Treaty state suppliers under the Procurement Act 2023: the official guidance, explained

The key facts

• Section 89 of the Procurement Act 2023 defines a treaty state supplier as a supplier entitled to the benefits of an international agreement specified in Schedule 9 of the Act.
• A treaty state is a state, territory or organisation of states or territories that is a party to an international agreement listed in Schedule 9.
• Section 90 provides that a contracting authority may not discriminate against a treaty state supplier.
• Part 7 rights generally apply only to public contracts, meaning contracts for pecuniary interest that are above threshold and not exempted.
• Section 90(7) treats a UK supplier as one established in, controlled from or mainly funded from the UK, the British Overseas Territories or the Crown Dependencies, and which is not a treaty state supplier.
• Section 19(3)(b) allows a contracting authority to disregard tenders from suppliers that are not treaty state suppliers, and section 20(5)(c) and (d) allow exclusion from a competitive flexible procedure, including where sub-contracting is proposed to such suppliers.
• Section 100 makes the section 90 duty enforceable in civil proceedings, so treaty state suppliers have equivalent access to remedies as UK suppliers.
• Procurements under section 7(1)(a) to (f) are not covered by the Schedule 9 agreements, so only UK, Crown Dependency and British Overseas Territory suppliers are guaranteed participation rights.
• Section 92 allows regulations to implement retaliatory measures where a party to an international agreement does not comply with its procurement obligations.

What this guidance is and who it applies to

This is the Cabinet Office guidance on treaty state suppliers, one of the Define phase documents in the Procurement Act 2023 guidance collection. It explains how contracting authorities must treat suppliers from countries with which the United Kingdom has an international trade agreement, and where the Act still permits an authority to prefer UK suppliers.

The rules sit in Part 7 of the Act. They generally apply only to public contracts, that is contracts for pecuniary interest which are above threshold and are not exempted. Below threshold, the position is different: the guidance is clear that Part 7 does not generally stop an authority reserving a below threshold procurement for UK suppliers, or for suppliers from a particular region or county.

The audience is broad. Any contracting authority running an above threshold competitive procurement needs to understand who counts as a treaty state supplier, because the answer changes what the authority may lawfully do when it shortlists, evaluates and awards. Suppliers established outside the UK need it for the opposite reason: it tells them when they have enforceable rights, and when they do not.

Who counts as a treaty state supplier

Section 89 of the Act defines a treaty state supplier as a supplier that is entitled to the benefits of an international agreement specified in Schedule 9. A treaty state is a state, territory or organisation of states or territories that is a party to one of those agreements. Schedule 9 is the definitive list, and it is updated as agreements change or as new agreements come into force.

The important point in the guidance is that treaty state supplier status is not a permanent badge attached to a company. A supplier may be a treaty state supplier for one procurement and not for another. Whether it qualifies depends on whether its country has a relevant agreement with the UK, whether that agreement covers the contracting authority in question, whether the goods, services or works being procured fall within scope, and whether the provisions of the Act being relied on are themselves covered by the agreement.

That is because each agreement contains a procurement chapter with market access schedules. Those schedules set out which entities are covered, for example central government departments, sub central authorities or utilities, and which goods, services and construction works are covered, together with exceptions. The guidance notes that the agreements are publicly available online, and that exemptions can include areas such as healthcare, research and development services and broadcasting content.

Section 90(7) defines the comparator. A UK supplier is one established in, controlled from or mainly funded from the UK, the British Overseas Territories or the Crown Dependencies, and which is not itself a treaty state supplier.

The duty not to discriminate

Section 90 is the operative obligation: a contracting authority may not discriminate against a treaty state supplier. Section 90(2) explains what discrimination means. An authority discriminates if it treats a treaty state supplier less favourably than it treats a UK supplier or another treaty state supplier, because of the supplier's association with its treaty state, or because of its lack of association with the UK or with another treaty state.

The duty also reaches the origin of what is being bought. Less favourable treatment because goods, services or works originate in a treaty state is caught in the same way. The test is comparative: the treatment of the treaty state supplier is measured against the treatment of a UK supplier or another treaty state supplier in circumstances which are not materially different.

Section 100 gives the duty teeth. Compliance with section 90 is enforceable in civil proceedings under the Act, which means a treaty state supplier has equivalent access to remedies as a UK supplier for the procurements that are covered. Suppliers that are neither UK suppliers nor treaty state suppliers cannot bring civil proceedings, although they may still complain to the contracting authority or raise the matter with the Procurement Review Unit. Under section 65, treaty state suppliers and UK suppliers may appeal court decisions relating to ministerial debarment.

