The National Procurement Policy Statement ("NPPS") marks the "next step in the government’s plans to transform public procurement [in the UK]".
As set out in Procurement Policy Note 05/21 ("PPN 05/21"), the application of the NPPS is extensive. From 3 June 2021, the NPPS has applied to all contracting authorities including "central government departments, executive agencies, non-departmental public bodies, local authorities…and the wider public sector."
Maximising national priorities
The NPPS sets out the "strategic priorities for public procurement" and encourages all contracting authorities to "support priority national and local outcomes for the public benefit" to help maximise "value for money in public procurement". The national priorities relate to "social value; commercial and procurement delivery; and skills and capability for procurement."
The social value outcomes are focused on:
- creating new businesses, jobs and skills (such as supporting small businesses and extending training opportunities in industries with known skills shortages);
- tackling climate change and reducing waste (including contributing to the UK government's target of achieving Net Zero by 2050 and prioritising opportunities in sustainable procurement); and
- improving supplier diversity, innovation and resilience (such as increasing innovation and implementing disruptive technologies throughout supply chains).
The commercial and procurement delivery priority requires contracting authorities to consider "whether they have the right policies and processes in place to manage…key stages of commercial delivery". Contracting authorities are encouraged to consider implementing new or revised tools including:
- market health and capability assessments;
- project validation reviews;
- delivery model assessments;
- should cost models; and
- resolution planning.
The third national priority encourages contracting authorities to consider "their organisational capability and capacity, with regard to…procurement skills and resources" to ensure public money "is spent effectively and efficiently". From a contracting authority's perspective, this may include:
- proactive planning to identify and fill gaps in capabilities;
- collaborating with other contracting authorities to leverage existing resources elsewhere;
- utilising shared services and buying organisations; and
- benchmarking "against relevant commercial and procurement operating standards" such as the Commercial Continuous Improvement Assessment Framework.
New mandatory measures for benchmarking and procurement pipelines
The Cabinet Office has also set out in PPN 05/21 an intention to introduce legislation which will require contracting authorities to have regard to the NPPS, publish details of their procurement pipelines and to benchmark their procurement capabilities. Currently, the proposed implementation period for these new mandatory measures are:
- April 2022 for contracting authorities with an annual spend of £200m or more; and
- April 2023 for contracting authorities with an annual spend of £100m or more.
Recognising "the huge power" of public expenditure in the UK (circa £270bn across all public sector bodies and £90bn in local government), Cabinet Office Minister Lord Agnew has stated that the NPPS will require procurement teams to consider wider issues from "generating economic growth, [recovery] from the COVID-19 pandemic, to supporting the transition to net zero." In addition to helping to deliver "quality public services that are good value for the taxpayer", the NPPS has scope to bring significant change and improvement to public procurement in the UK, not only for the contracting authorities who conduct them but also for the suppliers and third parties who engage with them. At present there could well be a tension between complying with the NPPS and ensuring that any specific procurement remains proportionate and linked to the subject matter of the contract. The full impact therefore, is unlikely to realised until the Government completes its proposed transformation of the public procurement regime, later this year/early next.
If you are a public body currently considering how the National Procurement Policy Statement might affect your organisation, please contact a member of our national public sector team to discuss how we might assist you.