The Procurement Bill was introduced on 11 May 2022 and is currently going through the parliamentary process. In this series of Procurement Bill Bytes we take a detailed look at some of the issues and draw out some of the key changes that contracting authorities and suppliers need to get to grips with. 

It should be noted that any of the provisions of the Procurement Bill might change as a result of the process of parliamentary approval. If changes occur to the provisions described in this article, we will update it on our website at the appropriate time. 

We are really interested in your thoughts on how these reforms will affect you and are particularly keen to hear any questions you may have on the topics covered in our Procurement Bill Bytes. Please send any questions to jessica.boardman@bevanbrittan.com and our procurement team will endeavour to answer as many as we can in our Procurement Bill Bytes Q&A Webinar to be published next month. 


In this article we explore the Direct Award provisions in the Bill. 

Under the Bill, public contracts must be awarded following a competitive tendering procedure (Section 19). If, however, a direct award justification applies, a contracting authority will be able to award a contract directly without a competitive tendering procedure. 


The Direct Award provisions are set out in Chapter 3 and Schedule 5, and include:

Section 40: Direct award in special cases

Section 41: Direct award to protect life, etc

Section 42: Switching to direct award

Section 43: Transparency Notices

Schedule 5: Direct Award Justifications


A direct award can be made either pursuant to Section 40 if a justification for the direct award as set out in Schedule 5 exists, or where a Minister has made regulations to protect life, health, public order or safety under Section 41, or where the authority meets the conditions in Section 42 for switching to direct award. 

  1. Schedule 5 Justifications 

Direct awards can be made pursuant to Section 40 where a justification for the direct award exists in Schedule 5: 

Prototypes and development

This justification relates to research and development contracts, where the production or supply concerns a specific prototype, or “novel” goods and services which the contracting authority has commissioned for development. The goods or services concerned must have been produced for one or more of three specified purposes; namely, testing their suitability, researching whether their production at scale would be viable, and any other research, experiment, study, or development.  

Single suppliers

This justification can be used where there is only one supplier capable of delivering a requirement. It can be used where the requirement is the creation or acquisition of a unique work of art or performance, where there are distinct intellectual property or exclusive rights to production, or merely where there is a complete absence of competition. Note that the exceptions in relation to IP rights and absence of competition both require that there must be no reasonable alternative to those goods, services, or works that might enable competition. 

Additional or repeat goods, services or works by existing suppliers

There are two separate elements under this justification.

First, where the supply of goods, services, or works by an existing supplier is required as an extension to or partial replacement of those already in place. This is permitted where the sourcing of alternative goods, services, or works would result in an incompatibility with the existing goods, services, or works. Note that this will usually relate to specific technical reasons regarding their operation or maintenance. Mere incompatibility is not enough. It must amount to causing “disproportionate” technical difficulties to enable the justification.

The second element relates to the supply of similar goods, services, or works by an existing supplier awarded a contract following a competitive tendering process. This justification can only be used if: (a) the original contract was awarded within the period of five years ending with the day of publication of the transparency notice (see our first article on Notices); and (b) the intention to rely on this direct award justification to procure those similar goods, services or works was made clear in the authority’s tender notice or tender documents for the original contract.

Contracting authorities therefore need to consider at the point of planning a competitive tendering procedure and preparing the tender notice whether they are likely to want to procure similar goods, services or works from the successful supplier in the next 5 years and to flag that possibility in the tender notice. 


This justification simply applies to any contract concerning the purchase of goods on a commodity market. 

Advantageous terms of insolvency 

Under this justification, the contract may be awarded to a supplier where the contracting authority will obtain advantageous terms due to a supplier undergoing insolvency proceedings. This most obviously refers to obtaining discounted materials in a ‘closing down sale’, but advantageous terms do not need to be limited to price. Note that the supplier to whom the contract is awarded need not be the entity undergoing insolvency proceedings. The justification provides clarification on what constitutes an “insolvency proceeding”; namely, bankruptcy or sequestration, insolvency or winding up, administration, receivership, liquidation, undergoing a creditor arrangement, being subject to a mere petition for such arrangements, and undergoing any equivalent of the above in a jurisdiction outside England and Wales. 


This applies where a situation of “extreme and unavoidable urgency” exists, such that there is no time to run a competitive tender. However, this justification does not apply where the urgency stems from any act or omission of the authority, or arises from a situation that should have been foreseen by that authority. In some cases, the Section 41 provision (see above) may still enable direct awards to deal with urgent situations that were foreseeable. 

Necessary to protect life, etc 

This justification reflects the Section 41 direct award provision (covered above), whereby a Minister can make regulations to permit direct awards where they are “necessary” to protect human, animal, or plant life or health, or to maintain public order or public safety. 

User choice contracts 

User choice contracts are those pursuant to which services are supplied directly to a particular individual under the Section 8 light touch regime; usually in the context of delivering bespoke care. To be applied, either the individual to be cared for must express a preference for who should supply the services, or there must be only one supplier capable of supplying them. Furthermore, the authority must also believe that a contract award via competitive procedure is not in the best interests of the individual.

Defence and Security

There are three scenarios in which this justification for a direct award may be used.

First, where the contract is a defence and security contract for the supply of air or maritime transport services to the military or security services; either where they are currently stationed outside the UK or in supplying the services this would allow them to be deployed there. The requirements of such service provision must also be such that no reasonable supplier could guarantee the terms of the tender remaining in effect for 10 days past the day of submission. This justification would appear to operate so as to enable direct award of contracts in short-term military or defence-related operational situations that are so fluid as to make any guarantee as to their duration or terms difficult to provide.

