Dynamic markets under the Procurement Act 2023: the official guidance, explained

The key facts

• A dynamic market is a list of qualified suppliers who have met the conditions for membership and are eligible to participate in future procurements.
• Dynamic markets must remain open to new suppliers to join at any time, and the number of suppliers on a market cannot be limited.
• Conditions for membership cannot be modified during the life of the dynamic market.
• Markets may be divided into categories called parts, with suppliers only eligible for the parts they qualify for.
• Contracts under a dynamic market must be awarded using the competitive flexible procedure, not the open procedure and not direct award.
• Four notices are required: a dynamic market intention notice under section 39(2), an establishment notice under section 39(3), a modification notice under section 39(4) and a cessation notice under section 39(5).
• Any fee on a standard dynamic market may only be charged to suppliers awarded a contract, as a fixed percentage of the estimated value of that contract.
• Utilities dynamic markets are established under section 40 by a qualifying utilities dynamic market notice and follow different rules.
• Mandatory standstill and the section 54(4) reduction of tendering periods do not apply, although a voluntary standstill is permitted.

What this guidance is and who it applies to

The guidance explains how dynamic markets operate under the Procurement Act 2023. Dynamic markets replace the dynamic purchasing systems and qualification systems that practitioners used under the previous regime, and the guidance is written for contracting authorities and utilities that want to establish or use one. It should be read with the Act and the associated regulations rather than in place of them.

Dynamic markets are available for all types of purchase of goods, services or works, other than purchases under concession contracts, unless the concession contract is also a utilities contract. That makes them a broad tool: any contracting authority may establish one, and any authority may buy through one where the establishment documents allow it.

The guidance describes a dynamic market as a list of qualified suppliers, meaning suppliers who have met the conditions for membership, who are then eligible to participate in future procurements. Markets can be split into categories called parts, so a supplier that qualifies for one part is only eligible for competitions run under that part.

Conditions for membership and how applications are handled

Conditions for membership must be proportionate, and the guidance draws a direct parallel with conditions of participation under section 22 of the Act. They exist to test a supplier's legal and financial capacity or technical ability to perform contracts, and nothing more. The same limits that apply to participation conditions apply here: an authority cannot demand audited accounts from a supplier that is not legally required to have its accounts audited, cannot require insurance relating to performance of the contract before award, cannot require the supplier to have held a contract with a particular authority, and cannot set requirements that breach the rules on technical specifications or demand particular qualifications without allowing equivalents.

Authorities may require evidence that is verifiable by a third party in order to satisfy a condition for membership, for example certification to an ISO standard. That is a practical point worth planning for, because it shapes how much assurance work sits with the market and how much sits with the buying team at competition stage.

The handling duties are specific. An authority that establishes a dynamic market must accept applications for membership at any time, consider applications within a reasonable period of time, admit suppliers as soon as reasonably practicable provided they are not excluded suppliers and they meet the conditions, and inform suppliers of the outcome of their applications and the reasons for the decision as soon as reasonably practicable. Two further rules give dynamic markets their character: the number of suppliers cannot be limited, and the conditions for membership cannot be modified during the life of the market.

The openness runs into the competition itself. Authorities must exclude suppliers that are not members from participating or progressing in the competitive flexible procedure, and must not award a contract to a non member. However, a supplier that is not yet a member may apply for membership even after the tender notice has been published, and the authority must consider that application before excluding the supplier or disregarding its request to participate or its tender, unless exceptional circumstances such as the complexity of the assessment make timely consideration impossible.

Notices, fees, modification and removal

The Act builds a notice at every stage of the life of a dynamic market. A dynamic market intention notice under section 39(2) is published before the market is established. A dynamic market establishment notice under section 39(3) follows once it exists. A dynamic market modification notice under section 39(4) is published promptly after changes and, under regulation 25(6), must give the date the modifications take effect, details of suppliers added or removed and a summary explaining any other modifications being made. A dynamic market cessation notice under section 39(5) closes the market, and under regulation 25(8) carries basic administrative information and the date the market ceased to operate. Each notice covers only one dynamic market, so separate notices are needed where an authority runs several.

Fees are dealt with under section 38. A fee may be charged only if it is provided for in the documents establishing the market, and on a standard dynamic market it may only be charged to suppliers that are awarded a contract, calculated as a fixed percentage of the estimated value of the contract awarded to that supplier under the market. There is no membership fee for simply being on the list. Utilities dynamic markets operate under different fee arrangements.

