Procurement in a Nutshell: Procurement Policy Note: Protecting the UK’s national security through public procurement

The need for this policy note stems from the Government’s National Security Strategy 2025 which states we are entering a new era of radical uncertainty and that a major cultural shift is needed for the UK to respond effectively. As part of this, the government is taking steps to refine its procurement strategy so that the UK’s considerable purchasing power is used more effectively to strengthen national security.

You can view the PPN here.

What does this Procurement Policy Note set out?

Where appropriate and justified on a case-by-case basis, the national security exemption set out in Schedule 2 to the Procurement Act 2023 (“the Act) can be relied on where contracting authorities determine that, in the interests of national security, a contract should not be subject to the provisions in the Act (or part of the Act).

For the avoidance of doubt, procurements in these critical sectors are not automatically exempt from the Act; authorities must consider on an individual basis whether the exemption can be applied to each particular procurement.

Exemption from the Act

Under the Procurement Act 2023, an “exempt contract” is a type of contract listed in Schedule 2 to the Act to which the rules on covered procurement do not apply.

The exemption means contracting authorities have more freedom to decide on the most appropriate approach to the procurement of goods, works and services where national security interests are at play.

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Who does this PPN apply to?

This PPN applies to central government departments, their executive agencies and non-departmental public bodies (i.e. “in-scope organisations”). Private utilities are strongly encouraged to apply this PPN guidance in relevant procurements.

Contracting Authorities under the Procurement Act 2023 can consider their own pipelines in the context of this guidance. Where procurements are of high value, complex or related to national interests, they are also encouraged to engage with Sector Leads.

In-scope organisations should note the provisions of this PPN with immediate effect.

Sectors and organisations

To be in line with National Security Strategy, the Government has commissioned action in four critical sectors with a nominated lead responsible for coordinating action on the procurement pipeline across central government:

• Shipbuilding – National Shipbuilding Office, Ministry of Defence
• Steel – Department for Business and Trade
• Artificial Intelligence (AI) – Department of Science, Innovation and Technology
• Energy Infrastructure – Department of Energy Security and Net Zero

Sector-specific requirements for relevant procurements

The following are considered relevant procurements under the guidance:

• Shipbuilding contracts valued at over £1 million, including those relating to maritime technology and associated technologies and skills. Authorities are encouraged to consult the National Shipbuilding Office for contracts valued below £1 million.
• Steel procurements valued at £10 million or more, or involving more than 500 tonnes of steel
• AI procurements valued at over £5 million, including AI hardware and projects involving Critical National Infrastructure or sensitive and personal information
• Energy Infrastructure relating to electrical equipment or other energy infrastructure, including but not limited to offshore wind, nuclear, solar, CCUS, hydrogen and heat pumps.

For further information, please contact Tim Care or Melanie Pears in our Public Sector team.