Bundling is now a legal decision, not just a commercial one
Most procurement teams have a settled habit around bundling. You look at a requirement, you decide whether one contract or three gets a better result, and you get on with it. The Procurement Act 2023 does not stop you bundling, but it does something quieter and more consequential: it turns the packaging decision into one with a legal test attached, and it sets the default so that if you could reasonably have separated the elements and chose not to, the fuller set of obligations applies anyway.
The test is separability, and the default is against you
Section 5 deals with contracts that mix above threshold and below threshold elements. Section 10 deals with contracts that mix special regime elements, meaning concessions, light touch, defence and security or utilities, with general rules elements or with another special regime. Both turn on the same question: could these elements reasonably have been separated?
If the answer is yes and you bundled anyway, the guidance is blunt. A mixed contract that could reasonably be separated but was not will be treated as above threshold, or under section 10 the general rules will apply. Bundling does not create an exemption. It never really did, but the Act now says so explicitly, which changes what a challenge looks like.
What counts as reasonable is genuinely a judgement, and the guidance allows for it. Practical and financial consequences of awarding more than one contract are legitimate considerations: the resource cost of running parallel procurements, the interface risk, the value for money case for a single award. The problem is not that authorities lack good reasons. It is that the reasons usually exist only in someone's memory.
What most organisations get wrong
The first mistake is treating this as a compliance check at notice stage. By the time you are drafting a notice, the bundle already exists and the analysis is retrospective. The element breakdown, the values and the separability reasoning belong in the design phase, before the requirement hardens.
The second is the main purpose test. Where elements genuinely cannot be separated, Schedule 1 paragraph 4 says a contract whose main purpose is works is a works contract, and that determines the threshold you measure against. Teams reach for the highest value element as a proxy for main purpose. Sometimes that is right. Sometimes the dominant purpose of the contract is not the most expensive line, and if you have not written down how you decided, you have nothing to point at later.
The third is exemptions. Schedule 2 paragraph 1 is narrow: a contract is only exempt where the goods, services or works forming its main purpose are exempt. An exempt element bolted onto a non exempt requirement does not lift the whole contract out of scope, and treating it as if it does is an expensive assumption.
The fourth, and the most costly, is frameworks. If a below threshold framework contains separable above threshold elements, it must be treated as an above threshold framework, and section 45 applies to the mixed contracts awarded under it. That is a decision taken once, at establishment, that then governs everything awarded under the arrangement for years. Get it wrong and you do not get one flawed contract, you get a pipeline of them.
The defence and security exception, and why it is not a general licence
Defence and security procurement gets more room. A mixed contract with defence and security elements may keep its special regime status even where the elements could be separated, provided there are good reasons for procuring them together. That is a real and deliberate difference from how concessions, light touch and utilities elements are treated.
It is worth being precise about the shape of that discretion. It is not a rule that defence bundles are always fine. It is a rule that good reasons can justify keeping them together despite separability, which means the reasons still have to exist and still have to be articulable. The exception rewards documented judgement, not absence of judgement.
Everything else stays as it was. Whichever way the analysis lands, a mixed contract remains a public contract subject to the Act. The question is only ever which obligations apply.
What to do about it
Build the element table into your intake process. Every requirement gets broken down, valued and labelled by category and regime before anyone drafts a specification. It takes an hour and it answers most of what sections 5 and 10 ask.
Make the separability rationale a required field, not an optional note. Two or three sentences on why the elements were bundled, written when the decision was live, is worth more than a page of reconstruction under challenge.
Use the annexes. Annex A maps the section 5 route and Annex B maps section 10. Running a contested bundle through the published decision route and saving the outcome with the numbers you used gives you a defensible record in the format the guidance itself endorses.
And revisit your existing frameworks. The framework rule is the one most likely to be sitting unexamined in an arrangement established without the mixed procurement analysis in mind.
The takeaways
- If elements could reasonably be separated and you bundle anyway, expect the above threshold or general rules treatment to apply.
- Reasonable separability turns on practical and financial consequences, so record the reasoning while the decision is live.
- Where elements cannot be separated, the main purpose test in Schedule 1 paragraph 4 decides the category and therefore the threshold.
- Exemption only follows the main purpose, under Schedule 2 paragraph 1, not a minor exempt element.
- Check frameworks first: a separable above threshold element can force the whole framework to be treated as above threshold, with section 45 applying to call offs.
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