The UK Government's National Procurement Policy Statement: a summary

The NPPS outlines the UK Government's strategic priorities for procurement, emphasising mission-led initiatives to fully harness public procurement's potential to deliver value for money, drive economic growth and enhance social value.  

Given that one of the reasons why the coming into force of the PA23 was delayed from October 2024 was for the new Labour Government to review and re-issue the previous Government's NPPS, the document that has now been released is somewhat underwhelming, covering largely predictable and well-trodden themes such as value for money, encouragement for SMEs, social value, and collaboration. This is not in itself a bad thing. Contracting authorities (and suppliers) will have a lot to get to grips with once the PA23 comes into force. It is helpful therefore that the NPPS is not seeking to introduce much in the way of new considerations or objectives.

Key points of interest are:

• There is much emphasis on growth and value for money, as well as social/economic factors and clean energy.
• Part of the growth objective includes high quality jobs and innovation. This is presented in connection with encouragement to SMEs, but contracting authorities should reflect generally on how their procurement practices could be used to foster high quality jobs and innovation.
• Whilst collaborative procurement activity is encouraged, a note of caution is sounded about the confusing proliferation of frameworks and other collective purchasing tools, some of which may not be compliant with the procurement rules. 

We set out below our more detailed summary.

Scope of the NPPS

All contracting authorities must 'have regard' to the NPPS in exercising their procurement functions, with certain exceptions. These exceptions include private utilities; contracts awarded under a framework or dynamic market; procurements under devolved Welsh or transferred Northern Irish arrangements; and devolved Welsh or transferred Northern Irish authorities.  

The NPPS also does not apply to contracts which are exempt from the PA23 under Schedule 2.   

In addition, perhaps happily for military purposes, the priority on delivering social value does not apply to the Ministry of Defence when awarding defence and security contracts.

Delivering value for money

In carrying out a procurement, contracting authorities must 'have regard to the importance' of delivering value for money. This involves optimising the use of public funds by balancing effectiveness, efficiency and economy over the life cycle of a product, service or works to achieve the desired outcomes.

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

• Driving economic growth: Strengthening supply chains by giving SMEs and voluntary community and social enterprises ("VCSEs") a fair chance. This approach is intended to create high quality jobs and champion innovation.
• Delivering social and economic value: Supporting the Government's missions by working in partnership across organisational boundaries where appropriate.
• Ensuring commercial capability: Maintaining high standards in procurement and contract management and collaborating with other contracting authorities to deliver the best value.

Driving economic growth

Contracting authorities are encouraged to drive economic growth by giving SMEs and VCSEs a 'fair chance' at public contracts. This initiative is designed to create high quality jobs, champion innovation, and strengthen supply chains.

Key priorities include:

• Maximising procurement spend: Increasing procurement spending with SMEs and VCSEs to boost local economies and generate jobs.
• Ensuring fair working conditions: Suppliers should be committed to providing high quality jobs, safe working conditions, fair pay, and opportunities for employee progression.
• Promoting innovation: Engaging early with the market to consider innovative products and services, which can enhance public sector performance and benefit UK companies.

Delivering social and economic value

The NPPS states that, when carrying out a procurement, contracting authorities should focus on delivering social and economic value that supports the Government's missions. This includes 'hav[ing] regard to the importance of maximising public benefit' by considering the positive impact of applying social and economic factors throughout the life of the contract. Contracting authorities can achieve greater social and economic benefits by collaborating with customers and front-line workers and communities.

This can be achieved by:

• Securing social and economic value: Supporting the delivery of national missions and local/regional growth plans by working in partnership with other contracting authorities, the private sector and civil society.
• Maintaining high standards: Ensuring suppliers are actively working to tackle bribery, corruption, fraud, modern slavery, and human rights violations, as well as reducing environmental impact (including reducing greenhouse gas emissions and minimising waste in their operations) and ensuring legal compliance.

Building commercial capability to deliver value for money and stronger outcomes

Contracting authorities must ensure that they have the right commercial capabilities and standards to effectively procure and manage contracts and collaborate with others to deliver the best value for money.

Contracting authorities can achieve value for money by implementing:

• Fair and open competition: Public sector organisations should acquire goods and services through fair and open competition.
• Efficient policies and processes: Ensure efficient and effective policies and processes are in place that focus on sustainable, long-term outcomes.
• Skilled workforce: The individuals undertaking the procurement and managing the contract have the necessary skills and expertise.

Government guidance, such as the Commercial Playbooks series, emphasises the importance of partnership across organisations and sectors to manage markets and strengthen supply chains. This approach is focussed on outcome-based delivery and early supplier engagement.

Contracting authorities should:

• Apply commercial best practice from the Government's Playbooks series.
• Benchmark their capabilities against professional standards, such as the Commercial Continuous Improvement Assessment Framework and the National Procurement Strategy Toolkit.
• Use collaborative procurement agreements to ensure value for money (provided those agreements are operating in accordance with relevant procurement legislation and good practice).

However, the NPPS has issued a word of caution regarding the proliferation of similar frameworks across the public sector. The NPPS implies that this abundance may lead to unnecessary transactional costs for suppliers and generate confusion for contracting authorities implementing the frameworks. Additionally, some agreements run by the private sector may not comply with legal standards. It is therefore crucial for contracting authorities to conduct due diligence on these frameworks before utilising them.

The newly published NPPS will come into effect alongside the PA23 on 24 February 2025.

If your organisation (whether a contracting authority or supplier) requires any advice in relation to the PA23, please contact Nick Pimlott or Holly Johnson.

The content of this blog does not constitute legal advice and is provided for general information purposes only. Specific legal advice should be sought before taking any actions based on the content of this blog.