Pagabo provides clarity on impacts of new NPPS and PPNs

The Labour government’s new National Procurement Policy Statement (NPPS) sets out strategic priorities for public procurement that in scope contracting authorities must have regard to. Meanwhile, a raft of new and updated Procurement Policy Notes (PPNs) have been published, detailing guidance on best practice for public sector procurement. Shamayne Harris, head of procurement at Pagabo – which sets up and manages frameworks on behalf of public sector contracting authorities – has stepped in to provide clarity on some of the essential details and impacts.

“Through the NPPS, the government aims to maximise the impact of the £400Bn spent each year on essential goods and services. The government intends to use public procurement to support the delivery of its missions by kickstarting economic growth, making Britain a clean energy superpower, taking back our streets, breaking down barriers to opportunity, and building a National Health Service fit for the future

“When delivering procurement, contracting authorities must have regard for the goals within the NPPS, which are the importance of delivering value for money, driving economic growth, delivering social and economic value, and building commercial capability to deliver value for money and stronger outcomes

“All contracting authorities must have regard to the NPPS as mandated by the Procurement Act. It applies to contracting authorities as defined in section 2 of the Act with the exception of the authorities and procurements set out in section 13(10). These include private utilities, contracts awarded under a framework or dynamic market, procurements under devolved Welsh or transferred Northern Irish procurement arrangements, and devolved Welsh authorities or transferred Northern Irish authorities.

“In addition to the publication of a new NPPS, we have seen the release of new and updated Procurement Policy Notes (PPNs). The two new PPNs 001 and 002 address SME and VCSE inclusivity and establish procurement spend targets, and taking account of social value in the award of contracts.”

PPN 001

“Essentially, PPN 001 acts a facilitator for one of the core objectives of the Procurement Act and NPPS – to open up public procurement to new entrants. Historically, there has been a target for SMEs to benefit from 33% of central government spend either directly or indirectly through the supply chain – but this is a target rather than a legal requirement, and data from Tussell suggests that direct spend with SMEs is currently around 20%.

“The difference now is that while there isn’t a mandated target, there is reference to setting a three-year target for direct SME spend from 1 April 2025 (or two-year targets for VCSEs from 1 April 2026) and to publishing annual results, which, of course, are there for accountability. This is all in reference to central government, but we expect to see the guidance trickle out to the wider industry, with other organisations voluntarily aiming for the same standards to ensure best practice in alignment with government.

“As with everything in this procurement reform, wording is incredibly important. Along with new and changing terminology, the Act incorporates a lot of permissive language – in this case that contracting authorities should ‘have a duty to consider’ reducing barriers for SMEs. This reflects that the Act is not there for short-term fixes but is a long-term commitment to change that will require transition.”

PPN 002

“With social value, there is not a mandated minimum award criteria required for all contracting authorities in scope of the Procurement Act. However, PPN 002 mandates central government authorities must apply a minimum 10% weighting of the total score, to social value where it is relevant and proportionate when the procurement commences on or after 1 October 2025. For procurements commenced under the Procurement Act 2023 prior to this date, in-scope organisations can choose to apply this PPN or continue to use PPN 06/20 during this transition period.

“When followed, PPN 002 should be applied across all stages of the commercial lifecycle, but particularly at the planning and preparation stages. As with the SMEs and VCSEs elements, it’s all about setting a clear direction of travel with a long-term aim to enact change, rather than setting unachievable parameters by expecting overnight change.”

Several updated PPNs were issued recently however the updates are limited to aligning the terminology to the act.

Positive steps are being taken

“Our immediate reaction to the new NPPS and PPNs is that we are pleased to see positive steps being taken in supporting the SME and VCSE inclusive agenda, which is something that we at Pagabo have always championed in collaboration with contracting authority hosts in framework procurement strategies.

“The NPPS sets out the expectation for the public sector to maximise SME and VCSE procurement spend and demonstrate how this can be delivered via preliminary market engagement, collaboration and transparency through visibility of procurement pipelines, which will be supported by the introduction of new mandated notices for applicable authorities under the Procurement Act 2023.

“Contracting authorities should familiarise themselves with the new NPPS and PPNs now, to help align their own goals with the government’s strategic goals for procurement. It’s an important period for procurement, so those concerned need to be doing everything they can to understand the changes and implement the processes to ensure compliance and alignment.”

To learn more about the current procurement reform, visit www.pagabo.co.uk/procurement-reform