Removal has both a mandatory and a discretionary limb. An authority must remove a supplier that is an excluded supplier under section 57(1)(b). It may remove a supplier that is an excluded supplier under section 57(1)(a), that no longer meets the conditions for membership, that has become an excludable supplier since being admitted, or that was excludable when it was admitted but this was not identified at the time. Before removing a supplier the authority must inform it that it is being removed and the reasons why, and a removed supplier may apply again if it later satisfies the conditions.

Buying through a dynamic market

Section 34 restricts the route to market. Contracts under a dynamic market must be awarded using the competitive flexible procedure. The open procedure is not available for a dynamic market competition, and direct award cannot be used under the market either, although an authority is not prevented from awarding a contract to a supplier that happens to be a market member through a separate procurement outside the market.

The tender notice must state that the contract is being awarded by reference to suppliers' membership of a dynamic market, and the guidance encourages authorities to be clear that membership is a requirement of participation. The minimum tendering period of 10 days still applies, and the reduction provisions in section 54(4) do not. The provisions on mandatory standstill do not apply to awards under a dynamic market, although an authority may choose to run a voluntary standstill period.

Transparency duties reach beyond the market itself. Anticipated expenditure through a dynamic market counts towards the 100 million pound threshold that triggers pipeline reporting, and contracts with an estimated value over 2 million pounds must be listed in pipeline notices. Utilities dynamic markets sit in a separate regime again: they are established under section 40 by a qualifying utilities dynamic market notice, they may only be used for utilities contracts and may include utilities concession contracts, tender notices are sent to market members rather than published, and the content requirements for notices differ.

Practical application

The design decisions that matter are made before the intention notice is published, because the conditions for membership are fixed for the life of the market. Teams should set conditions that are genuinely proportionate to the range of contracts the market will carry, decide whether parts are needed to reflect different capability sets, and settle in the establishment documents whether a fee will apply and on what basis. Getting the parts structure wrong is expensive, because the way to fix it later is a modification notice rather than a quiet internal adjustment.

Operationally, the market needs a running process rather than a project team that stands down after launch. Applications arrive at any time, must be considered within a reasonable period and decided as soon as reasonably practicable, with reasons given either way. Membership status has to be checked again at competition stage, and late applications from suppliers wanting to bid have to be assessed rather than ignored. Removals need their own trail: the ground relied on, the notice to the supplier and the reasons given.

Category teams should also plan the demand side. A dynamic market only earns its keep if real competitions run through it, and each of those competitions is a competitive flexible procedure that the authority has to design. Pipeline transparency, notice discipline and a clear internal statement of who may buy through the market keep it from becoming a list that nobody uses.

How eSourcing Data helps

eSourcing Data gives an authority one place to run a dynamic market as the continuous process the guidance describes. Supplier applications can be accepted at any time, assessed against the published conditions for membership, and decided with the outcome and reasons recorded and issued to the supplier, so the duty to inform applicants is met as a matter of routine rather than a manual chase.

Because membership status drives eligibility, the platform keeps the market register, the parts a supplier qualifies for and the history of admissions and removals in one auditable record. That supports the harder moments: a late application from a supplier that wants to bid on a live competition, a mandatory removal under the exclusions regime, or a challenge where the authority needs to show what it decided and when.

On the buying side, competitions can be run as competitive flexible procedures drawn from the market, with tender notices, tendering periods, evaluation and award all logged against the procurement. Notice management covers the intention, establishment, modification and cessation stages, and reporting lets commercial leads see market expenditure and forthcoming requirements alongside the rest of the pipeline.

What to do about it

1. 1Fix the conditions for membership before publishing the dynamic market intention notice, because they cannot be modified later.
2. 2Decide whether the market needs parts, and define them around real supplier capability rather than internal structure.
3. 3Set out in the establishment documents whether a fee applies, remembering it can only be charged to suppliers awarded contracts as a fixed percentage of estimated contract value.
4. 4Stand up a standing process to accept, assess and decide membership applications at any time, with reasons issued to applicants.
5. 5Build a step into every competition to check membership and to assess late membership applications before excluding a supplier.
6. 6Plan each buying event as a competitive flexible procedure, and record the tender notice statement that award is by reference to dynamic market membership.
7. 7Track anticipated dynamic market expenditure for pipeline reporting, including contracts estimated above 2 million pounds.