New procurement rules ‘to boost social value’

The government’s chief commercial officer shares more details about the impetus behind the creation of a national procurement policy

By Richard Johnstone

09 Jun 2021

New procurement guidance for departments is intended to help focus efforts around social value to maximise the benefits of public spending, the government’s chief commercial officer has told CSW.

Gareth Rhys Williams said the new national procurement policy statement aims to increase the benefits of public spending by streamlining how procurement teams use government contracts to meet key policy aims.

“The idea is this will be a statement [published] once a parliament from the government saying ‘we want you to major on these two, three, or four things’,” he said. “We’re trying to just focus everyone’s efforts on national strategic priorities rather than just having everyone going off hither and yon.”

The new policy, published on 3 June, sets out three priorities to be considered in procurement: creating new businesses, new jobs and new skills in the UK; improving supplier diversity, innovation and resilience, and tackling climate change and reducing waste.

This is intended to improve the ability of government departments and other public sector organisations to differentiate between suppliers. Procurement teams have been told they must not simply award contracts to the lowest bidder when wider economic benefits can be proved, and Rhys Williams said the aim of the new system is to enable officials to properly analyse external impacts.

“The problem before was that we score people on a number of quality metrics, and on price. But if we don’t set a quality metric that is sufficiently differentiated, then price is the deciding factor, because price is obvious.

“So what the social value criteria is doing is asking us to differentiate between vendors, such that we don’t give everyone eight out of ten. It is forcing ourselves, in a way, to differentiate on quality, and what the national procurement policy statement is doing is giving a bit of central guidance to what issues we want to concentrate on as a country.”

The national plan forms part of a number of post-Brexit procurement reforms, with legislation planned to replace the inherited EU rules.

Further changes will be coming, Rhys Williams said. “Although we’ve left the European Union, we have still got European rules in our law, and one of the things you want to change is [to move] from what’s called the most economically advantageous tender to the most advantageous tender... ‘detuning’ the emphasis on cost and trying to underline the point that we really are expecting people to include these other quality measures, particularly the social value measures, that are in the NPPS.”

He also highlighted that the policy statement sets out plans to publish more information on procurement pipelines, and to set standards for procurement professionals across the public sector.

The guidance says organisations should ensure they have the right capacity, skills and capability to manage efficient procurements, and must prioritise transparency.

The document calls on all public authorities to consider benchmarking themselves every year “against relevant commercial and procurement operating standards and other comparable organisations”.

Benchmarking should consider seven factors:

  • whether commercial objectives are aligned to relevant policies and organisational objectives
  • whether governance, management frameworks and controls are integrated,  proportionate and appropriate to the commercial work and level of prevailing risk
  • whether work is undertaken and assigned to people who have the required capability  and capacity to undertake it
  • whether business needs are adequately informed by the commercial strategy to determine when, and how to procure services and works
  • whether market conditions are sufficiently understood and procurement routes align with supply capacity and capability
  • whether contract management capability is sufficient and resources are proportional to complexity and risk
  • whether appropriate procurement systems and data reporting enables process efficiency, robust controls and effective decision making

Rhys Williams said the new benchmarking is about “setting standards across the country on procurement confidence”.

He said the new tests will “widen the group of public procurers who we are confident are sufficiently trained and sufficient numbers of them sufficiently competent to spend what in a normal year would be £290bn throughout the whole of the public sector”.

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