National procurement policy statement – the cart before the horse?

In the Transforming Public Procurement Green Paper, the Government signalled its desire to increase its control over procurements by all contracting authorities. The Government wants to shape procurement to meet national (i.e. the Government’s) priorities.

Our earlier ebriefing highlighted some of the issues around this procurement central power grab.

The Government is clearly not prepared to wait for legislation and has started this process with the issue of Procurement Policy Note 5/21. This PPN sets out details of the Government’s National Procurement Policy Statement (NPPS) which accompanies it.

National priorities
This PPN is said to apply to all contracting authorities, not just the central government. It says that contracting authorities ‘should consider’ the following national priorities in their procurements “where it is relevant to the subject matter of the contract and it is proportionate to do so”:

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

The NPPS sets out in more detail what each of these entails.

Most contracting authorities already look to secure social value in terms of apprenticeships, training opportunities and work experience through their procurements. Some have been factoring in environmental issues for several years, and there is clearly a widespread desire to do this (whilst recognising that there are often difficulties over the measurability of environmental sustainability promises and avoiding ‘greenwash’).

However, contracting authorities like housing providers may wonder why it is appropriate for their tenants’ money to be used to create new businesses, promote supplier diversity, and encourage disruptive technologies and business models in their supply chains.

Procurement capability
The PPN says that contracting authorities will be required to publish their procurement pipelines and benchmark their procurement capability. This will apply to contracting authorities with an annual spend of over £200 million from April 2022 and over £100 million from April 2023.

This is part of a focus in the NPPS on the procurement capabilities of contracting authorities. The NPPS says that contracting authorities should consider whether they have the right policies and processes in place to manage the key stages of procurement delivery set out in the NPPS. Much of this is just procurement good practice. We wrote about these key procurement stages (and a few others) in the NHF Contract Management Guide, which, working alongside echelon Consultancy Limited, we comprehensively updated in 2020.

Must you comply?
Contracting authorities will rightly ask whether they have to comply with this PPN. At the moment the answer would seem to be “no”.

There is no statutory authority for the Cabinet Office to issue this PPN. However, the PPN says that the Government is proposing to introduce legislation requiring contracting authorities to “have regard to” the NPPS in their procurements. Once this is done, contracting authorities will need either to comply with the PPN or to have a good reason for not doing so.

The proposed legislation is likely to be passed under section 39 of the Small Business Enterprise and Employment Act 2015. This Act enables the Minister for the Cabinet Office to make regulations imposing duties on contracting authorities in respect of the exercise of their procurement functions. Once the regulations have been passed the Minister can issue guidance relating to those regulations. What the Act does not do is authorise the issue of guidance without the intervening step of passing regulations.

For more information

For further information in relation to any of the above, please contact your relevant ACS contact or Andrew Millross.

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