Turnover and insurance requirements in public sector tenders

Where these requirements come from

Under section 22 of the Procurement Act 2023, a buyer can set conditions of participation that a supplier must meet to be awarded the contract. They can relate only to your legal and financial capacity or your technical ability, and they must be a proportionate way of checking that capacity, having regard to the nature, complexity and cost of the contract (Guidance: Conditions of Participation, GOV.UK).

Two points matter for bid planning:

• One failed condition is enough. If you fail any condition, you cannot be awarded the contract, even if you meet all the others.
• The tender notice tells you. Buyers must set out the conditions in the tender notice, supplemented where needed by the tender documents, so you can check them before you commit to bid.

Minimum turnover and the turnover ratio

Many tenders set a minimum annual turnover. Central government's economic and financial standing guidance (updated 5 November 2026) describes the test most departments use:

Turnover ratio = your annual revenue / the expected annual contract value

• Revenue is the figure on the face of your income statement, excluding your share of joint venture or associate revenue.
• For a multi-year contract whose value varies, the guidance recommends using the highest expected annual contract value.
• For frameworks with no single contract value, buyers may adapt the test, for example using the maximum value across the lots you bid for.

The guidance's suggested scale for all sectors runs as follows. These are a scale of risk for buyers to tailor, not fixed pass marks.

So, as an illustration, a contract worth £500,000 a year would put a supplier with more than £1m of annual revenue in the lower risk band. The guidance also says turnover thresholds should not impose unfair barriers to smaller suppliers, and that buyers should normally not exclude bidders on the turnover ratio alone unless the risk is exceptionally high and remains unacceptable after clarification and mitigation.

The turnover ratio is usually one of several tests. The same guidance sets out standard metrics including operating margin, debt and liquidity ratios, with separate suggested ranges for construction, engineering and facilities management. For smaller, simpler contracts it suggests a more basic check, such as a credit score from a ratings agency.

Audited accounts

Buyers cannot require audited annual accounts, as a condition of participation, from a supplier that is not required to have its accounts audited under the Companies Act 2006 or an overseas equivalent. They have to assess your financial capacity on other evidence instead. The government guidance lists examples:

• parent or ultimate parent company audited accounts;
• guarantees and bonds;
• bank statements and references;
• management accounts;
• financial projections, including cash flow forecasts, and your order book;
• details of previous contracts, including their values.

If your latest published accounts are drawn up to a date more than 12 months before you submit, the guidance says buyers should consider asking for more recent management accounts. Your economic and financial standing information also forms part of the core supplier information you hold on the Central Digital Platform.

Insurance levels

Insurance works differently from turnover, because you do not have to buy cover just to bid:

• No cover required before award. Buyers are prohibited from requiring insurance relating to the performance of the contract to be in place before award, so that businesses do not pay for cover with no guarantee of winning.
• What they can ask for. A buyer can make it a condition that you will have the contract's insurance levels on commencement, and ask for evidence. The guidance gives two examples: certificates showing you already hold the cover, or a letter from an insurer confirming it would offer you the cover, together with your commitment to take it out. In the second case, the buyer must verify the cover is in place before award.
• Legal requirements still apply. Insurance you must hold by law anyway, such as employers' liability, can be required as a condition of participation.
• Call-offs can add more. A framework call-off can include extra conditions that did not apply to the framework itself, for example bespoke insurance requirements for that contract.

Employers' liability insurance is a legal requirement for most employers. GOV.UK says you must be covered for at least £5 million by an authorised insurer, and you can be fined £2,500 for every day you are not properly insured. Tenders often ask for more than the legal minimum, and for public liability and professional indemnity cover too.

A live example: the Fusion21 framework

Construction News reported the requirements in the tender notice for Fusion21's £1bn construction and refurbishment framework, published on 5 November 2026:

Applicants also need employers' liability insurance of £10m and public liability and professional indemnity cover of £5m each, and the financial assessment looks at whether bidders are more likely than not to remain trading in four years' time. Tenders are due by noon on 8 January 2027. Banded requirements like these mean the band you apply for matters as much as the quality of your answers. For more on how frameworks work, see our guide to frameworks and dynamic markets.

If you fall short

A shortfall does not always mean you cannot bid. Depending on what the tender allows:

• Rely on another supplier. Section 22 lets you meet conditions through a consortium, a subcontractor or a guarantor, provided there will be legally binding arrangements. The buyer will then assess them as well, and suppliers you rely on (other than guarantors) are named in the contract award notice. See our guide to subcontracting on public sector contracts.
• Offer a parent company guarantee. If you are part of a group, the guidance says a parent company guarantee may be sought as a mitigation, and a written commitment to provide one is normally enough before award. The buyer will assess the guarantor too.
• Explain the numbers. The guidance lists turnover mitigations including new contracts won since your last accounts, historic turnover trends and forward-looking order books. Buyers should let you see your risk rating and explain why a different one is more appropriate.
• Pick the right lot or band. On a banded framework, a lower value band may match your turnover today.
• Ask a clarification question. If a turnover or insurance level looks disproportionate for the contract, ask the buyer during the clarification period. Conditions must be proportionate under the Act.

Check before you bid

• Find every financial and insurance condition in the tender notice and documents, and note which are pass/fail.
• Work out your turnover ratio using your latest accounts and the highest expected annual contract value.
• If your accounts are more than 12 months old, prepare up-to-date management accounts signed off by your board.
• Ask your broker now for confirmation that it would offer the required cover, so you are not chasing it at the deadline.
• Decide early whether you need a guarantor, consortium partner or subcontractor, because the paperwork takes time.

For the rest of the selection stage, read our main guide: Procurement Specific Questionnaire (PSQ) explained.

How West Gate can help

• Find the work: search open UK contracts free with our tender search, or set up free tender alerts for your sectors and regions.
• Outsource the selection stage: our PSQ, SQ and PQQ support covers your financial standing, insurance and the evidence for conditions of participation, and our framework application support helps you choose the right lots and bands. For the full bid, our bid writers handle research, compliance, writing and deadlines. West Gate has a 90%+ win rate† and does not support competing bidders on the same opportunity.
• Talk it through: book a free 30-minute call if you are not sure whether your turnover or insurance meets a tender's conditions.

† Figures based on bids West Gate submitted and contracts awarded in 2025.

Want us to handle this for a live bid? See our PSQ and conditions of participation support, or our full range of bid writing services.

Sources

• Guidance: Conditions of Participation (GOV.UK, updated 17 August 2026)
• Assessing and monitoring the economic and financial standing of suppliers guidance note (GOV.UK, updated 5 November 2026)
• Procurement Act 2023, section 22: conditions of participation
• Employers' liability insurance (GOV.UK)
• Employers' Liability (Compulsory Insurance) Act 1969: a brief guide for employers (HSE)
• Fusion21 launches £1bn construction framework (Construction News, 6 November 2026)

General information, not legal advice. Always follow the tender documents and take legal advice where needed.