PPN 024 introduces a mandatory Public Interest Test and five-year insourcing strategies, changing how UK government departments decide whether to outsource contracts.
If your business provides services to the UK government, you are likely used to a predictable cycle. A public contract comes to an end, the department puts it out to tender, and suppliers bid to win the renewal.
However, a newly released policy is about to completely disrupt that pattern.
On 17 June 2026, the Cabinet Office published an important new directive called Procurement Policy Note 024 (PPN 024): The Public Interest Test and Insourcing Strategy. This policy introduces a strict mandate: before the government spends money with external suppliers, it must formally prove that it cannot do the job itself. You can read the official document directly via the government's PPN 024 Policy PDF.
For the Supplierverse community, this signals a massive shift in priority. Here is a clear, fluff-free breakdown of what this policy means, who it affects, and how it impacts your business.
17 Jun 2026
PPN 024 published
1 Apr 2027
rules take effect
GBP 1m+
Public Interest Test threshold
GBP 100m+
5-year strategy threshold
What is a PPN and What is Insourcing?
Public sector procurement is full of acronyms that can feel like a foreign language. Let us break down the core terms used in this new policy.
- What is a PPN? A Procurement Policy Note is an official instruction issued by the Cabinet Office. Think of it as a mandatory rulebook update for government buyers, telling them exactly how they must handle public spending and supplier assessments.
- What is Insourcing? This is the exact opposite of outsourcing. Instead of hiring an external private company to handle a service, the government decides to handle the service in-house, using its own internal staff and resources.
The Two New Hurdles for Government Buyers
The core objective of PPN 024 is to stop public bodies from defaulting to the private market automatically. To achieve this, the government is introducing two major mechanisms that take effect on 1 April 2027.
How The New Gate Works
Contract Identified
new or renewal
→
Public Interest Test
GBP 1m+ incl. VAT
→
Record Outcome
quarterly reporting
→
Route Selected
insource or outsource
1. The Mandatory Public Interest Test
From April 2027, before starting any new project or contract renewal worth more than GBP 1 million (including VAT), government buyers must run a formal evaluation called a Public Interest Test.
Historically, when deciding whether to outsource, the government looked almost exclusively at the price tag. Under the new rules governed by the Procurement Act 2023, buyers are required to move past simple cost comparisons. They must explicitly analyze whether bringing the service in-house would better support wider national resilience, rebuild state capability, or meet broader economic and social goals.
The findings cannot be hidden either. Government departments must record the outcomes of every single test and submit quarterly reports to the Government Commercial Agency.
2. The Five-Year Insourcing Strategy
For the heavy spenders, the rules go even further. Any public organization with an annual contract spend of GBP 100 million or more must develop and publish a comprehensive five-year Insourcing Strategy by 1 April 2027.
The goal here is long-term planning. By forcing departments to map out their service needs five years in advance, the government wants to give itself enough lead time to hire staff, build internal skills, and prepare to take over services rather than renewing contracts with private suppliers.
Who Does This Apply To? (And What is Exempt?)
This policy applies directly to central government departments, executive agencies, and non-departmental public bodies. Local councils and other public authorities are not legally bound by it yet, though the Cabinet Office is actively encouraging them to adopt the same mindset.
It is also important to note that this is not a blanket ban on outsourcing. The Public Interest Test will not apply to certain types of contracts, including:
- Direct awards made during extreme emergencies or to protect public safety.
- Service contracts where the work is primarily delivered outside of the United Kingdom.
- Regulated health services that fall under specialized healthcare procurement regimes.
- Defense and security service contracts that must be delivered by the original equipment manufacturer.
| In Scope |
Exempt |
| Central government departments |
Emergency/public safety direct awards |
| Executive agencies |
Services primarily delivered outside the UK |
| Non-departmental public bodies |
Regulated health services |
| Local councils encouraged (not yet mandatory) |
Defense/security OEM-delivered services |
What Does This Mean for Private Suppliers and SMEs?
If you are an independent supplier or an SME, it is completely natural to look at an "insourcing strategy" and worry that public sector opportunities are shrinking. While some services will undoubtedly be brought back in-house, the reality is more nuanced.
First, PPN 024 does not force the government to insource everything. It simply forces them to give structured, evidence-based consideration to the option. If the government lacks the technical capacity, specialized software, or infrastructure to run a service efficiently, the contract will still go out to the private market.
Second, this policy creates a powerful filtering system. The contracts that do make it past the Public Interest Test and make it to the Find a Tender portals will be highly verified, essential projects. Because the government is looking to build long-term resilience, they will be looking for commercial partners who can deliver genuine social value, high-quality output, and robust operational security.
How to Prepare for 2027
The countdown to April 2027 has begun, and government departments are already reviewing their pipelines. If you want to protect your public sector revenue, now is the time to act:
- Audit Your Current Contracts: Identify which of your existing government contracts are valued over GBP 1 million and are up for renewal after April 2027. These will be subject to the Public Interest Test.
- Refocus Your Value Proposition: When pitching or bidding, stop focusing solely on being the cheapest option. Start emphasizing how your business builds long-term resilience, trains local workforces, and offers specialized innovation that the government cannot easily replicate internally.
- Watch the Public Strategies: Once large departments publish their five-year Insourcing Strategies in mid-2027, read them carefully. They will serve as an exact roadmap showing you which services the government intends to keep, and which ones they will continue to outsource.
The era of automatic contract renewals is coming to an end. By understanding these structural policy shifts early, you can position your business as an irreplaceable partner to a more deliberate, value-focused government market.