The concept of reservations was one we all became familiar with in 2020 (at a time before lockdown 3.0 was upon us and we were able to visit restaurants and pubs albeit with regimented seating times), but procurement professionals are going to have to get used to reservations in an entirely different context in 2021 as a result of PPN 11/20. The final volume of a bumper year for PPNs (the highest total since 2015, the year the new Regulations were published) mandates central government authorities, and encourages others, to consider reserving below threshold contracts to certain types of supplier. This PPN (with the new EU-UK Trade & Cooperation Agreement and the Government’s Green Paper on Transforming Public Procurement) is another signal that the Government wants to employ a more flexible procurement regime, including emphasis on social and environmental measures and helping SMEs.
PPN 11/20 applies to “in-scope organisations”, defined as “all Central Government Departments, their Executive Agencies and Non-Departmental Public Bodies”, but crucially, unlike other PPNs issued last year, all contracting authorities are encouraged to comply. Its provisions came into effect on 1 January 2021.
The PPN identifies two options that contracting authorities should consider for the procurement of below threshold contracts:
- Reserving the procurement by supplier location – meaning only suppliers from a certain geographical location can bid; and
- Reserving the procurement for Small and Medium Sized Enterprises (“SMEs”) and Voluntary, Community and Social Enterprises (“VCSEs”) – meaning only SMEs and VCSEs can bid.
In respect of the first of these two options, contracting authorities should be aware that the geographical location can be UK or county-wide. The location can’t be just one UK nation (meaning authorities couldn’t reserve a procurement for, say, English contractors).
Compliance with PPN 11/20
Each non-central government authority will have to decide whether it will abide by the principles set out in PPN 11/20. There are undoubtedly benefits associated with doing so – the Cabinet Office promises compliance will “streamline and simplify” below threshold procurement exercises – and ultimately the risk associated with compliance seems low; contracting authorities only have to consider options outlined above, they don’t actually have to reserve.
For those that decide to apply the PPN’s principles, prior to each new procurement exercise, authorities should consider whether to exercise these options singularly, in tandem or not at all. Authorities should consider factoring this consideration into their procurement plans to be sure it is not overlooked.
Authorities should be aware that the decision to reserve below threshold contracts to certain suppliers should be made on a case by case basis. Other considerations – including value for money and any associated risks – should still be borne in mind.
The Cabinet Office has published a useful guide to reserving below threshold procurements to supplement the PPN.
We advise contracting authorities on all manner of issues relating to public procurement and our experts are on hand to guide authorities through the intricacies of PPN 11/20 or to advise on any other procurement related issues.
This article is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published. If you would like further advice and assistance in relation to any of the issues raised in this article, please contact us today by telephone or email email@example.com.