Procurement Reforms 2025: Have your say on the future of public procurement

The Cabinet Office is consulting on big changes to public procurement - and suppliers have a chance to shape the outcome.

In this article, we’ve used Tussell data to break down what’s in the consultation, why it matters for your sales strategy, and how to have your say.

Skip ahead to read about:

• What is the 'Public Procurement: Growing British industry, jobs and skills' consultation?
• What is the Cabinet Office's proposal for supporting VCSEs & SMEs?
• What is the Cabinet Office's proposal for building national capacity?
• What is the Cabinet Office's proposal for social value?
• What next?

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🤔  What is the 'Public Procurement: Growing British industry, jobs and skills' consultation?

In June 2025, the Cabinet Office launched a new consultation on the future of public procurement - building on the reforms introduced by the Procurement Act 2023.

Titled Public Procurement: Growing British Industry, Jobs and Skills, the consultation sets out proposals to support three core policy goals:

• Boosting support for SMEs and VCSEs

• Building national resilience and capacity

• Embedding Social Value – with a focus on local jobs and skills

The consultation is open to government suppliers, buyers, and members of the public - all of whom are invited to review the proposals and share their views on the next phase of UK procurement reform.

🌱  What is the Cabinet Office's proposal for supporting VCSEs & SMEs?

According to the 2025 SME Procurement Tracker - published by Tussell, British Chambers of Commerce, and AutogenAI - direct public procurement spending with SMEs has remained flat at 19-20% since 2019.

The picture is particularly stark in central government. While local authorities spent 35% of their procurement budgets with SMEs in 2024, central departments spent just 11% - with some falling as low as 1%.

Source: 2025 SME Procurement Tracker

Additionally, in January, the UK National Audit Office found that four departments take between 3 and 7 weeks to pay 80% of the value of paper invoices (commonly used by SMEs).

To turn the tide, the Cabinet Office recently issued PPN 001, requiring central departments to set and report on new SME and VCSE spending targets.

This builds on measures introduced in the Procurement Act 2023, such as:

• Open Frameworks - a more SME-friendly alternative to traditional closed frameworks

• 30-day payment rules that apply across the full supply chain

Now, the Government is going further - and seeking supplier consultation on additional proposals:

• All large contracting authorities (spending £100m+ per year) must set and publish 3-year SME/VCSE spend targets, and report on them annually

• Suppliers could be barred from contracts worth £5m+ if they fail to pay their supply chains promptly

These proposals could boost certainty for tier 2 suppliers and shine a light on which public bodies are already supporting SMEs and VCSEs.

Greater transparency could be helpful - but without clear consequences for underperformance or concrete guidance on how to grow SME participation, there’s a risk that visibility alone won’t translate into meaningful change.

🏛️ What is the Cabinet Office's proposal for building national capacity?

In the new consultation, the Cabinet Office argues that “in today’s climate of global economic uncertainty, governments must bolster domestic resilience and protect national security.”

To improve national capacity, it invites feedback on two proposals:

• Giving Ministers powers to designate certain goods, works or services as critical to national security, allowing contracting authorities to apply exemptions from competitive tendering.

• Requiring a standard in-house vs. outsourced assessment for major contracts over £5m to support long-term capability and accountability in service delivery.

While these reforms may enhance state capacity, they fall short of directly strengthening the UK’s domestic private sector.

Tussell and techUK's recent Tech Titans report found that the share of public sector revenue going to the UK’s largest homegrown tech firms has fallen from 45% to 42% over the past four years - a shift towards overseas suppliers that risks undermining national capability in critical industries.

Source: Tech Titans 2025

One potential remedy could be Sarah Champion MP’s Public Procurement (British Goods and Services) Bill, which seeks to prioritise British suppliers - offering a more targeted route to building domestic private sector capacity and reversing this trend.

🌈 What is the Cabinet Office's proposal for social value?

Social value in procurement has already seen major reform in 2025.

The new National Procurement Policy Statement, alongside PPN 002, requires central government departments to align with five national missions when evaluating social value. On top of that, the Procurement Act 2023 empowers authorities to reserve contracts for local suppliers and SMEs/VCSEs - giving place-based procurement a real boost.

According to early data from Tussell, 2.7% of contracts in the first 80 days since the Act went live were set aside for local suppliers, with West Yorkshire, Lincolnshire, and Surrey leading the way.

Source: Tussell

Now, the Cabinet Office is proposing to go further. The consultation includes several key measures to strengthen how social value is embedded and measured in larger contracts:

• Mandatory award criteria: For contracts over £5m, at least one award criterion must relate to the supplier’s contribution to jobs, skills or opportunities, with a minimum 10% weighting.

• KPI reporting: Those same contracts must include at least one social value KPI in these areas – with performance tracked in contract performance notices.

• Standardisation: A new streamlined list of criteria and metrics, co-designed with suppliers and public bodies, would bring consistency and reduce admin burden.

• Location flexibility: Buyers could specify whether social value should be delivered in their local area, where the contract is performed, or where the supplier is based.

Social Value is one of the most important - yet often least understood - aspects of procurement.

These new proposals could both improve real-world outcomes and make it easier for smaller British firms to compete by scoring higher on Social Value criteria.

🤔  What next?

This consultation could reshape how billions of pounds in public contracts are awarded - with major implications for SME access, national capacity, and social value outcomes.

If you want to stay ahead of these changes, Tussell can help you turn policy into pipeline.

📊 Download the SME Procurement Tracker to dig deeper into the data behind these reforms. 👉 [Link to report]

🎯 Or book a personalised demo to see how Tussell’s market intelligence platform can help you identify opportunities, benchmark competitors, and win more public sector work. 👉 [Link to book a demo]

The consultation closes on September 5th 2025. Have your say today.