Procurement - New Procurement Policy Notes published

The government has recently issued a couple of new Procurement Policy Notes (“PPNs”).

The first PPN, PPN 05/21, sets out information and guidance for contracting authorities on the National Procurement Policy Statement. It applies to all contracting authorities – central government bodies, local authorities, universities (those that are contracting authorities), and NHS bodies. It requires all authorities to take into account three broad national priority outcomes, as follows.

Creation of new businesses, jobs and skills

Sub-priorities here include increasing opportunities for training and entrepreneurship, and opportunities for those in areas of disadvantage/who face high barriers to employment.

Tackling climate change and reducing waste

This priority includes contributing to the UK Government’s legally-binding target to reduce greenhouse gas emissions to net zero by 2050. On this topic, recent PPN 06/21 (Taking into account supplier carbon reduction plans on major government contracts) contains guidance on how suppliers’ commitments to the “Net Zero” target must be taken into account in the procurement of major government contracts valued at over £5m. While PPN 06/21 applies to central government authorities as the contracting authority, the PPN contains model templates for use at the selection stage which all contracting authorities may find helpful. Under PN 06/21 suppliers will be asked to demonstrate their carbon reduction plan and this will be assessed as part of technical and professional ability.

Improving supplier diversity, resilience and innovation

PPN 05/21 asks all authorities to consider whether procurement can be used to encourage SMEs and social enterprise companies in competing for public contracts, and whether innovative technologies/business models can be adopted to deliver lower cost or higher quality.

Overall, authorities are reminded that:

• a clear link needs to be maintained between the development of strategies and business cases for commercial projects/programmes and the crafting of the specification and award criteria. To achieve this, it suggests that commercial/procurement experts should be involved in the development of the business case/strategy from the earliest point;
• it is important not to gold plate social value benefits, and to balance the social value benefits with delivery of the core purpose of the contract. An example given is imposing Equality Act 2010 requirements, which are only intended to apply in the public sector, on private sector suppliers; and
• while value for money remains important, the government wishes to send a clear message that procurements teams may take the broadest view of what constitutes value for money that includes the improvement of social welfare or wellbeing.

Actions to take

PPN 05/21 sets out two key actions for all authorities:

• consider whether they have the right policies and processes in place to manage the key stages of commercial delivery identified in the statement, where they are relevant; and
• consider their organisational capability and capacity, with regard to the procurement skills and resources required to deliver value for money (including benchmarking their own performance).

Future directions

The statement notes that major new legislation is being brought forward to transform the procurement rules and create a new regulatory regime that is better fit for purpose, and that authorities need to prepare now to ensure they will have the capability to benefit from the changes when they arrive. Our understanding is that draft legislation will be made available in September of this year, meaning that we may have a new public procurement regime coming into force in 2022.

PPN 05/21 notes that this new legislation will make it a statutory duty on all contracting authorities to have regard to the National Procurement Policy Statement.

From April 2022 contracting authorities with an annual spend of £200m or more will be required to publish procurement pipelines and to benchmark their procurement capability. Where spend is £100m a year or more, this will be required from April 2023.