How to terminate a contract (Procurement Act 2023)

The Procurement Act (2023) extends public sector contracting authorities new rights to more easily terminate contracts with suppliers.

This article looks at contract & procurement termination under the Act, how it works, and the possible grounds for contract termination.

Skip ahead to read about:

What is contract termination?
What are the grounds for contract termination?
What is a contract termination notice?
What is a procurement termination notice?
What does all of this mean?

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This article is part of a series of articles on the 2023 Procurement Act.

Head to Tussell's Procurement Act Hub for all the information and resources you need to get Procurement Act-ready.

🚫 What is contract termination?

Under the 2023 Procurement Act, contracting authorities have increased rights to terminate a contract with a supplier whilst the contract term is still ongoing.

When terminating a contract, a contracting authority is required to publish a 'contract termination notice' within 30 days of the termination itself.

'Procurement termination notices' have also been introduced by the Procurement Act.

This notice must be published in instances where a contracting authority publishes a tender notice or transparency notice but then decides not to continue with the procurement.

Both of these notices form part of a larger Cabinet Office strategy to increase transparency in the public procurement process.

📜 What are the grounds for contract termination?

Each of the following circumstances may be used as grounds for contract termination:

The contracting authority considers that a contract is in breach of the Procurement Act;
A supplier has been excluded or has become an excludable supplier.

In some instances, a contract may also be terminated if a sub-contracted supplier is found to be excluded or excludable.

Learn more about the grounds for contract exclusion.

❓ What is a contract termination notice?

Contracting authorities have 30 days from the date of contract termination to publish a contract termination notice.

A contract termination must be published in instances where:

either party decides to terminate the contract early;
a contract reaches its natural expiration date.

The notice should be published on the UK government's central digital platform and must inform the market that the contract is no longer live.

📜 What is a procurement termination notice?

Procurement termination notices must be published by contracting authorities in instances where a tender or transparency notice is published but the buyer decides not to go ahead with the procurement.

This is so that the market may be alerted when expected procurements are canceled or postponed.

Contracting authorities may also choose to publish a procurement termination notice if, after publishing a 'planned procurement notice' or 'preliminary market engagement notice', the contracting authority chooses not to go through with procurement.

However, in such instances, publishing a procurement termination notice is entirely optional and not required.

Unlike with contract termination notices, there is no 30 day window in which a procurement termination notice must be published.

Contracting authorities should endeavour to publish a procurement termination as soon as possible once they have decided not to go ahead with the procurement.

Discover what Planned Procurement Notices are.

❓ What does this all mean?

Procurement termination notices and contract termination notices are just two of several new procurement notices that are introduced by the 2023 Procurement Act.

Whilst proponents of the Act claim that these notices increase transparency, some experts suggest that too many new notice types may lead to confusion, poor publishing practices and information overload for public sector suppliers.

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