The Public Procurement Process Explained
Fact checked by procurement expert Grahame Steed
Introduction
Public procurement is an essential mechanism for society to thrive. In the UK, public sector procurement spend was £407 billion, which is a 5% increase from the previous year. Statistics show this spend is set to increase even more in the coming years, demonstrating its importance.
A robust legal framework governing public procurement is crucial to ensure adherence to regulations and policies that promote transparency, competition, and value for money.
In this comprehensive guide, we will explain the public procurement process and help suppliers understand the key stages involved. With expert insights from procurement experts and our subject matter experts, suppliers will gain a thorough understanding and be well equipped to grow their public sector strategy.
What is Public Procurement?
Public procurement is the process of goods, works and services being purchased with public funds by public authorities for the benefit of society.
This involves the procurement of a vast range of items including local infrastructure, medical supplies, public buildings and defence equipment. Published budgets suggest UK procurement spending will increase by 10% in 2024/5.
Public procurement contracts carry significant financial implications and responsibilities in ensuring sustainable and socially responsible procurement practices.
With such a wide scope, multiple stakeholders are involved in the public procurement process.
At a top level, these include:
Public sector buyers – this includes the government, local government, public authorities, the NHS and the Ministry of Defence (MOD).
Suppliers – there are a wide range of suppliers to the public sector, both large organisations and SMEs.
Regulatory bodies – in the UK, this includes organisations like the Crown Commercial Service (CCS) which are instrumental in public sector procurement policy.
Read our blog for an in-depth guide on the key stakeholders involved.
The UK government states that ‘all public procurement must be based on value for money, achieved through competition’.
It is critical that public procurement is transparent and competitive to ensure fairness and the best outcome for all.
Key Principles of Public Procurement
For public procurement to be fair and successful, there are key principles that must be followed.
These include:
Value for Money
Fairness and Transparency in the Bidding Process
Sustainability and Social Value Considerations
Adherence to Relevant Laws and Regulations
While public sector procurement emphasizes compliance, fairness, and transparency, private sector procurement operates under different rules and regulations.
Read our guide on the key principles of public procurement
Watch our webinar on ‘The Changing Landscape for Social Value in Public Procurement’
Public Sector Procurement Policy and Legislation
EU Procurement Directives and UK Regulations
The EU procurement directives and UK regulations are foundational to public sector procurement policy and legislation. These directives aim to create a level playing field for businesses across Europe, ensuring that procurement processes are transparent, fair, and competitive. In the UK, these directives are transposed into national legislation through regulations such as the Public Contracts Regulations 2015, Utilities Contracts Regulations 2016, and Concession Contracts Regulations 2016.
These regulations apply to various contracting authorities, including government departments, local authorities, and certain public utility operators. They govern how these entities purchase goods, works, and services, setting out minimum harmonized rules to ensure transparency, fairness, and equal treatment for all bidders. The framework provided by these regulations also includes the use of framework agreements, which help ensure value for money and the efficient use of public money.
Public Contracts Regulations 2015
The Public Contracts Regulations 2015 (PCR 2015) are a cornerstone of public sector procurement in the UK. Designed to modernize the procurement process, these regulations aim to reduce bureaucracy and increase transparency. They apply to contracts exceeding specific value thresholds: £144,000 for works, £215,000 for services, and £431,000 for goods.
PCR 2015 introduced several significant changes to the procurement process. These include the mandatory use of electronic procurement tools, the introduction of the “innovation partnership” procedure, and the requirement for contracting authorities to publish procurement information on Contracts Finder. Emphasizing value for money, sustainability, and social responsibility, these regulations ensure that public procurement processes are efficient, transparent, and fair.
Stages of the Public Procurement Process
The procurement process can be lengthy and complex depending on the value of the contract and the requirements of the contracting authority. A thorough understanding will give suppliers the best chance of success.
Identifying Needs
The identifying needs stage of the procurement process involves:
Understanding requirements and defining objectives
Stakeholder engagement and pre-market consultations
Market research
Compliance considerations
Approval process
Understanding requirements and defining objectives
The first stage involves public sector organisations identifying the problem or opportunity and stating the work required. For example, a local council needs a new school building.
Stakeholder engagement and pre-market consultations
The buyer will need to involve the relevant stakeholders to fully understand the scope of the project and all requirements that should be considered.
For example, if procuring a new school building, the specifications might include building capacity, location and building design. Budgetary restrictions will also be considered to ensure Value for Money – one of the key principles of the procurement process.
During this stage, collaboration and early market engagement are critical for the success of the project.
Suppliers in particular should engage in early market engagement because they can help shape the requirements and position themselves for the work.
