On 17 June 2026, the Cabinet Office published Procurement Policy Note 024 (PPN 024): The Public Interest Test and Insourcing Strategy. It provides detailed guidance on the obligations that in-scope contracting authorities will face when assessing service delivery models and rebuilding internal capability. 

The guidance sits alongside the Procurement Act 2023 (PA 2023) and introduces two principal mechanisms, a mandatory Public Interest Test before procurements with a contract value of £1m (including VAT) or more, and a five-year Insourcing Strategy for larger contracting authorities.

Who does the PPN apply to?

The PPN applies to central government departments, executive agencies, and non-departmental public bodies. Other public sector contracting authorities are encouraged, but not required, to adopt the same approach.

The Public Interest Test does not apply to all contracts. The following are excluded:

• direct award contracts made under sections 41 or 42 of the PA 2023, covering extreme urgency and public safety.
• contracts exempted under Schedule 2 of the PA 2023.
• defence and security contracts for services related to defence and security goods where those services are delivered by the original equipment manufacturer.
• service contracts whose primary object is the provision of services delivered outside the United Kingdom.
• contracts for regulated health procurement exempted under regulation 43 of the Procurement Regulations 2024; and
• contracts where a specific service requirement has already been explicitly appraised within an Insourcing Strategy to an equivalent standard.

The Public Interest Test

From 1 April 2027, in-scope contracting authorities must carry out a Public Interest Test before commencing any planned project, including re-procurements, for a service with an estimated value exceeding £1m, inclusive of VAT, that may result in the award of a public contract under the PA 2023. The test requires authorities to assess the merits of internal delivery against market options, considering wider government objectives as well as key economic and social considerations. In doing so, it moves beyond the narrower, cost focused assessments that have often characterised value for money analysis in outsourcing decisions.

Any decision to insource or outsource following the application of a Public Interest Test must still be made in accordance with the PA 2023. Contracting authorities will therefore need to assess, on a case-by-case basis, whether a service is suitable for insourcing to secure the best outcome for the taxpayer.

Authorities must record the outcome of all Public Interest Tests using a quarterly reporting template and submit returns to the Government Commercial Agency within 30 calendar days of the end of each calendar quarter. The first return will cover the period from 1 April to 30 June 2027.

The five-year Insourcing Strategy 

Organisations with an annual contract spend of £100m, inclusive of VAT, or more must develop and publish a five-year Insourcing Strategy within 30 days of 1 April 2027. The strategy is intended to identify insourcing opportunities early in the project lifecycle, allowing sufficient time to build internal skills and operational readiness, and supporting a more deliberate, market shaping approach to central government procurement.

By putting in place a formal forward-looking framework, contracting authorities will be better placed to identify emerging opportunities for in-house delivery and plan the capability investment needed to support those decisions, rather than defaulting to the market at the point of procurement.

Value for money methodology

The guidance provides a structured methodology for practitioners to evaluate internal delivery models against external market options. Crucially, the framework requires contracting authorities to adopt a broader conception of value for money, ensuring that sourcing decisions actively consider wider government objectives and longer-term national resilience considerations, and not merely short-term cost comparisons. Government assessments have previously focused too narrowly on the cost element of service delivery; PPN 024 is intended to correct this imbalance.

Next steps for contracting authorities

With implementation scheduled for 1 April 2027, contracting authorities should begin preparing now. 

Key steps include:

• Reviewing PPN 024 and identifying which contracts will fall within the scope of the Public Interest Test.
• Confirming whether the organisation meets the £100m annual contract spend threshold that triggers the obligation to publish a five-year Insourcing Strategy.
• Establishing internal governance processes to ensure that the Public Interest Test is applied and documented at the appropriate stage of each procurement – note that the guidance is clear that this must be at an early part of project planning, the flow chart in the guidance document is helpful to consider.
• Training relevant commercial and procurement staff on the methodology and reporting requirements.
• Implementing systems to monitor quarterly reporting deadlines and submissions to the Government Commercial Agency.

Responsibility for conducting and recording the Public Interest Test rests with the contracting authority and cannot be delegated. Robust internal processes will therefore need to be in place well before the April 2027 deadline.

PPN 024 does not require contracting authorities to in-source services. It requires them to give structured, evidence based consideration to insourcing before procurement begins. Authorities should also note that these new requirements sit alongside, rather than replace, existing obligations under the PA 2023, including those relating to transparency, competition, and the publication of contract notices.