---
title: "Insourcing or Outsourcing? Making the Public Interest Test Evidence-Led"
canonical: "https://prestigecommercialconsulting.co.uk/articles/public-interest-test-insourcing"
author: "Prestige Commercial Consulting Limited"
category: "Commissioning and Sourcing"
published: "2026-08-10"
modified: ""
read_time: "8 min read"
keywords: ["UK public procurement", "Commissioning and Sourcing", "Procurement Act 2023", "procurement evaluation", "public procurement frameworks", "social value"]
---

# Insourcing or Outsourcing? Making the Public Interest Test Evidence-Led

PPN 024 makes the Public Interest Test a central-government policy requirement from 1st of April 2027, focused on early and evidence-led sourcing choices.

Insourcing and outsourcing are sometimes reduced to ideology or a short-term price comparison. PPN 024 requires a more disciplined starting point for its in-scope bodies. Its Public Interest Test asks whether direct delivery should remain a live option before a planned service project moves into procurement, using evidence about the service, the market, the authority's capability and long-term public value.

That does not create a general statutory duty to insource, and the Test is not the final delivery-model decision. PPN 024 is a central-government policy with a defined scope, exceptions and commencement date. Its method may nevertheless be useful to organisations that choose to adopt it as a commissioning discipline.

## PPN 024 is policy, not a general statutory duty

The [PPN 024 policy note](https://www.gov.uk/government/publications/ppn-024-the-public-interest-test-and-insourcing-strategy/ppn-024-the-public-interest-test-and-insourcing-strategy-html) applies only to central government departments, their executive agencies and non-departmental public bodies, which it calls in-scope organisations. It does not impose the same policy requirement on every council, NHS body, university, housing association or other public-sector contracting authority. The PPN says other public-sector contracting authorities may wish to adopt the approach and are encouraged to do so.

In-scope organisations should apply Public Interest Tests from 1st of April 2027. The requirement applies to new planned projects and re-procurements. It is not required for a project that, by commencement, has already completed a Strategic Outline Case, Delivery Model Assessment or equivalent internal governance stage. Subsequent sourcing choices still need the organisation's own approvals and, where applicable, must follow the procurement rules that govern the chosen route.

## Be precise about the projects that are in scope

The PPN says that the Test should be completed before commencing a planned project, including a re-procurement, for a service estimated at more than £1 million including VAT that may result in the award of a public contract under the Procurement Act 2023. The detailed [Public Interest Test guidance](https://www.gov.uk/government/publications/ppn-024-the-public-interest-test-and-insourcing-strategy/insourcing-and-the-public-interest-test-guidance-note-html) explains that the service contract must have as its primary object services delivered in the United Kingdom. That territorial condition prevents an overly broad reading of the policy.

The exceptions are material. They include direct awards under sections 41 and 42 of the Act, except a section 41 award relying on the absence-of-competition-for-technical-reasons justification in paragraph 6 of Schedule 5; Schedule 2 exempted contracts; specified defence and security services delivered by the original equipment manufacturer; services primarily delivered outside the United Kingdom; and regulated health procurement exempted by regulation 43. The policy and guidance also identify narrowly defined evaluation, research, and technical data or analysis work, and a service already assessed with equivalent rigour in an Insourcing Strategy. Record the scope conclusion and the evidence for it before treating a project as exempt.

Frameworks and dynamic markets need equally careful handling. Establishing one of those arrangements, with no specific service contract, does not itself require a Test. Where a Test led to the final sourcing decision to establish the arrangement, no further Test is required for a call-off for the same service. Where the arrangement was established without an applicable Test, the guidance says a Test should be applied before an individual in-scope call-off above the £1 million including VAT threshold. The file should therefore record which of those positions applies rather than treating the word framework as a complete answer.

## Treat the Test as an early decision aid

The guidance says to start the Test as soon as a service requirement is identified, before formal procurement stages and before a Delivery Model Assessment or Outline Business Case, or their equivalent, begins. For most lower-complexity requirements it is intended to be a proportionate, desk-based collaboration; more complex or higher-risk services may need broader functional input. The output is a Provisional Sourcing Decision, not a final investment decision.

