The Department for Work and Pensions is bringing 2,700 outsourced Universal Credit review staff in-house. From 1 April 2027, PPN 024 makes every central government department run a Public Interest Test on insourcing before it procures or re-procures a service worth over £1 million. Framework call-offs are caught too.
The Department for Work and Pensions is bringing 2,700 outsourced staff back in-house. They check Universal Credit claims, and until now they have worked for Teleperformance (Civil Service World, 1 October 2026). The contract was valued at between £368 million and £694 million when it was awarded, and was due to run to 19 June 2028 (Contracts Finder, 12 July 2024).
DWP chose to do that. From 1 April 2027, every government department has to ask the same thing about any service contract worth over £1 million before it goes out to tender again: could we do this ourselves? It is called the Public Interest Test, and it applies to central government departments, their executive agencies and non-departmental public bodies (Cabinet Office, PPN 024, 17 June 2026, paragraphs 4, 5 and 7).
If you supply central government, two things will catch you out. The department does not have to ask you anything before it decides. And being on a framework does not get you out of it.
Four questions to ask about your own contracts
- Do you hold, or are you bidding for, a service contract with a department, agency or non-departmental public body worth more than £1 million including VAT over its full term?
- Does it end, or come up for re-procurement, after 1 April 2027?
- Do you know whether that re-procurement will have completed its Delivery Model Assessment before 1 April 2027?
- If a civil servant read your performance reports and your original bid without you in the room, what would they conclude?
What is the Public Interest Test in PPN 024?
It is a check on whether the department should run a service with its own staff. It happens early, before anyone has planned the procurement. The guidance says it is “typically” done at Strategic Outline Case stage and is expected to take “at most two days to complete” for all but the most complex requirements (Cabinet Office, Insourcing and the Public Interest Test Guidance Note, section 2.1).
It has two parts. Part One asks nine questions about the service and its market. Part Two asks four about whether the department has the staff, assets and budget to run it. There is no score. The guidance says services where “a majority of the questions to Part One have been answered positively are good candidates for insourcing” (section 6.2).
The result is a Provisional Sourcing Decision, signed off by the project’s Senior Responsible Owner (section 7.1). If it says insource, the in-house option goes forward into the Delivery Model Assessment and the business case. It can be overturned later, but only with documented evidence and the Senior Responsible Owner’s approval (section 7.3).
The policy note does not tell departments to insource. The guidance does tell them to “avoid undue emphasis on risks or barriers to insourcing” (section 4.1).
How small a contract does £1 million catch?
Contracts you would think of as small. The £1 million includes VAT (PPN 024, paragraph 5). It also covers the whole contract and not one year of it. The guidance uses the valuation method in the Procurement Act 2023 (section 4.2), which counts the most the department could pay, including any optional extension years (Schedule 3, paragraph 1).
Here is a made-up example. You bill a department £14,000 a month before VAT on a three-year contract with two optional years. That is 60 months, so £840,000 before VAT (£14,000 times 60) and £1,008,000 with VAT at 20% (£840,000 times 1.2). That is over £1 million, so the department has to do the test before it re-tenders.
Which contracts get the question, and which do not?
| Situation, for an in-scope body | Is a test needed? |
|---|---|
| A new service or a re-procurement worth over £1 million including VAT, planned from 1 April 2027 | Yes |
| A project that had already completed its Strategic Outline Case, Delivery Model Assessment or equivalent stage by 1 April 2027 | No |
| A procurement that only sets up a framework or a dynamic market | No |
| A call-off worth over £1 million from a framework or dynamic market that was not itself the outcome of a test | Yes, before the call-off is awarded |
| A call-off for the same service from a framework that a test led to | No |
| A call-off from a framework let under the earlier regulations | At the department’s discretion |
| A direct award under section 41 (urgency, prototypes, repeat requirements and similar) | No, except a direct award for absence of competition on technical reasons, which does need one |
| A direct award under section 42 to protect life or public safety | No |
| Exempted contracts under Schedule 2, services delivered mainly outside the UK, regulated health procurement, and defence and security services delivered by the original equipment manufacturer | No |
| One-off research or evaluation, or work that needs an independent provider | No |
| A requirement already appraised to similar rigour in the department’s Insourcing Strategy | No |
| Local authorities, NHS bodies, housing associations and other contracting authorities | Not required. They are encouraged to adopt it |
Source: Cabinet Office, PPN 024, paragraphs 4, 5(a) to (j) and 7(a); Guidance Note, sections 2.2 and 4.2.
