The Cabinet Office last week launched its National Procurement Policy Statement (NPPS). Kieran McGaughey takes a look at the implications for local government.
What is the NPPS?
The National Procurement Policy Statement (NPPS) is a new concept within public procurement in England. The existence of this policy statement was first mentioned in the Green Paper consultation back in December, although a Welsh counterpart has been in force now for a number of years. The newly published NPPS sets out “the strategic priorities for public procurement and how contracting authorities can support their delivery”. It can be accessed via this link: https://www.gov.uk/government/publications/procurement-policy-note-0521-national-procurement-policy-statement.
When does it come into force?
The NPPS applies with immediate effect.
Why has the NPPS been introduced?
As noted in the accompanying PPN, the NPPS arrives at a time when the government is developing “major legislative reforms”. It follows on from the Green Paper consultation, the results of which are now awaited. There is a stated desire that public procurement “should be leveraged to support priority national and local outcomes for the public benefit”. The Cabinet Office is keen to ensure that the money spent on public procurement should “support the delivery of public sector policy priorities, including generating economic growth, helping our communities recover from the Covid-19 pandemic, and supporting the transition to net zero carbon.” The government wants to “send a clear message that…the public sector do not have to select the lowest price bid…” And that, in setting procurement strategy, drafting contract terms and evaluating tenders “they can and should take a broad view of value or money that includes the improvement of social welfare or wellbeing…”
The NPPS also seeks to ensure that contracting authorities have “the right capability and capacity” to deliver those policy outcomes. This includes “ensuring transparency in public procurement to support engagement with the market, allow proper scrutiny of procurement decisions and demonstrate good custodianship of public money”. The NPPS seeks to embed “a culture of continuous improvement in procurement practice and capability”. For example, benchmarking and the sharing of best practice amongst contracting authorities.
What topics does the NPPS cover?
The NPPS is comprised of three main sections:
- Social value
- Commercial and procurement delivery
- Skills and capacity for procurement
Contracting authorities are now required to “consider” the following outcomes in their procurement activities:
● creating new businesses, new jobs and new skills;
● tackling climate change and reducing waste, and
● improving supplier diversity, innovation and resilience.
They should “have regard” to these priorities where it is “relevant to the subject matter of the contract and it is proportionate to do so”.
Commercial and procurement delivery
The NPPS 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…” Some of the examples listed for consideration include: the publication of procurement pipelines; market health assessments; delivery model assessments (also known as Make versus Buy); pilots; KPIs; risk allocation and assessing the economic and financial standing of suppliers. Authorities should also look at tackling modern slavery, and how they can collaborate with other authorities to deliver value for money.
Skills and capacity for procurement
The NPPS also states that “all contracting authorities should consider their organisational capability and capacity, with regard to the procurement skills and resources required to deliver value for money”. They should be “confident they have sufficient capacity and capability to ensure tax payers’ money is spent effectively and efficiently.” Where gaps are identified then authorities should “plan now how to fill these”, whether that be via internal appointments or external collaboration/purchasing. In addition, authorities should consider benchmarking themselves annually against relevant commercial and procurement operating standards and other comparable organisations.
The NPPS is accompanied by an annex, which links to sources of additional information and tools which complement the national priorities described above.
This is a statement of national procurement policy. Does it apply then to local authorities?
Local authority readers should note that, despite the title, your authority is very much in scope of this new policy statement. Councils will be required to “have regard” to the strategic national priorities as set out above.
What exactly does it mean to “have regard to”?
This is certainly something which lawyers could argue over! In the case of R (on the application of London Oratory School Governors) v Schools Adjudicator  EWHC 1012 (Admin) this terminology was held to mean that guidance must be taken into account, rather than “ignored” or “merely paid lip-service to”. Guidance need not be followed in every case, however there must be “clear reasons” for departing from guidance. Those reasons must be “proper reasons, or legitimate reasons”. They do not need to be documented, although it was said to be “preferable” that they are.
Can we continue to apply our own local procurement policy goals?
Yes. There is nothing in the NPPS which prevents this. Indeed, the document expressly acknowledges the existence of local priorities. The important point to note however is that whilst local priorities can be taken account of, those need to be considered alongside (rather than instead of) these new national priorities.
Does this mark a greater central focus in public procurement?
I think so, yes. Particularly as it follows on from the Green Paper, which alluded to procurement having more of a mandated national focus. In the context of this particular document, that national focus may not prove too controversial for local authorities. In respect of climate change for example, research suggests almost 75% of Councils have already declared a climate emergency https://www.edie.net/news/9/Majority-of-local-authorities-have-declared-climate-emergencies/.
At a wider level though, it remains to be seen how local authorities (and others) will respond to any new centralisation of public procurement. The NPPS does at least recognise though that there may be additional/different local priorities. So long as Councils have had regard to the national priorities, there should be nothing to prevent them pursuing their own local policy outcomes via the procurement process. The Green Paper also proposed however the establishment of a central review unit at national level with possible intervention powers. I suspect that kind of interference is much less likely to be welcomed by local authorities…
What are the risks of non-compliance with the NPPS?
The NPPS is guidance rather than law. As such, a claim under the Public Contracts Regulations 2015 could not be brought against a local authority for a failure to comply with the NPPS. It is also possible however to bring judicial review claims in the context of public procurement, so this would seem at least a possibility where an authority had failed to adequately consider the NPPS. Indeed, the recent Good Law Project litigation would appear to widen the field of potential challengers in the context of procurement JR claims. However, such claims against local authorities remain infrequent. The vast majority of procurement legal challenges to Councils originate under the Regulations, from bidders who are unhappy they haven’t won a contract. As such, I think that the risks of non-compliance are more likely to lie in terms of any central review body setup under the Green Paper reforms. Given the apparent centralised focus as set out above, a local authority may end up in the government’s “bad books” for not toeing the party line. It remains to be seen though the exact remit, role and powers that such a review body will have.
What steps might a local authority take in respect of the NPPS?
It would be prudent to ensure that the NPPS is now being considered in decisions being made during procurement processes. On a case by case basis, that might include the content of specifications, evaluation criteria and contract terms. All of these considerations against the NPPS should be suitably documented - record keeping in public procurement is vitally important and can help safeguard against challenges and complaints.
Aside from ongoing projects, it is also worth considering how the NPPS might impact upon any underlying policies and procedures, and decision making documentation at your Council. Some of those may need tweaked or updated. If your authority has its own particular local priorities, then those could be listed alongside the national priorities for consideration. Such a list may act as useful aide memoire for decision makers and help to ensure consistent, robust processes.
In terms of capacity, the NPPS is perhaps a useful accompaniment to any internal requests for greater funding for procurement teams. Ongoing news headlines display the increased focus on public procurement, and it is undoubtedly going to be a busy few years with forthcoming reforms. The NPPS was accompanied by a PPN which states that “authorities need to prepare now to ensure they have the right procurement capability and capacity so they can benefit from these reforms”. Procurement practitioners are going to be in high demand in the coming years (both at officer and legal level). As such, Councils would be well advised to start recruitment processes sooner rather than later (where budgets permit!).
On that note, the government could most suitably demonstrate its commitment in this area by actions to back up these words. In particular, increased financial support and training for contracting authorities. If it fails to do so, there is a very real risk that many of the laudable aims of the NPPS will never be fully realised.