The Procurement Act 2023 is now in force. Explore our Procurement teams’ top takeaways on the Government’s strategic priorities following publication of the new National Procurement Policy Statement.

On 13 February 2025, the Cabinet Office published the long-awaited National Procurement Policy Statement (NPPS), reinvigorating a focus on public bodies using procurement to achieve public benefit. In the statement – which most contracting authorities have a legal duty to have regard to with effect from 24 February 2025, under the new Procurement Act (the “Act”) – the Government directs public bodies to spend more with small businesses, charities and social enterprises, provide good employment conditions, work collaboratively, and secure social value.

What is the NPPS?

This is a key document issued by the UK government under the Act where the government sets out the strategic priorities and actions that public sector bodies must ‘have regard to’ when procuring goods, services, and works. It came into effect with the Act on 24 February 2025.

For most types of public procurement contracts contracting authorities are under a statutory duty to ‘have regard to’ the policy objectives set out within the NPPS that is current at the time when carrying out a procurement and determine how procurements can contribute to the delivery of these wider policy objectives. ‘Having regard to’ means a duty to consider the guidance, proceed on a proper understanding of the guidance, and act in accordance with it or have clear reasons for not following it. Contracting authorities therefore need to take care when making a decision which departs from the NPPS as this could be an opportunity for suppliers to question and potentially challenge that decision. Also of note is that as the Act extends to the lifecycle of a public contract, so too does the NPPS and therefore should be considered by contracting authorities when, for example, making any modifications or extensions.

What is new?

Alongside the go-live date of the new Act, which heralds a new era for public procurement, this NPPS marks a significant shift in the UK government’s approach. There is an emphasis throughout on strategic alignment, support for SMEs and VCSEs, environmental sustainability, collaboration, employment conditions, and innovation: the theme of the NPPS is maximising public benefit, a shift away from the classic lens of maximising value for money.

However, the new emphasis sits alongside a continued focus on applying commercial best practice and making decisions based on value for money and service quality using the flexibilities of the Act, bolstered by an underlying aim to drive economic growth and deliver social and economic value.

The new NPPS offers opportunities for charities, social enterprises, and small and medium-sized businesses to win more public contracts, and for forward-thinking public bodies to find innovative approaches to public benefit through procurement.

Strategic priorities

The NPPS introduces a mission-driven approach, aligning procurement with broader government objectives: economic growth, clean energy, reducing crime, the NHS, and breaking down barriers to opportunity. It emphasises the overarching priority in public procurement is achieving value for money through:

  • Driving economic growth and strengthening supply chains by giving SMEs and VCSEs a fair chance;
  • Delivering social and economic value through partnership working; and
  • Ensuring the right commercial capability and standards are in place to procure and manage contracts effectively

With procurement decisions now more strategically aligned with long-term government objectives, suppliers will need to demonstrate how their offerings contribute to these goals. Contracting authorities will be expected to ensure that their procurement activities support these strategic priorities, necessitating a deeper understanding by contracting authorities of how each procurement aligns with these broader objectives. Having the right commercial capability means contracting authorities should ensure they have the appropriate procurement and contract management skills and the capacity to manage their procurements throughout their lifecycle.

Support for SMEs and VCSEs

One of the most notable elements of the NPPC is that contracting authorities are expected to maximise procurement spend with SMEs and VCSEs in order to drive economic growth and strengthen supply chains. This represents a significant opportunity for SMEs and VCSEs, as it should provide greater and easier access to government contracts.

There are obligations on contracting authorities to ensure suppliers are committed to providing high quality jobs that are fairly paid and that they adhere to the highest standards of integrity, ethical conduct and environmental sustainability as well as ensure prompt payment of invoices.

The ministerial statement accompanying the NPPS states that new rules will be put in place for government departments and their arms-length bodies to set three-year targets for direct spend with SMEs and VCSEs and publish progress annually with regular spot checks to ensure smaller companies are being paid within 30 days. It also states that changes will be implemented to allow local authorities to reserve competitions for low value contracts for local SMEs and VCSEs.

Innovation and technology

The NPPS introduces new initiatives to foster and champion innovation with contracting authorities expected to work collaboratively across policy and develop a ‘pro-innovation’ mindset through early market engagement and a focus on challenge to solve rather than specific solutions to buy. This opens up new opportunities for suppliers to collaborate on innovative projects. For contracting authorities, it encourages the adoption of innovative procurement practices and the use of new technologies to improve service delivery and efficiency.

In the ministerial statement the Government also commits to updating the Sourcing Playbook to introduce a new public interest test for contracting authorities ‘to assess at the outset of a procurement process whether or not work should be outsourced or if it could be done more effectively and with better value for money, in house’. Contracting authorities should use collaborative procurement arrangements, where appropriate for the requirement and the market, to ensure value for money, provided the arrangements follow law and good practice.

Environmental, economic and social value

The NPPS has a strong emphasis on environmental sustainability, economic and social value, with the aim to maximise public benefit. It includes specific measures to accelerate progress towards net zero and promote green technologies. Additionally, it encourages suppliers to recruit from, and remove barriers to entry for, young people and underrepresented groups, enhancing social value. Suppliers must now demonstrate their commitment to environmental sustainability and social value, which could involve adopting green technologies and inclusive hiring practices.

Contracting authorities, on the other hand, are expected to evaluate suppliers based on these criteria, incorporating environmental, economic and social value into procurement decisions, and to co-design requirements with stakeholders. They are also expected to support national missions and regional and local growth plans by working in partnership with other contracting authorities, the private sector and civil society.

Separate to the NPPS, the Cabinet Office also published on 13 February a procurement policy note (PPN) on taking account of social value in the award of contracts, giving further guidance on how contracting authorities should apply social value and aligning it to the NPPS priorities. The PPN applies to procurements on or after 1 October 2025; until then contracting authorities can either apply this PPN or use the previous PPN on social value (PPN 06/20). The PPNs are mandatory for central government departments, executive agencies and non-departmental public bodies, with discretion given to other public bodies.

As well as the minimum 10% weighting of the total score for social value there is a new requirement that all social value commitments by suppliers during the procurement process must be reflected in the contract as contract terms, key performance indicators or performance indicators whilst ensuring these are relevant and proportionate and comply with the principles of equal treatment and non-discrimination. There is a guide to using the social value model which contains a model question and menu of social value award criteria, and standard metrics to include in contracts.

Conclusion

The NPPS is a welcome development for contracting authorities and suppliers alike, embedding public benefit in the procurement process, alongside the more technical changes in the Act itself. For suppliers, particularly those who are SMEs and VCSEs, there should more opportunities with clearer expectations around sustainability and how to demonstrate social value. For contracting authorities, the guidance also provides some welcome clarity on maximising public benefit and framing social value and should help empower them to use the flexibilities of the Act throughout the lifetime of the contract – although many authorities may find it difficult to navigate the practical realities of implementation of the NPPS in its early days.

If you are a contracting authority or public sector supplier looking for support with the new Act or the NPPS, please get in touch with our public procurement experts, Augustus Della-Porta, Lindsay Draffan, Charlie Miller, and Suhan Rajkumar.

The material in this article is provided for guidance and general information only and is not intended to constitute legal or other professional advice upon which you should rely. In particular, the information should not be used as a substitute for a full and proper consultation with a suitably qualified professional. Please do contact the Bates Wells team if you require further information.