On 8 December 2020, the Cabinet Office published Procurement Policy Note 09/20 (PPN 09/20). This PPN serves as an action note with respect to the Construction Playbook published by the Cabinet Office on the same day, which Trowers & Hamlins is proud to have provided input into.
The Playbook sets out commercial best practices in the form of 14 key policies for how the government should assess, procure and deliver public works projects and programmes. The 14 key policies are as follows:
1. Commercial pipelines: In-Scope Organisations should publish their proposed pipelines so that the market is aware of upcoming opportunities.
2. Market health and capability assessments: public works projects should carry out an assessment of the market to effectively design commercial strategies which promote healthy markets.
3. Portfolio and longer term contracting: the appropriate use of longer-term contracts and standardising portfolios are critical in the pursuit of increasing productivity and delivering value for money.
4. Harmonise, digitise and rationalise demand: seeking opportunities to collaborate will allow contracting authorities to develop and adopt common standards across a range of public works.
5. Further embedded digital technologies: in order to improve the quality and consistency of data available, In-Scope Organisations should apply the UK Building Information Management (BIM) Framework to their projects.
6. Early supply chain involvement (ESI): public works projects which contract for ESI can benefit from more effective designs, faster delivery and increased value for money.
7. Outcome-based approach: focussing on the whole life-value, performance and cost of a project will enable In-Scope Organisations to access continuous innovation and improvements.
8. Benchmarking and Should Cost Models: analysing data from past projects to create a benchmark will provide In-Scope Organisations with the foundations to carry out a whole life cost evaluation.
9. Delivery model assessments (DMA): in applying a DMA, organisations will be able to better define roles and responsibilities that deliver value and desired outcomes.
10. Effective contracting: sustainable, resilient and effective relationships across the supply chain with a focus on desired outcomes can be achieved through appropriate and standardised commercial terms.
11. Risk allocation: In-Scope Organisations should appropriately designate risks to the parties who are best equipped to manage and bear them to deliver successful projects with sustainable outcomes.
12. Payment mechanism and pricing approach: In-Scope Organisations should link payment to the delivery of outputs and/or performance objectives to achieve an equilibrium between price risk and return in a contract.
13. Assessing the economic and financial standing of suppliers: in carrying out due diligence of suppliers, consideration of their financial positions will enable contracting authorities to better safeguard the delivery of public sector projects.
14. Resolution planning: organisations should apply effective planning, monitoring and risk mitigation strategies in order to reduce the impact of insolvency.
The 'In-Scope Organisations' to which the PPN applies to are Central Government Departments, their Executive Agencies and Non-Departmental Public Bodies. These organisations are expected to follow the policies mentioned in the Construction Playbook on a 'comply or explain' basis, underlining the core importance of value-led procurement moving forward but recognising the fact that there is not a one-size-fits-all approach for all public works.
The Playbook and its accompanying guidance are intended to form the basis of what is considered 'good practice' for the wider public sector and its impact is therefore expected to apply well beyond the narrow scope of central government bodies.
The PPN sets out that In-Scope Organisations should take action to meet principles set out in the Construction Playbook, such as:
- Setting clear and appropriate outcome-based specifications to drive continuous improvement and innovation;
- Favouring longer term contracting across portfolios where appropriate; and
- Standardising designs, components and interfaces.
The Construction Playbook dictates that in adopting the 14 key policies set out therein, these principles will be met. For instance, the use of a Project Scorecard, which forms part of the Effective Contracting policy, will pave the way towards setting clearer and more appropriate specifications.
PPN 09/20 applies with immediate effect to In-Scope Organisations. In addition to this PPN, the Construction Playbook should be considered alongside the Outsourcing Playbook and its accompanying guidance and updates, which continue to apply to the delivery of public services by In-Scope Organisations. These two playbooks are intended to compliment each other as part of the initiative to promote value-led public procurement.
Read the full Construction Playbook here.
