It plans to slash around 350 regulations governing public procurement and integrate the current regulations into a single, uniform framework.
The Transforming Public Procurement Green Paper sets out proposals to allow public works contracts under £4.7m to be limited to small businesses or to firms from a certain geographical area, allowing a buy British approach.
The post-Brexit shake-up will also allow public procurers to assess the wider social benefits offered by a supplier, such as economic, social and environmental factors, when assessing who to award a contract to, while also still considering value for money.
Prequalification for all works will also be through a single digital platform that will mean firms should only have to submit data once to prequalify for any tender contest.
Public sector bodies will be free to take account of a bidder’s past performance and exclude the firm if it does not have the capability to deliver under the new plan.
These new rules are designed to support SMEs by opening up new opportunities and making it easier for them to win contracts. This should help to drive local growth, promote innovation, support local recruitment and level up communities across the UK, said the Cabinet Office.
The process for challenging procurement decisions will be reformed to speed up the review system and make it more accessible.
There will also cap the level of damages available to bidders, reducing the attractiveness of speculative claims.
Cabinet Office Minister, Lord Agnew, said: “The measures outlined today will transform the current outdated system with new rules, providing flexibility to the public sector and less burden on business.
“These long-standing plans have been developed with international procurement specialists and will help unleash innovation across the country and provide a fairer system for small businesses.”