Cabinet Office updates procurement policy note on reserving below threshold procurements

The Cabinet Office has updated its procurement policy note and guidance on reserving below threshold procurements to provide additional clarification on the application of the policy for other contracting authorities, reservations by supplier location and transparency requirements.

It has also updated the frequently asked questions to reflect common questions raised by contracting authorities since the policy was published in December 2020.

The policy note (PPN 11/20) sets out the options that contracting authorities may consider when procuring contracts for goods, services and works with a value below the applicable thresholds.

The PPN “sets out information and associated guidance on the options available…. to streamline and simplify procurement under these thresholds, and also tackle economic inequality, create new businesses, jobs and skills, as well as increasing supply chain resilience, encouraging entrepreneurship, and attracting new entrants to government markets”.

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The contents of the policy note apply to all central government departments, their executive agencies and non-departmental public bodies in conducting procurements for public contracts.

Other contracting authorities may apply the principles outlined in the PPN. “However, application of the PPN should be considered in the light of authorities’ relevant legal obligations, including but not limited to the restriction applicable to local authorities and certain other authorities under section 17 of the Local Government Act 1988," the Cabinet Office says.

There are exceptions to the applications of the policy, to certain procurements which involve the provision of goods into Northern Ireland.

The PPN sets out the current thresholds for central government and says that in-scope organisations may consider, where appropriate, the following options for the procurement of below threshold contracts:

  • Reserve the procurement by supplier location – “this means being able to run a competition and specify that only suppliers located in a geographical area can bid. This could be UK-wide to support domestic supply chains and promote resilience and capacity, or where appropriate, by county (metropolitan or non-metropolitan, or by borough for London) to tackle economic inequality and support local recruitment, training, skills and investment. In-scope Organisations should not define by nations of the UK (i.e. England, Scotland, Wales, Northern Ireland) and where a county reservation is to be applied, only a single county (or borough for London) may be reserved. Supplier location should be described by reference to where the supplier is based or established and has substantive business operations and not by location of corporate ownership." And
  • Reserve the procurement for Small and Medium sized Enterprises (SMEs) / Voluntary, Community and Social Enterprises (VCSEs) - "this means being able to run a competition and specify that only SMEs and VCSEs can bid."

The policy note says these options should be considered on a case-by-case basis, and can be exercised on their own or together. “For example, an In-scope Organisation may wish to reserve a procurement for suppliers based in the particular location and for SMEs and VCSEs only. In-scope Organisations should be clear in their procurement documentation about any intention to reserve the procurement, for example by including the standardised definitions of SME / VCSE and supplier location outlined in the associated guidance.”

It adds that “in applying the policy it is important that In-scope Organisations achieve value for money and use good commercial judgement. In-scope Organisations may still choose to compete below threshold contracts on an open basis without any reservation for supplier type or supplier location. In order to ensure value for money, In-scope Organisations should not direct award when reserving procurements under this policy.”

The policy note stresses that in considering whether to reserve a procurement, In-scope Organisations will still need to comply with their own internal guidance, governance and procedures. “These will need to be updated as appropriate to capture the new flexibilities and to reflect the policy measures in this PPN.”

The PPN adds that in reserving procurements, In-scope Organisations should:

  • ensure value for money;
  • assess the sector / market;
  • identify and manage associated risks, including fraud and corruption;
  • ensure a budget is available and approved at an appropriate level(s);
  • use suitable model contracts;
  • develop simple and proportionate KPI and data reporting mechanisms;
  • undertake supplier due diligence checks;
  • ensure final approval is obtained at an appropriate level(s);
  • keep suitable records of commercial decisions;
  • publish transparency notices on Contracts Finder as appropriate in a timely manner.

It stresses that In-scope Organisations must continue to comply with the legal requirements in Chapter 8 of the Regulations applicable to below threshold procurements. “These include obligations on certain organisations to publish certain contract opportunities and awards on Contracts Finder and rules on assessing suitability.”

Further information is included in an associated guidance document and frequently asked questions.

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