The government just confirmed that price isn't always the point

One of the most persistent myths in public sector tendering is that the cheapest bid wins. It doesn't, and it hasn't for a long time. But a new procurement policy note published on 19 June 2026 makes that clearer than ever.

PPN 025, issued by the Cabinet Office, requires in-scope central government bodies to identify contracts in their pipeline relevant to national security and to prioritise UK suppliers in four specific sectors: shipbuilding, steel, artificial intelligence and energy infrastructure. Where justified, buyers are instructed to consider using the national security exemption available under the Procurement Act 2023, a provision that allows them to award contracts outside the normal competitive process entirely.

This isn't a minor operational tweak. It's the government formally stating, in procurement policy, that who you buy from can matter as much as what you pay.

What PPN 025 actually requires

The note applies to central government departments and their arm's-length bodies. It asks them to go through their upcoming procurement pipelines and flag contracts that touch on the four named sectors, then engage early with designated sector leads to consider whether the national security exemption applies.

Where it does apply, buyers have significant discretion. They can restrict competition to UK suppliers, use the exemption to award directly, or structure a procurement in ways that would otherwise be impermissible. The normal rules around open competition, which apply to most public contracts, don't override a genuine national security justification.

The four sectors aren't random. Shipbuilding, steel, AI and energy infrastructure are all identified in the government's Modern Industrial Strategy as areas where UK capability needs to be sustained for defence and resilience purposes. The logic is straightforward: you can't build warships if you've lost the skilled workforce, and you can't source steel domestically in a crisis if no one has been buying it domestically in peacetime.

Why this matters beyond those four sectors

If you're not in shipbuilding or steel, you might wonder what this has to do with you. The answer is less about the specific sectors and more about what PPN 025 signals for public procurement more broadly.

The direction of travel over the past year has been consistent. The government's "Growing British industry, jobs and skills" reforms are pushing buyers to think about where spend goes, not just how little it costs. SME and VCSE spend targets, social value requirements and local reservation powers for below threshold contracts all point in the same direction. Procurement is increasingly being used as a tool for achieving wider policy outcomes, not just securing the lowest unit price.

PPN 025 is the most explicit version of that argument yet. It's the government saying in writing: sometimes the national interest means paying more, buying from a specific supplier or restricting competition. That's a significant statement from a system that has spent decades insisting it treats all suppliers equally.

What to take from this if you're an SME

For small businesses and charities bidding for public sector work, the practical lesson isn't really about national security. Most SMEs aren't supplying warships. It's about understanding the broader shift in how public buyers are thinking.

Value for money in 2026 is a more nuanced concept than it was five years ago. Buyers are under pressure to demonstrate that their spending supports jobs, develops skills, strengthens local economies and now in some cases protects national interests. A bid that addresses only price and technical quality is increasingly leaving points on the table.

That doesn't mean you need to overhaul your approach overnight. It does mean it's worth understanding what your buyer is being measured on, not just what they've put in the tender documents, and making sure your response speaks to it.

PPN 025 won't affect most SME bids directly. But the thinking behind it will keep showing up in the criteria, the weightings, and the conversations that happen before a tender is ever published.