National Procurement Policy Statement: What you need to know

The new National Procurement Policy Statement (NPPS) came into effect on 24^th of February 2025, alongside the Procurement Act 2023 (the Act). The NPPS set out the government’s policy on national priorities for public procurement. It aims to modernise how the public sector and publicly funded entities deliver values through procurement and introduces a framework to help contracting authorities focus on a way of achieving value for money in a way that supports broader national goals. The priorities set out in the NPPS reflect the Act’s general policy shift towards evaluating the social value as well as economic value of procurement decisions.

Scope

The Statement applies to all “contracting authorities” as defined in Section 2 of the Act, covering central government departments, executive agencies, local authorities and other entities that are either wholly or mainly funded out of public funds or are otherwise subject to public authority oversight.

New Procurement Priorities

The NPPS sets out the Government’s strategic priorities for public procurement that contracting authorities must “have regard to” when undertaking their procurement activities. This means that they must consider whether the procurement can contribute to achieving one or more of the policy objectives set out in the NPPS. The NPPS sets out three major priorities for public procurement which are accompanied by actions that contracting authorities should take. These are summarised below:

• Driving economic growth and strengthening supply chains by giving SMEs and VCSEs a fair chance, creating high quality jobs and championing innovation by:
  1. maximising procurement spend with SMEs and VCSEs;
  2. ensuring suppliers are committed to providing high quality jobs, safe and healthy working conditions, fair pay, opportunities and progression for workers; and
  3. working collaboratively across policy, delivery and commercial functions to develop a “pro-innovation mindset”, defining challenges to solve rather than solutions to buy, and engaging early with the market to consider innovative products and services.
• Delivering social and economic value that supports the Government’s missions including by working in partnership across organisational boundaries where appropriate by:
  1. securing social and economic value which supports delivery of the national missions considering priorities in local and regional economic growth plans and working in partnership with other contracting authorities, the private sector and civil society in the exercise of their procurement functions; and
  2. ensuring their suppliers are actively working to tackle bribery, corruption, fraud, modern slavery and human rights violations, environmental impact (including reducing greenhouse gas emissions and minimising waste in their operations) complying with their tax employment law and other obligations and stamp out late payment of invoices in their supply chains.
• Ensuring the right commercial capability and standards are in place to procure and manage contracts effectively and to collaborate with other contracting authorities to deliver best value by:
  1. applying commercial best practice including the principles and policies in the Government’s playbook series and make decisions based on value for money and service quality when assessing delivery models and outsourcing decisions.
  2. benchmarking their organisational capability and workforce capacity to ensure they have the appropriate procurement and contract management skills and capacity to deliver value for money; and
  3. using collaborative procurement agreements, where appropriate for the requirement and the market, to ensure value for money (if those agreements are operating in accordance with relevant procurement legislation and good practice).

The Duty to have Regard

The Act’s requirement that all public bodies “have regard” to the NPPS is a statutory duty.  Failure to do so could invalidate decisions taken by contracting authorities. Existing case law confirms that this duty requires that the authority must take the guidance into account, proceed on a proper understanding of the guidance; and act in accordance with or give clear reasons for departing from the guidance. For example, the 2015 case of R on the Application of London Oratory School v The Schools Adjudicator analysed the meaning of ‘have regard’ and the judge concluded:

“’have regard’ … [means] take the … Guidance into account and if they decide to depart from it, they must have and give “clear reasons” for doing so …’have regard to’ involves a greater degree of consideration than merely to ‘consult’ … but plainly does not mean … ‘follow’, or ‘slavishly obey’. I would add that the “clear reasons” referred to … must in my judgment objectively be proper reasons, or legitimate reasons.”

Implementation Measures

To support the implementation of the NPPS, the Government has already introduced a number of new measures including:

• implementing three-year SME spend targets for central government departments (with targets for VCSEs to follow in 2026);
• requiring departments to exclude suppliers from bidding for major contracts (+£5m) if they cannot demonstrate they pay their invoices in an average of 45 days;
• publishing an update to the model for taking account of social value in central government procurement, streamlining the standard criteria and aligning with the missions; and
• establishing a new online register of commercial agreements that will give contracting authorities better visibility of existing frameworks and the fees they charge.

In June 2025, the Cabinet Office launched a consultation on the Government’s proposals for introducing further measures to support the implementation of the NPPS, targeted at supporting SMEs, national capacity, local skills and jobs.

In addition, the Cabinet Office has published a new “Procurement Policy Note”, aka (PPN 002) which will be mandatory from October 2025. PPN 002 lays out a social value model that builds in exemplar criteria, objectives and reporting metrics for assessing social value in tenders, again couched in the Government’s mission-based language.

PPN 002 applies to all central government bodies acting as contracting authorities so it is not binding on other types of contracting authority (e.g. local authorities), although other organisations are expressly invited to apply the same or a similar approach to their own tenders. You would therefore expect to see adaptations of this model appearing across the sector over the next few years.

Guidance for Contracting Authorities

The Act states that contracting authorities should be able to show that the goals of the NPPS were considered as part of any given procurement and the duty to have regard to the NPPS extends to the whole lifecycle of the public contract. It is therefore recommended for contracting authorities to:

• document their decision-making processes in relation to the NPPS, including any decisions made relating to procurement contract extension or modifications.
• target procurement decisions, to achieve value for money by using public money efficiently and promoting social value; and
• assess internal processes and procurement policies and ensure they are aligned with the priorities of the NPPS.

If you have any questions about the NPPS, this article or on any other issues it has raised, please do contact its authors for further advice and support.