Contract Performance Notices: Are Councils Ready to Publish Supplier Failure?

Why this matters now

A lawful tender and a properly documented award are no longer sufficient indicators of procurement success. Under the Procurement Act 2023, contract delivery is increasingly part of the public procurement record.

For councils, this is a significant operational change. Contracts supporting care, transport, housing, construction, technology, waste, community services and facilities management all depend on effective performance monitoring. Where the relevant statutory triggers arise, supplier performance or failure may now need to be published through a contract performance notice on the central digital platform.

The Cabinet Office guidance on contract performance notices, updated on the 20th of April 2026, explains that the notice has two functions. It records performance against statutory key performance indicators where the KPI duty applies. It also records particular breaches or failures to perform a public contract, except where a breach results in full termination and a contract termination notice is required instead.

This creates a different risk environment. Weak contract management does not only reduce service quality or delay intervention. It can leave a council without the evidence, consistency or governance route required to publish a fair and defensible account of supplier performance.

The practical question for authorities in June 2026 is not whether contract performance should be managed. It is whether existing contract management arrangements are sufficiently disciplined for the transparency regime now in force.

Contract performance notices have two distinct functions

The two uses of a contract performance notice should be understood separately.

The first is routine performance reporting against key performance indicators. Where section 52(1) of the Procurement Act 2023 applies, the authority sets and publishes KPIs and subsequently assesses the supplier against the three KPIs it considers most material at the time of the performance notice.

The second is publication relating to specified breach or failure events. This can apply more widely across public contracts and is not confined to those contracts that cross the value threshold for mandatory KPI reporting.

This distinction matters because a council may not have a contract subject to routine statutory KPI publication, but may still encounter a reportable supplier failure. An operational team should not assume that the absence of three published KPIs means there can be no transparency obligation during delivery.

Equally, routine KPI reporting should not be confused with breach reporting. A supplier can receive an adverse KPI rating without the circumstances necessarily amounting to the kind of breach or failure event that engages the separate reporting requirement. Conversely, a serious contractual failure may concern an obligation that was not selected as one of the three most material published KPIs.

Authorities therefore need two connected but distinct processes: planned periodic KPI assessment for captured higher-value contracts, and event-driven escalation for material breach or performance failure across relevant public contracts.

Which contracts require statutory KPI reporting

For public contracts above £5 million, the Procurement Act 2023 generally requires at least three KPIs to be set before the contract is entered into, unless a statutory exception applies. The Cabinet Office guidance describes the expanded reporting regime as applying to the majority of public contracts above that value.

The KPI information is included when the contract details notice is published. During the contract lifecycle, the authority must assess performance against the relevant KPIs and publish performance information through a contract performance notice at least once every 12 months and on termination.

The notice requires assessment against the three statutory KPIs that the authority regards as most material to performance of the contract obligations at the time the notice is published. That detail has important consequences.

A contract may contain more than three KPIs.

The KPIs most material at contract award may not remain the most material during mobilisation, operational delivery, recovery or exit.

An authority may need to explain transparently why the three KPIs assessed in a later notice differ from those initially highlighted.

Changing or introducing a KPI during contract life may itself require consideration as a contract modification.

For councils managing major works, strategic technology, high-value commissioned services or significant service partnerships, KPI governance should therefore be treated as a lifecycle responsibility, not a tender document exercise.

Meaningful KPIs are a commercial control, not decoration

Many council contracts already contain service levels, performance measures and reporting schedules. The new transparency duty does not make every measure a useful KPI.

An indicator may be simple to count while revealing little about whether the contract is succeeding.

Meetings held on time

Reports submitted

Emails acknowledged

Visits scheduled

Activities delivered

These measures may support administration, but on their own they often fail to test the outcomes, risks or public value that justified the contract.

A meaningful KPI should be connected to an important contractual obligation and a credible management response. Depending on the contract, the most material measures may concern service availability, quality and safety, statutory compliance, safeguarding, delivery against construction milestones, system uptime, incident response, cost control, social value commitments, carbon reduction, user outcomes or continuity of essential provision.

Good KPI design requires clear answers.

What outcome or risk does the indicator test?

