Defence procurement: The Procurement Act 2023 and the Defence and Security Public Contract Regulations 2011
From October 2024 the Procurement Act 2023 will replace the current Defence and Security Public Contracts Regulations 2011 that oversee defence procurement.
There are two sets of regulations that oversee defence procurement: The Defence and Security Public Contracts Regulations (DSPCR) and the Single Source Contract Regulations (SSCR).
The DSCPR will be repealed when the Procurement Act 2023 comes into force. This is expected to be in October 2024.
This paper explains what the DPSCR are, how they came about, and how they will be replaced.
What are the DSPCR?The Defence and Security Public Contracts Regulations 2011 (DSPCR) regulate the award of contracts for military and sensitive equipment, works and services. The regulations transpose a 2009 EU directive intended to improve efficiency and competition in the EU defence market. The regulations were amended by two statutory instruments in 2019 and 2020 to ensure the rules continued to operate effectively after the UK left the EU.
CoverageThe regulations apply to all contracts within its scope above the financial threshold.
However, the regulations do not apply in all circumstances, and some contracts, such as government to government sales, those relating to intelligence activities and military operations outside the UK, may be excluded.
Exemptions also allow a the government to take measures necessary for the protection of UK essential security interests.
In addition, the regulations do not apply to contracts which are not competed. These are regulated by a separate regime, the Single Source Contract Regulations and are discussed in a separate Library briefing.
The Procurement Act 2023In 2022 the government overhauled the procurement rules regulating public authority purchases of supplies, services and public works from the private sector. This was driven partly in response to the UK’s exit from the EU, to replace the UK’s EU law-based procurement rules with a procurement framework better suited to the UK. The government believes the new system will make procurement simpler, quicker, more transparent and less bureaucratic.
The reforms are set out in the Procurement Act 2023 (hereafter the 2023 act). This introduces a single system for public procurement, repealing and replacing several regulatory systems including the DSPCR. It includes specific defence and security provisions that provide derogations and flexibility to cater for the ways defence and security contracts may operate compared to other public contracts.
The act was expected to come fully into force in October 2024. However, on 12 September 2024, the Cabinet Office announced that the act will now go live in February 2025. This is so that the new government can produce a new national procurement policy statement that reflects its priorities for public procurement. The statement produced by the previous government has been withdrawn. New regulations will be laid to bring the new date into effect. The DSPCR remain in effect until the Procurement Act 2023 comes into force.
About this paperThis paper was first published on 4 November 2022 and originally included a detailed explanation of the Procurement Bill as it was introduced in the House of Lords. It has been revised to reflect the Procurement Act 2023.
This paper focuses on the 2011 regulations and how they will be repealed by the Procurement Act. A more general overview of defence procurement, including the different approches to defence acquisition can be found in Library briefing Defence procurement reform.