Where you may still exclude, and the defence position

The Act does not require authorities to open every competition to the world. Section 19(3)(b) permits a contracting authority to disregard tenders from suppliers that are not treaty state suppliers in a competitive tendering procedure. Section 20(5)(c) and (d) allow an authority to exclude such suppliers from a competitive flexible procedure, and to exclude suppliers that propose to sub contract performance of all or part of the contract to suppliers that are neither UK nor treaty state suppliers.

The guidance sets an important sequence before any of that happens. The authority must first satisfy itself that the supplier really is not a treaty state supplier for this procurement, and that the goods, services or works are not covered by a relevant agreement. Getting that wrong is what creates legal risk. The guidance also frames the decision as a value for money one: disregarding tenders should be done for value for money reasons rather than as a reflex.

Defence and security is treated separately. Procurements falling under section 7(1)(a) to (f) are not covered by the Schedule 9 agreements. For those, only UK suppliers and suppliers from the Crown Dependencies and British Overseas Territories are guaranteed participation rights, and an authority may exclude treaty state suppliers or restrict sub contracting to those territories. For contracts falling under section 7(1)(g), and for other procurements by defence authorities, the authority must check Schedule 9 coverage, because treaty state suppliers may well have participation rights.

Two further points sit alongside this. Where national security concerns arise about a supplier, the guidance directs authorities to engage the National Security Unit for Procurement in the Cabinet Office, which supports exclusion and debarment referrals. And section 92 allows regulations to implement practical retaliatory measures where a party to an international agreement does not comply with its procurement obligations, for example by removing market access for particular goods or services. That power is exercised through Parliament and concerns procurement only.

Applying this in practice

The practical work happens early, in the define stage, not at evaluation. Before you decide the shape of the market, establish whether your organisation is a covered entity under the relevant agreements, and whether the goods, services or works in scope are covered. That single check determines whether you have discretion over supplier nationality at all.

Record the reasoning. Because status is procurement specific, a decision that was correct on last year's contract may be wrong on this one. Authorities that keep a short written assessment on file, naming the agreement considered and the conclusion reached, are in a far stronger position if a decision is challenged. The same applies to any decision to disregard a tender under section 19(3)(b) or to exclude under section 20(5), where the value for money rationale should be visible.

Finally, make sure the tender documents say what you have decided. If sub contracting to suppliers outside the UK and treaty states will disqualify a bid, that must be clear to bidders from the outset rather than discovered at award. Consistent treatment of comparable bidders across shortlisting, clarification and scoring is what the section 90(2) comparison will actually be tested against.

How eSourcing Data helps

The treaty state rules are a documentation problem as much as a legal one. The Act's non-discrimination duty is enforceable in civil proceedings, so the question a challenged authority faces is whether it can show that comparable suppliers were treated the same way in circumstances that were not materially different. eSourcing Data captures that evidence as a by product of running the procurement: every clarification, every shortlisting decision and every score is time stamped and attributable, so the audit trail exists without anyone assembling it after the fact.

The platform also helps at the point where the decision is actually made. Define stage questions about scope, coverage and any restriction on sub contracting can be recorded against the procurement record, so the reasoning sits with the competition rather than in someone's inbox. Where an authority decides to restrict participation, that decision and its value for money rationale can be documented once and reflected consistently in the notices and tender documents issued to the market.

For below threshold work, where the Act allows reservation to UK or regional suppliers, eSourcing Data supports lighter workflows that keep the same discipline of consistent treatment and retained records. Nothing here replaces legal advice on whether a particular agreement in Schedule 9 applies to your organisation. What the platform does is make sure that once you have taken that decision, it is applied uniformly and can be evidenced.

What to do about it

1. 1Check Schedule 9 of the Procurement Act 2023 and the relevant market access schedules to confirm whether your organisation is a covered entity for the procurement in hand.
2. 2Confirm whether the specific goods, services or works you are buying fall within the scope of a relevant agreement, and note any exemptions that apply.
3. 3Record a short written assessment of treaty state supplier status for each above threshold procurement, since status is procurement specific and not permanent.
4. 4Decide early whether you will disregard tenders under section 19(3)(b) or exclude under section 20(5), document the value for money rationale, and state it in the tender documents.
5. 5Check whether your defence procurement falls under section 7(1)(a) to (f), which are outside Schedule 9 coverage, or under section 7(1)(g), where treaty state suppliers may have participation rights.
6. 6Engage the National Security Unit for Procurement in the Cabinet Office where national security concerns arise about a supplier.
7. 7Review your below threshold policy to confirm any reservation to UK or regional suppliers is deliberate, documented and consistently applied.