What data will be used?

Who verifies that data?

How frequently will performance be reviewed?

What threshold distinguishes acceptable, improving and unacceptable performance?

What corrective action or contractual remedy follows failure?

Can the authority stand behind the result if it becomes publicly visible?

A council that cannot answer those questions before award risks creating measures that are onerous to administer, difficult to evidence and ineffective at identifying deteriorating delivery.

KPI design must begin before tender publication

A frequent cause of weak contract management is treating KPIs as content to be added late in the procurement process.

By that point, the service requirement may already have been developed without measurable outcomes. Pricing may not reflect the reporting effort required. The payment mechanism may not connect performance to consequence. Data needed for monitoring may not be available to the authority. Service teams may not have allocated resource to validate evidence.

This is especially risky where the contract will exceed the statutory value threshold. Performance indicators published after award will be difficult to strengthen if the underlying contract does not provide the necessary data rights, audit rights, reporting obligations, remedy framework and governance structure.

KPI development should therefore begin at the commissioning and sourcing stage.

The authority should identify critical outcomes and delivery risks.

Preliminary market engagement should test whether proposed data and performance requirements are realistic.

Tender documentation should identify measures clearly and enable bidders to price and plan for delivery.

Evaluation should test whether the supplier's operating model can generate reliable evidence.

Mobilisation should establish reporting baselines, named owners, system access and escalation routes.

Contract management should then use the measures actively, rather than assembling a retrospective annual assessment shortly before publication is due.

Public ratings require sound evidence and fair process

The purpose of performance publication includes providing greater visibility to the public and other contracting authorities. It may also be relevant when an authority later considers a discretionary exclusion ground connected with breach of contract or poor performance.

That makes evidence and procedural fairness essential.

A published assessment should not be based on informal frustration with a provider, an unverified commissioner view or a late effort to reconstruct what occurred during the year. It should be supported by contemporaneous records, contractually relevant evidence and a fair process for addressing performance.

Councils need consistent performance review arrangements.

Supplier reports should be scrutinised rather than filed.

Evidence should be retained in a format capable of supporting the stated rating.

Concerns should be notified clearly and promptly.

Improvement plans should define required actions, evidence and deadlines.

Decisions to escalate, remedy, settle, vary or terminate should be connected to procurement, legal and governance advice where appropriate.

Performance assessments should be approved by an officer with sufficient authority and understanding of the consequences of publication.

Consistency also matters across service areas. If two contract managers apply materially different standards to similar levels of supplier performance, the authority may create unfairness, make published information less reliable and expose itself to challenge.

Breach and poor performance reporting is wider than the £5 million KPI duty

The breach and failure-to-perform provisions are particularly important for councils because they may apply to most public contracts, including frameworks and concession contracts, rather than only contracts above £5 million. The guidance confirms that the breach and poor performance requirement does not apply to light touch contracts or private utilities.

Where a supplier breaches a public contract, a contract performance notice is required where the breach results in one or more specified outcomes.

Partial termination of the contract

An award of damages

A settlement agreement between the supplier and the contracting authority

Where a breach results in full termination, a contract termination notice is published instead.

A notice may also be required where a supplier is not performing a public contract to the authority's satisfaction, has been given a proper opportunity to improve performance and has failed to do so.

For both breach and relevant failure to perform, the publication requirement is time-sensitive. The notice must be published within 30 days of the day on which the statutory reporting trigger first applies.

This means contract managers cannot be expected to recognise every transparency duty alone. A partial termination, settlement agreement or damages award may be managed through legal, finance or service governance routes. Unless those routes connect promptly to procurement transparency ownership, a council may resolve the operational issue but miss the publication consequence.

The hidden risk in informal supplier recovery arrangements

Councils generally seek to maintain essential services and solve performance problems proportionately. That is appropriate. The difficulty arises when supplier recovery is managed informally and without clear records.

A provider may repeatedly fail performance standards while the service team accepts assurances that matters will improve.

A project may miss milestones while extension and cost implications are discussed without formal escalation.

A supplier may agree a financial settlement with the authority before anyone checks the reporting obligation.

