Background and scope
The National Procurement Policy Statement (“NPPS”) is a statement published by the Cabinet Office that sets out the UK Government’s strategic aims and objectives in relation to public procurements
All contracting authorities (as defined in the Procurement Act 2023) must have regard to the NPPS, with the exception of:
- private utilities;
- contracts awarded under a framework or a dynamic market;
- procurements under devolved Welsh or transferred Northern Irish procurement arrangements; or
- devolved Welsh authorities or transferred Northern Irish authorities.
As outlined in our earlier article on the effect of the Procurement Act 2023 in Scotland (see here), the Procurement Act 2023 will only apply to Scottish procurements conducted by public bodies with cross-border functions and Scottish public authorities with reserved functions. Therefore the NPPS will only need to be considered by Scottish contracting authorities that have these functions.
New provisions that have been introduced
The NPPS introduces a new priority for contracting authorities to have regard to “Value for Money” which accompanies the existing priorities contained in the previous National Procurement Policy Statement that was published in June 2021. This new priority requires contracting authorities to “place value for money at the forefront of all procurement activities”. To achieve this, contracting authorities will be expected to “optmise the use of public funds by balancing effectiveness, efficiency and economy over the life-cycle of a product, service or works”. In this sense, the new NPPS is more closely aligned with the fiduciary duty that often applies to the spending of public money. For example:
"It is well established by the authorities... that a local authority owes a fiduciary duty to the ratepayers from whom it obtains moneys needed to carry out its statutory functions, and that this includes a duty not to expend those moneys thriftlessly but to deploy the full financial resources available to it to the best advantage".
Lord Diplock, Bromley LBC v Greater London Council [1983] 1 AC 768
This should not, however, prevent a contracting authority fom taking into account other factors or purchasing the most expensive tender (provided this is the most advantageous tender) but the basis for such an award will need to be carefully balanced with the benefits to be derived from such as course of action.
Unamended provisions
With the exception of the priority mentioned above there have been no significant changes to the existing priorities that were published in the National Procurement Policy Statement in June 2021. The priorities that remain unchanged include:
a. Social Value
From 28 October 2024, contracting authorities will still be expected to have regard to the following local priorities and the outcomes in their procurement activities, where it is relevant to the subject matter of the contract:
- generating “resilient businesses and opportunities for quality employment and skills development”;
- enhancing “innovation, supply chain resilience and security of supply”; and
- taking measures to tackle “climate change and reduce waste”.
b. Small and medium-sized enterprizes
Contracting authorities must “support businesses to achieve sustainable growth and open up public procurement opportunities to more SMEs, voluntary, community and social enterprises (VCSEs) creating a thriving, competitive marketplace”.
It is key for contracting authorities to “ensure that they level the playing field for SMEs, VCSEs and start-ups to compete in public procurement by reducing and removing barriers in the procurement process”. This should include designing and implementing a procurement process that is appropriate and proportionate to the opportunity that is being tendered.
c. Commericial and procurement delivery
Contracting authorities will need to “consider whether they have the right operational policies and processes in place to manage the key stages of commercial delivery”. This can be achieved by considering “how the principles, practices and guidance from the Government’s Playbook series could be applied to their organisation”.
d. Skills and capacity for procurement
Contracting authorities should also “consider their organisational capability and workforce plans, with regards to the procurement and contract management skills and resources required to deliver value for money”. With this in mind contracting authorities should have “sufficient work force and capability” in place “to ensure taxpayers’ money is spent effectively and efficiently”.
Preparing for the new procurement regime
With just over three months to go before the Procurement Act 2023 comes into full force and effect, contracting authorities should consider accelerating their arrangements to get ready for the new rules. This should include considering how they will “have regard” to the new value for money priority in their procurements that commence from 28 October 2024.
