Procurement: PPN 11/20 – Reserving Below Threshold Procurements

The Cabinet Office has recently published Procurement Policy Note PPN 11/20: Reserving Below Threshold Procurements and accompanying PPN Guide which apply from 1 January 2021.

This PPN applies to central government departments, executive agencies and non-departmental public bodies (referred to as “In-scope Organisations”)[1]. Other contracting authorities not falling into the above category are encouraged to apply the principles set out in the PPN.

The PPN notes that the UK’s exit from the EU means that the UK can exercise additional freedoms in relation to contract spend on goods, services and works contracts with a value below the applicable thresholds.  The PPN itself sets out the thresholds for central government.  Please see our article on thresholds.

The PPN provides that In-scope Organisations may consider, where appropriate, the following options for the procurement of below threshold contracts:

1. Reservation by supplier location – this is the ability to run a competition specifying that only suppliers located in a geographical area can bid. This could be UK-wide or by county (metropolitan or non-metropolitan).  Organisations should not define by nations of the UK (i.e. England, Scotland, Wales, Northern Ireland) and where a county reservation is to be applied only a single county may be reserved.
2. Reservation for Small and Medium sized Enterprises (“SMEs”) or Voluntary, Community and Social Enterprises (“VCSEs”) – this is the ability to run a competition that only permits SME’s and VCSEs to bid.

The above two options should be considered on a case-by-case basis, and can be exercised on their own or together.  The PPN sets out a number of considerations when reserving contracts – which are expanded upon in the PPN Guide.  These include that In-scope Organisations should: ensure value for money, assess the sector/market, identify and manage risks including fraud and corruption risks, use suitable model contracts, undertake supplier due diligence.

Where In-scope Organisations conduct competitions for below threshold contracts which are to be reserved, then this will need to be clearly identified in the procurement notices and documentation. The PPN Guide also sets out a number of standardised definitions (e.g. of SME / VCSE and supplier location) that should be used as well as a sample document that In-scope Organisations may use to record the rationale/approval of their decision to reserve a procurement.  The PPN Guide highlights that In-scope Organisations should keep appropriate records of all their commercial decisions and that spot checks on below threshold procurements may be undertaken by the Public Procurement Review Service.

In applying the policy, it is important that In-scope Organisations achieve value for money and use good commercial judgment.  It is important to note that In-scope Organisations may still choose to compete below threshold contracts on an open basis without any reservation for supplier type or supplier location.  Further the PPN states that in order to ensure value for money, In-scope Organisations should not make direct awards when reserving procurements under this policy.

The PPN highlights the importance of In-scope Organisations complying with their own internal guidance, governance and procedures (which may need to be updated in the light of the PPN) when deciding to reserve contracts.

Publishing transparency notices

The PPN also reiterates the Government’s policy to adopt and encourage greater transparency in its commercial activities. As such, the legal requirements set out in regulations 110 and 112 of the Public Contracts Regulations 2015 (as amended) to publish on Contracts Finder, will continue to apply to below threshold procurements as well as the rules on assessing suitability.[2]

Additional guidance

There is detailed additional guidance included within the PPN Guide which sets out some wider considerations that will be of use for both In-scope Organisations contracting authorities generally.  There are also detailed FAQ’s contained within the PPN Guide which provides further helpful information. 

Any enquires about this PPN can be directed to the Crown Commercial Service Helpdesk on 0345 410 2222 or info@crowncommercial.gov.uk 

[1] PPN 11/20 does not however, apply to certain procurements which involve the provision of goods into Northern Ireland and where there is cross border interest.

[2] Further information on these requirements can be found in PPN 02/17