PPN 024 The Public Interest Test and Insourcing Strategy: the official action note, explained

The key facts

• PPN 024 is an action note issued in June 2026 introducing the Public Interest Test and the Insourcing Strategy.
• It applies only to central government departments, their executive agencies and non-departmental public bodies. Other contracting authorities are encouraged to adopt the approach.
• The Public Interest Test applies before commencing any planned project, including re-procurements, for a service with an estimated value of more than £1 million including VAT that may result in a public contract under the Procurement Act 2023.
• Public Interest Tests should be applied from 1 April 2027, and are not required for in-progress projects that have already completed a Strategic Outline Case, Delivery Model Assessment or equivalent internal governance stage at that date.
• Outcomes of all Public Interest Tests must be recorded on the quarterly reporting template and submitted to the Government Commercial Agency within 30 days of the end of each calendar quarter.
• The first quarterly return covers 1 April 2027 to 30 June 2027 and is due by 30 July 2027, with organisations responsible for redacting sensitive information.
• Organisations with annual contract spend of £100 million including VAT or more must develop and publish a five year Insourcing Strategy within 30 days of 1 April 2027.
• Exceptions include direct awards under sections 41 and 42, exempted contracts under Schedule 2, certain defence and security contracts, services delivered outside the UK, some regulated health procurement, and procurements solely to establish a framework or dynamic market.
• Where a Public Interest Test led to establishing a framework or dynamic market, subsequent call-off contracts for the same service do not require further Tests.

What PPN 024 is and who it applies to

PPN 024 is a June 2026 action note that introduces two linked mechanisms: the Public Interest Test, applied before individual sourcing decisions, and the Insourcing Strategy, a five year forward look. The premise is that sourcing decisions critically impact the quality of public services and the delivery of government objectives, and that insourcing can be a crucial mechanism for enhancing value, control and resilience.

The note applies only to central government departments, their executive agencies and non-departmental public bodies, referred to as in-scope organisations. Other public sector contracting authorities may adopt the approach and are explicitly encouraged to do so. It should be circulated to commercial, procurement, contract management and security colleagues, and may also be relevant to finance, operational and sustainability roles.

Its diagnosis of the problem is that sourcing decisions have historically been made on a contract by contract basis, whereas effective sourcing of public services requires a longer term approach and the capability and capacity to consider delivering the service directly. A new approach is described as necessary to guarantee that the viability of internal delivery is explored consistently.

When the Public Interest Test applies, and when it does not

The Test applies prior to commencing any planned project, including re-procurements, for a service with an estimated value of more than £1 million including VAT that may result in the award of a public contract under the Procurement Act 2023. Note the inclusion of VAT in the value test, which differs from the exclusive of VAT convention many teams are used to from the older regulations.

The exceptions list is detailed. It covers direct award contracts under section 41 of the Act, which permits direct awards for special cases including extreme urgency, prototypes, exclusive rights, repeat requirements, commodities, insolvency and user choice contracts, with the exception of the justification in paragraph 6 of Schedule 5 relating to absence of competition for technical reasons. It also covers direct awards under section 42 necessary to protect life or public safety, and exempted contracts under Schedule 2.

Further exceptions cover defence and security contracts for services related to defence and security goods where those services are delivered by the original equipment manufacturer, service contracts whose primary object is services delivered outside the UK, contracts for regulated health procurement exempted under Regulation 43 of the Procurement Regulations 2024, and certain policy or programme evaluation, research, or technical data or analysis development work meeting the criteria in section 4.2 of the guidance.

Two further exceptions reflect the structure of the regime itself. Where a specific individual service requirement has already been explicitly appraised within the Insourcing Strategy, with analysis of similar rigour to the Test, no separate Test is needed. And procurements solely to establish a framework or dynamic market are excluded, as are subsequent call-offs for the same service where the Test led to that framework or dynamic market being established.

The three actions and their deadlines

The first action is to conduct a Public Interest Test before commencing any in-scope planned project or re-procurement, using the accompanying guidance and subject to the exceptions. Tests should be applied from 1 April 2027. They are not required for in-progress projects that, at the date of commencement, have already completed a Strategic Outline Case, Delivery Model Assessment or equivalent internal governance stage.

The second action is reporting. Outcomes of all Public Interest Tests must be recorded using the provided quarterly reporting template and submitted to the Government Commercial Agency within 30 days of the end of each calendar quarter. The first return covers 1 April 2027 to 30 June 2027 and is due by 30 July 2027. In-scope organisations are responsible for redacting sensitive information before submission.

The third action applies to larger spenders. Where an organisation has annual contract spend of £100 million including VAT or more, it must develop and publish a five year Insourcing Strategy, completed by 1 April 2027 and published within 30 days of completion. The Strategy is not just a document: it can discharge the need for individual Tests where a specific service requirement has already been appraised within it to comparable rigour.

Why this changes sourcing decisions

The stated rationale is that a new framework is necessary to systematically evaluate the option of delivering services in house before a procurement begins, placing greater emphasis on rebuilding state capability and long term national resilience. This is a shift in default posture: internal delivery has to be actively considered rather than assumed away.

The note is critical of past practice on value for money, saying government assessments have often focused too narrowly on the cost element of service delivery when comparing insourcing to traditional market options. The accompanying guidance is designed to encourage a broader view, with a methodology for evaluating internal delivery models so that sourcing decisions move beyond simple cost comparisons and take account of wider government objectives alongside economic and social goals.

The five year strategies serve a timing purpose. Identifying insourcing opportunities early in the project lifecycle provides the lead time required to build internal skills and operational readiness, supporting what the note calls a more interventionist, market shaping approach in central government procurement. Any resulting insourcing or outsourcing decision must still be carried out in accordance with the Procurement Act 2023, and organisations should make a case by case assessment of whether a service is a good candidate for insourcing.

How eSourcing Data helps

The Public Interest Test creates a new gate before procurement starts, and a new record that has to survive quarterly reporting. eSourcing Data supports that by holding the pre-procurement decision alongside the competition it leads to, so the Test outcome, the reasoning and the eventual award sit in one audit trail rather than in a business case document that becomes detached from the procurement record.

Reporting is where structure pays. Because outcomes of all Tests must be submitted to the Government Commercial Agency within 30 days of each quarter end, organisations need a reliable list of which projects crossed the £1 million including VAT threshold, which were excepted and why, and what each Test concluded. Pipeline and reporting views built on live procurement data make that return an extract rather than a hunt.

The Insourcing Strategy needs the same underlying evidence at portfolio level: contract expiry dates, annual spend by service, and which requirements have already been appraised. Consolidated supplier and contract records give commercial leads a defensible base for a five year forward look, and make it easier to show which service requirements the Strategy has already covered to the depth needed to displace an individual Test.

What to do about it

1. 1Confirm whether your organisation is in scope and whether annual contract spend reaches £100 million including VAT, which triggers the Insourcing Strategy duty.
2. 2Build a pipeline view of planned services projects and re-procurements estimated above £1 million including VAT.
3. 3Map which of those fall within the exceptions, recording the specific ground relied on.
4. 4Add a Public Interest Test gate to your governance before Strategic Outline Case or Delivery Model Assessment sign off, ready for 1 April 2027.
5. 5Set up the quarterly reporting process and redaction review so the first return, covering 1 April to 30 June 2027, can be submitted by 30 July 2027.
6. 6Start the five year Insourcing Strategy early enough to complete it by 1 April 2027 and publish within 30 days.
7. 7Assess where internal delivery capability and capacity would need to be built, since lead time is the point of the forward look.