Expert Insights on Pre-Market Engagement with Grahame Steed
Did you know?
Tracker Intelligence holds a database of around 80,000 key decision makers to help suppliers engage early and influence the procurement process.
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Market Research
The buyer will conduct market research to fully understand:
The availability of the goods or services required
The potential suppliers and their capabilities
Trends, innovations and technologies that could shape the procurement
Compliance Considerations
The procurement requirement needs to align with legal regulations. For example, The Procurement Act 2023 sets out new structures and policies that must be adhered to from 24 February 2025.
Examples of changes include social value requirements, environmental considerations and a focus on involving more SMEs.
Approval Process
Once approvals have been received from the key stakeholders involved, the buyer moves on to the next stage of the public procurement process.
Preparing the Procurement
This stage involves:
Drafting the procurement strategy
Developing tender documentation
Setting budgets and financial thresholds
Drafting the Procurement Strategy
The buyer will define the approach for the procurement process:
Procurement Method (Current)*
Open Procedure
Restricted Procedure *
Competitive Dialogue
Negotiated Procedure
Evaluation Criteria, also known as Award Criteria, which include:
Quality
Cost
Social Value
Sustainability.
*Did you know? The Procurement Act 2023 launches in February 2025 and will bring in procedural changes which include:
The removal of the Restricted Procedure
The introduction of the Competitive Flexible Procedure – which allows buyers to create the tendering procedure they feel is suitable for the contract they are procuring.
Watch our webinars on The Procurement Act 2023 to get all the latest guidance and insight
Drafting tender documents
Drafting tender documents includes the following:
Invitation to Tender (ITT) – detailed instructions to suppliers, with all the necessary information about the project, including scope of work, requirements, budgets and timelines.
Specifications – outline full requirements clearly so suppliers understand what is needed. For example, building a new school would require technical and functional needs to be explained.
Evaluation Criteria – how bids will be assessed (e.g., price vs. quality weighting).
Contract Terms – terms and conditions are stated to ensure clear communication.
Social Value and Sustainability Requirements – with the introduction of the Procurement Act 2023, this will be a vital area of differentiation for suppliers.
A framework agreement plays a crucial role in ensuring value for money and the efficient use of public money by establishing behavioral commitments for suppliers, promoting transparency, and ethical conduct throughout the duration of the agreement.
Setting Budgets and Financial Thresholds
The maximum budget will be shared and financial thresholds considered.
Again, pre-market (or early market) engagement is key here, as suppliers can engage with key decision makers and give feedback on the project. This ensures transparency and fairness for everyone involved in the public procurement process.
To find out how Tracker Intelligence can help shape your early market engagement strategy, book a free consultation with our team
Advertising the Opportunity
This is a critical step in the public procurement process, with the buyer announcing the procurement officially to potential suppliers. This involves:
· Publishing the procurement notice
· Ensuring compliance with legal requirements
Publishing the Procurement Notice
The contract notice (tender notice under Procurement Act 2023) is published through procurement portals. Legally, buyers must publish their notices through procurement portals, but they do not need to do so through every portal.
Did you know? Contract notices can be published through over 1,900 different portals. Tracker Intelligence provides an overview of all these portals, ensuring that suppliers never miss a relevant public sector opportunity.
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Key details to include in the advertisement
Name of contracting authority
Description of the goods or services required
Budget range or contract value
Key dates
Award criteria
How to access tender documents
Ensuring Compliance with Legal Requirements
Adherence to relevant procurement laws (including the Procurement Act 2023) is required to ensure transparency and fairness in the tendering process.
Supplier Response and Tender Submission for Public Procurement Contracts
During this stage, suppliers must register their interest in the procurement project and submit their bids.
Key Activities in the Supplier Response and Tender Submission Stage
Get the Tender Documentation
The Contract Notice will specify where you can access the tender documentation.
Before applying for a tender, suppliers need to read the full tender documentation from the buyer. This will give them all the information they need on the specific requirements, scope of the contract, and which tendering procedure is to be used.
The tendering procedure will then determine how you should structure your tender bid as a potential supplier. There are various tender procedures.
Suppliers should pay attention to the evaluation criteria and weightings that will be used to score responses as these indicate the buyer’s priorities.
Conduct a Feasibility Assessment
As a supplier, it’s helpful to evaluate whether your business can meet the requirements – including the deadlines for deliverables and the budget.
Understanding your capabilities will allow you to select the best public sector opportunities for your business.
