The Government’s latest guidance on the Procurement Act 2023 reinforces a fundamental change in public sector contracting: supplier performance is no longer solely a matter between the contracting authority and its supplier.
Under Sections 52 and 71 of the Act, contracting authorities must establish and publish KPIs for qualifying public contracts with an estimated value exceeding £5 million, subject to specified exceptions. From January 2026, the statutory performance reporting provisions have introduced a further responsibility. Authorities must assess and publish supplier performance against the relevant KPIs at least once every twelve months and on termination.
What happens when the KPIs are poorly designed?
Consider a £12 million facilities management contract where the supplier achieves 98% compliance with planned maintenance schedules. On paper, performance appears excellent. However, building users are experiencing repeated heating failures, emergency repairs are taking too long, and complaints are increasing.
The problem is that the performance measures may be recording activity rather than the outcomes that matter to the authority.
Publishing these results does not necessarily demonstrate that the contract is delivering value for money.
What should public sector contract managers do?
I would advise they:
- Establish KPIs that measure meaningful contractual outcomes.
- Distinguish strategic KPIs from operational SLAs and management information.
- Define targets, thresholds, tolerances and measurement methods.
- Ensure performance information is reliable and auditable.
- Establish escalation and corrective action procedures.
We are running our very popular “Designing Contract Performance Management Regimes under the Requirements of the Procurement Act” course. 15-16 December 2026. This provides practical training in developing meaningful KPI and SLA regimes, monitoring supplier performance and protecting contractual value. This course is also available as an in-house tailored event.
Check out our course: Designing Contract Performance Management Regimes
