Public bodies will be required to take into account job creation, investment in skills and opportunities for local growth when awarding public contracts, under the National Procurement Policy Statement issued by the Cabinet Office.
The policy statement – contained in policy note PPN 05/21 – applies to contracting authorities including central government departments, executive agencies, non-departmental public bodies, local authorities, NHS bodies and the wider public sector. It is effective on publication.
The guidance states that all contracting authorities “should consider the following national priority outcomes alongside any additional local priorities 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.”
It says 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 statement where they are relevant to their procurement portfolio.
“Typically, the greater the complexity, cost and risk, the more important a project or programme will be and the more robust and rigorous a process is required to successfully set up, procure and manage contracts relating to it," it says later.
The policy statement adds: “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.”
The policy statement adds that the Government intends to bring forward legislation when Parliamentary time allows to ensure that:
- all contracting authorities are required to have regard to the National Procurement Policy Statement when undertaking procurements;
- contracting authorities with an annual spend of £200m or more are required from April 2022 to publish procurement pipelines and to benchmark their procurement capability;
- contracting authorities with an annual spend of £100m or more are required from April 2023 to publish procurement pipelines and to benchmark their procurement capability.
Further guidance can be viewed here in an annex.
The Cabinet Office said that while securing the best value for money was crucial, procurement teams had been told (although this is not specifically set out in the policy statement) they must not simply award contracts to the lowest bidder – "especially when wider economic benefits can be proved".
Cabinet Office Minister, Lord Agnew, said: “The public sector across the UK, from hospitals and schools to central government, police forces and universities, spends about £290 billion a year through public procurement.
“The huge power of that expenditure must support us in tackling some of the most important issues we face today, from generating economic growth and helping our communities recover from the COVID-19 pandemic, to supporting the transition to net zero.
“With the new statement published today, procurement teams will have to consider those issues as well as making sure they deliver top-quality public services that are good value for the taxpayer.”
Rebecca Rees, partner at Trowers & Hamlins said: "The National Procurement Policy Statement has been a long time coming - published today it demonstrates a new direction for the regulation of public procurement in England.
“Concentrating on the priorities of Government for procurement outcomes - the NPPS clearly sets out key principles that the public sector now need to be cognisant of when spending their money."