Practical tips for dealing with underperformance under the Procurement Act

The Procurement Act 2023 (the Act) has not only changed how public procurements are run, but it has also introduced greater transparency in relation to supplier performance after a public contract has been awarded. This includes empowering contracting authorities to name and shame (and ultimately exclude) suppliers where they have failed to perform their obligations under a public contract.

In this insight, we outline the key provisions of the Act in relation to contract performance and offer some practical tips for dealing with underperformance using the Act.

Sections 70 and 71 of the Act

From 1 January 2026, where key performance indicators (KPIs) have been incorporated into a public contract pursuant to s.52 of the Act (i.e. the contract is worth over £5m), s.71 of the Act now requires the contracting authority to:

1. assess a supplier’s performance against the KPIs (at least annually and upon termination); and
2. publish information on the supplier’s performance in a contract performance notice (CPN).

This includes, amongst other things, a requirement to publish a CPN where the supplier is not performing a public contract to the satisfaction of the contract authority and has failed to improve its performance having been given an opportunity to do so.

These increased transparency provisions should provide a greater incentive to a supplier to properly perform its contractual obligations under any public contract and could act as a significant lever for the contracting authority to manage supplier performance. However, it is worth noting that where a CPN identifies supplier failings or underperformance, such notice could be subject to challenge under s.100 of the Act.

Practical tips

We set out below six practical considerations for managing suppliers under the Act:

1. Set clear KPIs

Ensure that KPIs are objective, measurable and material to any suppliers’ primary obligations under the contract. Any perceived ambiguity and subjectivity in the performance criteria will provide a strong incentive for suppliers to challenge, hence the need for clear and concise wording.

2. Use bespoke KPIs

Avoid using standardised KPIs across certain contracts. Poorly drafted KPIs can expose contracting authorities and suppliers to satellite disputes.

3. Keep consistent records

Implement systems to track, record and report on performance against KPIs. It is essential that contracting authorities keep consistent, contemporaneous records of performance under public contracts in order to evidence and support the publication of CPNs. CPNs can be challenged by the supplier and contracting authorities should anticipate challenges to the accuracy and fairness of CPNs, particularly where the content is potentially damaging to a supplier’s reputation and business.

4. Maintain accurate data

Contracting authorities should assume that performance related data will be disclosable to the supplier (particularly where there is a challenge to the content of a CPN). Therefore, it is essential that this data is accurate and up to date.

5. Monitor consistently

Implement clear governance processes to ensure regular monitoring of supplier performance under the contract and that, where there are issues with performance, these are tackled head on. This is to ensure that remedies under the contract, such as rectification and/or remedial plans, are actioned promptly.

6. Seek advice early

When developing KPIs and/or where a supplier is underperforming under a public contract, contracting authorities should seek legal input early on to ensure that appropriate steps are taken to manage the supplier effectively.

To explore practical guidance on managing underperformance, strengthening supplier relationships and navigating the new Procurement Act landscape, visit our Navigating Supplier Performance hub. It brings together insights, tools and strategies to help in house teams stay ahead.

Contributors: Jon Hainey and Matthew McLellan

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at February 2026. Specific advice should be sought for specific cases. For more information see our terms & conditions.