Why does being on a framework not get you out of it?
Setting up a framework is exempt. The guidance says no test is needed at that point “as there is no committed spend or specific service defined”. But it then says “the Test should be applied prior to the award of any specific call-off contract under such arrangements, where the estimated value of that individual call-off exceeds the £1 million (including VAT) threshold” (section 2.2).
None of the frameworks you are on today had a test when they were set up. On our reading, a call-off worth over £1 million by an in-scope body from a framework let under the Act, G-Cloud 15 for one, will need a test first from 1 April 2027. Call-offs from older frameworks let under the previous regulations are left to the department’s discretion (section 2.2). The DWP contract was itself awarded as a call-off from a framework (Contracts Finder, 12 July 2024).
Why will nobody ask you?
The guidance tells departments to do the test from their desks. Evidence gathering “should be a desk-based review of existing market intelligence rather than a new market engagement exercise”. For a service that is already outsourced, the instruction is to “use information from the incumbent or original bid”, alongside “historic contract performance metrics” (section 5.2).
Trade unions are named as contributors. The guidance expects them to provide “frontline operational insights” and evidence on “historical employment practices” (section 4.4, table 2). At DWP, the department said its decision “was not due to supplier performance”. The PCS union said members had reported poor case handovers from the contractor (Civil Service World, 1 October 2026; Computer Weekly, 2 October 2026).
So the department decides from what it already has on you: your monthly reports, your original bid, and what its own staff say about working with yours. You can do something about four of the questions now.
| What the test asks (Part One) | What you can put on record before April |
|---|---|
| Will in-house delivery give better value because “removed contracting costs outweigh any potential market efficiencies”? | A short cost statement showing what your price covers that an in-house team would also have to fund: management, recruitment, cover for absence, systems |
| Is the service “inherently difficult to define or measure”? | A clean set of measures, reported on time, with few disputed change requests |
| Have suppliers “previously struggled to deliver high-quality services”? | Your performance record, with any missed targets explained and the fix recorded in the contract meeting minutes |
| Is insourcing “unlikely to have a disproportionate impact on SMEs and VCSEs”? | If you are an SME, or use SME sub-contractors, tell your contract manager how much of the contract value reaches them |
Source: Guidance Note, section 6.2, indicators 1b, 1c, 1d and 3c. The right-hand column is our advice.
The test also happens long before you would hear about a re-tender. It is typically done at Strategic Outline Case stage, before the Delivery Model Assessment or the Outline Business Case has started (Guidance Note, sections 2.1 and 4.2). So when a tender notice comes out, the department has already decided not to bring the service in-house. If your contract is ending and no tender notice comes out, ask your contract manager why.
The dates you should know
| Date | What happens |
|---|---|
| 17 June 2026 | PPN 024 and its guidance published |
| 27 September 2026 | An Insourcing Unit announced in the Office for the Prime Minister and Cabinet. The Cabinet Office says it will look to bring its own building management services, including cleaning and security staff, in-house when contracts end in 2028, subject to a test |
| 1 October 2026 | DWP’s decision on 2,700 Universal Credit review staff reported |
| 1 April 2027 | Tests apply to new planned projects and re-procurements. Departments with annual contract spend of £100 million or more complete a five-year Insourcing Strategy, to be published within 30 days |
| 30 July 2027 | First quarterly return of test results, covering 1 April to 30 June 2027, due at the Government Commercial Agency |
Source: PPN 024, paragraphs 7 and 8; Cabinet Office, Measures to rewire the state, 27 September 2026; Civil Service World, 1 October 2026.
You will be able to read two things. The Insourcing Strategies will show which service categories each large department thinks it could run itself. And the guidance says test results “will be published centrally” by the Government Commercial Agency, which “will not redact information prior to publication” (section 7.5).
What should you do before 1 April 2027?
| If | Do this |
|---|---|
| A contract of yours ends after 1 April 2027 | Ask your contract manager when the re-procurement starts and whether its Delivery Model Assessment will be complete before 1 April 2027. If it will, the test does not apply to it |
| Your reports show missed targets | Agree the explanation and the fix now, and make sure both are recorded. The test works from the record |
| Your central government income comes through call-offs over £1 million | List which of your frameworks were let under the Act. Expect a test before each large call-off from those |
| Your customer spends £100 million or more a year on contracts | Read its Insourcing Strategy when it is published after 1 April 2027 and check whether your service category is named |
| You are planning which departments to pursue next year | Check each department’s pipeline notice. Section 93 of the Act requires bodies expecting to pay more than £100 million a year to list planned contracts over £2 million for the next 18 months |
Source: PPN 024; Guidance Note; Procurement Act 2023, section 93. The actions are our advice.
