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Legal changes

National Procurement Policy Statement published

The National Procurement Policy Statement (NPPS) and its accompanying Procurement Policy Note 05/21 (PPN) were published on 3rd June 2021.

The NPPS sets out national strategic priorities for public procurement which contracting authorities will have to have regard to. As set out in the Green Paper on procurement reform which was published in December 2020 and last month’s Queen’s Speech, the government intends to bring forward legislation when parliamentary time allows to ensure that all contracting authorities will be required to have regard to the NPPS when undertaking procurements. The PPN also states that the legislation will require contracting authorities with an annual spend of £100m or more to publish procurement pipelines and to benchmark their procurement capability.

Action required now

The NPPS sets out three national priorities (social value; commercial and procurement delivery and skills and capability for procurement). The PPN requires that with immediate effect all contracting authorities should familiarise themselves with the NPPS and that they should consider the following national priority outcomes alongside any additional local priorities in their procurement activities:

  • creating new businesses, new jobs and new skills;
  • tackling climate change and reducing waste; and
  • improving supplier diversity, innovation and resilience.

In addition, all contracting authorities should consider whether they have the right policies and processes in place to manage the key stages of commercial delivery identified in the NPPS and whether they have the right organisational capability and capacity with regard to the procurement skills and resources required to deliver value for money.

Application of the NPPS

Who does it apply to?

All contracting authorities including central government departments, executive agencies, non-departmental public bodies, local authorities, NHS bodies and the wider public sector.

Scope

Contracting authorities should have regard to the national priorities set out in ‘exercising their functions relating to procurement’. This has the same meaning as in section 39(2) of the Small Business, Enterprise and Employment Act 2015 and includes the exercise of functions not only in preparation for entering into contracts but also in the management of contracts thereafter. This is particularly relevant in the context of procurement delivery.

Duration

The NPPS is intended to cover the period from the date of publication - 3 June 2021 - to the end of the current Parliament and will remain in place until it is withdrawn, amended or replaced and can be reviewed when the Minister for the Cabinet Office considers it appropriate to do so.

National priorities set out in the NPPS

Social Value 

The government wants to send a clear message that authorities do not have to select the lowest price bid and that in setting the procurement strategy, drafting the contract terms and evaluating tenders, they can and should take a broad view of value or money that includes the improvement of social welfare or wellbeing, referred to in HM Treasury’s Green Book as social value. This is a welcome clarification of the exiting regime.

Commercial and procurement delivery 

The NPPS sets out principles, practices and guidance that authorities should consider before, during and after procurements. Importantly, the NPPS recognises that some of these may not be relevant to every procurement. Contracting authorities should consider opportunities for working with each other to deliver best value for money through economies of scale and resource efficiencies. It will be interesting to see if this acts as a catalyst for more shared services and joint working.

Skills and capability for procurement 

All contracting authorities should consider the adequacy of their procurement skills and resources given the scale and complexity of their portfolios. Where contracting authorities identify gaps in their capability they should plan now how to fill these, whether through developing their own team’s capacity and capability, collaboration with other contracting authorities or making use of professional buying organisations. All contracting authorities should consider benchmarking themselves annually against relevant commercial and procurement operating standards and other comparable organisations. The potential resource implications of carrying out an annual benchmarking exercise will be a concern to smaller authorities, although the PPN states that this will only be mandatory for contracting authorities with an annual spend of £100m or more.

Conclusions

The NPPS “sets out the national priorities that all contracting authorities should have regard to in their procurement where it is relevant to the subject matter of the contract and it is proportionate to do so”.  Some of the recommendations, particularly around procurement delivery and skills, will have resource implications and this reference to proportionality is welcome. We need to see the precise wording of the legislation but in the NPPS itself the overriding duty is for authorities to consider its recommendations. This should be recorded by authorities at each decision stage in connection with the relevant procurement. Having regard to the NPPS will still allow authorities some freedom in certain circumstances as most of its recommendations are general in nature and there is an express reference to relevance and proportionality.

Authorities should familiarise themselves with the NPPS and consider how its recommendations apply to them and to their procurements. 

Contact Vincent, or our local government solicitors if you have any queries about how the National Procurement Policy Statement applies to you.

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