The Procurement Act 2023: new powers for investigations and debarment from all public procurement

This is the first in our series of cross-sector articles considering the impact of the Procurement Act 2023 (the Procurement Act), which came into force on 24 February 2025 and introduces changes to how public procurements are awarded, managed and investigated. This article reviews the new powers awarded to public bodies for investigations and debarment under the Procurement Act and considers how they may be utilised.

The Procurement Act aims to enhance transparency and accountability in UK public sector procurement. One of the key changes introduced by the Procurement Act is the establishment of a new centrally managed and publicly available Debarment List of excluded or excludable suppliers. Suppliers placed on this list risk being banned from participating in all UK public procurements for up to five years, leading to severe commercial – and reputational – damage, with spending on UK public sector procurement estimated to have reached £447.7 billion in 2024/2025.

How has the exclusion regime changed?

Debarment is not a new concept and existed under the previous procurement regime. However, the Act has transformed the exclusion process, including: 

• introducing the Debarment List: a centralised, publicly available list of suppliers that must be excluded from all public contracts or are excludable at the discretion of the contracting authority. This is a significant change, designed to provide greater visibility to contracting authorities of those suppliers who have been excluded from tenders 

• expanding the mandatory grounds for exclusion set out in Schedule 6, including failing to co-operate with an investigation, certain criminal offences including corporate manslaughter, competition law infringements and threats to national security

• expanding the discretionary grounds for exclusion set out in Schedule 7, including environmental misconduct, professional misconduct, lack of integrity and breach (or poor performance) of prior contracts with public authorities

• introducing scrutiny of a supplier's broader supply chain: when considering whether a supplier is excluded or excludable, the conduct of not only the supplier itself but also its suppliers, subcontractors, and other associated or connected companies and persons is relevant; suppliers must exercise heightened diligence in scrutinising their supply chains to avoid debarment.

Where a supplier is earmarked for inclusion on the Debarment List, they may be subject to an investigation initiated by a contracting authority or Minister. This investigation aims to determine whether the exclusion grounds apply.

While certain exclusion grounds, such as 'integrity' or 'poor performance' may be vulnerable to a broad discretion in their application, suppliers must be given the chance to make representations and provide supporting evidence as to whether the grounds apply, and whether the relevant circumstances are likely to occur again. Suppliers must actively engage with the investigation process, not least because failure to co-operate may itself be enough to justify entry on the Debarment List. However, difficulties in assessing the grounds may arise where contractual performance is disputed – particularly where a 'no-admission' settlement has been reached between the parties.

How aggressively debarment investigations will be pursued by a contracting authority, or a Minister, will be an important issue to review and scrutinise as the public sector, as much as the private sector, start to grapple with these new rules and powers. Moreover, any debarment of prominent contractors that are heavily integrated within existing supply chains has the potential to cause significant disruptions, raising questions as to whether discretionary exclusion grounds will be enforced by contracting authorities in such circumstances.

Investigation and debarment of suppliers involved in the Grenfell tragedy

On 26 February 2025, two days after the Procurement Act came into force, the government announced its intention to initiate the process of adding seven contractors accused of poor conduct associated with the Grenfell tragedy to the Debarment List. On the same day, the Cabinet Office signalled its objective to "make early use of the new powers in this [Procurement] Act that enable us to take stronger and broader action in relation to supplier misconduct" and "act swiftly and decisively" in doing so. This announcement follows the government's warning letters sent to those organisations found by the Grenfell Tower Inquiry to have been at fault.

The UK government appears to currently only be investigating these contractors for 'professional misconduct', which is a discretionary exclusion ground. While this will be a judgment call for the UK government, it appears likely to be established based on the severity of the criticism by the Grenfell Tower Inquiry, which found, for example, that certain suppliers demonstrated "systematic dishonesty" and used "deliberate and sustained strategies to manipulate the testing processes, misrepresent test data and mislead the market". Moreover, further information revealed during the investigations – or non-compliance with the investigation itself – could present grounds for mandatory exclusion.

However, when evaluating whether exclusion grounds apply to a supplier, any events that occurred before either a three-year or five-year period prior to the decision – depending on the specific ground for exclusion – must generally be disregarded. The Grenfell tragedy occurred over seven years ago. It is therefore likely that the government will rely on the interpretation of the term 'events' to mean that the relevant period commences only from the date of publication of the Phase 2 Report published on 4 September 2024, on the basis that this was when the suppliers' misconduct became evident. Nevertheless, authorities may independently announce supplier exclusions outside of the Procurement Act; for example, the Royal Borough of Kensington and Chelsea has already stated that contractors and products implicated in the report will not be used in its future projects.

Comments

The UK government's Remediation Acceleration Plan underscores the wider intention shown to utilise its new powers to stop the "most egregious" companies being awarded government contracts and introduce "sufficient deterrents" with "proportionate consequence". However, all suppliers must carefully scrutinise their compliance – and that of their 'connected' entities – to avoid debarment. The precise mechanics of the investigations under the Procurement Act and the debarment process are still to be clarified, but robust, swift statements indicate a clear intent to use these new tools at pace. 

This also demonstrates that building safety (and failures in that regard) remain front and centre of the UK government's focus.

If you would like to hear more, please join us at our public procurement webinar on 5 June 2025 which forms part of our webinar series: Regulation for innovation. The webinar will address how procurement changes may allow for greater innovation.

Our public procurement article series also explores other considerations in more detail. Please contact Matt Evans or a member of our team if you want to discuss this or any other issue.