Procurement Policy Note 05/21 – National Procurement Policy Statement

The statement is part of the Government’s public procurement reforms as outlined in its Green Paper on Transforming Public Procurement. Its focus is on guiding authorities to leverage support for national and local outcomes when procuring outsourced services, prioritising:

• Creation of businesses, jobs and skills
• Improving supplier diversity, innovation and resilience
• Tackling climate change and reducing waste.

Actions for buying authorities

The PPN emphasises that, when procuring, contracting authorities should have regard for:

• Social value
• Commercial and procurement delivery
• Skills and capability for procurement.

Social value

All contracting authorities should consider the following national priority outcomes alongside any additional local priorities in their procurement activities:

-Creating new businesses, new jobs and new skills;

-Tackling climate change and reducing waste, and

-Improving supplier diversity, innovation and resilience.

The PPN reinforces the Government’s assertion that authorities should consider not just price when procuring, but also consider value for money, including improvement of social welfare or wellbeing, pointing to HM Treasury’s Green Book for further information on social value. The key message is to develop scoring criteria that consider price and quality, including scoring suppliers’ social value proposals.

Commercial and procurement delivery

All contracting authorities should consider whether they have the right policies and processes in place to manage the key stages of commercial delivery identified in this statement, where they are relevant to their procurement portfolio.

This part of the PPN emphasises that each authority needs to have infrastructure and processes in place for managing the procurement process to ensure they achieve value for money through robust procurement practices. To support this, the PPN outlines a range of recommended measures and guidance that authorities should consider:

• Publishing pipelines of planned procurement activity for at least the next 18 months
• Market assessments to understand the relevant market and its strengths and weaknesses
• Independent review of complex outsourcing projects
• Conducting delivery model assessments to decide whether to outsource, insource or re-procure a service
• Development of key performance indicators, relevant and proportionate to the contract and the authority’s priorities
• Assessing the financial standing of bidders to identify any risk of a supplier going out of business during a contract, and planning continuity measures for critical services to mitigate the impact of supplier insolvency.

Skills and capability for procurement

All contracting authorities should consider their organisational capability and capacity, with regard to the procurement skills and resources required to deliver value for money.

Authorities should consider their procurement and contract management capability, benchmarking themselves against commercial and procurement operating standards, such as the Commercial Continuous Improvement Assessment Framework produced by the Government Commercial Function with NHS England and NHS Improvement, and the National Procurement Strategy Toolkit produced by the Local Government Association

When assessing and benchmarking their capability, authorities should consider:

• People working in procurement – whether they have the skills and capacity to undertake it effectively
• Market conditions – whether these are understood and considered in procurement
• Business needs – ensuring these are understood and the authority knows when and how to procure the relevant services
• Contract management – appropriate capacity and capability to manage contracts beyond procurement

What the PPN means for companies bidding into public sector authorities

Authorities are being told that when scoring the quality of bids, they should consider ways in which the bidder will achieve social, economic and environmental benefits. This is nothing new, with social value having been part of tenders since the Social Value Act 2012; however, PPN 05/21 suggests that authorities should incorporate award criteria that enable them to compare social value.

While the proportion of the scoring to be allocated to social value is not mentioned in this PPN, the Government has previously proposed in PPN 06/20 that social value should be ‘explicitly evaluated’ in central government procurement, mandating a weighting of at least 10%. This 10% weighting is a ‘floor’, and in practice Executive Compass has supported bidders for central government tenders with as much as 40% of the evaluation dedicated to social value, and weightings of 20% are relatively common. For companies bidding into authorities, this means that social value should be strategically considered and planned for, in advance of bidding, rather than thought about only at the tender stage. Strategically planning social value is the only way to embed a deep-rooted and methodical approach which aligns with local and national outcomes and, ultimately, scores highly in tender evaluation. This planning should include consideration of:

• The procuring authority’s priorities
• Local assets, strengths, demographics and areas for improvement
• Resources available for social value including time, money, equipment and space
• What you can realistically deliver
• Who will be responsible and accountable for ensuring social value activities are delivered
• How you will measure and evidence delivery and resultant impact.

The guidance to authorities to publish annual pipelines of their planned procurements for the next one to five years, and to engage with the market, represents further opportunities for bidders to determine, in advance, what they plan to bid for and start preparations early.

Our specialist social value division, the Social Value Practice, are experts in supporting SMEs to embed social value activities. Beyond designing, implementing and evidencing social value, our professional bid writers can advise on how to articulate social value activities in tenders in order to demonstrate to authorities how you will support them to meet their priorities.