Deciding which contracts to defend and which buyers to pursue is the work our consultants do in Strategic Public Sector Growth. When a re-procurement does reach the market, bid leadership starts from the same record the department has been reading.
What should contracting authorities take from this?
If you are an in-scope body, you need a test process by 1 April 2027: who completes it, which Senior Responsible Owner signs it off, and who redacts the quarterly return, because the Government Commercial Agency will not. The first return is due by 30 July 2027.
If you are a local authority, an NHS body or a housing association, the test is encouraged and not required. If you adopt it, apply it the same way every time and keep the decision record, because a sourcing decision made without one is hard to defend later. Our procurement transformation and advisory work covers setting that process up.
If you supply central government, pick your largest contract that ends after April 2027. Ask this month when its re-procurement starts. If the Delivery Model Assessment will be finished before 1 April 2027, the test does not apply to it.
Questions suppliers are asking
What is the Public Interest Test in PPN 024?
It is an assessment that central government departments, their executive agencies and non-departmental public bodies must carry out before starting any planned project, including a re-procurement, for a service with an estimated value of more than £1 million including VAT. It asks whether the service should be delivered in-house. The result is a Provisional Sourcing Decision signed off by the Senior Responsible Owner (Cabinet Office, PPN 024, 17 June 2026, paragraph 5; Guidance Note, section 7.1).
When does the Public Interest Test start?
Tests apply from 1 April 2027 to new planned projects and re-procurements. A project that has already completed a Strategic Outline Case, Delivery Model Assessment or equivalent internal governance stage at that date is not required to have one (PPN 024, paragraph 7(a)). The first quarterly return of results covers 1 April to 30 June 2027 and is due by 30 July 2027 (paragraph 8(b)).
Does the Public Interest Test apply to framework call-offs such as G-Cloud 15?
Setting up a framework or dynamic market is exempt. The guidance says the test should instead be applied before the award of any specific call-off whose estimated value exceeds £1 million including VAT (Guidance Note, section 2.2). A call-off is exempt only where the framework was itself the outcome of a test for the same service (PPN 024, paragraph 5(j)). Applying the test to call-offs from frameworks let under the previous regulations is at the department's discretion. On our reading, call-offs over £1 million by in-scope bodies from frameworks let under the Procurement Act 2023, including G-Cloud 15, are caught.
Does PPN 024 apply to local authorities and the NHS?
No. It applies only to central government departments, their executive agencies and non-departmental public bodies. Other contracting authorities are encouraged to adopt the approach (PPN 024, paragraph 4). Regulated health procurement exempted under regulation 43 of the Procurement Regulations 2024 is outside the test in any case (paragraph 5(f)).
Can a department end my contract early to bring the service in-house?
PPN 024 does not give a department any new right to end a contract. The test applies to planned projects and re-procurements. For the five-year Insourcing Strategy, the guidance asks departments whether existing arrangements can be exited without prohibitive costs (Guidance Note, section 3.2), so whether a contract can be ended early depends on its own terms. DWF's commentary of 10 August 2026 says insourcing is more likely to be considered when an existing contract comes to an end.
Sources: Cabinet Office, PPN 024: The Public Interest Test and Insourcing Strategy, 17 June 2026; Cabinet Office, Insourcing and the Public Interest Test Guidance Note, 17 June 2026; Cabinet Office, Measures to rewire the state, 27 September 2026; Civil Service World, DWP to bring 2,700 staff carrying out Universal Credit checks in-house, 1 October 2026; Computer Weekly, DWP insources Universal Credit checking work, 2 October 2026; Department for Work and Pensions, Universal Credit Targeted Case Review Resource Augmentation, contract award notice on Contracts Finder, 12 July 2024; Procurement Act 2023, section 93 and Schedule 3, paragraph 1, as shown on legislation.gov.uk on 12 October 2026; Browne Jacobson, Cabinet Office publishes new guidance on Insourcing and the Public Interest Test, 23 June 2026; DWF, Insourcing and the Public Interest Test: what contracting authorities need to know, 10 August 2026.