As more public services are provided by the marketplace and purchased through procurement teams, successive governments have recognised procurement’s crucial role in either supporting, or hindering, the success of public policy objectives.

The National Procurement Policy Statement (NPPS) aims to ensure that every pound spent by the public sector delivers maximum benefit to society. Presented to Parliament on 13th February 2025, the NPPS outlines the government’s strategic priorities for public procurement, marking a significant shift in how public funds will be managed. It embeds social value into procurement processes, ensuring public money is spent in a way that maximises societal benefits.

It marks a shift away from transactional procurement to a strategic approach, using public spending to achieve societal goals such as fair working conditions, innovation, and support for SMEs and social organisations. It also aligns with national priorities, including economic growth, clean energy, crime reduction, and NHS improvement.

In this article, we will delve into the essence of the NPPS, its rationale, key mandates, and the implications for public sector buying authorities and suppliers.

Why the Previous Statement Was Withdrawn

The National Procurement Policy Statement was originally published in May 2024 under the previous Conservative government and was due to come into effect in October 2024 alongside the Procurement Act 2023.

Following the national election, Labour’s Georgia Gould, Parliamentary Secretary for the Cabinet Office, stated that the previous statement “did not fully harness the potential of public procurement to deliver value for money, economic growth, and social value.”

Critics of the previous procurement policy statement rounded on its narrow focus on cost savings, often at the expense of quality, ethical considerations, and long-term value. Detractors highlighted several key shortcomings, including its failure to address the need for a more flexible framework in response to Brexit and COVID-19, its lack of focus on environmental standards and the role of procurement in delivering social value, and its insufficient alignment with the Procurement Act 2023.

In tandem, many small businesses also expressed concerns that existing procurement processes were slow, convoluted, and often favoured larger enterprises, thereby limiting their ability to compete effectively for public sector contracts.

Georgia Gould confirmed that the NPPS would be rewritten to address the concerns she had identified, and as a result the introduction of the Procurement Act 2023 was pushed back to 24th February 2025.

Decoding the NPPS – Key Mandates and Priorities

The new National Procurement Policy Statement, implemented as part of the new governments’ Plan for Change, aims to harness public procurement to serve the common good and support their broad policy aims:

• Economic Growth: Public procurement should boost the UK’s economy through careful spending and investment in local businesses while reducing financial pressure through effective purchasing.
• Clean Energy Transition: The government aims to make the UK a clean energy superpower by accelerating progress towards net-zero emissions and minimising waste. Public procurement processes must prioritise suppliers that demonstrate high environmental standards.
• Crime Reduction: To contribute to community safety, the government wants to encourage procurement practices that support organisations working to strengthen community cohesion and tackle crime.
• Increasing Opportunity: Lawmakers want to use procurement policies to actively break down barriers to opportunity, especially for underrepresented groups.
• A Sustainable NHS: Efforts will be made to ensure public spending supports a sustainable and effective NHS, focusing both on physical and mental health outcomes.

The NPPS is designed to provide guidance to allow public sector bodies to procure goods and services in a way that promotes sustainable economic growth, social value, and responsiveness to community needs. It also places a strong emphasis on decent working conditions, inclusivity, and fostering innovation within the public procurement processes.

Some of its core mandates include:

