No competition, more paperwork: what direct award really costs under the Procurement Act 2023
Every procurement team has had the conversation. The deadline has moved, the incumbent already knows the estate, and someone asks whether this one can just go direct. The Procurement Act 2023 guidance on direct award does not close that door, but it makes very clear what walking through it costs. Competition is the default. Departing from it means naming a specific statutory justification, proving the test behind it, publishing a transparency notice that spells out your reasoning to the market, and usually sitting through an 8 day standstill while anyone who disagrees decides what to do about it.
The justification is a test, not a label
The most common failure is treating the Schedule 5 grounds as categories to be claimed rather than tests to be passed. Technical exclusivity is not satisfied by the incumbent knowing the system best; the guidance requires an absence of competition for technical reasons and no reasonable alternatives. The intellectual property ground is not satisfied by a supplier owning the software; the guidance expects you to consider whether a competitor could licence the rights or you could acquire a sublicence.
Urgency is the ground that attracts the most optimism and the least evidence. Under paragraph 13 the need must be strictly necessary for reasons of extreme and unavoidable urgency, the urgency must not be attributable to the authority's own acts or omissions, and it must have been unforeseeable. A contract expiring on a date everyone has known about for three years fails all three. Worth noting too that the guidance does not treat urgency as a bar to any competition at all: an informal competition remains possible, and running one strengthens rather than weakens the position.
The repeat award you forgot to signpost
One of the most useful grounds is also the one most often lost through inattention. Direct award for a repeat requirement depends on the original contract having been awarded under a competitive tendering procedure and on the tender notice or tender documents having set out the intention to carry out a subsequent procurement of similar goods, services or works by direct award. Broadly speaking, it needs to happen within 5 years of the original award.
That is a drafting decision made at the start of a programme, not a rescue available at the end of one. Teams planning phased work, pilot to rollout, or a build followed by extensions should be writing the intention into the original documents while they still can. The compatibility ground exists for cases where a change of supplier would produce goods, services or works that are different or incompatible and cause disproportionate technical difficulties, but it is a genuine technical argument, not a preference for continuity.
Transparency is the price, so pay it early
The Act pairs the freedom to award directly with an obligation to explain yourself in public. The transparency notice under section 44 must be published before award, and regulation 26 asks for real content: the grounds relied on, the rationale, excluded supplier status where relevant, the section 43 reasoning where a competition failed, and known risks where you are leaning on the modification ground in Schedule 8, paragraph 5. Thin notices invite exactly the questions they were meant to answer.
Timing then does most of the risk management. Suppliers have 30 days under section 106 to bring a claim from the point of knowledge, so publishing promptly starts that clock while the award is still easy to unwind if something is wrong. Publish the contract award notice before entering into the contract, get it right first time because an inaccurate notice means republishing and a fresh standstill, and observe the 8 day standstill unless one of the stated exceptions applies. Where an exception does apply, a voluntary standstill is still available and is often the cheaper option.
What good looks like
A defensible direct award reads as a short, contemporaneous file: the justification named by its Schedule 5 paragraph or by section 42 or section 43, the market analysis that shows why no reasonable alternative exists, the supplier checks against section 57, the transparency notice as published, the award notice, the standstill dates, and the contract details notice afterwards. None of it is difficult. All of it is hard to reconstruct after the fact.
The wider lesson is that direct award is not a lighter regime. Non discrimination under section 90 still applies to treaty state suppliers, technical specification rules under section 56 still apply, and where a competition has collapsed under section 43 you still have to assess the suppliers who tendered and tell them in writing why their tenders were unsuitable. Teams that build the file as they go find direct award workable. Teams that decide first and document later find out what a 30 day claim window feels like.
The takeaways
- Competition is the default; every direct award needs a named justification under section 41, 42 or 43.
- Schedule 5 grounds are evidential tests, especially no reasonable alternative and unforeseeable urgency.
- Signpost any intended repeat direct award in the original tender documents and stay within 5 years.
- Publish the transparency notice before award and the award notice before entering the contract, then observe the 8 day standstill.
- Build the file contemporaneously; the 30 day claim period under section 106 leaves no time to reconstruct it.
Want the full breakdown?
The complete explainer covers the key facts, the requirements in detail and a practical action list, free and printable in the Procurement Library.