Britain’s New Rights to End Public Contracts Ignore the Results

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When a purchase doesn’t produce what it was bought to produce, the first thing a buyer asks is what it can actually do about it. Often the answer is whatever somebody wrote into the contract a year or two earlier, before anyone knew what the work would look like in practice. I have watched that conversation from the vendor’s side of the table, where the business case was built, and the buyer’s options were usually fixed long before the disappointment showed up.

The Procurement Act 2023 put part of that answer into statute, expanding the termination rights public contracts carried under the old rules, and the part it chose is worth reading carefully.

Every public contract covered by the Act carries a right for the buyer to terminate that nobody has to negotiate for. Section 78(1) implies it into the contract, and section 78(10) says any term “purporting to restrict or override the implied term is without effect.” Parliament decided there were exits a public buyer should never be able to sign away, and it listed the grounds.

The Grounds Parliament Guaranteed

Section 78(2) sets out three. The contracting authority considers that the contract was awarded or modified in material breach of the Act or regulations made under it. Or the supplier has, since the award, become an excluded or excludable supplier. Or a subcontractor doing all or part of the work is an excluded or excludable supplier, subject to conditions about what the authority asked and knew before it signed.

The first ground is about whether the contract was awarded or changed lawfully. The second and third are about whether the people doing the work are fit to hold public money, and the second reaches further than it looks.

How Poor Performance Reaches the Exit

The same Act deals with a supplier who isn’t delivering. Section 71(4) applies where the authority considers that a supplier “is not performing a public contract to the authority’s satisfaction,” has been given proper opportunity to improve, and has failed to do so. Section 71(5) then gives the authority thirty days to publish that fact and the circumstances behind it. How those published verdicts work, and what they leave out, is covered in Britain Made Buyers Publish a Verdict on Their Suppliers. Section 71 came into force, for specified purposes, on January 1, 2026.

That publication matters beyond the notice itself. Schedule 7, paragraph 12, makes poor performance of that kind a discretionary exclusion ground, and under paragraph 12(4) the ground also applies once an authority has published information under section 71(5). That link into future competitions is also covered in UK Buyers Now Rate Suppliers Publicly, With No Way to Compare. A supplier is excludable when a discretionary ground applies and the authority considers the circumstances “are continuing or likely to occur again” (section 57(2)). A supplier that becomes excludable after the award falls under the second termination ground. So a public buyer whose supplier keeps failing to perform does have a statutory way out, through exclusion.

Look at what every step of that route is measured against. Breach means breach of a contract, and poor performance means not performing a contract to the authority’s satisfaction. Nothing in section 71, in paragraph 12 or in section 78 refers to the result the purchase was made to produce. If a supplier does everything the contract requires and the result never arrives, the buyer would have to argue that a supplier who met every term was not performing the contract to its satisfaction. That is a hard argument to make, and none of those sections helps the buyer make it.

There is one place the result can get in. For most contracts with an estimated value over £5 million, section 52 requires the buyer to set at least three key performance indicators before signing, each “a factor or measure against which a supplier’s performance of a contract can be assessed during the life-cycle of the contract.” A buyer that writes the intended result into those indicators gives itself evidence it can use when it judges whether the supplier is performing to its satisfaction. That choice is the buyer’s, and it starts before award.

The Government Says To Write Your Own

The Cabinet Office guidance on contract termination, updated July 20, 2026, is plain about the rest: “Contracting authorities are able to provide for termination on other grounds than those implied by section 78.” That’s accurate, and it puts the whole burden back on the contract. Any exit tied to the result exists only if somebody wrote it in, in whatever form that person chose on the day.

Private Contracts Face the Same Question

Private-sector buyers outside the Act have no section 78 and no section 71. Their termination rights are whatever they negotiated, so the same question applies to each ground in their agreements: whether it would fire if the supplier did everything the contract requires and the result the purchase was made for never arrived. Where no ground would, the thing to look for is whether the outcome was written down anywhere before the contract was drafted, since a clause can only point to something that already exists on paper.

That writing has to happen before the contract, and before the proposal. Before the requirement goes to market, the buyer sets out what the purchase has to produce, how that will be measured, what conditions have to hold for the measurement to be fair, what evidence suppliers must provide, and how competing bids will be compared on all of it. Put that in front of suppliers as its own document, ahead of the request for proposal, and the contract has something concrete to carry into its terms, including its exits. The name for that document is a Request for Value.

A supplier that expects to deliver gives up nothing when the result is written down early. It gets a contract that can tell its work apart from a competitor’s that only met the paperwork, and a record it can point to at renewal.

Sources: Procurement Act 2023, section 52, section 57, section 71, section 78 and Schedule 7, paragraph 12, legislation.gov.uk; The Procurement Act 2023 (Commencement No. 4) Regulations 2025 (S.I. 2025/1316); Cabinet Office, Guidance: Contract Termination, updated July 20, 2026, GOV.UK.

Keep reading: ACT II · Chapter 19: Preemptive Value Architecture