PPN 11/20: What does it mean for social enterprises?

On 15 December 2020 the Cabinet Office issued a Procurement Policy Note (PPN 11/20: Reserving Below Threshold Procurements) and accompanying PPN Guide, which became applicable from 1 January 2021. It sets out the options that may be considered by contracting authorities when procuring goods, services and works with a value below the applicable thresholds. These options are: 1. allowing contracts to be reserved for local suppliers; and 2. allowing contracts to be reserved for Small and Medium Sized Enterprises (SMEs) and Voluntary, Community and Social Enterprises (VCSEs).

The PPN applies to all central government departments, their executive agencies, and non-departmental public bodies. These are referred to in the document as “In-scope Organisations”. Other contracting authorities that do not fall into this category (e.g. local authorities or housing associations) are nonetheless “encouraged to apply” the principles set out in the PPN.

In-Scope Organisations or those that choose to apply PPN 11/20 to their procurements may now implement the following options when procuring below-threshold contracts:

1. Reservation by supplier location: If reserving a procurement by supplier location, the contracting authority would be able to run a competition and specify that only suppliers located in a particular geographical area can bid. This could be UK-wide or by county but should not be defined by nations of the UK (e.g. England, Scotland, Wales or Northern Ireland).

2. Reservation for SMEs and VCSEs: In reserving the procurement for SMEs and VCSEs, the contracting authority would be able to run a competition and specify that only these types of organisations can bid for the contract.

Either or both of the above options can be applied, though it should be noted that contracting authorities may still choose not to apply the policy and run below-threshold contracts on an open basis without these reservations.

However, if these options are applied, bidding opportunities could essentially be ring-fenced for local and/or social businesses. This could mean greater opportunities for social enterprises (particularly small social enterprises), allowing them to better compete with larger organisations and mainstream businesses. Below threshold contracts represent significant expenditure by contracting authorities and could therefore mean major business opportunities for local and social enterprises.

Along with the new social value framework that came into action this year, PPN 11/20 is a step in the right direction, towards supporting social enterprises bidding for government contracts.

2021 has been hailed as the year in which Britain needs to rebuild. So far, as far as social enterprise is concerned, we are seeing steps in the right direction: both this PPN, and the new Social Value Framework, were effective from January 1st, and we hope that together, they represent a new horizon for Britain’s social enterprises. Throughout the COVID-19 pandemic, the social economy has proven to be a crucial pillar of struggling communities, helping vulnerable people through the most difficult times. In this new light, it is more urgent than ever that we support a sector that places social value at the heart of business. This should come as no surprise either: as organisations established to address social, economic and environmental issues, social enterprises are perfectly placed to support the collective effort to build back better from the crisis.