Source · Select Committees · Public Accounts Committee
Recommendation 4
4
Accepted
Update Sourcing Playbook to balance socio-economic benefits with SME access to public contracts.
Recommendation
Government has not demonstrated that it has consistently used its purchasing power to support local and national policies and objectives, or to drive healthy and competitive markets, including buying from SMEs. Government could not provide evidence that it is consistently using its purchasing power to create new businesses, new jobs, and new skills, to tackle climate change and reduce waste, and to improve supplier diversity, innovation, and resilience. The way that social value requirements are implemented can leave smaller businesses, as well as larger companies unable to meet them constraining their ability to bid on public contracts. Public authorities are not yet approaching this consistently to support SMEs to develop and build resilience to a level where they can bid on public contracts. Crown Representatives have helped government to understand its markets, but further work is needed to support SMEs. Recommendation 4: The Cabinet Office should set out, as part of its Treasury Minute response, details explaining how it will revise its Sourcing Playbook and support government buyers towards achieving a consistent approach to balance achieving economic, social, and environmental wellbeing with unnecessarily imposing artificial constraints that create barriers to entry for SMEs.
Government Response Summary
The government agreed with the recommendation, stating it will revise the Sourcing Playbook during 2024 in line with the Procurement Act 2023, and anticipates the first statutory National Procurement Policy Statement (NPPS) will be in place later in 2024.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation Recommendation implemented The Sourcing Playbook outlines how government commercial policy considerations should be balanced by contracting authorities and will be revised in line with the Procurement Act 2023 during 2024. Government commercial policy is set out in Procurement Policy Notes (PPNs). Ensuring a level playing field for small and medium-sized enterprises (SMEs) seeking to contract with the government is a key component to the design, delivery and implementation of commercial policy. For example, during the formulation of the government’s social value policy, as well as a public consultation, there was consultation with the Federation of Small Businesses, the Cabinet Office Small Business Advisory Panel and the Crown Representatives for Small Business and Voluntary, Community and Social Enterprises (VCSEs), on the content of the model, a proposed minimum 10% weighting for evaluating social value in bids, and whether the approach posed any particular accessibility issues for SMEs. Central government’s social value policy states that bids should be scored on a qualitative contract by contract basis, as comparing volumes or use of financial proxies could disadvantage SMEs. This process of ensuring SMEs are not overburdened has been replicated on other policies, for example reducing carbon in government supply chains which has a threshold at which the measure applies to minimise impact on SME and VCSE suppliers, as does the prompt payment policy. The commitment to reducing barriers to SMEs in public procurement is demonstrated by near doubling of spend with SMEs from 2016-17 to 2021-22 (latest figures) from £11.1 billion to £21 billion1. As part of the Procurement Act 2023, the government has powers to publish a National Procurement Policy Statement (NPPS), to which all contracting authorities must have regard. This will provide the government of the day an opportunity to set out its strategic priorities to which it expects procurement to contribute and may include subjects such as driving 1 https://www.gov.uk/government/collections/central-government-spend-with-smes innovation, creating jobs and tackling climate change. It is anticipated that the first statutory NPPS will be in place later in 2024. A successful commercial agreement strategy takes into consideration a number of factors to balance the risk appetite of customers (the public sector) against the best value offering from a supplier; with suppliers fairly evaluated against each other, ensuring transparency and ultimately competitive tension; it is tailored to market opportunities and customer needs, which varies by commercial agreement; and it also balances commercial pricing with quality of product or service and considers policy implication, for example, SMEs, social value and net zero. Where the balance points are is determined by each contracting authority or Minister. The Crown Commercial Service implements government commercial policy by ensuring that commercial agreements, for which it is the Framework Authority, comply with PPNs and government commercial policy, as well as being compliant with the Procurement Regulations.