• Maximising Procurement Spend with SMEs and VCSEs: The NPPS encourages contracting authorities to increase procurement spend with Small and Medium-sized Enterprises (SMEs) and Voluntary, Community, and Social Enterprises (VCSEs), aiming to stimulate local economies (e.g., ring-fencing some contracts for local firms), promote supply chain diversity, and leverage their expertise.
• Ensuring High-Quality Jobs and Fair Pay: The NPPS mandates suppliers to offer safe conditions, fair pay, and career progression. This emphasis on ethical employment practices aims to improve the quality of jobs supported by public spending, supporting inclusion, skill development, and worker wellbeing.
• Fostering Innovation: The NPPS promotes a “pro-innovation” mindset, encouraging collaboration across policy, delivery, and commercial functions and early market engagement to develop new solutions that meet increasingly complex and evolving needs.
• Securing Socio-Economic Benefits: The NPPS aligns national missions with local growth plans, co-designing services with communities and prioritising socio-economic and environmental benefits to enhance social value and support community cohesion.
• Tackling Social and Environmental Issues: The NPPS combats fraud, bribery, modern slavery, and human rights violations, while also requiring procurement to consider Scope 3 emissions, waste management, and greener food production techniques to position the UK as a clean energy leader.
• Applying Commercial Best Practices: The NPPS aligns with the government’s Commercial Playbook series for robust value-for-money decision-making and reinforces the need for transparency. Contracting authorities must ensure taxpayer money is spent efficiently, reflecting value for money in procurement.
• Enhancing Organisational Capability: Procurement teams should have the skills and capacity to deliver value for money, fostering continuous improvement, supporting talent retention through training, and building a skilled workforce to tackle complex challenges.
• Introducing the Public Interest Test: A key addition to the NPPS is the public interest test, which mandates contracting authorities to assess whether work should be outsourced or completed in-house. This aims to improve value and procurement management, ensuring resources are allocated efficiently.
• Emphasising Monitoring and Accountability: The NPPS emphasises regular assessments to ensure procurement aligns with objectives and encourages technology-driven solutions to improve efficiency, responsiveness, and adaptability to community needs.
• Supporting Collaborative Procurement Frameworks: The policy endorses collaborative frameworks to consolidate spending, enabling faster contracting, competitive pricing, and ensuring value for money, although hints that the framework market requires some consolidation.

What Does This Mean for Public Sector Procurement Teams?

The NPPS marks a significant shift in how public sector buying authorities and procurement teams operate, aiming to deliver better outcomes for society while presenting both opportunities and challenges:

Pros

• Increased Market Participation: The focus on SMEs and VCSEs allows a more diverse range of suppliers to participate. This broader pool of potential suppliers should encourage public sector buyers to think creatively and engage early with the market, sparking healthy competition and ultimately leading to the development of better services and products.
• Improving Standards and Continuity: By giving buyers scope to reject low-value, poor-quality bids, buyers will be able to award contracts to more reliable suppliers who are committed to responsible business practices and high standards of service delivery.
• Social Impact: The emphasis on social value creates opportunities for procurement teams to engage with local communities, ensuring that public spending has a broader social impact and can deliver greater value for money in the long term.
• Flexibility and Responsiveness: The introduction of the public interest test provides procurement teams with the framework to flexibly assess whether some contracts can deliver better outcomes in-house rather than through outsourcing.
• Upskilled Procurement Teams: The NPPS stresses the need for skilled procurement teams to ensure value for money. Free government-provided training will enhance their knowledge and efficiency, improving procurement practices.
• Increased Public Trust: By aligning with modern legislative frameworks, the policy fosters greater transparency in procurement processes, which can lead to increased public trust.

Cons

• Increased Complexity: The inclusion of socio-economic and environmental benefits adds complexity to procurement, requiring new evaluation criteria and expertise. Transitioning to the new guidelines may also pose practical challenges as teams integrate new processes.
• Longer Procurement Cycles: A possible side effect of this added focus on social value, sustainability and innovation is that procurement cycles may get longer, potentially delaying project timelines.
• Upskilling Challenges: While the NPPS largely aligns with broader trends in procurement, some staff may find the new processes unfamiliar, for example managing cyber and supply chain risk or using the Commercial Continuous Improvement Assessment Framework or National Procurement Strategy Toolkit, requiring retraining.
• Limited Resources: Smaller public sector bodies struggle to adopt the NPPS efficiently due to limited resources, including staff and technology, which could lead to disparities in how the policy is implemented across different authorities.
• Dependence on Frameworks: Too much reliance on collaborative procurement frameworks may inadvertently limit opportunities for smaller suppliers if they are not part of larger consortia, constraining market participation.

