Government prioritises British suppliers for shipbuilding, steel, AI and energy contracts
The UK government will now require departments to favour British companies for contracts in shipbuilding, steel, AI and energy infrastructure, citing national security concerns. The Cabinet Office published new guidance this week setting out how public sector procurement should prioritise domestic capacity in these four sectors.
The move follows recent disruptions to global supply chains, which exposed vulnerabilities in the UK's reliance on overseas suppliers for critical goods and services.
What changes for government buyers
Departments must assess whether contracts worth more than £1 million could be delivered more effectively in-house rather than outsourced. This "Public Interest Test" will cover over 95% of central government contracts by value.
For steel specifically, departments must either use British-sourced material or justify why overseas sourcing is necessary. This requirement strengthens the UK Steel Strategy launched separately last week.
On AI, the government recognises it as critical infrastructure and will factor this into procurement decisions, though specific requirements remain limited in the guidance.
Social value becomes a procurement requirement
Government buyers must now consider local jobs, skills and apprenticeships when evaluating bids. Companies that integrate regional employment schemes into their proposals will have stronger chances of winning contracts.
Departments will set specific social value goals for all contracts over £5 million and report on these annually. This covers approximately 90% of central government contracts by value.
Simplified bidding for small businesses
The government has developed AI tools to streamline the procurement process. Contract terms will be simplified, and a central platform will consolidate business information so suppliers don't submit duplicate details across multiple bids.
Cabinet Office Minister Chris Ward said the reforms aim to back British businesses and workers while cutting waste. "For decades, previous governments have defaulted to outsourcing public services without properly asking whether they could be done better and more cost-effectively by public sector workers. This will change," he said.
These changes form part of a broader package aligned with the government's AI for Government priorities and the National Security Strategy, which the government says aligns national security with economic growth objectives.
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