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Transforming Procurement - What Can Universities Expect?

on Tuesday, 22 February 2022.

The Green Paper on Transforming Procurement promises simplification of the procurement rules for universities, as well as generating social value and ensuring value for money.

However, the big announcement in 2021 was that the introduction of a new procurement regime is unlikely to come into effect until 2023.

At the end of 2021, the Government published its response to the consultation process.

Universities have successfully persuaded the Cabinet Office to introduce a minimum contract value threshold of £2 million in relation to some of the transparency requirements to reduce the administrative burden on universities, particularly regarding the publication of information.

However, the administrative burden on university procurement teams is unlikely to go away.

For example, universities must have regard to the whole raft of procurement guidance coming from the Cabinet Office in the form of procurement policy notices (PPNs). The PPNs need to be read alongside the Public Contracts Regulations 2015.

Of the nine PPNs published in 2021, six apply to universities as part of the wider public sector. Universities should review each PPN to see if they fall within the definition of an In-scope Organisation for that particular PPN. Although sometimes referred to as “guidance”, PPNs will often be mandatory.

We highlight below some of the key points from the 2021 PPNs.

PPN 05/21 National Procurement Policy Statement

The National Procurement Policy Statement aims to promote the Government’s national strategic priorities through procurement.

Universities are required to consider the following national priority outcomes alongside local priorities in their procurement activities:

  • creating new businesses, new jobs and new skills
  • tackling climate change and reducing waste
  • improving supplier diversity, innovation and resilience.

In practice, many universities will already be looking at ways of incorporating these areas through their procurement processes.

PPN 10/21 Procurement Thresholds and VAT

The procurement thresholds are reviewed every two years, and new procurement thresholds apply as from 1 January 2022. This year, as well as a review of the thresholds to take into account currency fluctuations, there has been a change to the method of calculation so that the thresholds now include VAT.

Where procurements involve different rates of VAT, calculating the thresholds may not be straightforward.

Universities should also note that the thresholds for social and other services, including education and training services which are subject to lighter touch procurement rules, remain the same, meaning a reduction in real terms.

PPN 09/21 Requirements to Publish on Contract Finder

PPN 09/21 confirms the requirements for In-scope Organisations to publish contract opportunities and certain contract award information on Contracts Finder. For universities, this means contracts with a value in excess of £25,000 including VAT. Certain post-contract award information must be published within 90 days of award. This is extended to cover call offs under framework agreements and awards which have not been openly competed.

A version of this article first appeared in University Business on 27 January 2022.

For further information on procurement law please contact Stephanie Rickard in our Procurement and Subsidy Control team on 07384 251 896 or complete the form below.

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