Background

With the ink only just dry on the Procurement Act 2023, the UK Government has set out proposals in a new consultation which aims to build on the changes introduced in the Procurement Act 2023 and support implementation of the recently revised National Procurement Policy Statement. The consultation has the stated aim of ensuring that public procurement plays its full role in delivering the Government’s industrial strategy and fostering a resilient economy that supports British businesses and creates good jobs in communities across the country. The proposals in the consultation are intended to open up more opportunities for small and medium-sized enterprises (SMEs) and voluntary, community, and social enterprises (VCSEs)

National security exemption

The consultation reveals that the Government is considering giving ministers the power to designate specific services, works or goods as critical to the UK’s economic security and allowing them to direct contracting authorities to take this into account when considering whether the national security exemption in the Procurement Act 2023 applies to a particular procurement.  Where a service or product is designated as critical, contracting authorities would need to review their purchasing plans to assess any potential risks involved in depending on international suppliers.  If there are significant concerns for national security, the national security exemption available under the Procurement Act 2023 could be invoked.  The consultation does not pose any specific questions for consultation on this matter.

Proposals for consultation

The proposals in the consultation invite responses on specific questions.  These proposals relate to:

(a) Supporting small businesses and social enterprises

• Requiring large contracting authorities with spend over £100m p.a. to publish their own 3-year target for direct spend with SMEs and VCSEs and report against it annually, as well as extending spend reporting requirements.
• Clarifying in primary legislation where it may be appropriate to award contracts for certain services delivered to vulnerable citizens without full competitive procedure, so that decisions can be driven by the needs of the individuals and vulnerable groups.
• Requiring contracting authorities to exclude suppliers from bidding on major contracts (+£5m) if they cannot demonstrate prompt payment of invoices to their supply chains.

(b) Supporting national capability

• Giving Ministers powers to designate specific services, works or goods as critical to our national security and direct contracting authorities to take this into account when considering whether the national security exemption applies to a particular procurement to protect the UK’s national interests.  As explained above, the Government is not inviting public consultation on this proposal.  It is however proposing to engage with relevant national security stakeholders as necessary.
• Requiring contracting authorities to make a standard assessment before procuring a major contract (+£5m) in order to test whether service delivery should be inhouse or outsourced.  It is proposed that before any service is contracted out, public bodies would be required to carry out a quick and proportionate public interest test, to understand whether that work could not be more effectively done in-house. The test will evaluate value for money, impact on service quality and economic and social value goals holistically.

(c) Supporting local jobs and skills

• Requiring contracting authorities to set at least one award criteria in major procurements (+£5m) which relates to the quality of the supplier’s contribution to jobs, opportunities or skills. Contracting authorities would need to apply a minimum weighting of 10% of the scores available, to social value award criteria. 
• Requiring contracting authorities to set at least one social value KPI relating to jobs, opportunities or skills in major contracts (+£5m) and report on delivery performance against this KPI in the contract performance notice.
• Requiring contracting authorities to use standard social value criteria and metrics selected from a streamlined list (to be co-designed with the public sector and suppliers) in their procurement of public contracts.
• Allowing contracting authorities to specify the area in which the social value is to be delivered by choosing between the location of a contracting authority’s area of responsibility, the location where the contract will be performed, or the location where the supplier is based.