Government issues National Procurement Policy Statement, unveils plans to tackle "rip-off" frameworks

The Government has published its long-awaited National Procurement Policy Statement (NPPS) which sets out eight actions contracting authorities should take “to return public procurement back into the service of the country and working people”.

Commencement of the Procurement Act 2023 was delayed by four months from the original go-live date of October 2024 to allow time for this new NPPS to be produced.

The NPPS, which was published today (13 February) and will come into force on 24 February (the same day as the 2023 Act), says: “Public procurement is a key lever in achieving the Government’s missions by sourcing goods and services that deliver value for money, including social and economic value across the commercial lifecycle that drives sustainable economic growth and benefits local communities, raising living standards in every part of the United Kingdom.

“Simplifying public procurement and aligning it with the Government's missions, including the Industrial Strategy, will put UK firms in the best possible position to compete for and win public contracts.”

The NPPS suggests contracting authorities can deliver value for money by:

• driving economic growth and strengthening supply chains by giving small and medium-sized enterprises (SMEs) and voluntary, community and social enterprises (VCSEs) a fair chance, creating high quality jobs and championing innovation;
• delivering social and economic value that supports the Government’s missions including by working in partnership across organisational boundaries where appropriate; and
• ensuring the right commercial capability and standards are in place to procure and manage contracts effectively and to collaborate with other contracting authorities to deliver best value.

The eight actions it says contracting authorities should take to do this are:

1. Maximise procurement spend with small and medium-sized enterprises (SMEs) and voluntary, community and social enterprises (VCSEs).
2. Ensure their suppliers are committed to providing high quality jobs, safe and healthy working conditions, fair pay, opportunity and progression for workers.
3. Work collaboratively across policy, delivery and commercial functions to develop a ‘pro-innovation mindset’, defining challenges to solve rather than solutions to buy, and engaging early with the market to consider innovative products and services.
4. Secure social and economic value which supports delivery of the national missions taking into account priorities in local and regional economic growth plans (where available) and working in partnership with other contracting authorities, the private sector and civil society in the exercise of their procurement functions. This includes the mission aims and outcomes outlined at the beginning of the Statement.
5. Ensure their suppliers are actively working to: tackle bribery, corruption, fraud, modern slavery and human rights violations, environmental impact (including reducing greenhouse gas emissions and minimising waste in their operations); comply with their tax, employment law and other legal obligations, and stamp out late payment of invoices in their supply chains.
6. Apply commercial best practice including the principles and policies in the Government’s Playbook series (where appropriate) and make decisions based on value for money and service quality when assessing delivery models and outsourcing decisions.
7. Benchmark their organisational capability and workforce capacity to ensure they have the appropriate procurement and contract management skills and capacity necessary to deliver value for money.
8. Use collaborative procurement agreements, where appropriate for the requirement and the market, to ensure value for money (as long as those agreements are operating in accordance with relevant procurement legislation and good practice).

The NPPS reveals that the Government will also update the Sourcing Playbook to introduce a new public interest test for contracting authorities “to assess, at the outset of a procurement process, whether work should be outsourced or if it could be done more effectively, and drive better value for money, in-house”.

The Government claimed that the new NPPS would mean thousands of small businesses across the country would have more opportunities to win valuable contracts.

It suggested that local councils would be “able to reserve contracts for small businesses to maximise spend within their area and help boost local economies”. 

Alongside this, a new duty will be placed on firms that win contracts with government bodies to advertise jobs at job centres.

The Government has also announced that a new Register of Framework agreements will be produced, “shining a light on those rip-off frameworks from third party providers that are profiting off our local councils and NHS, taking money away from front line services”.

It pointed to a recent estimate from the National Audit Office that there are between 8,000 and 21,000 frameworks available to public sector buyers through external third party organisations.

“These agreements are often not transparent, with hidden fees and charges, racking up the cost of common goods and services,” the Cabinet Office claimed.

The Government has meanwhile unveiled the development of a new AI tool for commercial teams across government “to cut bureaucracy wherever possible - such as to simplify redacting contracts and quality assurance of procurement documents”. 

Consultations will be held on further reforms including a requirement for large contracting authorities to publish their three-year targets for small business and social enterprise spend and report on this annually - as well as the exclusion of suppliers from contracts worth more than £5m if they don’t complete prompt payments of invoices.

Georgia Gould, Parliamentary Secretary at the Cabinet Office, said: “Businesses tell me that the current system isn’t working. It is slow, complicated and too often means small businesses in this country are shut out of public sector contracts.

“These measures will change that, giving them greater opportunity to access the £400 billion spent on public procurement every year, investing in home grown talent and driving innovation and growth.”

Small Business Minister Gareth Thomas said: “For too long small businesses have been stuck on the sidelines of the procurement process with complicated bureaucracy and a confusing system. That changes today.

“These measures will mean small firms can more easily offer their expertise to key projects both locally and nationally, helping SMEs to scale up, securing jobs and creating opportunities across the country.”

All contracting authorities must have regard to the NPPS as mandated by section 13 of the Procurement Act. It applies to contracting authorities defined in section 2 with the exception of the authorities and procurements set out at section 13(10) as follows: Private utilities; Contracts awarded under a framework or dynamic market; Procurements under devolved Welsh or transferred Northern Irish procurement arrangements; Devolved Welsh authorities or transferred Northern Irish authorities.

The document says the NPPS should be read “not just by procurement teams, but by the strategic leadership and key decision-makers in contracting authorities”.

Responding to publication of the policy statement, Mark Cook, partner and procurement law specialist at Anthony Collins, said: "The revamped National Procurement Policy Statement (NPPS), which sets out the Government’s policy objectives for public procurement, is long awaited and all commissioning authorities should embrace the opportunities it brings to improve social value delivery.

“In particular, the guidance (provided by the NPPS) spells out to contracting authorities the importance of ‘maximising public benefit’. The NPPS explains how applying social and economic value requirements in procurement can have ‘a significantly positive impact’ by broadening the public benefits that are delivered through the life of the contract. It also explains how focusing on these outcomes and collaborating with customers, front line workers and communities, contracting authorities can achieve ‘greater social and economic value benefits for the people and places that most need them, including creating opportunities in areas of deprivation’. This is all very positive and provides the clear guidance that contracting authorities need."

He added: “Public bodies must now be empowered to implement the guidance provided by the NPPS. To achieve this, the Government should consider reinstating the requirement for local authorities to have a community strategy and bring back the power to promote economic, social and/or environmental wellbeing in their area. Both the community strategy and the power to promote wellbeing (Section 2(1) Local Government Act 2000) were scrapped by the previous government but should now be reinstated with immediate effect. Ideally, the same focus on promoting wellbeing locally should also be applied to all public bodies, including central government.”

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