What Does This Mean for Public Sector Suppliers?

England was once known as a nation of shopkeepers. While that may no longer be the case, it remains undeniably a nation of small businesses. This statement aims to enhance their participation in public sector procurement:

Pros

• Greater Access to Opportunities for SMEs and VCSEs: In conjunction with legislation, including the Procurement Act 2023, the NPPS aims to level the playing field by providing more contract opportunities for small businesses, recognising their role in driving innovation and social value. This includes the potential for councils to reserve contracts for local firms.
• Recognition of Good Practices: Suppliers that contribute to their communities by demonstrating positive employment and environmental practices should be rewarded, leading to greater opportunities and an enhanced reputation.
• Rewards for Innovation: Suppliers are incentivised to develop innovative solutions that better meet needs and drive efficiency, with the knowledge that buyers are being encouraged to seek out new ways of solving existing problems that also deliver social and environmental value.
• Focus on Sustainability: Suppliers who prioritise environmental standards and social responsibility in their operations could gain a competitive advantage when bidding for contracts.
• Clearer Guidance: Overall, the policy’s clarity on procurement processes will help suppliers navigate how to engage with buyers and construct tender responses more effectively.

Cons

• Increased Competition: The focus on supporting small businesses may heighten competition among suppliers, which may prove a problem for suppliers who have been reliant on government contracts. This increased competition could put pressure on prices and margins.
• Higher Compliance Requirements: Suppliers may face stricter compliance and reporting requirements to assess the social value and environmental impact of their activities, requiring investment in processes and training and potentially impacting margins. This may disproportionately affect smaller suppliers.

Key Actions for Buyers and Suppliers

To align with the new National Procurement Policy Statement, both public sector buyers and suppliers could consider the following actions:

For Buyers

• Review and Update Procurement Processes: Ensure that procurement practices align with the new guidelines and reflect a strong emphasis on social value and environmental sustainability.
• Collaborate with Local Communities: Engaging with local communities and stakeholders to understand their needs can result in more effective procurement outcomes.
• Invest in Training: Prioritize training for procurement teams to develop their skills and understanding of how to implement the new procurement strategies effectively.
• Monitor and Report: Establish clear metrics for tracking compliance with the new policy and report on outcomes to demonstrate accountability.

For Suppliers

• Engage with Public Authorities: Engage with procurement authorities to understand their needs and tailor offerings accordingly. Building strong relationships with public sector buyers can lead to better opportunities and insights into upcoming procurement and the application of policy.
• Embrace Technology: The NPPS values the use of technology and innovative approaches. Embrace technology to streamline processes, enhance efficiency, and track compliance with policy requirements.
• Prepare for Collaboration: Be open to collaborative proposals and partnerships with other organisations, as collaborative procurement frameworks are likely to be favoured by public authorities.
• Focus on Sustainability and Social Value: Emphasising sustainability and social responsibility in proposals can enhance competitiveness in public procurement.
• Boost Your Compliance Readiness: Get familiar with the new standards and ensure that operations align with the expectations set out in the policy. Maintain all required documentation to demonstrate compliance with the new policies.

The Path to Success

The NPPS aims to ensure that public spending aligns with national priorities such as economic growth, environmental sustainability, and social value, while maintaining procurement efficiency, transparency, and fairness. The implications of the statement present both challenges and opportunities for public sector buyers and suppliers.

As the NPPS is rolled out, both parties must collaborate to realise its full potential, requiring them to balance multiple priorities. The goal is a transparent, effective procurement system that meets national needs and benefits both suppliers and the communities they serve.

As public sector spending through procurement teams continues to rise, so do their responsibilities in supporting public policy objectives. Ultimately, only time will tell whether the NPPS sets procurement teams up to fail or provides the guidance they need to succeed.