Lots under the Procurement Act 2023: the official guidance, explained

The key facts

• Lots are a way to split a larger single procurement into smaller chunks which are then procured under separate contracts, potentially with different suppliers.
• Section 18 requires contracting authorities to consider whether the goods, works or services could reasonably be supplied under more than one contract as lots.
• The duty to consider lots now applies to defence and security contracts, which was not the case under the previous regulations.
• There is no prescribed list of reasons for not using lots, but authorities must have regard to the procurement objectives in section 12, including value for money and barriers to participation for small and medium sized enterprises.
• For contracts that are not light touch or utilities contracts, the reasons for not splitting a procurement into lots must be given in the tender notice under regulations 18(2)(q) and 19(2)(a).
• Section 20(7) allows a contracting authority to limit the number of lots any one supplier can tender for, and the maximum must be stated in the tender notice.
• Where the number of lots that may be awarded to one supplier is limited, the maximum number and the criteria for deciding which lots a supplier is awarded must be set out in the tender notice and/or associated tender documents.
• Contracts must still be valued by aggregating the total value of all the lots.
• Lot information runs through the transparency notices: the tender notice, the contract award notice, including the ceased lots field, and the contract details notice, where lot descriptions and estimated values are required by regulation 32(2)(j).

What this guidance is and who it applies to

The guidance on lots is one of the technical guidance documents published to support the Procurement Act 2023. It explains how contracting authorities should approach dividing a larger requirement into smaller contracts, and it is written for practitioners rather than as a substitute for the Act. It should be read alongside the Act and the associated regulations, and read in full.

The definition is simple. Lots are a way to split a larger single procurement into smaller chunks which are then procured under separate contracts, with the possibility that different suppliers win different lots, or that one supplier wins several. The guidance points to the benefits: reducing risk in the supply chain by using more than one supplier, maintaining diversity in the supply market, and encouraging small and medium sized enterprises to bid. One change deserves early attention: the duty to consider lots now applies to defence and security contracts, which was not the position under the previous regulations.

The duty to consider lots

Section 18 creates the core obligation. Before publishing a tender notice, a contracting authority must consider whether the goods, works or services could reasonably be supplied under more than one contract, in other words as lots. This is a duty to consider, not a duty to divide, but it has to happen at the right point in the process and be capable of being evidenced.

The guidance connects the point to section 12. The procurement objectives, and in particular the requirement to have regard to the barriers facing small and medium sized enterprises, strengthen the case for taking the lotting question seriously, because dividing a contract is one of the most direct ways to reduce those barriers. Lots are described as particularly useful for commodity purchases and straightforward service contracts, and the worked example is a cleaning service delivered across multiple sites, divided geographically so that smaller suppliers can compete for the areas they can genuinely serve.

If lots would be feasible, the authority may still decide not to use them, provided it has reasons. There is no prescribed list. The authority must weigh the procurement objectives in section 12, including value for money and integrity, alongside the practical consequences of dividing the work. The reasons the guidance mentions include increased technical risk in delivery, undermining contract liability and contract management, and a disproportionate increase in cost. Pre market engagement is flagged as a useful way to inform that judgement.

Recording the decision and limiting lots per supplier

Where a contract is not divided into lots, the reasons have to be recorded and, for most contracts, published. Regulations 18(2)(q) and 19(2)(a) require the reasons for not splitting a procurement into lots to be included in the tender notice. For light touch contracts and utilities contracts the guidance indicates the reasoning can be held in internal records rather than published in the notice, but the reasoning still has to exist.

Where lots are used, the Act gives authorities two levers to control concentration. Section 20(7) allows a contracting authority to limit the number of lots any one supplier can tender for, and where that limit is applied the maximum must be stated in the tender notice. Separately, an authority may limit the number of lots that can be awarded to a single supplier. In that case the maximum number of lots and the criteria by which it will be decided which of the lots a supplier will be awarded must be set out in the tender notice and/or the associated tender documents, including where the authority intends to allow lots to be combined.

Award follows the normal rule applied lot by lot. Award criteria for each lot are set out in the tender notice and tender documents, and the most advantageous tender for each lot determines who wins it. If no suitable tenders are received for a lot, the authority may be able to use direct award under section 43, or may decide not to award that lot while the others proceed competitively.

Notices, transparency and valuation

Lots surface across the transparency regime, and the guidance sets out where. The tender notice must state whether or not the contract will be split into lots, and if it is, describe the lots and any maximum number a single supplier may tender for or be awarded. If the contract is not being split, the reasons appear here too for contracts that are not light touch or utilities contracts.

The contract award notice comes before the authority enters into the contract and carries lot related information as well. One notice may cover more than one lot where lots are awarded at the same time or to the same supplier, and it contains a ceased lots field used to show lots that are no longer going to be awarded. Before it is published, assessment summaries must be provided to every supplier that submitted an assessed tender for each lot. The contract details notice is published per public contract and must include the lot descriptions and estimated values, as required by regulation 32(2)(j).

Practical application

The practical discipline is to make lotting an explicit, dated decision rather than a default. Ask the section 18 question before the tender notice is drafted, use pre market engagement to test whether the market could realistically deliver in parts, and write down what you concluded and why. Where the answer is no lots, the reasoning needs to be good enough to publish, because for most contracts the tender notice is exactly where it goes.

Then plan the mechanics before going to market. Decide whether to cap the number of lots a supplier may bid for under section 20(7), decide whether to cap the number a supplier may be awarded, and write the criteria that will decide which lots go to whom. These belong in the tender notice and tender documents at the outset. Keep valuation honest at the same time: aggregating the total value of all the lots is the rule, and treating each lot as a separate small contract for threshold purposes is not available.

How eSourcing Data helps

eSourcing Data gives contracting authorities somewhere to make and evidence the section 18 decision. The lotting consideration, the market engagement that informed it and the reasons for dividing or not dividing can be recorded against the project before the tender notice is drafted, so the published reasoning under regulations 18(2)(q) and 19(2)(a) reflects a real, time stamped decision.

The platform then carries lots through the process. Lot structures, per lot award criteria, limits on the number of lots a supplier may tender for or be awarded, and the criteria for allocating lots can be defined up front and applied consistently at evaluation, with assessment summaries produced for suppliers that submitted assessed tenders for each lot. Notice data stays aligned across the tender notice, contract award notice and contract details notice.

Reporting closes the loop. Because aggregate value and lot level detail sit in the same record, commercial leads can see how work has been divided across a pipeline and how many lots individual suppliers hold.

What to do about it

1. 1Ask and answer the section 18 question, whether the requirement could reasonably be supplied under more than one contract, before drafting the tender notice.
2. 2Use pre market engagement to test whether the supply market could deliver the requirement in parts.
3. 3Record the reasons for not dividing into lots, and publish them in the tender notice for contracts that are not light touch or utilities contracts.
4. 4Decide before going to market whether to limit the number of lots a supplier may tender for under section 20(7), and state any maximum in the tender notice.
5. 5If limiting how many lots one supplier can win, publish the maximum and the criteria for allocating lots in the tender notice and/or tender documents.
6. 6Value the contract by aggregating the total value of all the lots, not lot by lot.
7. 7Plan the notice sequence, tender notice, assessment summaries, contract award notice including the ceased lots field, and contract details notice with lot descriptions and estimated values under regulation 32(2)(j).