CMA sets its sights on further reform to public procurement to drive its broader growth agenda

Why should I read this?

The CMA is now however very openly looking at whether it can leverage public procurement to increase growth in the UK.  Changes are being considered, and further reform is expected.  With a drive to support new, smaller players and reduce incumbency advantages, alongside a crackdown on illegal bid rigging in public contracts, there will be winners and losers.

1. Potential for relaxation of procurement rules in some sectors to support “scale-ups”

Doug Gurr, the interim head of the CMA, said on 23 October “that procurement is a problem - with rules so complex that it is easier to sell anywhere other than the UK.  NHS trusts often come up as examples, but this applies across the public sector”.  He asked for “evidence of where procurement is holding back firms from scaling and succeeding”.

The CMA particularly wants to assist agile, perhaps disruptive, smaller competitors to grow fast to become strong competitive forces – known as ‘scale-ups’.  Winning larger public contracts and using the resulting advantageous cash flow to grow is considered a particularly helpful mechanism to increase competition.  The CMA’s September discussion paper on scale-ups asked for views from industry as to where public procurement could be used, changed or improved “to drive market dynamism” and remove competitive barriers, especially if the position in the UK is worse than overseas.  

The CMA’s current market study into the supply of railway and public road infrastructure by the civil engineering sector is also looking closely at improving how the public sector and industry work together, including through improvements to public procurement. The study is expected to result in recommendations to government, with a statutory deadline to report by June 2026.

As a result there is a significant possibility that by Spring 2026 the CMA will recommend the relaxation of at least some procurement rules in some sectors.  Legally that is easier to achieve in some sectors, especially NHS purchasing, than others.

2. Better designed procurements to shape markets may involve more centralisation of procurements

In its recent response to a Cabinet Office Consultation on narrower changes to the Procurement Act 2023, the CMA made much wider comments.  It is recommending public authorities consider how their buying activity can shape relevant supply markets because they are often important buyers.  Choices in the design of procurements can influence the number, size and diversity of firms left active on a market and can therefore impact a market’s resilience.  The choice of evaluation criteria can influence where the focus of competition in the procurement will be – e.g. only price, or different aspects of quality or innovation.  Finally, feedback to unsuccessful bidders can help them improve and increase competition in procurements which repeat.  

This type of design is easier or more effective when procurement is more centralised as skills, resources and market knowledge are not split across several buying contracting authorities.  This, along with joint procurements to increase buyer pressure, may become a prompt for more combined or centralised procurements in the future.

3. Pressure on incumbents

As  well as more competition in procurements, incumbent suppliers can now expect a greater push to do things which will reduce barriers or increase competition in any re-procurement.  Experience shows that this pressure can be fairly uncomfortable, particularly when it arises (as it often does) shortly before a re-procurement. Responses need to be carefully calibrated as the incumbent often wants to make the most of their market advantage, but without irritating the procuring authority too much.

4. Tough enforcement will increase

In common with other international competition regulators, the CMA continues to give high priority to enforcement against bid rigging in public contracts as a means of saving taxpayer’s money, quoting research that bid rigging typically increases prices by 20%.  With dawn raids having been carried out in December 2024 into suspected bid rigging in relation to a key government fund for improving the conditions of school buildings, the CMA believes that there is more to uncover and is trialling data-driven tools, including scanning data at scale, to identify unusual patterns in bidding data.  Importantly, the new Procurement Act 2023 has increased the amount of data which needs to be reported and more data may make detection easier by making anomalies stand out more.

5. Debarment from procurements

Bidders found to have breached competition law (or a wide-range of other obligations) can be banned from tendering for up to 5 years and added to a central  debarment  list.  As a means of uncovering bid-rigging in public contracts, very recent changes to the CMA’s leniency regime provide that the first in to apply for leniency before the CMA has started an investigation will have guaranteed immunity from public exclusion and debarment.  

Comment

These latest developments signal a clear intention by the CMA to leverage public procurement rules to help shape and unlock dynamic markets, to support scale ups, to deliver economic growth and to save taxpayer’s money by cracking down on illegal bid rigging. Whilst the detail for changes to the rules is as yet unknown, we should expect changes fairly soon and the impact of this new approach to be felt across the supply chain, as the CMA continues on its mission to deliver growth to the UK economy.