Background
On 19 June 2026 the Government issued a Procurement Policy Note 25 (PPN 025) entitled, ‘Protecting the UK’s national security through public procurement’ (the ‘Notice’), which was accompanied by a helpful guidance note (the ‘Guidance’) and letter to Accounting Officers (the ‘Letter’). PPN 025 forms part of a broader recalibration of public procurement policy to align with the increasingly imperative UK National Security Strategy 2025 (the ‘Strategy’).
In wake of recent international events, which display the uncertainty and volatility of the current geopolitical and economic environment, the instability of global supply chains has become ever more apparent, and it is this realisation that has prompted Government to re-assess its procurement strategy and whether our approach is sufficiently strong enough to protect the UK’s national security.
Noting statistics that show ‘one third of Government spending follows procurement’, the Government, by placing procurement at the heart of national security strategy in issuing this Notice, is actively using procurement to shift the focus onto domestic efforts and anchor key supply chains.
But how is this done?
At its core, this is achieved by reframing procurement as a strategic tool with clear policy outcomes, rather than as a purely commercial function. The Guidance applies primarily to central government departments, executive agencies and non-departmental public bodies (collectively referred to as “in-scope organisations”) operating under the Procurement Act 2023 (PA23). It emphasises that no longer can national security be restricted to defence or intelligence as true national security extends to broader economic resilience, supply chain security and the protection of critical sectors. The Government intends to secure national security through the identification of four priority sectors with corresponding department leads, those being:
- Shipbuilding - National Shipbuilding Office, Ministry of Defence
- Steel - Department for Business and Trade
- Artificial intelligence (AI) - Department for Science, Innovation and Technology; and
- Energy - Department of Energy Security and Net Zero
Finally, whilst not expanding the exemption, the Guidance clarifies and stresses the significance of applying the national security exemption under Schedule 2 of the PA23, when this is relevant, something which with increased understanding, through this guidance, is hoped to be progressively applicable. As, despite not being automatic, the exemption when correctly applied gives flexibility to deviate from standard procurement rules in order to protect national security.
A new focus
The Guidance seeks to shape these ‘key markets’ by encouraging “in-scope organisations” to proactively follow certain actions which are summarised below:
- Sector prioritisation: Specific focus and review of the key sectors noting the importance of:
- Shipbuilding – to effectively support maritime generally, whilst ensuring the navy are best suited when they are needed most.
- Steel – production to ensure relevant infrastructure can swiftly obtain steel to keep essential services stable.
- AI – which has an inescapable requirement for compute resources which domestically could arguably see improvement.
- Energy – where the importance of power cannot be overstated, and stable domestic generation ensures a protected country.
- Pipeline management: In-scope organisations are required to identify relevant procurements within their pipelines and assess them against sector-specific thresholds and criteria.
- Early engagement: Collaboration with department sector leads will increase clarity and ensure procurement strategies align with wider government objectives, including domestic capability.
- Flexible procurement tools: In-scope organisations are encouraged to consider a wider suite of commercial approaches, with the Letter highlighting an evolved concept of “value for money” which adopts a wider, more balanced assessment incorporating resilience, long-term sustainability, and security considerations.
- National security exemption: A more active consideration of whether the exemption applies is encouraged to protect national security, particularly where standard transparency or competition requirements could create risk.
Conclusion
PPN 25 means that in-scope organisations need to consider the UK's national security interests prior to procuring works, services and goods that fall within certain sectors (Shipbuilding, Steel, AI and Energy). The impact on procurement strategy will depend on the facts of each procurement and the reliance on any national security exemption in paragraph 25 of schedule 2 of the PA23 and comply with international trade agreements will need to be supported by a clear and evidenced based rationale (which cannot include protecting the economic interests of UK companies).
If you think your organisation is affected by this notice, or you would like further guidance, please feel free to contact our procurement lawyers or visit our Procurement Centre of Excellence web page.
