UK Public Procurement Is Shifting

The UK’s £300bn+ public procurement market is undergoing its most significant structural shift in a decade. The landscape that is fragmenting, opening up, and increasingly welcoming to new entrants. For international investors, high-growth challengers, and tech-driven service providers, this represents a major moment of opportunity.

Below, we unpack the key trends shaping the UK public sector market and what they mean from Larkspur’s strategic perspective.

1. Strategic Suppliers Are Losing Ground- Opening Doors for New Entrants

The UK Government’s 39 Strategic Suppliers traditionally the gatekeepers to major contracts have seen their market share fall to just 10%, a five-year low. Their revenue has also declined even as overall public procurement grew.

This is a clear signal:

• The UK is deliberately diversifying its supplier base.

Government disaggregation, pro-SME policy, and new procurement rules under the Transforming Public Procurement reforms are breaking up historic monopolies. International firms, innovative SMEs, and scale-ups now face fewer structural barriers to entry.

Looking to enter or expand in the UK can now compete more effectively against incumbents. Early positioning, market intelligence, and partnership building will be essential.

2. International Firms Are Gaining Share- But the UK Wants More Local Investment

UK-headquartered suppliers still command the largest share of revenue, but this has fallen from 65% to 61% in five years. European, US, and Canadian suppliers continue to grow their footprint.

Two implications matter for Larkspur’s portfolio:

• The UK is increasingly receptive to international competitors

Foreign suppliers are not only welcome, but they are also winning more business than ever.

• But economic sovereignty concerns are rising

Political sentiment is shifting toward the localisation of supply chains and UK job creation, especially in tech, defence, and infrastructure.

Larkspur supports organisations in localising operations, establishing UK subsidiaries, forming partnerships, and strengthening supply-chain commitments- now a decisive factor in public sector competitiveness.

3. £41.7bn in Contracts Are Expiring This Parliament- With 2026 as a Breakout Year

Perhaps the biggest opportunity:

• £12.8bn of Strategic Supplier contracts are set to expire in 2026 alone.

This is prime territory for Larkspur’s public-sector-focused clients. Challengers that prepare early- mapping buyers, identifying frameworks, and aligning propositions, can displace incumbents for the first time in years.

Key hotspots include:

• Technology and cloud services (DBT to reprocure Microsoft & Azure licences; major shifts toward AI and digital)
• Decarbonisation and energy (large NHS and Local Government estate programmes)
• Major hospital programmes
• MOD procurement, with 10% of equipment spend ring-fenced for novel tech from 2026

We specialise in helping international suppliers’ position for UK contracts early, build stakeholder relationships, understand buying cycles, and tailor their market entry for maximum competitiveness.

4. Frameworks Remain the Real Gatekeepers- But They Are Opening Up

56% of Strategic Supplier contracts are awarded via frameworks, three times the SME rate. Frameworks can be a barrier, but the report highlights:

• Only six frameworks account for over £6bn in awards.
  By targeting the right frameworks, not all frameworks, new entrants can unlock meaningful access to the UK public sector.

High-value frameworks include those run by:

• Crown Commercial Service (CCS)
• NHS Shared Business Services
• Jisc
• Transport and infrastructure consortia

We help companies identify, qualify, and join the specific frameworks that align with their growth strategy, especially important for overseas suppliers unfamiliar with UK routes to market.

5. Technology, AI, and Digital Are Underserved- Especially in Local Government

Central Government directs 43% of its Strategic Supplier spend toward technology.
Local Government, however, allocates just 9%.

That gap is not a lack of demand, it’s a lack of capacity.

• AI-related procurement is surging (26 contracts last year), but Strategic Suppliers still represent <1% of all AI deals.

This means:

• AI, data, automation, cloud, cybersecurity, and digital transformation markets are largely open to challengers
• Local authorities urgently need tech partners but lack bandwidth and supply chain diversity
• International digital firms have a unique opportunity to become trusted transformation partners

We support digital suppliers in UK expansion, identifying buyer pain points, mapping the competitive landscape, and preparing compliant, compelling propositions.

6. Defence, FM, Infrastructure and Decarbonisation Continue to Offer Deep Opportunities

• Defence

Despite political rhetoric, defence spend with Strategic Suppliers has grown only 1.2% CAGR.

With MOD committing 10% of its future equipment budget to novel tech, international defence-tech and dual-use innovators have a golden window.

• Outsourcing and FM

Still 50% above pre-pandemic levels and growing at 8.8% CAGR, ideal for suppliers offering estate management, health logistics, security, or soft services.

• Construction and Engineering

Transport remains the biggest spending driver (HS2, Lower Thames Crossing, regional rail). Great opportunities for engineering firms, architects, decarbonisation specialists, and major contractors.

We help infrastructure, FM, and defence suppliers understand UK regulatory environments, identify public-sector buyers, and localise delivery models.

7. The Rise of the “Challengers”: New Partnership Pathways

Ten major firms now match Strategic Suppliers in revenue without being on the official list.

For Larkspur’s smaller or mid-market suppliers, these companies are ideal channel partners, consortium leads, and framework bidders. We support organisations in finding strategic partners, forming consortia, and navigating UK teaming arrangements.

8. What This Means for Larkspur Clients: A Market Ripe for Entry, Expansion, and Investment

Across all sectors, the UK public sector is signalling a clear message:

The era of automatic incumbency is ending.

Innovation, international expertise, and agile delivery models are in demand.

Larkspur supports- international suppliers, innovators, and investors, to be exceptionally well positioned to capitalise on:

• Contract expiries in 2026
• Weakening incumbents
• Local Government digital underinvestment
• MOD demand for novel defence tech
• NHS infrastructure and decarbonisation needs
• Increasing openness to international players
• Frameworks that can unlock rapid scale

9. Conclusion: A Strategic Moment for Public Sector Growth

Tussell’s 2025 report makes one thing clear:

• This is the most open, competitive UK public procurement market in a decade.

For firms looking to enter, expand or invest in the UK, now is the time to act.
And Larkspur International through our expertise in:

• UK market-entry strategy
• Public sector positioning
• Stakeholder engagement
• Supply chain localisation
• Procurement intelligence
• Partnership and consortium formation

Larkspur is ideally placed to help companies convert these insights into winning strategies.