The Procurement Act 2023 (the "Act") that came into force in February this year marked a shift in the UK’s approach to public procurement, including the regulation of defence and security contracts. Replacing the Defence and Security Public Contracts Regulations 2011 (DSPCR), the Act introduces a consolidated legal framework that applies to defence and security (D&S) contracts alongside other public procurement processes, which aims to both streamline procurement legislation and simplify the rules for contracting authorities.

This article explores key changes under the Act, focusing on:

  1. the differences from the DSPCR;
  2. the new concept of Defence Authority Contracts; and
  3. national security provisions, including exclusion and debarment on national security grounds.

1. From DSPCR to the Procurement Act 2023: key changes in the treatment of defence and security contracts

Despite aiming to consolidate the general procurement rules in the UK, the Act retains distinct provisions tailored for the unique sensitivities and operational demands of defence & security procurement.

Wider scope of D&S contracts

The scope of a defence and security contract under the Act is notably broader than under the DSPCR. It encompasses not only traditional military goods and services but also any goods, services, or works relevant to the operational capability, effectiveness, readiness for action, safety, or security of the armed forces. This allows greater flexibility in classifying and managing procurements with dual-use or emerging technologies, such as civilian drones repurposed for military applications in order to maintain operational advantage.

Increased flexibility

The Act introduces more flexible mechanisms for direct awards and permitted modifications, enabling defence authorities to respond rapidly to technological advancements. These flexibilities are designed to ensure continuity of supply, enable defence authorities to respond to adverse developments, and to seize technological advantages—vital capabilities in a fast-moving defence environment. Further detail is included on these mechanisms below.

2.Defence authority contracts: special rules

The Act introduces the concept of the defence authority contract, creating a sub-category of defence and security contracts with special rules that apply only to designated defence authorities.

Who qualifies as a defence authority?

Defined under section 7(5) of the Act, a "defence authority" is a contracting authority specified in regulations made by a Minister of the Crown. Currently, the following are specified as defence authorities:

  • The Secretary of State for Defence
  • The Atomic Weapons Establishment
  • The National Crime Agency
  • The Oil and Pipelines Agency

Special provisions applying to defence authorities

Certain provisions of the Act relating to defence and security contracts only apply to those awarded by defence authorities. Those are:

  • Direct awards (Schedule 5, para 20): Defence authorities may directly award contracts when necessary to enhance or maintain the operational capability, effectiveness, readiness for action, safety, or security of the armed forces; and
  • Modifications (Schedule 8, paras 10–11): Modifications of defence and security contracts are permitted for:
    • Incorporating new technologies; or
    • Mitigating negative impacts of technological developments; or
    • Ensuring uninterrupted supply of essential goods, works or services to ensure the armed forces' ability to maintain their operational capabilities, effectiveness, readiness for action, safety, security or logistical capabilities.

These targeted provisions acknowledge the practical and security-driven needs of defence procurement, enabling agility without undermining legal integrity.

3. National security: grounds for exclusion and debarment

National security plays a central role in the exclusion and debarment mechanisms under the Procurement Act 2023. The Act introduces new and extended exclusion rules, with both mandatory and discretionary grounds related to national security.

a. Definition and scope of D&S contracts

Section 7(1) provides an expansive definition of D&S contracts, being a contract for the supply of:

  • Military equipment including parts, components and subassemblies;
  • Sensitive equipment, goods, services or works necessary for the development, production, maintenance or decommissioning of military equipment or sensitive equipment;
  • Logistics services relating to military or sensitive equipment;
  • Goods, services or works for wholly military purposes;
  • Sensitive services or works;
  • goods, services or works that are otherwise relevant to the operational capability, effectiveness, readiness for action, safety or security of the armed forces.

This includes scenarios where ostensibly civilian goods are repurposed for military objectives—emphasising functional use over nominal classification.

b. Exemptions for national security

Schedule 2, paragraph 25 provides a broad exemption for procurements deemed to be in the interests of national security. This exemption:

  • Is available to all contracting authorities (not just those procuring defence and security contracts);
  • Includes procurements that are too sensitive to advertise;
  • Permits UK-supplier-only provisions when essential to national security.

Crucially, "national security" is not defined in the Act, ensuring sufficient flexibility. However, robust justifications must be provided when invoking this exemption.

c. Exclusion and debarment mechanisms

The Act significantly expands the grounds upon which contracting authorities must or may exclude a supplier and also establishes a central debarment list.

Mandatory exclusion (Schedule 6, para 35):

This is a new ground introduced by the Act. This applies where an appropriate authority considers that the supplier (or its connected person) poses a threat to national security or would pose a threat in relation to public contracts of a particular description and is named on the central debarment list. The exclusion only applies to contract types specified in the debarment entry (e.g., contracts for sensitive sites or provisions of particular types of services).

  • Only appropriate authorities (e.g., Ministers of the Crown) can place suppliers on the debarment list after a government-led investigation.
  • Contracting authorities must verify the applicability of the debarment entry to their procurement before excluding a supplier.

Discretionary exclusion (Schedule 7, para 14):

Discretionary exclusion on the grounds of national security is also a new ground introduced by the Act. Contracting authorities may exclude suppliers they determine pose a national security threat—but only after:

  1. Notifying a Minister of the Crown of the intention to exclude on this basis; and
  2. Receiving Ministerial agreement (who when making their assessment are expected to work closely with the National Security Unit for Procurement (NSUP)).

This discretionary mechanism recognises that not all threats meet the threshold for mandatory debarment, but still require a proactive response. However, the process of obtaining Ministerial agreement can take up to two months, which authorities must account for in planning.

d. Assessing national security risk

Where the supplier (or associated person) is not on the debarment list for a national security ground, the NSUP advises contracting authorities to conduct a preliminary sensitivity check before assessing the national security threat posed by suppliers, and contracting authorities should consider whether a greater opportunity for harm to UK national security is posed by the type of procurement. Sensitivity indicators include whether the procurement provides access to or control of:

  • assets, data, computer systems or networks that are critical UK national infrastructure;
  • locations such as sensitive sites or locations where material classified as secret or above is processed or sites requiring high security clearances or vetting; and
  • data which is of national significance, including sensitive personal data, sensitive nuclear information or large-scale data (national or regional level datasets, big data).

If the risk does not meet the threshold of opportunity to harm UK national security, exclusion on these grounds is likely to be disproportionate.

Navigating the future of defence and security procurement

The Procurement Act 2023 fundamentally reshapes the defence and security procurement landscape in the UK. By consolidating previously separate regimes and introducing new mechanisms like defence authority contracts and national security-based exclusions, the Act provides both clarity and agility. For those working in the defence procurement sector, the key lies in understanding the enhanced flexibility and expanded obligations—especially where national security is concerned. As the Act is implemented, careful navigation of these provisions will be essential to balancing transparency, security, and operational effectiveness.

If you have any questions or need support navigating these developments, get in touch with Elizabeth Williams,  Christopher Brennan or Alison Richards.