A raft of updates to public buying rules are designed to spread prosperity more fairly and reward sustainability efforts. By Nick Hughes.
Public sector buyers will be required to maximise spend with small and medium-sized businesses (SMEs) under a shake-up of government procurement rules.
The new rules, which apply to food along with other publicly purchased goods and services, are designed to remove bureaucratic barriers that effectively lock many SMEs out of bidding for current government contracts.
Last week, the UK Government published an updated National Procurement Policy Statement (NPPS) which sets out the criteria public organisations are obliged to consider when choosing contractors. It will come into effect on February 24th 2025 at the same time as the Procurement Act 2023, which overhauls public procurement law in the UK by simplifying bidding processes and giving a greater share of public sector supply opportunities to small businesses.
The government has also updated its Social Value Model through which public sector buyers are required to give a minimum 10% weighting in contract decisions to social and environmental benefits.
The update is designed to align with the government’s strategic priorities that include kick-starting economic growth and achieving net-zero as well as tackling crime and improving health. Buyers are expected to select from a range of relevant social outcomes for their contract including good working conditions and fair pay practices, and evidence of sustainable procurement practices like reduced waste and carbon footprints.
Prospective suppliers are expected to be able to demonstrate measurable and time-bound commitments to achieving the outcomes. Buyers can start applying the new model from February 24th 2025, but it will be mandatory from October 1st 2025.
SME support
In a written statement to Parliament announcing the NPPS, Georgia Gould, parliamentary secretary for the Cabinet Office, said the government is determined to ensure the £400bn of public money spent annually on public procurement supports small businesses and creates good jobs across the country.
“For too long, small and medium-sized enterprises and voluntary, community and social enterprises (VCSEs) have been held back by government procurement processes that are too slow, bureaucratic, and difficult to navigate,” she said.
New rules will require all government departments and their arm’s length bodies to set three-year targets for direct spend with SMEs and VCSEs and publish progress annually. On top of this, regular spot checks will ensure smaller companies in the supply chain are paid within 30 days.
Gould told the FT the government is also examining proposals that would allow local authorities legally to discriminate in favour of SMEs in their communities to “maximise spend within their area and help boost local economies”.
Food questions
The NPPS specifically mentions food as an area in which the government expects “the highest standards of integrity, ethical conduct and environmental sustainability in business practices from suppliers delivering public contracts”.
Last month, Defra secretary of state Steve Reed confirmed that Labour plans to take forward a commitment in its election manifesto for 50% of public sector food to be local or produced to high environmental standards. This would require an update to the Government Buying Standard for food and catering services (GBS), but such an update did not form part of the suite of policies published last week.
It is still not clear whether the 50% target will apply to food purchased across the entire public sector or only to institutions that are already subject to the existing GBS such as hospitals, army bases and prisons, but not to schools, colleges and local authority care homes.
