National Procurement Policy Statement

The Cabinet Office published the National Procurement Policy Statement (the NPPS), the last major step in bringing the Procurement Act 2023 (the Act) into effect. It sits alongside the NPPS for Wales and two Procurement Policy Notes (PPNs) published at the same time and supporting the NPPS. We will discuss the PPNs in another blog post.

The NPPS applies, with some exceptions, to all procurements under the Act. The NPPS applies mainly to English contracting authorities. It also does not apply to private utilities, contracts awarded under frameworks or dynamic markets established under the Act. The PPN indicates that the social value aspects of the NPPS do not apply to defence and security contracts.

We recommend that contracting authorities as part of their internal record-keeping document their assessment of their procurement against the NPPS, including if they have given effect to its principles and, if so, how they did so. This is because contracting authorities must have regard to the relevant national procurement policy statement. While that duty is not enforceable as a claim under the Act, there is at least the potential that a failure to have regard could be subject to a judicial review challenge.

The NPPS sets out a central aim of delivering value for money. Alongside this, it sets three priorities:

• delivering economic growth;
• delivering social and economic value; and
• building commercial capability to deliver value for money and stronger outcomes.

Within each of these priorities are a series of actions that contracting authorities should take to implement the NPPS priorities.

 

Delivering economic growth

Contracting authorities are encouraged to drive economic growth and strengthen supply chains by giving small and medium-sized enterprises (SMEs) and voluntary, community and social enterprises (VCSEs) a fair chance at public contracts, creating high quality jobs and championing innovation. They should do this by:

• maximising procurement spend with SMEs and VCSEs. Central government contracting authorities face additional requirements concerning SME and VCSE spend under the new PPN 001 (SME and VCSE procurement spend targets);
• ensuring their suppliers are committed to providing high quality jobs, safe and healthy working conditions, fair pay, opportunity and progression for workers; and
• working collaboratively across functions to develop a ‘pro-innovation mindset’, defining challenges to solve rather than solutions to buy, and engaging early with the market to consider innovative products and services.

 

Delivering social and economic value

The NPPS requires contracting authorities to deliver social and economic value that supports the Government’s missions and requires them to have regard to the importance of maximising public benefit. The NPPS says that contracting authorities should achieve this through:

• securing social and economic value that supports delivery of the Government's national missions and working in partnership with other contracting authorities, the private sector and civil society;
• ensuring suppliers are working actively to:
• tackle matters such as corruption, modern slavery and human rights violations, and environmental impact;
• comply with their tax, employment law and other legal obligations; and
eliminate late payment of invoices in their supply chains.

As noted above, this priority does not apply to defence and security contracts. In addition, central government contracting authorities will need to comply with the requirements of the new PPN 002 (Taking account of social value in the award of contracts).

 

Building commercial capability

Under the NPSS, contracting authorities are told they should ensure the right commercial capability and standards are in place. The focus of this requirement is implementing commercial best practice and ensuring commercial teams have the sufficient capability. The NPPS says that contracting authorities should:

• apply commercial best practice including the principles and policies in the Government’s Playbook series;
• benchmark their organisational capability and workforce capacity to ensure they have the appropriate procurement and contract management skills and capacity; and
• use collaborative procurement agreements, where appropriate, to ensure value for money (as long as those agreements operate in accordance with relevant procurement legislation and good practice).

 

Putting the NPPS into practice

The NPPS is not directly enforceable under the Act against contracting authorities. However, it is likely the duty can be enforced by judicial review. Contracting authorities may find it difficult to defend such a challenge where they have not considered the NPPS and documented their consideration. Further, the Act does not limit the stages of a procurement where contracting authorities must have regard to the NPPS. This suggests that they may need to demonstrate they have had regard to it throughout the procurement lifecycle. We suggest, therefore, that at each of the key stages of a procurement, from initiation up to and including termination contracting authorities should document their assessment of how they have given effect to the priorities and specific actions under each priority in their procurement decisions.