PPN 024 – Introducing the Public Interest Test and Insourcing Strategy

As with all Procurement Policy Notes (PPN), PPN 024 applies to central government departments undertaking a tender process. Following a raft of PPNs after the introduction of the Procurement Act 2023 and the National Procurement Policy Statement (NPPS), PPN 024 is the first new Note published in 2026.

We break down the contents of PPN 024, what this means in practical terms and how buyers and suppliers should adjust their bid strategies accordingly.

What is PPN 024 all about?

Fundamentally, PPN 024 was issued to align public sector procurement with the guiding principles of the Procurement Act 2023 and the NPPS – including ‘improving the quality of public services, successful delivery of government objectives and enhancing value, control and resilience’.

As of 1 April 2027, all in-scope organisations – comprising central government departments and their arms-length bodies, such as the DVLA for the Department for Transport – will be required to apply a Public Interest Test to all planned procurements with an estimated value exceeding £1 million (including VAT).

All outcomes of Public Interest Tests must be recorded, using a specified template from the Government Commercial Agency (GCA) on a quarterly basis – further supporting oversight and compliance with PPN 024.

What will the Public Interest Test consider?

The Public Interest Test will assess whether the planned works or services are suitable for insourcing, or whether external support from suitable suppliers is required. As part of this, procurement leads will need to consider:

• Organisational capability and capacity to self-deliver works or services – in many instances, this will not be possible due to specialist skills required
• Value for money in procuring works or services, potentially considering the updated Magenta Book guidance
• Impacts on service quality and strategic importance resulting from works or services being insourced
• Economic growth and market impact that would result from opening up the contract to outsourced suppliers, with an emphasis on building local supply chains and resilience.

Lastly, in-scope organisations with an annual contract spend exceeding £100 million (including VAT) will also be required to develop and publish a five-year Insourcing Strategy, supplementing the new UK1 Pipeline Notice introduced by the Procurement Act.

Exemptions under PPN 024

Importantly, in-scope organisations can claim exemptions to certain contracts under PPN 024. However, these must fulfil one or more of the below criteria, as outlined in Paragraph 5 of the Note itself:

• Direct award contracts made under Sections 41 and 42 of the Procurement Act, which makes allowances for award under extreme urgency, prototypes, protecting life or public safety and other critical constraints
• Exempted contracts under Schedule 2 of the Procurement Act, which lists formal exemptions such as acquisition/leasing of land and ‘vertical’ procurement arrangements, such as a local authority directly awarding contracts to its trading company
• Defence and security contracts where services are delivered by original equipment manufacturers, alongside service contracts primarily delivered outside the UK
• Regulated health procurement contracts under Regulation 43 of the Procurement Act, which excludes health services from standard procurement regimes.

Further exemptions apply where the contracting authority has determined that a framework agreement or dynamic market is the best route for works or services.

What does this mean for public sector buyers and suppliers?

Understandably, current and prospective suppliers may have reservations around the Public Interest Test and whether this will reduce the available opportunities to do business with the public sector.

Value for money in procurement

Ultimately, the introduction of PPN 024 mirrors a broader shift in delivering ‘value for money’ through works or services funded through the public purse. However, value for money is not just the cost of outsourcing or insourcing delivery models, but informed decisions based on service quality, supply chain resilience and wider economic and social outcomes.

In many instances, outsourcing will look like the best ‘value for money’ approach given the economic benefits of integrating British businesses into public sector supply chains – particularly small- and medium-sized businesses and third-sector organisations, who may possess specialist expertise and innovative service models.

Considering delivery models

As the Public Interest Test must commence before the planned tender procedure, contracting authorities will give greater consideration to delivery models within strategic planning. While outsourcing through the tender procedure is still the most likely option, contracting authorities will now have to demonstrate that alternative options were considered and why putting the contract out to tender was the best option.

Viewed through this lens, PPN 024 actively demonstrates to the government and public that outsourcing is the most appropriate action – strengthening the credibility of public procurement.

Length of Public Interest Test

Importantly, the Public Interest Test is not meant to be a lengthy, extensive process some suppliers may envision. The assessment will be a proportionate, early-stage exercise rather than a multi-step approval process, with additional scrutiny before the tender is released providing greater clarity around the structure of the contract and delivery model before it goes to market.

Support with central government tenders

Since our formation in 2009, Executive Compass have provided clients with guidance and consultative advice on regulatory changes to the public procurement process. This forms part of our wider bid management support, included as part of our bid and tender writing, bid review and bid writing training services.

If you would like to find out more about the range of bid and tender writing services we provide, our sales and marketing team are available for a free, no-obligation chat or bespoke quotation via 0800 612 5563 or email info@www.executivecompass.co.uk.