The Cabinet Office has launched new procurement guidance for departments and agencies that aims to prioritise national security and supply chain resilience above short-term savings.
The move is designed to “draw a line” under approaches to the UK’s annual £400bn procurement spend that have left the nation “exposed to global shocks”, like the closure of the Hormuz Strait and Russia’s invasion of Ukraine.
The guidance looks to highlight the power of public spending to safeguard sovereign capability and support businesses, jobs, and skills across the UK.
A procurement policy note published on Friday states: “National security extends beyond defence; true resilience requires supporting critical sectors and securing supply chains so they can be relied upon during crises to protect the UK’s national security. This means understanding that foundational assets like steel and shipbuilding are capabilities essential to the UK’s security rather than mere commodities and treating them as such.”
It continues: “It means procuring emerging essentials like artificial intelligence and energy infrastructure with strategic intent to strengthen our resilience and ensure the UK is not left vulnerable to supply chain shocks.”
The three-page note says ministers want action in four “critical” sectors – shipbuilding, steel, AI and energy infrastructure – and have identified departments to work as sector leads for each. The Ministry of Defence is sector lead for shipbuilding; the Department for Business and Trade for steel; the Department for Science, Innovation and Technology for AI; and the Department of Energy Security and Net Zero for energy infrastructure.
Departments, agencies and arm’s-length bodies are required to identify processes in their procurement pipeline that may have national security impacts in relation to shipbuilding, steel, AI and energy infrastructure and “engage early” with the relevant sector lead to ensure their procurement approach will “protect the UK’s national security interests”.
Organisations are instructed to deploy the national security exemption in the Procurement Act 2023 where it is “appropriate and justified” in a relevant procurement.
Chancellor Rachel Reeves said the guidance would have the dual benefit of increasing the UK’s safety and boosting business for domestic firms.
“We have the right economic plan – using the power of public procurement to protect our national security and strengthen the UK’s economic resilience,” she said.
“British companies are delivering the innovation and resilience we need in a more uncertain world. This government will continue to back British businesses as we strengthen our national security and economic resilience.”
Chief secretary to the prime minister Darren Jones said this year’s closure of the Strait of Hormuz and the ongoing war in Ukraine underscored the need to protect national security and invest in home-grown British expertise and industry to secure sovereign capability.
“For too long, governments have prioritised short-term buying decisions that leave us vulnerable to the actions of others,” Jones said. “This guidance will change that. From shipbuilding in Barrow to steel in Scunthorpe, we will make national security a priority and back British businesses and jobs.”
A letter to departmental accounting officers supporting the new guidance, written by HM Treasury officer of accounts David Fairbrother, says any use of the national security exemption in the 2023 act should take account of relevant international agreements.
Fairbrother’s letter also underscores the ongoing need to have regard to HM Treasury’s Managing Public Money and Green Book guidance.
However it notes that in applying the Green Book’s value for money standard, accounting officers can consider factors such as the role of domestic capability in national security and enhancing supply chain resilience; the long-term benefits of supporting critical and emerging sectors; and the contribution of procurement decisions to economic growth, jobs, and skills in the UK.