Procurement: PPN 05/21 - National Procurement Policy Statement

Introduction

On 3 June 2021, the Cabinet Office published Procurement Policy Note, PPN 05/21- National Procurement Policy Statement (“the PPN”).

The PPN contains information and guidance for contracting authorities on the National Procurement Policy Statement (the “NPPS”), which sets out national strategic priorities for public procurement. The NPPS is published together with the PPN.  There is also an annex to the PPN that contains a list and links to sources of additional information which complement the national priorities as detailed in the NPPS

The intention to introduce a National Procurement Policy and to place requirements on contracting authorities concerning the Statement and priorities, was flagged in the Government’s Green Paper on ‘Transforming Public Procurement’[1]. The publication of this PPN is a stepping stone towards future changes. The Government intends to bring forward legislation to place obligations relating to the NPPS and other related matters onto a firmer footing.

All “contracting authorities”[2] must have regard to the PPN. This includes central government departments, executive agencies, non-departmental public bodies, local authorities, NHS bodies and the wider public sector.

The PPN requires that all contracting authorities should familiarise themselves with the contents of the NPPS and “have regard to” the national priority outcomes in their procurement, alongside any additional local priorities in their procurement activities where it is “relevant to the subject matter of the contract and it is proportionate to do so”.  The PPN applies with immediate effect.

The national priority outcomes presented under the general heading of “Social Value” are:

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

The NPPS explores each of these priorities in further detail.

In addition to the obligation to have regard to the national priorities in exercising their functions related to procurement, the NPPS requires  contracting authorities to consider their procurement policies and processes, as well as procurement related organisational capability and capacity:

Commercial and procurement delivery

The PPN states that 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 (where they are relevant to their procurement portfolio) and to manage their most important contracts.

This includes having sufficient governance processes in place to enter into and manage contracts and tailoring the processes in line with the complexity/cost/risk of the contract. The NPPS provides a list of principles, practices, and guidance which could be applied by contracting authorities, including: publication of procurement pipelines, market health and capability assessments, and resolution planning.

Skills and capability for procurement

The PPN states that all contracting authorities should consider whether they have the right organisational capability and capacity with regard to the procurement skills and resources required to deliver value for money.

It highlights the role of benchmarking annually against relevant commercial and procurement operating standards and other comparable organisations as a way of assessing a contracting authorities’ skills and capability to deliver value for money.

The NPPS provides further details, stating that where contracting authorities identify gaps in their capability they should plan now how to fill these. It provides a list of considerations for contracting authorities when benchmarking their procurement and commercial capability.

Next Steps

As noted earlier, the PPN confirms that the Government intends to bring forward legislation, although it has not provided a timescale for doing so, which will incorporate elements of the PPN. As well as the duty to have regard to the NPPS when undertaking procurement, this will include requirements to publish procurement pipelines and to benchmark procurement capability for contracting authorities with an annual spend of £200m or higher from April 2022 and contracting authorities with an annual spend of £100m or higher from April 2023.

You can access PPN 05/21- National Procurement Policy Statement, the National Procurement Policy Statement, and accompanying Annex at: Procurement Policy Note 05/21: National Procurement Policy Statement - GOV.UK (www.gov.uk)

If you would like to discuss this topic in more detail, please contact Trevor Watt, Senior Associate, or Alisha Muhmood, Trainee Solicitor.

[1] Green Paper: Transforming public procurement - GOV.UK (www.gov.uk)              

[2] The way in which the contracting authorities are described differs from the usual description in PPNs, by referring to contracting authorities as defined in section 39(3) and (4) of the Small Business Enterprise and Employment Act 2015, presumably to reflect the statutory basis for current and future requirements concerning the NPPS.