Procuring steel in government contracts under PPN 04/23

The Cabinet Office published PPN 04/23 ‘Procuring Steel in Government Contracts’ (the ‘PPN’) on 11 April 2023 which provides updated guidance on how public procurements should create a level playing field for UK steel producers. Juli Lau and Shyann Sheehy look at the details.

At a glance

It replaces PPN 11/16 and reflects the importance of the public as a buyer of steel, changes to the commercial landscape and project appraisal and clarifies the scope of reporting requirements on steel origin data. This PPN applies to all Central Government Departments, Executive Agencies and Non Departmental Public Bodies (‘In Scope Organisations’) who should apply this PPN with immediate effect.

The specifics

In March 2021 the Government launched the Steel Procurement Taskforce consisting of the six major steel companies, UK Steel, trade unions and devolved administrations. This PPN was created following their recommendations to develop new technologies, promote greater transparency and improve data.

One of the key changes to this PPN was to the scope of organisations this guidance applies to. Rather than applying generally to all major procurements involving steel, this PPN specifies that it applies only where steel is being procured either directly or indirectly with the procurement and supply being covered by:

• Part 2 of the Public Contracts Regulations 2015;
• the Utilities Contracts Regulations 2016;
• the Defence and Security Public Contracts Regulations 2011; and
• the Concessions Contracts Regulations 2016.

(together the ‘Regulations’)

It also actively encourages other public sector authorities to apply this PPN unlike PPN 11/16 which advised for these authorities to only apply the guidance when necessary.

The PPN outlines the considerations   that In Scope Organisations   should take when designing their procurements , specifically pinpointing the policies , tools and methodologies which should be considered (such as the National Procurement Policy Statement in PPN 05/21 and Social Value Model from PPN 06/20). In Scope Organisations should be careful to only apply the relevant means for their procurements and should consider:

• Developing strong business cases aligned with relevant government policy objectives, with a plan on how key objectives will be delivered,
• How best value will be ensured throughout the life of the asset,
• Adopting best commercial practice and suitable delivery models, and
• The impact of wider social, environmental and economic considerations.

The PPN requires In Scope Organisations to provide an annual steel return to the Department for Business and Trade within ten weeks of the end of the financial year. The data collection requirements apply to projects/programmes with a value of over £10 million or less than £10 million where over 500 tonnes of steel are anticipated to be required when reporting the actual data on steel produced in the previous year. In Scope Organisations should ensure all of their steel origin data is recorded as required in the Inspection Certificate (EN10204 Type 3.1) and should indicate where the steel was melted and poured.

Key takeaways

Central Government Departments, Executive Agencies and Non Departmental Public Bodies need to ensure they understand their obligations under the Regulations and the PPN when procuring steel. In Scope Organisations should ensure they apply the PPN when directly procuring steel and where steel is being procured indirectly in their supply chains. This PPN emphasises the importance of ensuring a balance between creating a level playing field for all suppliers and ensuring value for money for taxpayers.   In Scope Organisations should carefully consider which of the policies, tools and methodologies referred to in the Guidance apply to their procurements under this PPN and engage in early market engagement to understand the options available. In order to guarantee efficient data collection In Scope Organisations should implement contractual provisions to make their suppliers/supply chains aware of the requirements and enable them to start data collection from the outset of the project/programme, in real time rather than retrospectively.

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