What should the housing sector make of the government’s post-Brexit procurement strategy?

On social value, housing associations need to “consider” three core national priority outcomes in their procurement activities alongside local priorities:

• Creating new businesses, new jobs and skills: this outcome includes increasing opportunities for entrepreneurship, helping new and/or small businesses to grow, and employment and training opportunities, with a focus on skills shortages and high-growth sectors.
• Tackling climate change and reducing waste: this outcome asks housing associations to contribute to the UK government’s legally binding target to reduce greenhouse gas emissions to net zero by 2050, reduce waste and improve resource efficiency.
• Improving supplier diversity, innovation and resilience: housing associations are asked to create more diverse supply chains, comprising start-ups and small and medium-sized enterprises (SMEs) and look at disruptive technologies and solutions to deliver lower-cost and/or higher-quality goods.

None of these priorities is likely to be difficult to deliver for housing associations, most of which will already be securing these types of benefits (and more).

Given that these national priorities sit alongside any “additional local priorities” and that the relevant obligation is “to have regard to them” (in other words, properly consider them and take them into account, rather than simply pay lip-service to them), housing associations are likely to continue to embed what they are doing already without too much kerfuffle.

With regard to commercial and procurement delivery, housing associations must now “consider whether they have the right policies and processes in place to manage the key stages of commercial delivery identified in the NPPS, where they are relevant to their procurement portfolio”.

This is a completely laudable requirement, but may lose most of its housing association readers. It uses central government practice and vocabulary and assumes that procurement procedures are run along a business case/gateway process, which is not reflective of procurement practice in the housing sector.

Furthermore, many of the tools it mentions (project validation reviews, delivery model assessments, should cost models) could be well used by the housing sector, but the guidance cross-referred to is central government/HM Treasury Green Book-focused and no attempt has been made to translate them into tools fit for the wider public sector.

This is a lost opportunity. If housing associations do not understand the vocabulary of the NPPS, or do not recognise the processes set out or the practices employed, how can they establish relevance and application for their procurements on a day-to-day basis?

Associations should not be completely put off, however. Those that make it past the central-government speak will find a number of other good recommendations: identifying and mitigating modern-slavery risks in their contracts; an acknowledgement of the benefits of collaborative procurement; the need to take a proportionate approach to assessing the economic and financial standing of suppliers; and scrutinising risk allocation ahead of going to market via meaningful market engagement, to name but a few.

Unless housing associations shout loudly and quickly, providing central government with examples of their current procurement practices and “ask” for reform, the ensuing Procurement Bill is unlikely to anticipate the needs of the housing sector.

The implementation of these policies and practices should make procurement a more effective, efficient and cross-organisation function in the housing sector, which should, in turn, improve value-for-money outcomes.

Housing associations should also note that they will need to join in with the rest of the government in publishing a procurement pipeline. The pipeline needs to look forward at least 18 months, but “ideally three to five years”.

Government is expected to legislate for this to become compulsory for housing associations with an annual spend exceeding £200m by April 2022, and for housing associations with an annual spend exceeding £100m by April 2023.

With regard to skills and capability, the NPPS provides that “all contracting authorities should consider their organisational capability and capacity with regard to the procurement skills and resources required to deliver value for money”.

Where housing associations identify gaps in their skills, capability and capacity, they need to have a plan as to how they are going to fill them: either via collaboration with other housing associations or the wider public sector, making use of shared services and central purchasing bodies, or through training and recruitment of their own teams.

Most interesting is the government’s aim to benchmark the procurement capability of all contracting authorities by reference to relevant standards and other comparable organisations. This requirement to benchmark will also be brought forward in legislation, with the government indicating it will apply to associations under the same timelines as the duty to publish a pipeline.

How will this work? Will central government be choosing the relevant comparators and leagues? Will this fall within the remit of the Ministry of Housing, Communities and Local Government, which is currently advertising for senior procurement policy advisers and officers, or the Regulator of Social Housing?

Transforming Public Procurement, the government’s green paper, put forward a Procurement Oversight Unit, but on the presumption that that unit will be run out of the Cabinet Office, a more direct line of sight may be preferred going forward.

Overall, this strategy has a lot to commend it. It is setting out a clear vision as to what procurement should and could be in a post-Brexit England.

Nevertheless, read alongside the green paper, the NPPS shows a clear ‘land grab’ of procurement regulation by central government.

Unless housing associations shout loudly and quickly, providing central government with examples of their current procurement practices and “ask” for reform, the ensuing Procurement Bill is unlikely to anticipate the needs of the housing sector.

This will leave millions (if not billions) of pounds subject to being spent via procurement procedures, tools and delivery structures that do not quite fit the bill.

Rebecca Rees, partner, Trowers & Hamlins