Public procurement guidance targets supplier lock-in risk

New guidance linked to implementation of the Procurement Act 2023 is drawing attention to supplier lock-in as a growing procurement challenge and encouraging contracting authorities to take a more strategic approach to supplier management and contract design.

Supplier lock-in occurs when organisations become increasingly dependent on incumbent providers, reducing flexibility and making it more difficult to introduce competition, switch suppliers or renegotiate commercial arrangements. The issue can develop gradually through repeated contract extensions or emerge within complex procurements where operational, legal or technical barriers limit transition options.

The guidance notes that long-standing supplier relationships are common across public services, particularly where outsourced operations and embedded systems play a significant role in service delivery. However, where contracts continue without meaningful market engagement or reassessment, dependency can create commercial and operational risks over time.

Among the risks identified are reduced competitive pressure at contract renewal stages, weaker incentives for supplier innovation, increasing imbalance in commercial terms and barriers for SMEs and alternative providers seeking access to public opportunities. Authorities may also face higher transition costs and greater legal complexity when attempting to change provider arrangements.

To reduce exposure, contracting authorities are encouraged to adopt a procurement lifecycle approach that considers supplier exit and market competition from the outset. Recommended actions include establishing clear exit planning provisions, favouring open and interoperable solutions where appropriate, conducting regular market testing and strengthening rights relating to data access and intellectual property.

Additional emphasis is placed on transparent pricing structures and ensuring that transition requirements are incorporated into procurement planning rather than addressed only at contract expiry.

From a procurement perspective, the guidance reflects broader priorities across public purchasing to strengthen resilience, maintain competitive supply markets and improve long-term value for money outcomes. Procurement teams are increasingly being expected to balance operational continuity with commercial flexibility and supplier diversity.

The recommendations underline the evolving role of procurement as a strategic function that extends beyond contract award into supplier governance, market stewardship and long-term organisational performance.

Read more in the original source for additional detail on supplier lock-in mitigation and implementation considerations under the Procurement Act 2023.