Procurement Act 2023: What It Means for Public Sector Suppliers
The Procurement Act 2023 is now in force. It came into full effect on 24 February 2025, replacing the Public Contracts Regulations 2015 (PCR 2015) as the primary legislation governing how public authorities in England, Wales, and Northern Ireland buy goods and services. If your business supplies the public sector, this is worth understanding, both for future contracts and for any late payment entitlements you may already have.
According to a 2025 Coface survey, 90% of UK businesses are currently experiencing payment delays, a rate significantly higher than comparable European economies including France (85%), Germany (81%), and Poland (60%).
Source: Coface UK Payment Survey, 2025
This guide explains what the Act does, what it means for suppliers, and how it affects your right to claim late payment compensation.
What Is the Procurement Act 2023?
The Procurement Act 2023 replaces the Public Contracts Regulations 2015 and the Concessions Contracts Regulations 2016. It governs how contracting authorities (local councils, NHS trusts, central government departments, housing associations, and similar bodies) procure goods and services.
The Act was designed to create a more flexible, transparent, and accessible procurement framework, with stronger emphasis on social value and reducing barriers for smaller businesses. Where the PCR 2015 was rooted in EU procurement law, the Procurement Act 2023 is domestic legislation built for the UK post-Brexit.
What Changed for Suppliers?
The Act introduces a number of meaningful changes for businesses that work with the public sector.
Transparency obligations have been strengthened. Contracting authorities must now publish more detailed procurement notices and provide better information to suppliers at each stage of a procurement process. This gives businesses clearer sight of opportunities and more meaningful feedback when bids are unsuccessful.
Access for smaller businesses has been a stated priority. The Act reduces some of the administrative barriers that historically made public procurement difficult for SMEs to navigate.
On payment, the Act reinforces the existing 30-day payment obligation under the Late Payment of Commercial Debts (Interest) Act 1998. Section 69 of the Procurement Act requires contracting authorities to include payment terms in public contracts that reflect the statutory 30-day rule. This makes prompt payment a contractual obligation, not just a statutory one.
What About the PCR 2015?
The PCR 2015 does not disappear overnight. Procurements that were commenced under the old regime before 24 February 2025 continue to be governed by PCR 2015 for their duration. Contracting authorities are effectively running a dual regime during a transitional period. New procurements fall under the 2023 Act; existing ones continue under the old rules.
New procurement thresholds, which came into effect from 1 January 2024, apply to any procurements commenced on or after that date. If you provide services to contracting authorities, it is worth ensuring they are applying the correct thresholds when calculating contract values.
What About Late Payment Compensation?
The Procurement Act 2023 does not replace or affect the Late Payment of Commercial Debts (Interest) Act 1998. The two pieces of legislation work alongside each other.
This means your entitlement to statutory interest and fixed compensation for overdue public sector payments remains fully intact. Under the 1998 Act, suppliers are entitled to interest calculated daily at 8% above the Bank of England base rate, plus fixed compensation per overdue invoice of £40, £70, or £100 depending on the invoice value. These rights apply whether your contract was procured under the PCR 2015 or the new Act.
Critically, the entitlement also applies to invoices that have since been paid. If a public sector client paid you late at any point in the last six years (or five years in Scotland), you may still have a live claim.
How LPA Can Help
LPA buys statutory late payment rights outright from businesses that have supplied the public sector. We pay a fixed, guaranteed sum on completion and pursue the claim independently. Your involvement ends at the point of payment. For a full overview of how the process works, see our dedicated guide.
Step 1: Tell us your company details. That's all we need to get started. (Takes minutes)
Step 2: We check our records to assess whether you have a claim. (No input required from you)
Step 3: If you have a claim, we offer you a fixed, guaranteed purchase price. (Fixed amount, agreed upfront)
Step 4: We send our standard-form assignment documents for signature and ask you to confirm your bank details. (Straightforward documentation)
Step 5: Once in receipt of the signed documents and bank details, we make payment within 24 hours and your involvement is over. We then take full responsibility for the claims. (Immediate payment, zero ongoing obligations)
For the latest on UK procurement legislation and late payment compensation rights, visit our insights hub or read our plain-language overviews of the Procurement Act 2023 and the Late Payment of Commercial Debts (Interest) Act 1998.
Am I eligible to claim?Frequently Asked Questions
What is the Procurement Act 2023?
The Procurement Act 2023 is the primary legislation governing how public bodies in England, Wales, and Northern Ireland procure goods and services. It came into force on 24 February 2025, replacing the Public Contracts Regulations 2015 and the Concessions Contracts Regulations 2016.
When did the Procurement Act 2023 come into force?
The Act came into full effect on 24 February 2025. Procurements commenced before that date continue to be governed by the PCR 2015.
Does the Procurement Act 2023 affect late payment compensation rights?
No. The right to claim statutory interest and fixed compensation for late public sector payments remains fully intact under the Late Payment of Commercial Debts (Interest) Act 1998. The two pieces of legislation operate alongside each other.
What replaced the Public Contracts Regulations 2015?
The Procurement Act 2023 replaced the PCR 2015 for new procurements commenced on or after 24 February 2025. The PCR 2015 continues to govern contracts already in progress.
What are the new procurement thresholds?
New thresholds came into effect from 1 January 2024. They apply to procurements commenced on or after that date. Contracting authorities are required to apply the new thresholds when calculating contract values for future procurement activity.
Am I eligible to claim?