Secondly, where there is an existing contract between the authority and supplier, the contracting authority is permitted to rely on certain contract modification grounds as the basis for directly awarding a new contract to that existing supplier provided any new contract, to be awarded directly, would be a “qualifying defence contract” for the purposes of Section 14(2) of the Defence Reform Act 2014. For this justification to apply the new contract must fall within one of the two following modification situations. Treating the new contract as a modification of the existing contract it must either (a) not be a “substantial modification” of the existing contract as described in Section 69(2), or (b) be a modification required due to “unforeseeable circumstances” (Para 4, Sch 8) or “additional goods, services or works” (Para 8 Sch 8).

Thirdly, where the contract is a defence authority contract (but not a defence and security contract by virtue of Section 6(1)(g) relating to goods, services, or works relevant to the operational capability, effectiveness, and readiness for action, safety, or security of the armed forces) and direct award is necessary to maintain operational capability, effectiveness, readiness for action, safety, or security of the armed forces. 

  1. Protection of life, health, public order or safety under Section 41

Direct awards may also be permitted in future to manage particular emergency events that arise, like the Covid-19 pandemic. The section will be able to be relied on to create new justifications for direct awards even where the event triggering the urgency is foreseeable (where the Schedule 5 justification for direct award can only be relied on if the event was unforeseeable).

In this respect, if a Minister considers it necessary to protect human, animal or plant life or health, or to protect public order or safety, the Minister can make regulations to allow the direct award of contracts, essentially creating a new direct award justification. 

  • The contracts permitted by this may be specified contracts or classes of contracts (but note that the Minister does not have to specify a class of contracts or specify particular contracts under this provision).
  • It will be possible for the Minister to allow direct award of contracts to be made with reference to a particular purpose, or subject matter of the contract, or by contracting authority, but again the Minister does not have to do this.
  • The Minister will be able to impose conditions or limitations on making direct awards under these provisions, but again does not have to do this.
  • The Minister can instead confer a discretion in relation to making direct awards under these provisions.
  • There is therefore a fairly wide power for a Minister to enable direct awards to be made where the Minister considers it necessary to protect life, public order or safety. The sole restriction on this is that the Minister must keep any regulations made under Section 41 under review and must revoke the regulations if no longer necessary. 
  1. Switching to direct award where no suitable tenders have been received under Section 42 

Provided a supplier is not an excluded supplier, a contracting authority can award it a public contract directly if it has run a competitive tendering process but has received no suitable tenders or requests to participate. Unlike the current provision in Regulation 32(2)(a) of the PCR 2015, Section 42 does not contain an express requirement that the initial conditions of the contract are not substantially altered. This requirement ensured equal treatment by preventing authorities from making changes in a directly awarded contract which, had they been part of the initial award procedure, would have allowed for different tenderers to participate or different tenders to be accepted. It is therefore arguably implied by the overarching duty to treat suppliers equally. There is also no requirement to submit a report to the Cabinet Office or equivalent body in the devolved administrations if they request one.

What is “not suitable”? 

Under Section 42(2), a tender or request to participate is not suitable if:

  • it would be disregarded on the grounds set out under Section 18(3) (e.g. because it does not satisfy the conditions of participation or materially breaches a procedural requirement in the tender notice or tender documents);
  • it does not satisfy the award criteria when assessed by reference to the assessment methodology and the relative importance of the criteria;
  • the price is abnormally low; or
  • there is evidence of corruption or collusion between suppliers or between suppliers and contracting authorities. 


There are some limitations around to whom a direct award can be made.  First, before making a direct award, a contracting authority must consider whether a supplier is an “excludable supplier” (Section 40(4)).  (Considering whether a supplier is an “excluded supplier” or an “excludable supplier” involves considering the mandatory and discretionary exclusion grounds (respectively). We will cover this in further detail in a future article. 

  • If the proposed supplier is not an excluded supplier, then the authority can make a direct award (provided a justification exists and a transparency notice is published).
  • A direct award can also be made to an “excluded supplier” but only if the contracting authority considers that there is an overriding public interest in awarding the contract to that supplier. What is an overriding public interest? If any of the following apply:
    • It is necessary in order to construct, maintain or operate critical national infrastructure
    • It is necessary in order to ensure the proper functioning of a sector on which the defence, security or economic stability of the UK relies
    • Failure to do so would prejudice the conduct of military or security operations, or the effective operation of the armed forces or intelligence services, or
    • The contract is being awarded by reference to paragraph 13 of Schedule 5 (extreme and unavoidable urgency) and cannot be awarded to, or performed by, a supplier that is not an excluded supplier within the necessary time frame.

Under both Section 40 (where the authority is relying on the Schedule 5 justifications for making a direct award) and Section 42 (where the authority is switching to direct award having received no suitable tenders) a contracting authority can undertake a selection process or take “such other preliminary steps as it considers appropriate” for the purposes of making a direct award (Section 40(3)).

We assume that this means that a contracting authority could ensure that a supplier meets standard selection criteria before making a direct award.  It is not clear whether this means that a contracting authority could assess more than one supplier under this provision before making a direct award.


Before making a direct award a transparency notice must set out that the contracting authority intends to award a contract directly and any other information specified in regulations due to be published under Section 86. 

The only exemption to having to issue a transparency notice is if the direct award is made on the basis of the justification in Schedule 5 for user choice contracts (paragraph 16).

The requirement for transparency is a significant change from current provisions where a contracting authority making a direct award under Regulation 32 (negotiated procedure without notice) has a choice whether to issue a transparency notice (a VEAT notice) but is not required to.

Direct award


Switching to direct award


This article was co-written by Rupert Simpson, Trainee Solicitor.

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