A service may reduce the provider's scope informally, effectively creating a partial termination without involving the commercial governance team.

In each case, the council may lose control of the evidence and timing required for statutory reporting.

The correct response is not to make every operational concern a formal dispute. It is to define triggers that require commercial review. Service teams should know when ordinary contract management becomes a potential reportable matter and who must be informed.

This is especially important in decentralised authorities where contract ownership sits across directorates rather than within one contract management function.

What this means for high-risk local authority contracts

Different categories of contract require different measures and escalation routes.

In social care and community support, performance may be linked to safeguarding, missed care, quality standards, workforce stability, service continuity and outcomes for vulnerable people. Commercial escalation must be aligned with safeguarding and commissioning responsibilities.

In construction and major works, performance may concern programme milestones, cost control, defects, health and safety, quality, statutory consents, community disruption and social value delivery. Delayed action can create substantial financial exposure before a performance notice is considered.

In technology and digital services, availability, cyber incident handling, response times, data protection, implementation milestones, service recovery and exit support may be material. Evidence should not depend solely on supplier-produced dashboards.

In transport, housing, facilities or environmental services, failure may affect residents immediately and require rapid operational intervention. The authority still needs records capable of supporting remedies, payment decisions and any transparency duty.

The best KPI framework is not the one with the greatest number of measures. It is the one that enables the authority to identify and respond to material service risk before failure becomes entrenched.

What councils should do now

Identify contracts subject to statutory KPI reporting.

Councils should maintain a register of public contracts awarded under the Procurement Act 2023 showing value, KPI duty status, the published KPIs, annual review date, termination reporting requirement, contract owner and named transparency lead.

Map reportable failure escalation.

Authorities should create a route for contract managers, commissioners, legal advisers and finance colleagues to notify procurement governance officers when a supplier failure may result in partial termination, damages, a settlement agreement or formal failure-to-improve action.

Test existing KPI quality.

For major contracts already being prepared or mobilised, councils should review whether indicators are material, measurable, supported by data, linked to contractual obligations and practical for publication.

Create evidence standards.

A standard performance assessment pack can identify required evidence, review dates, supplier representation arrangements, approval routes, retention requirements and the process for producing a notice where required.

Align remedies and transparency.

Contractual remedies, improvement notices, payment deductions, damages, settlement decisions, modification requests and termination recommendations should not sit in separate governance silos. Each may affect what the council must record or publish.

Support commissioners and contract managers.

Post-award statutory duties will often be triggered by officers outside the procurement team. They need practical training on performance evidence, early escalation and notice consequences, not only an overview of procurement legislation.

Plan for publication from the outset.

Where information is likely to be published, officers should consider data quality, confidentiality and appropriate redaction during contract design and performance reporting. Publication should not become an obstacle discovered after a performance issue arises.

Practical contract performance tools and procurement governance support are available through the Prestige Commercial Consulting support hub. Structured learning on Procurement Act 2023 transparency and contract management is available through the PCC Learning Platform.

The supplier perspective

Suppliers should expect public sector contract performance to be managed with greater formality. For a provider delivering a contract with published KPIs, commitments made during tendering need to translate into credible data, responsive governance and prompt corrective action where performance declines.

This can benefit reliable suppliers. Consistent and transparent performance information may help authorities identify providers with a strong delivery record and distinguish them from suppliers whose tender promises are not reflected in delivery.

Suppliers should also engage early where a measure is ambiguous, evidence cannot be generated reliably or a performance concern has arisen. Silence, unsupported assurance or delayed recovery action may increase the likelihood of formal escalation and publication.

Closing takeaway

Contract performance notices change the balance of procurement accountability. Councils are no longer judged only by how they tender and award. They may also need to publish how suppliers perform and how serious failure was managed.

A strong authority will choose meaningful KPIs, retain reliable evidence, give suppliers fair opportunity to improve, escalate serious issues promptly and connect operational management with procurement transparency.

A weak authority may find that poor supplier performance is compounded by missing evidence, inconsistent decisions and a notice deadline discovered too late.

For support with KPI frameworks, contract management assurance or Procurement Act 2023 governance, contact Prestige Commercial Consulting Limited.