On 3 June 2021 the Cabinet Office released PPN 05/21.
What are the key takeaways?
1. Benchmarking and pipelines
Contracting authorities (Authorities) will need to publish procurement pipelines and benchmark their performance against "relevant commercial and procurement operating standards and other comparable organisations".
For Authorities with annual spend of £200m or more this comes into effect in April 2022; for Authorities with an annual spend of £100m or more the key date is April 2023.
The NPPS says that Authorities should ensure transparency to, "allow proper scrutiny of procurement decisions and demonstrate good custodianship of public money." This seems to go further than usual value for money and reasonableness standards and is in line with the focus on transparency in the Green Paper.
Benchmarking and the likely increased transparency requirements which the legal reforms will usher in (though let's not forget FOIA) will mean much more information about Authority purchasing practice is out in the open. Authorities should be looking to take steps before 2022/2023 to ensure they are ready. What should Authorities be looking at to get ready? The answer is found in the second takeaway.
2. Better procurement
The NPPS encourages good procurement practice. The foundation will be having in place the "the right policies and processes" to manage procurement activity. Layered on top of this are considerations such as having the right people doing to right work, being alive to the commercial realities affecting the procurement (including market conditions) and having systems and data reporting capabilities to assist decision making and enable monitoring of Authority performance.
These are things all Authorities are probably working to in any event. However, mandating this through a legally enforceable NPPS adds another dimension and will require Authorities to consider areas where improvements should be made. This is reinforced by the fact Authorities may find themselves benchmarking their performance on these metrics. Expect policies and procedures to be refined and scrutinised over the next year and lots of interest in sharing best practice.
3. Better for society
The NPPS sets out 3 areas of social value to which Authorities "should have regard" (note: it does not say "must have regard") when procuring. Broadly these are:
- Growing the economy (new businesses, new jobs, new skills)
- Tackling climate change
- Supply-chain diversity, innovation and resilience
There is nothing ground-breaking here and much of the detail will be familiar. Authorities have always been able to take into account these sorts of criteria when awarding contracts (apprenticeships, SMEs, VCSEs, environmentally friendly approaches, etc.). However, this is another nudge from government to procure with social value or "public good" in mind (other recent examples include the updates to the Sourcing Playbook, PPN 06/20 (see our comments here) and PPN 06/21 (which we will comment on shortly in a later article)). This also represents a more centralised procurement strategy than we have seen previously, which is what the Green Paper hinted at and what the NPPS was billed to achieve.
It is interesting to consider how Authorities are expected to achieve this, which brings us to the next takeaway.
4. Legal background
Correctly, the NPPS states that implementation by Authorities must be done in line with legal obligations, including as provided for in international trade agreements (which will include the GPA and the UK-EU Trade and Cooperation Agreement).
The relationship with the legal framework has never been an easy one. This means Authorities will be pressed even harder than before to adopt sophisticated procurement approaches, achieve commercial outcomes and enhance social value (including, it seems, things such as favouring local area employment). Further detail of how legal reform will clarify this vital area is key to managing the burden on Authorities and their legal teams and to give suppliers the confidence to set up the right social value programmes to win contracts in the future.
The last takeaway, and something to bear in mind, is that the NPPS is subject to legislation being passed. The PPN notes that, "Government intends to bring forward legislation when Parliamentary time allows." It seems likely that this will be done via the Minister for the Cabinet Office's powers to introduce regulations under section 39 of the Small Business Enterprise and Employment Act 2015.
Therefore, it is yet to be seen exactly what the NPPS is and how it will be enforced, so watch this space.