National Procurement Policy Statement – what is it and when does it apply?

The Government Commercial Function recently published the National Procurement Policy Statement (NPPS) accompanying the new Procurement Act 2023 (the Act). It will help set the course for public procurement in the United Kingdom, highlighting strategic priorities and shaping how contracting authorities should, and can engage, with suppliers and support delivery.

Public procurement currently absorbs a substantial amount (around a third) of public expenditure every year. This puts the spotlight on contracting authorities to ensure that procurement activities drive and facilitate a culture of continuous improvement, value for money and sustainable economic growth.

The NPSS is an important document within the scheme of the Act. It receives the approval of Parliament, and so is a form of legislation. All contracting authorities – with certain limited exceptions – must have regard to it. Failure to do so in circumstances where the NPPS applies could invalidate decisions taken by contracting authorities. It reflects some of the principles set out in section 12 of the Act, such as value for money and maximising public benefit, but not others, such as sharing information and acting with integrity.

Arguably the NPSS does not offer anything new or unexpected: the principles of value for money, social value and the level playing field will be familiar to those who have undertaken procurements under the existing regime. The current non-statutory version of the NPSS focuses on social value, commercial and procurement delivery, and skills and capability, three of the themes in the new NPSS, using substantially the same language. The NPSS is therefore another example of where the new UK regime is evolution rather than revolution in many ways, so readers should be comforted that their experience to date will continue to be relevant.

Key Takeaways:

The NPPS outlines five overarching national priorities that will guide procurement practices and how contracting authorities can support delivery:

1. Value for Money: a key priority is maximising value for taxpayers – this is to be achieved through ensuring efficient and effective procurement processes. This involves rigorous cost analysis, risk assessment, and performance evaluation; and ensuring that this is considered even at the preliminary market engagement and strategy design phase of the relevant procurement.

2. Social Value: As we have seen more and more over the past few years social value considerations remain critical in any government procurement. Beyond financial considerations, the NPPS highlights the importance of social value. Contracting authorities must consider broader societal benefits when awarding contracts and ensure proportionality eg not imposing disproportionate clauses that set unnecessary diversity reporting under the Equality Act 2010. It is notable that this potentially runs counter to some of the themes in the current Social Value Model focusing on equal opportunity and wellbeing.

3. Level playing field for SMEs: the NPPS also identifies the importance of small and medium enterprises (SMEs) citing them as the “backbone of our economy”. As such, there is a focus on ensuring that public procurement opportunities are made open to more SMEs and voluntary, community and social enterprises (VCSEs) allowing for greater competition. Interestingly, the NPPS specifically calls out the need to “level the playing field” to remove the barriers in the procurement process that are currently faced by both SMEs and VCSEs. This reflects a key obligation under the Act for contracting authorities to consider whether barriers to participation for SMEs in procurements can be reduced or removed.

4. Focus on commercial delivery: the NPPS also points contracting authorities in the direction of the government playbook series to identify how those practices, guidance and principles set out in the available literature can help ensure that contracting authorities have in place the right processes to manage delivery. We are seeing more and more usage day to day by contracting authorities of these guides and playbook and would welcome this direct focus on how the existing guidance can help steer contracting authorities to implement best practices.

5. Skills and capability for procurement: closely linked to the priority of value for money, consideration must also be given by contracting authorities to the capability and workforce plans for contracting authorities to ensure that taxpayers’ money is not spent ineffectively and inefficiently.

Implementation Timeline

Once it has completed its Parliamentary process (which should be a formality) the NPPS will take effect from 28 October 2024 alongside the new Act.

Exceptions

The NPPS applies more generally to most contracting authorities and in many procurements. The key exclusion relates to contracts awarded under frameworks or using dynamic markets, presumably on the basis that the contracting authority establishing the framework or the dynamic market will consider the NPSS during that process. Also excluded are devolved Welsh (which will be subject to a separate policy statement for Wales) and transferred Northern Irish procurement arrangements. The NPPS also expressly disapplies the social value element in Ministry of Defence defence and security contracts (as defined in section 7 of the Act).

For the full NPPS see: National Procurement Policy Statement.