Prepare a high-level information pack proportionate to the value and complexity of the service. It should draw on existing knowledge of the service need and outcomes, performance, market, staffing, cost, material risks and strategic alignment. The guidance expressly says that high-level estimates are sufficient at this stage: a final technical specification and a full should-cost model are not required. Make clear what is established fact, what is an estimate and what must be tested later.

Starting early matters because a credible in-house option may depend on workforce planning, data and system access, assets, leadership capacity and transition time. If these questions are first asked after tender design, a viable option may already have been excluded in practice. The reverse is also true: an early evidence-based assessment can show that an outsourced or mixed model is the better provisional answer.

## Look beyond the initial price comparison

Part One of the Test considers whether the service is a good candidate for insourcing. The guidance groups the indicators under value for money and strategic alignment, social value, and economic growth and market impact. Relevant evidence can include the need for direct control, likely whole-life value, whether the service is hard to specify or subject to policy volatility, past service performance, market health, labour constraints, resilience, effects on SMEs and VCSEs, and wider social or economic outcomes.

This is not an invitation to build a case for a pre-selected outcome. The guidance permits additional organisation-specific criteria only when they are not intended to drive a particular sourcing result, and it sets no automatic numerical score. Record the factual basis, assumptions and evidence gaps for each conclusion. Where Part One indicates a good candidate for insourcing, Part Two tests whether the authority has the capability, capacity, budget, assets, delivery vehicle and governance readiness to make that option realistic.

The process can also identify distinct service lines or a mixed delivery model, but it should not become a premature detailed disaggregation exercise. Detailed analysis belongs in the later Delivery Model Assessment or business case. The Test is valuable when it widens the range of options honestly, not when it predetermines the answer.

## Make the five-year strategy useful, not ceremonial

In-scope organisations with annual contract spend of £100 million including VAT or more should develop a five-year Insourcing Strategy. PPN 024 says it should be completed by 1st of April 2027 and published within 30 days of completion. The guidance describes a living, medium-term outlook, refreshed as circumstances change and given a comprehensive bottom-up review at least every five years.

The useful strategy is more than a list of contract expiries. It profiles services and operational needs, identifies where control or resilience may matter, and maps the capabilities, assets, investment and transition activity required to make an in-house option credible. It should connect to the commissioning pipeline, workforce, data, asset and governance plans.

PPN 024 also says in-scope organisations should record Test outcomes using the quarterly return template and send it to the Government Commercial Agency within 30 days of each calendar-quarter end. The first return covers 1st of April 2027 to 30th of June 2027 and is due by 30th of July 2027. The organisation is responsible for redacting sensitive information before submission. A concise and intelligible record from the outset will make later approval and reporting more reliable.

## Build a decision record that can withstand change

The decision record should identify the service boundary, scope conclusion, evidence considered, provisional outcome, assumptions, risks and next decisions. The guidance says the Provisional Sourcing Decision and supporting rationale should be formally recorded and signed off by the relevant Senior Responsible Owner or an appropriately delegated individual. If later assessment changes the direction, record the new evidence and rationale rather than quietly replacing the earlier view.

The provisional decision may be validated, revised or overturned by later detailed analysis. This is a feature of the approach, not a failure of it. It allows the authority to begin proportionate enabling work where an in-house option merits it, while retaining normal governance and a full comparison of feasible delivery models.

[Prestige's services](https://prestigecommercialconsulting.co.uk/services) can support needs assessment, option appraisal, commissioning strategy and route-to-market planning, helping teams structure evidence and workable choices. Prestige does not make the sourcing decision: the authority retains responsibility for its evidence, approvals and final delivery model.

## Important scope note

This article is general information, not legal advice. PPN 024 has specific organisational, service, value, territorial, timing and exception criteria. Readers should check current law, guidance and their own organisation-specific rules before acting.

## About this article

Published by [Prestige Commercial Consulting Limited](https://prestigecommercialconsulting.co.uk/about).
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This article provides general procurement information and does not constitute legal advice.