UK: Procurement Policy Notes (PPNs) – Developing Public Procurement During A Pandemic And In The Midst Of Brexit

While public procurement has clearly taken a high-profile role during the COVID-19 pandemic (not always for the best of reasons) an important point to make at the outset is that the law around public procurement has not in fact needed to change at all to adapt to the urgent requirements presented to us all by the pandemic. The Public Contracts Regulations 2015 (PCR) were considered to be sufficiently broadly drafted to allow for the unforeseen and urgent circumstances that everyone faced during the pandemic.

However, as we know, the Cabinet Office periodically issues guidance in the form of PPNs to the public sector, as a means to direct interpretation of how PCR should be operated in practice. This remains guidance, but is generally accepted as good practice to be followed. Everyone will remember PPN 01/20, which was published in mid-March 2020. This simply highlighted the routes to contract awards that were already set out in PCR, allowing for rapid direct awards in circumstances that were directly affected by the pandemic, and which were genuinely 'unforeseeable'. It is worth pointing out that PPN 01/2020 made clear the point that those provisions of PCR should only be used to award contracts of a scope and duration which were 'absolutely necessary'. Use of the highlighted mechanisms moving forward are unlikely to be justifiable any longer given that we have been living and breathing the impacts of the pandemic for over seven months already.

Subsequent PPNs were issued, in particular PPN 02/2020 and then PPN 04/2020, which were aimed at permitting a higher degree of flexibility for public sector buyers to be able to adjust service deliveries to flex around less predictable requirements, but at the same time to permit more rapid payment to contractors by public sector bodies to maintain liquidity. These were seen as helpful guides to allow contracting authorities to negotiate day-to-day variations in services/service levels and payment regimes as circumstances altered daily.

Social value - New requirements in evaluation

One of the most recent PPN guidance notes issued (One of the most recent PPN guidance notes issued (PPN 06/2020), which currently only applies to central government departments (those listed in Schedule 1 of PCR, including, for example, NHS trusts and the NHS Business Services Authority), their executive agencies and non-departmental public bodies, from the date of publication (24 September 2020), requires affected contracting authorities to explicitly evaluate social value in procurements '...where the requirements are related and proportionate to the subject-matter of the contract.' However, it is not a requirement if this would place an unreasonable burden on the contracting authority's procurement team, or upon suppliers. It is not, therefore currently mandated in all procurements moving forward.

This marks a relatively significant shift from the current provisions of the Public Services (Social Value) Act 2012, which simply requires contracting authorities to consider social value matters (economic, social and environmental wellbeing of the relevant area) when putting together award criteria for a procurement for public sector contracts. As we have experienced since the introduction of the 2012 Act, its provisions were largely overshadowed by PCR coming into force particularly, since its provisions were seen to be encapsulated indirectly within the requirements set out in PCR, on top of which the 2012 Act itself had no sanctions for a failure to explicitly comply with its terms. It is fair to say that the 2012 Act has had very little real impact to date.

In addition, PPN 06/20 requires, from 1 January 2021, a newly developed social value model to be used in all procurements to which PCR would otherwise apply as a means to foster post-COVID social and economic development through procurements. The idea is to standardise how 'social value' will be defined moving forward. However, commercial teams will retain flexibility in deciding which outcomes from the social model should be applied to their particular procurement, to ensure relevance and proportionality. In addition, a minimum weighting of 10% of the total available scores should be applied to social value to ensure it can become a differentiating factor in bid evaluation.

Further guidance is expected from the Cabinet Office in due course, but currently training workshops are available via sv@cabinetoffice.gov.uk.

Brexit

Clearly Brexit will present its own issues later in the year, but as things currently stand, with only one month left, there is no clear direction of travel with negotiations with the EU as to what will happen once the transitional period expires under the Withdrawal Agreement.

Once we have further clear guidance on the impact of Brexit on public procurement we will keep you informed, but until then it is safest to assume that things will remain largely unchanged.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.