead, and consider whether the national security exemption is justified.
The guidance also makes clear that national security is now being interpreted more broadly than defence alone. Supply chain resilience, dependency on overseas suppliers, market concentration and continuity of critical capabilities can all be relevant. However, the exemption must still be used consistently with the UK’s trade agreement obligations, and authorities are expected to keep a written record of their rationale.
PPN 025 could mark a major shift in Central Government procurement.
For procurement teams, the Cabinet Office lays out the following recommended steps when procuring within the shipbuilding, steel, AM and energy infrastructure sectors:
Review upcoming procurement pipelines and identify any relevant opportunities within these sectors.
Contact the relevant sector leads where relevant procurements are identified.
Conduct market analysis and begin developing a commercial strategy.
Identify national security risks and impacts, and build a supporting evidence base.
Confirm whether the procurement is a “covered procurement” under the Act - for example, whether it is above the applicable Schedule 1 threshold or potentially subject to another exemption.
Determine whether use of the national security exemption is supported by the evidence.
Check whether the procurement is covered by any trade agreements and, if so, whether the national security exemption falls within the relevant exceptions.
Consider legal advice before launching the procurement.
It's important to note that PPN 025 and national security considerations must be considered alongside national and international legal obligations. Read the full PPN to learn more.
For suppliers, PPN 025 will increase scrutiny across four strategic sectors: shipbuilding, steel, AI and energy infrastructure.
Government wants to use procurement more deliberately to support national security, resilience and market capacity. So, suppliers that can show how they strengthen UK capability, reduce supply chain risk or support strategic industrial priorities may be better placed in relevant competitions.
As the policy beds in, the bar is also likely to rise. Buyers are being asked to look beyond price and delivery, and to consider national security risks, supply chain exposure, market resilience and long-term strategic value. That means suppliers may need stronger evidence on where their products are sourced, who they depend on, how resilient their supply chains are, and how their offer supports UK priorities.
It also makes early engagement more important. If buyers are reviewing pipelines and speaking to sector leads before launching procurements, suppliers need to spot relevant opportunities earlier - before requirements are finalised and before the formal tender process begins.
For suppliers in these sectors, the key question is no longer just “can we deliver this contract?” It is also: "can we spot opportunities early enough?" and “can we show why our offer supports the UK’s strategic resilience?”
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Possibly - but not across the board.
PPN 025 signals a clear shift in Central Government procurement across AI, shipbuilding, steel and energy infrastructure, with greater emphasis on national security, resilience and sovereign capability.
But its direct scope is limited. For local authorities, NHS bodies and many wider public sector buyers, the guidance is optional.
Even so, suppliers in affected sectors should act now: review supply chains, identify exposure to strategic dependency risks, and prepare evidence that their delivery model is secure, resilient and strategically valuable.
The biggest risk is restricted access to some opportunities if buyers decide national security justifies a narrower procurement approach. For this reason, pre-procurement early market intelligence is more important than ever.
We have a whole series of PPN explainers - click here to access them.
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