Buy well, manage well, pay well: the new rules of public procurement

Public procurement is moving into a new phase. The Procurement Act 2023 has changed more than the rules for running a compliant tender process, and the developing Commercial Payments Bill points in the same direction: organisations spending public money will increasingly be judged on how contracts are managed, how suppliers are paid and how supply-chain risk is controlled after award.

For housing associations and public bodies, that shift matters. Development, retrofit, maintenance and repairs rely on supply chains that need to work in practice, not just on paper. A compliant award is only the start.

The Procurement Act reaches beyond award

The Procurement Act includes obligations relating to contract performance, modifications, termination, payments and transparency. Procurement, operational, finance, commercial and legal teams need to consider the entire contract lifecycle, not simply the tender process.

Why payment now matters beyond finance

Section 68 of the Act implies payment terms into most public contracts. In broad terms, sums due must be paid within 30 days of receipt of an invoice or, if later, when payment falls due in accordance with the invoice, subject to the statutory provisions on disputed or invalid invoices.

Section 73 carries equivalent protections into public sub-contracts, helping to ensure that prompt payment does not stop at the first tier of the supply chain.

For housing associations, delivery often depends on networks of contractors, subcontractors, consultants and specialist SMEs. Payment delays can quickly become an operational as well as a financial problem.

The transparency position needs particular care in Wales. Section 69 payments compliance notices took effect for procurement regulated by the Welsh Ministers on 1 April 2026, following commencement elsewhere in January. Section 70, concerning information about individual payments above the statutory threshold, has not yet commenced . Organisations must identify which requirements apply to their procurement, rather than assume a uniform UK position.

Reliable data and clear accountability matter beyond statutory reporting: they show whether payment processes actually work. That means tracking invoice disputes and approval bottlenecks, as well as payment dates. Contract reviews should also test whether main contractors can evidence payment to subcontractors, rather than relying only on a promise in the tender.

The Commercial Payments Bill raises the stakes

The Bill completed its House of Lords third reading on 20 October 2026 and has moved to the Commons.  The practical task is to prepare for the proposals that emerged from the Lords, while recognising that they are not yet law.

Those proposals include maximum commercial payment periods, mandatory statutory interest that cannot be contracted out of, stronger payment-dispute remedies and expanded Small Business Commissioner powers. The general ceiling would be 60 days for private purchasers and 30 days for public authorities, which retains the 30 day period under the Procurement Act.

The Bill would also amend the Procurement Act directly through Schedule 1, Part 3. One amendment would replace section 69’s reference to compliance with the 30-day term with the broader concept of “payment performance”. That wording does not itself create an additional payment deadline. For ordinary public contracts, a separate amendment would remove section 68’s alternative later invoice-due-date starting point, making receipt the basis of the 30-day period.

It nevertheless offers a useful management lens. Procurement leaders should ask where delays arise, whether invoice validation is proportionate, what happens further down the supply chain and what payment data reveals about contract management. Paying the main contractor promptly is not enough if money then stalls before reaching the businesses delivering the work.

Why this matters in housing

Housing supply chains support new homes, decarbonisation, building safety and day-to-day services. Many essential suppliers are SMEs with limited capacity to absorb payment delays.

Poor payment practice can mean higher tender prices, reduced supplier appetite, disputes, financial pressure on subcontractors and disrupted programmes. Residents ultimately bear the consequences.

Consider a small repairs contractor whose invoices sit unapproved while teams resolve internal coding queries. Even where the work is complete, delayed payment may leave less cash for materials and subcontract labour, putting later appointments at risk. The problem is not the payment clause: it is the approval process.

Good payment practice is therefore part of effective delivery, not simply supplier goodwill.

Construction retentions need attention

The Bill introduces a proposed prohibition on construction retentions is particularly important for housing associations. Retentions provide leverage over completion and defects, but also remove working capital from the supply chain. Reform requires more than deleting a clause from the next building contract.

The Bill provides a two-year transition from commencement of the relevant retention provision before newly agreed retention clauses become void. Covered transitional clauses would cease to operate after a “last retention day” three years from that same commencement, with separate rules for paying retained sums. This is not an immediate release of every historic retention, nor a timetable running from Lords passage.

Associations should review existing arrangements alongside future projects, considering bonds, guarantees, insurance, inspections and contractor performance management. The aim is to protect quality without simply replacing one cashflow burden with another. A bond or guarantee is not necessarily a like-for-like substitute: availability, cost and the circumstances in which it can be called all matter.

The Bill also introduces specific payment machinery for public construction contracts and sub-contracts, aligning the Procurement Act with the Housing Grants, Construction and Regeneration Act 1996. The proposed construction regime generally limits the final date for payment to 30 days after the due date, rather than treating invoice receipt as the universal starting point.

For example, a works contract with a final date 45 days after the due date would need review against that proposed limit. Procurement, construction and finance teams should check the payment cycle together, rather than assume that adding a generic “30-day payment” clause fixes it.

The Welsh policy context

Housing associations are not directly subject to the socially responsible procurement duty under the Social Partnership and Public Procurement (Wales) Act 2023 merely because they are housing associations. Its defined list of contracting authorities is different from the Procurement Act’s. But the distinction between legal obligation and policy direction matters.

The wider objective remains relevant: procurement should improve social, economic, environmental and cultural well-being. Fair work and responsible supply chains are part of that policy picture. Prompt payment helps sustain local businesses able to invest in jobs, apprenticeships and communities. At Lords third reading, the Government said Welsh legislative consent was still being sought. Welsh implementation and delegated powers therefore remain matters to monitor, not assumptions to make from the Bill’s territorial extent alone.

From compliance to commercial management

This is not a task for procurement alone. Finance systems must deliver the payment terms; contract managers must monitor supply-chain obligations; and operational teams must approve work promptly. Without shared ownership, compliant drafting can conceal poor commercial performance.

Procurement professionals need the authority and skills to connect those functions: understanding markets, interpreting commercial data and challenging supplier behaviour, as well as applying the rules. There is an opportunity here to lead commercial decisions, not just police the process. That requires visibility of performance after award and a place in discussions about supplier resilience, operational priorities and how contractual risks are allocated.

Boards and procurement leaders need not wait for the Bill to become law. They should ask whether:

• payment terms in standard contracts properly reflect the Procurement Act requirements;
• procurement, finance and contract management systems are aligned to deliver those requirements in practice;
• payment data is reliable and supports the reporting requirements applicable to their organisation;
• supply-chain payment obligations are properly flowed down and monitored;
• asset teams have reviewed retentions and alternative performance security across existing and future contracts; and
• boards receive enough information to understand commercial performance, rather than procurement compliance alone.

Buy well. Manage well. Pay well.

Another compliance checklist will not be enough. The direction is to buy well through fair procurement, manage well through active oversight, and pay well throughout the supply chain. Each depends on the others.

The next test of procurement leadership is whether organisations connect those responsibilities. For housing associations, success should be measured not only by a defensible award, but by reliable delivery, resilient suppliers and better outcomes for residents.

This article reflects the position at 6 November 2026, including the Bill’s Lords third reading on 20 October. The Bill remains subject to parliamentary amendment and commencement arrangements.