PPN 025 explained: national security and procurement

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PPN 025 explained: the national security shift in public procurement

Clélie

Content Marketing Manager

Written

June 19, 2026

Last updated:

October 19, 2026

In this article

‍Key Takeaways

PPN 025 is a Cabinet Office Procurement Policy Note, published on 19 June 2026 and effective immediately. It requires central government departments, executive agencies and NDPBs to assess national security before procuring in four critical sectors: artificial intelligence, energy infrastructure, shipbuilding and steel.

What buyers must do: identify in-scope procurements in their pipeline, engage the relevant Sector Lead (DSIT, DESNZ, the National Shipbuilding Office or DBT) before going to market, and consider whether the Procurement Act 2023 national security exemption is justified.
Thresholds: AI £5m+ (hardware, CNI or sensitive personal data), shipbuilding over £1m, steel £10m+ or over 500 tonnes, and energy infrastructure set per procurement.
Not a ban on overseas suppliers: the exemption must be evidence-based, used case by case and consistent with trade agreements.

Suppliers should build evidence on supply chain origin, resilience and UK capability contribution, and engage early, because sourcing conversations now start before the tender.

‍Quick answer

PPN 025 (Procurement Policy Note 025) is a Cabinet Office policy, issued in June 2026, that requires Central Government departments to consider national security implications before procuring in four critical sectors: artificial intelligence, energy infrastructure, shipbuilding, and steel. In-scope buyers must identify relevant procurements in their pipeline, engage with government-appointed Sector Leads before going to market, and consider deploying the national security exemption under the Procurement Act 2023 where justified. PPN 025 applies immediately with no phased implementation date. It applies to Central Government departments, their Executive Agencies, and Non-Departmental Public Bodies. Private utilities are strongly encouraged to follow it for energy infrastructure procurements.

What is PPN 025?

PPN 025 requires Central Government departments to identify procurements in four critical sectors, engage with government-appointed Sector Leads before going to market, and consider whether the national security exemption in the Procurement Act 2023 applies. The four sectors are artificial intelligence, energy infrastructure, shipbuilding, and steel.

The Cabinet Office published PPN 025 on 19 June 2026. Unlike most procurement policy notes, it comes into force immediately, meaning there is no future deadline to work towards. If you supply into any of the four sectors, the landscape changed this week. You can search tenders in these sectors to see what is coming to market.

The policy is rooted in the government's National Security Strategy 2025, which argues the UK is entering what the Cabinet Office calls "a new era of radical uncertainty." Its response is to use public procurement more deliberately, not just to buy goods and services at the best price, but to actively shape the markets the UK depends on for its long-term security.

For suppliers, that means the question buyers ask is changing. Capability and price still matter, but government now also wants to know: where does your supply chain come from, how resilient is it, and does your offer strengthen UK capability rather than deepen strategic dependency?

The policy is not a blanket restriction on who can bid. It is a framework for buyers to assess national security risk at the planning stage, before a commercial strategy is finalised. The national security exemption, which can dis-apply some or all of the Procurement Act's competition and transparency requirements, can only be used where there is a clear, evidence-based justification on a case-by-case basis. It is not automatic, and it is not a shortcut.

Who does PPN 025 apply to?

PPN 025 applies with immediate effect to Central Government departments, their Executive Agencies, and Non-Departmental Public Bodies

Private utilities are strongly encouraged to apply the guidance for energy infrastructure procurements and to engage with the relevant Sector Lead. Other public sector contracting authorities, including local government and NHS bodies, can consider the guidance voluntarily, particularly for high-value or strategically significant procurements.

What are the Sector Leads under PPN 025?

Each of the four critical sectors has a designated government lead responsible for coordinating procurement activity across Central Government. In-scope buyers are expected to engage with the relevant Sector Lead before launching procurements that fall within the defined thresholds.

The four Sector Leads are:

Artificial Intelligence: Department for Science, Innovation and Technology (DSIT): CommercialDir@dsit.gov.uk
Energy Infrastructure: Department for Energy Security and Net Zero (DESNZ): EnergyInfrastructureSectorLead@energysecurity.gov.uk
Shipbuilding: National Shipbuilding Office, Ministry of Defence: nsocommercialandpipeline@mod.gov.uk
Steel: Department for Business and Trade (DBT): steelstrategy@businessandtrade.gov.uk

Sector Leads can provide strategic context, market intelligence, and cross-government coordination. The full guidance makes clear that departments should understand the consequences of not engaging, including the risk of procurement approaches that inadvertently weaken domestic capability or increase strategic dependency.

Which procurements fall within scope?

The thresholds vary by sector and are set by the Sector Leads, so they may change over time. As of June 2026:

Artificial Intelligence: Procurements of £5 million or more substantially related to AI hardware (chips, data centres, networking, power, cooling), AI embedded in Critical National Infrastructure, or AI tools handling sensitive personal data such as health, financial or biometric records. Values should include estimates of consumption-based spend over the contract's expected life.

Energy Infrastructure: Procurements covering electrical equipment including cables, transformers, switchgear and control systems, as well as generation assets including offshore wind, nuclear, solar, CCUS, hydrogen and heat pumps.

Shipbuilding: Procurements of over £1 million related to shipbuilding and maritime technology, including naval architecture, ship design, marine engineering, autonomy, digitalisation and AI in maritime applications. Departments are also encouraged to engage the National Shipbuilding Office for contracts below £1 million.

Steel: Procurements of £10 million or more, or any procurement expected to require more than 500 tonnes of steel.

