Subcontracting in the public sector: working with tier ones

Subcontracting on a public sector contract means doing part of the work for the supplier that holds the contract with the public buyer, called the prime or tier one supplier. “Tier one” is industry shorthand, not a term in the Act, which says “sub-contract”.

Since 24 February 2025, the Procurement Act 2023 has given subcontractors a 30-day payment term on public sub-contracts, with a few exceptions (section 73). This guide covers how the chain works, your payment rights, what the buyer can ask about you, and where to find the firms that win. It is part of our guide on how to win public sector contracts.

How subcontracting works in the public sector

The buyer contracts with the prime. The prime contracts with you. You may in turn subcontract part of your work.

The Act’s term is “public sub-contract”: a contract substantially for the purpose of performing, or contributing to the performance of, all or part of a public contract (section 73(5); payment guidance para 22). The guidance says the aim is that prompt payment “flows down to the lower tiers of the supply chain” (para 22).

A “public contract” is one at or above the threshold (section 3). Below the threshold, section 88 does the same job for regulated below-threshold contracts.

Your right to be paid within 30 days

Section 73 implies the payment terms in section 68(2)–(5) into every public sub-contract. In plain terms:

• 30 days. Sums due must be paid within 30 days of the later of receiving your invoice or the day payment falls due under it (section 68(2)).
• Invalid or disputed invoices. The clock doesn’t run on an invoice the payer considers invalid or disputes, but it must tell you without undue delay (section 68(3)–(4)).
• No contracting out. Any term that restricts or overrides these terms has no effect, and you can agree to be paid earlier (section 73(3)–(4)).
• Valid invoice. The e-invoicing rule doesn’t apply to sub-contracts (section 73(2)). A valid invoice carries the minimum information: your name, a description of what you supplied, the sum requested and a unique identification number, plus anything else the contract requires (section 68(8)–(9)).
• Not covered. Sub-contracts under a concession contract, a utilities contract awarded by a private utility, or a contract awarded by a school (section 73(6)).
• Below the threshold. Section 88 implies the same terms into sub-contracts wholly or substantially for performing a regulated below-threshold contract (section 88(8); guidance para 8).

PPN 021 asks central government departments, executive agencies and non-departmental public bodies to spot-check that 30-day terms are applied in sub-contracts under in-scope contracts (over £5 million a year including VAT), at least once every six months from the award date, from 1 October 2025 (paras 3, 4, 8, 11).

If you are paid late, PPN 021 says the Public Procurement Review Service investigates complaints about late or unfair payment in the supply chain (para 12). That is a route to report it, not legal advice.

What the buyer can ask about its subcontractors

In a competitive tendering procedure, the buyer must ask whether a supplier intends to subcontract. It must also try to establish whether any intended subcontractor is on the debarment list, and it may ask for more information to see whether a subcontractor is excluded or excludable (section 28).

If the buyer concludes the prime plans to use an excluded supplier, it must treat the prime as excluded. For an excludable one, it must treat the prime as excludable and may remove it. Before rejecting a tender on this basis, it must notify the prime and give it a reasonable opportunity to find a different subcontractor (section 28(3)–(5)).

There is a second power. If a prime relies on you to meet the conditions of participation, the buyer can direct it to enter a legally binding arrangement with you. If the prime doesn’t, the buyer may decline to contract with it, direct it to use another appropriate supplier, or end the contract (section 72; conditions guidance paras 26, 28). If a prime names you in its bid, agree terms in writing early.

So expect the prime to ask you about exclusion grounds. Keep your answers consistent with what you would give a buyer directly.

Finding tier one suppliers to work with

We don’t list subcontract opportunities. We list public notices from Find a Tender and Contracts Finder, and those notices point you to the firms to approach:

• Contract award notices. A contract award notice tells interested parties which supplier the buyer intends to contract with. It is published on the Central Digital Platform before the contract is entered into (award notice guidance paras 1, 8). Here is how to search Find a Tender.
• Pipeline notices. A buyer expecting to pay more than £100 million under relevant contracts in the coming financial year must publish a pipeline notice (private utilities and transferred Northern Ireland authorities aside; para 3). It covers planned contracts worth more than £2 million over an 18-month reporting period (pipeline guidance paras 2, 7).
• Frameworks. Call-offs go to the suppliers on the framework, who may need subcontractors to deliver them. See frameworks.
• Lots too big for you. If a notice splits work into lots beyond your size, the award notices show who won them.

In the week to 10 Oct 2026, 124 of the 366 live notices that stated a value were over £1 million (as of 10 Oct 2026; how we count). For trade-specific notices, see construction tenders, repair and maintenance tenders and highways tenders.

Construction supply chains and the Construction Playbook

The Construction Playbook is government guidance. Its 14 key policies are expected to be followed by central government departments and their arm’s length bodies on a “comply or explain” basis. The PDF is Version 1.1, September 2022.

It says that where SMEs are engaged through the supply chain, the government expects prime contractors to follow its principles and the Supplier Code of Conduct (p.19). It also says prompt payment matters “throughout the supply chain, especially at the lower tiers” (p.58).

Treat it as a statement of policy expectations only. It predates the Procurement Act 2023 and still refers to the Standard Selection Questionnaire (p.58), so don’t use it for current procedure. For site-safety schemes, see SSIP, CHAS and Constructionline.

Subcontract or bid direct?

Bid direct where the work fits you. For regulated below-threshold contracts, the Act bars a separate suitability stage before tenders are submitted, but the buyer can still assess suitability at the award stage (section 85(1); below-threshold guidance para 16). Larger works contracts (£135,018 or more for central government, £207,720 or more for others, from 1 January 2026), Welsh devolved buyers and framework call-offs are outside that bar (section 85(3), (5)).

Consider a consortium if you are close. Suppliers can meet conditions of participation together by submitting a tender together as a consortium (conditions guidance para 26).

Subcontract where the contract is beyond your size, insurance or turnover, as stated in the pack. Our bid or no-bid checklist helps you decide.

Before you sign a subcontract

Check the subcontract for the following. This is a checklist, not legal advice.

• Payment period. A longer period than 30 days on a public sub-contract has no effect on the implied term (section 73(3)).
• What the prime passes down. Look for insurance levels, accreditations and KPIs from the main contract. The buyer must set at least three published KPIs on contracts estimated above £5 million, with exceptions such as frameworks and light touch contracts (section 52). Also check any social value commitments.
• Staff transfer. If staff may move to you, read up on TUPE.
• Invoicing. How and where to send invoices, and that they carry the minimum information (section 68(9)).

Your next step

Tell us your trade and postcode to join the free weekly list of live tenders, starting soon. On Pro (£49/month), notices that fit your trade and area are checked against what each states about insurance, certifications and location, and you get an email each morning on days with new matches.