PPN 024 explained: what the Public Interest Test means for suppliers

Quick answer

PPN 024 (Procurement Policy Note 024) is a Cabinet Office policy, issued in June 2026, that requires Central Government departments to complete a Public Interest Test before launching any service procurement worth over £1 million (including VAT). The Test assesses whether a service could be better delivered in-house before going to market. Large departments with annual contract spend above £100 million must also publish a five-year Insourcing Strategy by April 2027. PPN 024 applies to Central Government departments, their Executive Agencies, and Non-Departmental Public Bodies. It does not apply to local government or the NHS, though both are encouraged to adopt the approach.

The Cabinet Office published PPN 024 on 17 June 2026. From April 2027, any Central Government department planning a service procurement worth over £1 million will first need to formally assess whether to bring it in-house.

For years, outsourcing has been the default. Now departments will be required to challenge that default before they go to market and suppliers should pay attention to what that means for their pipeline.

What is the Public Interest Test?

The Public Interest Test is a pre-procurement assessment, conducted at the Strategic Outline Case stage, that determines whether a service is better suited to in-house delivery or external sourcing. It runs before a formal procurement begins and is designed to take no more than two working days to complete.

The Test works in two parts:

• Part One asks whether the service is a good candidate for insourcing, based on factors including value for money, social value, market competitiveness, and whether the service is genuinely difficult for the private sector to deliver.
• Part Two asks whether the authority has the capability and budget to actually do it. If Part One concludes the service isn't a strong insourcing candidate, Part Two isn't required.

The outcome is a Provisional Sourcing Decision — to insource, outsource, or flag insourcing as a future goal once capacity is built. All outcomes must be submitted to the Government Commercial Agency within 30 days of the end of each calendar quarter.

Which contracts are in scope?

From 1 April 2027, the Test applies to any planned service procurement (including re-procurements) worth more than £1 million (including VAT) awarded under the Procurement Act 2023.

Key exemptions include direct awards under Sections 41 and 42 of the Act, Defence and Security contracts, contracts for services delivered outside the UK, and procurements solely to establish a framework or Dynamic Market. Call-off contracts from a framework are also exempt, provided the underlying framework itself went through a Test.

What is an Insourcing Strategy?

An Insourcing Strategy is a five-year forward plan, required from any Central Government department with annual contract spend over £100 million (including VAT), identifying which services could be delivered in-house over the coming years. Strategies must be published within 30 days of 1 April 2027.

The Cabinet Office guidance identifies several service characteristics that make insourcing particularly worth considering: services that are difficult to specify in advance, highly prescriptive contracts where suppliers can't add real value, services operating in markets with limited competition, and contracts that have generated excessive supplier profit without evidence of cost efficiency.

Which service categories are most exposed?

The PPN's own criteria for "high insourcing potential" describes markets that are government-created, lack genuine competition, or involve services where requirements are hard to define in advance. That profile maps closely onto how much of Central Government's consultancy and digital delivery market actually operates.

Stotles data tracking award values across the top 15 consultancies winning UK public sector business shows quarterly spend has remained consistently above £1bn in recent quarters, reaching £1.37bn in FY 2026 Q1. The peak across the period was £2.08bn in FY 2024 Q1. Central Government accounts for over 50% of all digital consultancy contract volume.

‍

These are large, recurring relationships. And they're precisely the kind of contracts that a Public Interest Test is designed to scrutinise.

Other high-exposure categories include professional services, business process outsourcing, facilities management, and operational delivery, anywhere government relies on external providers for services it could theoretically run directly.

What does this mean for suppliers?

PPN 024 doesn't ban outsourcing, and it won't trigger a wave of immediate insourcing. The Provisional Sourcing Decision is just that: provisional. It's subject to a full Delivery Model Assessment before any final decision is made, and most services will still be outsourced, particularly where suppliers can demonstrate genuine specialist capability.

But the policy does shift the commercial dynamic in two ways that matter.

First, the timing of engagement changes. If a department runs a Public Interest Test at the Strategic Outline Case stage (months before a formal tender) that's when the sourcing conversation is actually happening. Suppliers who aren't in the room at that point may be trying to influence a decision that's already been made.

Second, the evidence bar goes up. Authorities will increasingly need to document why outsourcing represents the best outcome. Suppliers who can proactively build that case (on value for money, delivery quality, specialist capability, and market competitiveness) will be in a much stronger position than those who wait for the ITT.

For suppliers with significant Central Government service exposure, the practical steps are:

• Review your current contract portfolio and assess which services match the PPN's high-insourcing-potential criteria
• Identify contracts coming up for re-procurement after April 2027, these will be first in scope
• Start building the evidence base for why outsourcing delivers better outcomes on those contracts
• Look for early buying signals so you can engage before sourcing decisions are made

Stotles tracks pre-tender notices, pipeline signals, and contract expiries across Central Government, so you can see when a department is approaching a decision point, not just when the tender lands. Join a live product tour to see how it works.

Related reading

Palantir NHS contract: what the Federated Data Platform break clause means for public sector suppliers

Read the blog

FAQ

Will PPN 024 actually reduce the number of contracts going to market?

Probably not significantly, at least in the short term. The Test produces a Provisional Sourcing Decision, not a final one, it still has to be validated through a full Delivery Model Assessment and business case process. Most services will continue to be outsourced, particularly where the authority lacks the internal capacity to deliver them directly. The more meaningful change is earlier engagement: sourcing decisions are being made before the tender, not during it.

How does the Public Interest Test affect re-procurements?

Re-procurements are fully in scope from 1 April 2027. If your contract is coming up for renewal after that date and it's a service worth over £1 million, the authority will need to complete a Public Interest Test before launching the new procurement. That means the question of whether to re-tender at all gets asked formally, potentially months before you'd normally expect engagement to begin.

Can a Provisional Sourcing Decision to insource be reversed?

Yes. A Provisional Sourcing Decision is the starting point for further analysis, not the final call. If the subsequent Delivery Model Assessment finds that insourcing is operationally or financially unfeasible, or that outsourcing delivers better value, the provisional decision can be overturned. The authority must document the rationale if it diverges from the original provisional decision.

What should incumbent suppliers do before April 2027?

Start by identifying which of your Central Government contracts are service contracts worth over £1 million and due for re-procurement after April 2027. For each one, assess how it maps against the PPN's high-insourcing-potential criteria — particularly whether the market is competitive, whether requirements are hard to specify, and whether there's a perception of high supplier margins. Then build the evidence base early: delivery performance, value for money, capability that government couldn't easily replicate in-house. The worst position to be in is making that case for the first time at ITT stage.

When does PPN 024 come into force?

The Public Interest Test requirement applies from 1 April 2027, covering any new or re-tendered service procurement worth over £1 million (including VAT) under the Procurement Act 2023. Departments with annual contract spend above £100 million must publish their Insourcing Strategy within 30 days of that date.