Why the lotting decision is now a published one
Dividing a contract into lots used to be a quiet internal debate that rarely left the sourcing strategy. Under the Procurement Act 2023 it is a duty with a paper trail. Section 18 obliges contracting authorities to consider whether the goods, works or services could reasonably be supplied under more than one contract, and for most contracts the reasons for deciding not to divide have to appear in the tender notice itself. The consideration was always good practice. What is new is that the market gets to read the answer.
A duty to consider, with an audience
The obligation is not a duty to use lots. Authorities remain free to run a single contract where that is the right commercial answer, and the guidance is candid about the reasons that can justify it: increased technical risk in delivery, undermining contract liability and contract management, or a disproportionate increase in cost. There is no prescribed list, which means the reasoning has to stand on its own feet.
What has changed is the visibility. Regulations 18(2)(q) and 19(2)(a) put the reasons for not splitting a procurement into lots into the tender notice for contracts that are not light touch or utilities contracts. A thin justification is now a thin justification in public, in front of exactly the suppliers who would have wanted the work broken up. That is a different discipline from writing a line in a strategy paper nobody outside the team reads.
What most teams get wrong
The first mistake is timing. The section 18 consideration belongs before the tender notice is published, and it needs to be informed. Pre market engagement is the obvious tool, because the honest question is whether the market could actually deliver the requirement in parts, and that is a question suppliers can answer better than a category plan can. Teams that reach for the justification after the specification is already written tend to find that the specification itself is the reason lots look impractical.
The second is treating lots as a purely strategic choice with no mechanics. If you want to cap how many lots a supplier can bid for, section 20(7) allows it, but the maximum has to be in the tender notice. If you want to cap how many a supplier can win, the maximum and the criteria for deciding which lots they get have to be in the tender notice and/or the tender documents. These are not decisions you can take once tenders are open and the outcome is visible.
The third is valuation. There is no special regime that lets a divided contract be assessed lot by lot for threshold purposes. Contracts must still be valued by aggregating the total value of all the lots. Splitting the work does not split the value.
Lots as the practical face of the SME duty
Section 12 asks authorities to have regard to the barriers facing small and medium sized enterprises. Lots are the most concrete lever available. A cleaning contract covering a hundred sites is closed to most local suppliers. The same requirement divided geographically is open to them, which is precisely the example the guidance uses. Diversity in the supply market and reduced dependence on a single provider are the commercial benefits that come with it.
That is also why the published reasoning matters. If an organisation states publicly, contract after contract, that division would create unmanageable risk, it is making a claim about its own contract management capability as much as about the market. Over a pipeline, those statements add up to a picture. Better to have the lotting conversation properly a few times than to reuse a paragraph until someone challenges it.
What good looks like
Make the lotting decision explicit, early and evidenced. Engage the market before you fix the structure. If you divide, define the lots, the per lot award criteria and any caps on tendering or award up front, and make sure the tender notice, the assessment summaries, the contract award notice with its ceased lots field and the contract details notice all carry the same lot data. If a lot attracts no suitable tenders, use the routes the guidance points to, including direct award under section 43 where it applies, or decline to award that lot and let the others proceed.
None of this is heavy work if it is planned. It becomes heavy when the lotting question is asked late, answered informally and then has to be defended in a published notice.
The takeaways
- Section 18 is a duty to consider lots, not a duty to use them, but the reasoning has to be real.
- For most contracts, the reasons for not dividing go in the tender notice under regulations 18(2)(q) and 19(2)(a).
- Caps on lots tendered for or awarded must be published up front, with the allocation criteria.
- Value the contract by aggregating all lots; dividing the work does not divide the value.
- The duty to consider lots now covers defence and security contracts.
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