Develop a Comprehensive Bid
Include the following key components:
Executive Summary – provide an overview of your understanding of the project and why your business is the best fit
Technical Solution – how your business will deliver the project
Pricing – provide transparent and competitive pricing, aligning with compliance regulations and the buyer’s evaluation criteria
Compliance documents – include any required documents, including certifications or insurance
Social Value and sustainability – this area will give you the best chance of differentiation if you can include key examples that are relevant to the project
Remember: the buyer will have sources and communication channels to help suppliers with any questions they may have. It is important to ask questions in good time, ideally as soon as possible after reading the tender documents.
Common challenges for suppliers during this phase
Did you know? Tracker Intelligence provides real-time tender alerts to help suppliers stay ahead of public sector opportunities and position themselves for success in the public procurement process
Book a consultation to find out more
Evaluation and Award
During this stage of the procurement process the buyer evaluates the supplier submissions against predefined criteria to select the best proposal for the project.
Evaluating tenders based on criteria (price, quality, social value)
The criteria will be those outlined in the Invitation to Tender (ITT). Common criteria include:
Price
Quality
Social Value
Delivery Capability
Criteria will be weighted to ensure transparency and fairness. For complex procurement projects, shortlisted suppliers may be invited to give more information on their proposals.
Communicating the decision and awarding the contract
Outcome 1: Unsuccessful
There can be a number of reasons why a supplier wasn’t successful.
In order to understand why and learn from mistakes for future bids, always ask the contracting authority for a debrief. Suppliers are entitled to request feedback on their performance throughout the procurement process, and it is essential that suppliers receive this to help win contracts in the future.
In certain cases, the award decision can also be challenged.
Outcome 2: Successful
Congratulations! Winning a tender is the culmination of the hard work the supplier put in to the tender process. As the successful bidder, the supplier will have further meetings with the contract authority to prepare for the project.
Pro Tip: Even when a supplier succeeds, they are still entitled to feedback about their performance to continue to learn and improve.
Contract Management
This is the final stage in the procurement process, and begins once the contract has been awarded. Focus will be on managing the successful implementation of the project, and maintaining supplier relationships.
Post-award activities
Activities during this stage include onboarding the chosen supplier, sharing necessary documents and plans, and establishing Key Performance Indicators.
This ensures everyone involved in the project stays on track and delivers Value for Money.
Importance of maintaining supplier relationships and compliance
Pre-market engagement isn’t the only time buyers and suppliers should build relationships. It’s important for the supplier to maintain strong relationships with the buyer; this will avoid potential issues and ensure effective collaboration.
Also, suppliers who adhere to compliance regulations will have the most positive impact on the procurement project.
Sustainable and Responsible Procurement
Environmental Considerations
Sustainable and responsible procurement is becoming increasingly vital in public sector procurement policy and legislation. Both the EU procurement directives and UK regulations stress the importance of considering environmental, social, and economic factors in procurement decisions.
Environmental considerations are a key component of sustainable procurement. Contracting authorities are encouraged to evaluate the environmental impact of their procurement choices, such as opting for energy-efficient products, sustainable materials, and environmentally friendly services. The PCR 2015 introduced the “innovation partnership” procedure, allowing contracting authorities to collaborate with suppliers to develop innovative solutions that meet their needs while minimizing environmental impact.
The UK government has also launched several initiatives to promote sustainable procurement. The Greening Government Commitments aim to reduce the environmental footprint of government procurement. Additionally, the Procurement Policy Note 09/15 provides guidance on incorporating environmental criteria into procurement decisions.
Beyond environmental factors, sustainable procurement also encompasses social and economic considerations. Contracting authorities are urged to consider the social impact of their procurement decisions, such as supporting local suppliers, promoting employment opportunities, and encouraging the participation of small and medium-sized enterprises (SMEs). The PCR 2015 introduced the “light touch regime,” a simplified procurement procedure for contracts below certain thresholds, currently £750,000 for services and £5 million for works.
In summary, sustainable and responsible procurement is a crucial aspect of public sector procurement policy and legislation. By considering environmental, social, and economic factors, contracting authorities can ensure that public money is spent efficiently, effectively, and sustainably.
Common Challenges in Public Procurement
Balancing Transparency and Efficiency
This is a tricky balance to find – it’s vital that buyers are open and accountable, but they will also want to use resources wisely. Finding the sweet spot between the two is the ultimate goal. This can be achieved through clear communication and pre-market engagement.
Ensuring Compliance with Evolving Regulations
The Procurement Act 2023 brings in many changes to the procurement process which must be adhered to.
Watch our webinars on The Procurement Act 2023 to get the latest guidance.
Encouraging SME Participation
A key focus in public procurement is bringing more SME suppliers in on projects. There are a variety of resources available to facilitate SME participation.
Start Building Your Public Sector Strategy
Now you have a thorough explanation of the procurement process, you can get started on building a successful public sector strategy.