For the full sector-specific requirements, read Annex A of the guidance.

PPN 025 sector thresholds at a glance

Sector	Threshold	Sector Lead
Artificial Intelligence	£5m or more (AI hardware, CNI, sensitive personal data)	DSIT
Energy Infrastructure	No fixed threshold — defined by Sector Lead per procurement	DESNZ
Shipbuilding	Over £1m (maritime technology, naval architecture, ship design)	NSO / MOD
Steel	£10m or more, or over 500 tonnes of steel	DBT

Thresholds are set by Sector Leads and may be updated. Source: PPN 025 Guidance, Cabinet Office, June 2026.

Why AI and energy infrastructure matter most for suppliers

Of the four sectors, AI and energy infrastructure carry the broadest supplier implications and the largest existing spend.

Stotles data shows that data, AI and automation has become the highest-value tech procurement category across Central and Local Government, with £17.29bn in total contract value recorded between 2022 and 2025. The figures skew heavily towards Central Government, which historically controls the vast majority of total tech contract value.

PPN 025 matters in this context because AI supply chains are heavily concentrated. The guidance explicitly acknowledges this, noting that the UK has strengths in hardware innovation but that supply chain dependencies are "highly concentrated, with advanced hardware shaped by a small number of global suppliers." That concentration is precisely what the policy is trying to address.

For energy infrastructure, the Sector Lead is already focusing on specific categories: cabling, control and protection systems, and transformers. Major forthcoming projects have been identified as targets for early engagement. If you supply into these categories, waiting for a tender notice is too late.

What does this mean for procurement teams?

PPN 025 asks buyers to think differently about what value for money means.

The guidance references HM Treasury's updated Green Book, which frames value for money as a balanced judgement, not just cost, but strategic alignment, deliverability, and risk. Buyers are being told that focusing solely on short-term price or operational preference could expose UK national security interests to avoidable risk.

In practice, procurement teams in scope should:

Regularly review their pipeline and identify procurements in the four critical sectors
Contact the relevant Sector Lead before commencing any identified relevant procurement
Conduct market analysis and assess national security risks, including supply chain vulnerabilities and market concentration
Consider whether the national security exemption is justified, and seek legal advice before applying it
Keep a written record of their rationale where the exemption is used

The guidance also makes clear that national security is now being interpreted more broadly than defence alone. Supply chain resilience, dependency on overseas suppliers, and continuity of critical capabilities are all relevant considerations. Read the full PPN 025 guidance for the complete recommended steps.

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What does this mean for suppliers?

PPN 025 doesn't close markets, but it does raise the bar for what suppliers operating in these sectors need to demonstrate.

Buyers are being asked to look beyond price and delivery capability. They now need to consider whether a supplier's offer strengthens or weakens UK capability, how resilient its supply chain is, and whether strategic dependency on that supplier creates long-term national security risk. Suppliers who can answer those questions clearly, with evidence, will be better positioned than those who can't.

Early engagement becomes more important than ever. If buyers are reviewing pipelines and speaking to Sector Leads before launching procurements, the commercial conversation is happening before most suppliers know it's starting. Getting in front of buyers at the planning stage, when commercial strategies are still being formed, is now a meaningful competitive advantage.

For suppliers in the four sectors, the practical steps are:

Understand how your offer maps onto the national security considerations the PPN sets out: supply chain origin, resilience, UK capability contribution
Identify which of your existing or target buyers are likely to be running procurements in scope
Build your evidence base now: supply chain transparency, resilience credentials, UK economic contribution
Monitor early procurement signals so you can engage before requirements are finalised

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. See how it works here.

FAQ

What is PPN 025?

PPN 025 is a Cabinet Office Procurement Policy Note, issued in June 2026, that requires Central Government departments to assess national security implications before procuring in four critical sectors: artificial intelligence, energy infrastructure, shipbuilding, and steel. It takes effect immediately and requires buyers to engage with government-appointed Sector Leads before going to market on relevant procurements. Read the full PPN here.

Who does PPN 025 apply to?

PPN 025 applies to Central Government departments, their Executive Agencies, and Non-Departmental Public Bodies, with immediate effect. Private utilities are strongly encouraged to follow the guidance for energy infrastructure procurements. Local government, NHS bodies and other public sector buyers can apply the guidance voluntarily.

Does PPN 025 mean government will stop buying from international suppliers?

No. PPN 025 does not restrict procurement to UK suppliers. The guidance is explicit that suppliers from the UK's close trading partners will continue to be important and will often be well-placed to meet government requirements. The national security exemption must be used consistently with the UK's international trade agreements, and authorities must justify its use on a case-by-case basis.

What is the national security exemption under the Procurement Act 2023?

The national security exemption is a provision in Schedule 2 of the Procurement Act 2023 that allows contracting authorities to dis-apply some or all of the Act's rules, including competition and transparency requirements, where they determine this is necessary in the interests of national security. It cannot be used as a blanket restriction or to secure economic advantage. It must be justified with a clear evidence base on a case-by-case basis, and authorities must keep a written record of their rationale.

What should suppliers in these sectors do now?

Suppliers should review their Central Government target accounts and identify which are likely to have procurements in scope under PPN 025. They should build a clear evidence base on supply chain resilience, UK capability contribution, and strategic value, not just delivery performance and price. Early engagement matters: buyers are being asked to engage Sector Leads before procurements formally begin, which means commercial decisions are being made earlier than suppliers might expect.

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