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Procurement Teams Must Consider Wider Benefits of Public Spending

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New guidance sets out how public spending should help drive wider benefits, from job creation to helping protect the environment.

Job creation, investment in skills and opportunities for local growth should be taken into account when awarding public contracts, following new guidance published today for public bodies.

The new guidance – issued to officials in central government as well as those at other public organisations such as local authorities, NHS trusts and police forces – makes it clear that the wider benefits of spending public money should be factored into the procurement process.

This includes considering how public contracts will help to create new businesses and jobs across the UK, lead to the development of new skills and innovations and tackle climate change and environmental waste.

And while securing the best value for money is crucial, procurement teams have been told they must not simply award contracts to the lowest bidder – especially when wider economic benefits can be proved.

Cabinet Office Minister, Lord Agnew, said:

The public sector across the UK, from hospitals and schools to central government, police forces and universities, spends about £290 billion a year through public procurement”.

The huge power of that expenditure must support us in tackling some of the most important issues we face today, from generating economic growth and helping our communities recover from the COVID-19 pandemic, to supporting the transition to net zero”.

With the new statement published today, procurement teams will have to consider those issues as well as making sure they deliver top-quality public services that are good value for the taxpayer.

When it is done well, public procurement can help small businesses grow, increase employment opportunities in disadvantaged areas and increase training opportunities for people in industries with known skills shortages, and the guidance published today sets out how teams should take these considerations into account.

It also sets out how organisations should ensure they have the right organisational capacity, skills and capability to manage efficient procurements and how transparency should always be a key element of public procurement.

Now the UK has left the EU and the transition period, we have the opportunity to completely overhaul the public procurement rules that govern how this money is spent and create a simpler procurement regime which tackles poor performance in the supply chain while also reducing costs for businesses and the public sector and complying with our international obligations.

The publication of the National Procurement Policy Statement today is the next step in the government’s plans to transform public procurement, following the Queen’s Speech last month, which outlined reforms to make it quicker, simpler and better able to meet the country’s needs.