The Procurement Act 2023 has reshaped the public procurement landscape in the UK, particularly regarding supplier risk. Whether you’re a public sector buyer or a supplier bidding for contracts, understanding how the new regulations impact supplier management is crucial. In this guide, we dive into how supplier risk is identified, handled, and mitigated under the Procurement Act 2023 and how you can ensure compliance.
Are You Ready to Manage Supplier Risk Under the Procurement Act 2023?
The Procurement Act 2023 significantly changes how the public sector approaches supplier risk. With supply chain disruptions, rising ESG demands, and financial instability, authorities must proactively manage risky suppliers. But how exactly does the Act address these challenges? Here’s what you need to know.
How Are Risky Suppliers Handled Under the Procurement Act 2023?
Are you concerned about working with high-risk suppliers in public procurement? The Procurement Act 2023 provides clear rules for dealing with risky suppliers to ensure the integrity of public contracts.
Mandatory Exclusion of Risky Suppliers
Under the Act, authorities must exclude suppliers convicted of serious offences like fraud, bribery, or trafficking. But what about suppliers that present potential risk without breaking the law? The Act also allows for discretionary exclusion based on factors such as:
- Repeated contract failure
- Non-compliance with ESG or regulatory standards
- Poor financial health or ownership concerns
Suppliers who fall under these categories will find it harder to secure public contracts.
Public Debarment List for Maximum Transparency
The Procurement Act 2023 also introduces a central debarment register for suppliers with ongoing risk. This list is publicly available, enabling procurement teams to quickly verify whether a supplier has been excluded from public contracts in the past.
Under the New Procurement Law, What Due Diligence Is Required on Suppliers?
With the Procurement Act 2023, due diligence is more than a one-time process—it’s an ongoing responsibility. Here’s what public procurement teams need to do to ensure risk-free supplier relationships:
Before You Award the Contract: Pre-Contract Checks
Public sector buyers now must evaluate suppliers’ risk profiles before awarding contracts. This includes:
- Financial stability: Are they solvent or have they had a history of financial struggles?
- Past performance: Have they delivered on previous contracts or failed to meet KPIs?
- Compliance: Are they adhering to legal, environmental, and ethical standards?
This helps to ensure that only suppliers with a strong track record and low risk are selected.
After the Award: Ongoing Monitoring of Supplier Risk
Due diligence doesn’t stop after the contract is signed. The Procurement Act mandates that procurement teams must monitor supplier performance throughout the lifecycle of a contract. This includes:
- Regular risk assessments
- Monitoring of social value delivery
- Tracking KPIs to assess supplier stability and compliance
With the right tools, you can avoid surprises and take early corrective actions if issues arise during the contract execution.
What’s Holding Teams Back?
Before diving into the specifics of the Act, it’s essential to understand the real-world challenges facing procurement teams across the UK public sector:
- Lack of Clear Systems for Supplier Risk
Many public bodies lack a centralised system for assessing and monitoring supplier risk over time, making it harder to spot issues until it’s too late. - Measuring Social Value Is Still a Struggle
Although the Act mandates a minimum 10% weighting for social value, teams often lack the tools or data to quantify and track social impact throughout the contract lifecycle. - Supporting SMEs and VCSEs Is Complex
Small businesses and social enterprises are meant to have better access to public contracts, but many still face barriers in qualification, visibility, and engagement. - Managing ESG Expectations Without Tools
Environmental and governance factors are now part of supplier evaluation; however, many authorities are under-equipped to consistently track ESG performance. - Burden of Multiple Systems
Public buyers must manage multiple tools, platforms, and databases, which can lead to inefficiencies, poor visibility, and fragmented procurement processes.
These challenges make compliance with the new Procurement Act 2023 difficult, especially when managing high-risk or strategic suppliers. Now, let’s explore what the Act says.
How Does the Procurement Act Help Identify High-Risk Suppliers?
