Why Public Sector Clients Need to Get Their KPI Strategy Right Under the Procurement Act 

When the Procurement Act 2023 came into force, attention largely centred on compliance. Procurement teams focused on understanding new procedures, adapting internal processes and preparing suppliers for the transition. But as the new regime matures, it is vital for the public sector to ensure it can prove that procurement is delivering the outcomes promised.  

This is where the Act’s new KPI requirements become particularly important. For contracts valued above £5 million, contracting authorities must set and publish at least three key performance indicators and report supplier performance against them. Unlike previous procurement regimes, performance data will increasingly be visible beyond the contract management team, creating greater transparency and accountability throughout the supply chain.  

Authorities are now beginning to generate performance data against these KPIs, making the quality and relevance of measurement crucial. 

Why this matters more than ever 

Public sector organisations are under increasing pressure to demonstrate that every pound spent is delivering measurable outcomes, whether that’s improved service delivery, stronger social value, local economic growth, skills development or progress towards sustainability goals. Against a backdrop of constrained budgets and heightened public scrutiny, procurement is no longer simply a buying function but is a key mechanism for delivering wider organisational objectives. 

Measuring success 

The Procurement Act gives contracting authorities a rare opportunity to rethink what success looks like. Rather than relying on traditional measures of cost and programme performance alone, authorities can now embed indicators that reflect the outcomes communities care about most. For a construction project, that might mean tracking local employment, apprenticeships, carbon reduction or the use of local supply chains.  

However, the Act also raises the stakes. Poorly designed KPIs risk driving the wrong behaviours, relying on unreliable data or creating reporting requirements that fail to genuinely reflect supplier performance. Authorities therefore need to ensure their KPIs are meaningful, measurable and aligned with strategic priorities from the outset. Robust data collection, clear targets and consistent supplier engagement will be essential if the published results are to provide genuine insight rather than simply satisfy a compliance requirement.  

The importance of supply chain engagement 

It is also fundamentally important that local authorities engage early with the supply chain, to ensure all parties understand the legislation. Construction frameworks, early contractor involvement and two-stage procurement enable better dialogue and help ensure that SMEs are not missing out due to not understanding the Act’s demands.  

SCF and our NACF partners have been collecting contractor performance data for more than 20 years and therefore have the skills and know-how to support public sector clients with evidencing social value outcomes.  

Clients can work with and use the experience of framework teams to create better, more impactful KPIs while also providing a structured environment for honest feedback and sharing lessons learnt across the industry.  

A final thought 

The real question for public sector organisations is no longer whether they have implemented the Procurement Act. It is whether they are using it to drive better outcomes. As KPI reporting becomes embedded across the sector, the authorities that succeed will be those that view performance measurement not as an administrative exercise, but as a powerful tool for improving projects, strengthening accountability and delivering greater value for the communities they serve.