Mixed contracts are a routine feature of modern procurement, but they are also a common source of legal risk. Design and build arrangements or facilities management contracts that combine services and minor works raise the same underlying question: which procurement rules apply?
Under the Procurement Act 2023 (the Act), the answer matters. Getting the classification or procurement route wrong can undermine compliance, distort competition and expose authorities to challenge, so getting it right is crucial.
Why classification matters
The way in which a mixed contract is classified determines how the procurement must be conducted. An incorrect approach can expose authorities to allegations of unlawful direct award, breaches of transparency or fair treatment duties, and in some cases, the risk of the contract being set aside.
Therefore, early and careful analysis is key.
How to approach mixed contracts under the Procurement Act 2023
1. Break it down early:
Authorities should begin by identifying what each element of the contract consists of. By the end of this exercise, the authority should be able to map out the contract elements clearly, including:
- works;
- services;
- goods;
- light touch services;
- concessions; and
- any exempt elements.
This initial assessment forms the foundation for the remainder of the analysis.
2. Could the elements be conducted under separate contracts:
The Act requires authorities to consider whether the different elements of a mixed contract could reasonably be awarded under separate contracts.
The test is not theoretical. The concept of ‘reasonable separability’ allows authorities to take into account practical considerations, including:
- value for money;
- operational efficiency;
- risk allocation; and
- whether separation would undermine delivery of the authority’s objectives.
Where separation would be artificial, inefficient or risky to the authority, it may be reasonable to treat the elements as a single contract.
Where the elements can reasonably be separated, authorities may procure them under separate contracts in accordance with the regimes applicable to each element, and no further mixed contract analysis is required. If the authority does not wish to procure as separate contracts, or the elements cannot be procured as separate contracts, they should move onto step 3 of this process.
3. Find the ‘main purpose’:
Where the elements cannot reasonably be separated, the key question becomes:
What is the main subject matter of the contract?
This assessment must be based on objective purpose and value, rather than labels, internal preferences, or how the contract is described administratively.
Once the main purpose is identified, the procurement rules applicable to that purpose will apply to the contract as a whole.
If the elements (see step 1 above) can be reasonably separated, but the authority wants to continue to procure as a mixed contract, the authority should, where the contract involves above-threshold elements, treat the entire contract as above-threshold.
For clarity, the thresholds for each contract type are as follows for any procurements commenced from 1 January 2026:
| Contracting authority – Contract type | Threshold (inclusive of VAT) |
| Central Government – Supplies and Services | £135,018 |
| NHS Trusts / NHS Foundation Trusts – Supplies and Services | £135,018 |
| Utilities – Supply and Services Contracts | £415,440 |
| Sub-Central / Other Contracting Authorities – Supplies and Services | £207,720 |
| All Authorities – Works Contracts | £5,193,000 |
| All Authorities – Concession Contracts | £5,193,000 |
| Light Touch Regime | £663,540 |
The following examples illustrate how the ‘reasonably separable’ and ‘main purpose’ analysis operates in practice:
Design and build contract which cannot be reasonably separated:
This contract includes:
- an above-threshold services element (design); and
- a below-threshold works element (build).
The authority concludes that the works element constitutes the main purpose, and that separating design and build would undermine single point responsibility. It would also increase risk for the authority as well as potentially increasing overall cost.
As the elements cannot be reasonably separated, the contract is treated as a below-threshold works contract, reflecting its main purpose.
Care services contract with minor cleaning services:
This contract includes:
- a below-threshold, light touch service (care services); and
- a below-threshold services element (minor cleaning services).
The authority concludes that the care services constitute the main purpose. The cleaning services are ancillary and cannot be reasonably separated without undermining service delivery.
The contract is therefore treated as a below-threshold light touch contract.
Broadcasting contract with audience analytics reporting:
This contract includes:
- the production and broadcast of a public health message, which falls within the broadcasting exemption under Schedule 2 of the Act; and
- post-broadcast audience analytics reporting to measure engagement with the broadcast content.
The analytics reporting derives its value exclusively from the broadcast itself and is functionally dependent on that activity. Given the interoperability between the two elements, the authority concludes that they cannot be reasonably separated.
The broadcast is the main purpose of the contract. As a result, the contract is treated as exempt overall, notwithstanding the inclusion of non-exempt ancillary services.
These examples are hypothetical illustrations of how these rules may be applied in practice but do not reflect real life scenarios. Each procurement must be assessed individually to determine both reasonable separability and the main purpose of the contract.
4. Apply the correct procurement regime:
Once step 3 is complete, the authority must procure the whole contract under the relevant regime as determined by the ‘reasonably separable’ and ‘main purpose’ tests (e.g. open procedure, competitive flexible procedure or light touch regime).
5. Document reasoning:
At all stages of the tender exercise, authorities should record their reasoning. In particular, for the purposes of mixed contracts, it is good practice to document:
- the breakdown of contract elements;
- the ‘reasonably separable’ test;
- the ‘main purpose’ rationale; and
- why the selected procedure is proportionate.
Clear documentation is critical in reducing challenge risk and demonstrating compliance with transparency and good governance obligations under the Act.
Conclusion
Mixed contracts are a familiar feature of modern procurement, but they require careful early analysis. By assessing whether contract elements can reasonably be separated, identifying the main purpose of the contract, and clearly documenting decision making, authorities can manage mixed contracts confidently and compliantly under the Procurement Act 2023.
How can we help?
For further information about issues raised in this article, please contact a member of our Procurement team.
Nicola Cullen is an Associate in our Public Law and Regulatory team. Nicola provides comprehensive public procurement advice, guiding clients from the initial planning phases through to contract ma... Read More