The Procurement Act 2023 equips procurement teams with the tools to identify high-risk suppliers early in the process. But how exactly does this work?
Centralised Digital Platform for Supplier Transparency
The UK government’s new centralised procurement platform will provide buyers with crucial data, including:
- Supplier Financial Health: Get real-time updates on their financial standing.
- Legal and Compliance Issues: Verify if a supplier has any outstanding legal cases or previous exclusions.
- Social value performance: Track whether a supplier meets its social value commitments.
This platform significantly enhances transparency, allowing you to quickly identify suppliers that might pose a risk to your public sector contracts.
Real-Time Data for Smarter Decisions
In addition to government platforms, third-party services provide real-time insights into supplier risk. Authorities can assess whether a supplier is likely to deliver on time and meet agreed-upon standards, helping them avoid risky partners in the first place.
Is Supplier Risk a Bigger Focus in Public Procurement After the 2023 Act?
If you’ve wondered whether supplier risk is getting more attention under the Procurement Act 2023, the answer is a resounding yes. The focus on risk management is now integral to the procurement process, and here’s why:
Why the Focus Has Shifted
- The rise of ESG concerns: Procurement teams are now expected to assess environmental, social, and governance (ESG) factors as part of supplier risk management.
- Public money at stake: With taxpayers’ money on the line, authorities are expected to minimise financial and reputational risks.
- Supply chain resilience: Disruptions, such as the COVID-19 pandemic, have demonstrated the importance of managing supplier relationships more effectively.
Managing Risk for Long-Term Success
The Procurement Act’s emphasis on supplier risk ensures that public procurement can avoid long-term issues, such as supplier failure, fraud, or environmental damage. By considering these factors upfront, public procurement teams can ensure that contracts deliver cost savings and sustainable, long-term value.
Managing Supplier Risk in Public Contracts, UK: Best Practices
Now that you know how the Procurement Act addresses supplier risk, let’s look at the best practices for managing it under the new regulations:
- Establish a Clear Risk Management Framework
Set up an internal risk management framework that aligns with the Procurement Act 2023’s requirements. This includes risk identification, evaluation, and ongoing monitoring systems that track supplier performance and the impact on social value. - Use Data to Drive Decisions
Utilise digital tools and data-driven insights to automate supplier risk assessments. This will save time and increase accuracy, enabling procurement teams to make more informed decisions more quickly. - Stay Agile and Responsive
The Procurement Act encourages continuous monitoring, not just at the pre-contract stage. Establish systems to promptly address supplier issues, including delays, financial instability, or regulatory non-compliance. - Educate Your Team
Ensure that your procurement team is trained on the new regulations under the Procurement Act. This will help them identify potential risks early and take corrective actions.
How DataGardener Can Help You Navigate Supplier Risk Under the Procurement Act 2023
As public procurement teams face growing demands for supplier risk management under the Procurement Act 2023, having the right tools is essential. Here’s how DataGardener can help:
- Most up-to-date Supplier Intelligence
DataGardener provides real-time company insights, including financial data, director history, and supplier performance. This allows procurement teams to evaluate supplier risk before awarding contracts. - Automated Risk Monitoring
DataGardener’s automated tools alert procurement teams to financial deterioration, compliance issues, or performance risks that might arise after the contract is awarded, ensuring you can respond proactively. - Enhanced Transparency for SME Inclusion
DataGardener helps identify SMEs and VCSEs that align with public procurement criteria, helping public bodies meet the Act’s requirements for diverse supply chains while minimising risks.
Final Thoughts
The Procurement Act 2023 prioritises supplier risk in public procurement. The Act ensures that public authorities are better equipped to manage supplier risk effectively by mandating clearer due diligence, continuous monitoring, and transparency. Whether you’re a public procurement officer or a supplier, understanding these new requirements is key to maintaining successful contracts and minimising financial, reputational, and operational risks.
With tools like DataGardener, you can simplify risk management, stay compliant with the Procurement Act, and ensure your contracts deliver long-term value.