Procurement Act 2023: A Game Changer for Local Charities?

The government is urging public sector bodies to give local charities a bigger slice of procurement spending under new guidance that takes effect on 24 February.

Councils, government departments, the NHS and other public bodies are being told to prioritise small and medium-sized enterprises (SMEs) and voluntary, community and social enterprises (VCSEs) when commissioning services.

The updated procurement guidance is designed to direct more public sector contracts towards smaller businesses and charities.

It states that the government wants to "maximise procurement spend" with SMEs and VCSEs, arguing that this will strengthen supply chains, stimulate economic growth and encourage innovation.

The guidance highlights the benefits of shifting procurement in this direction: "Small businesses and social enterprises are more likely to generate diverse and thriving local economies, creating jobs and economic growth."

It goes on to say that increasing spending with these suppliers is now a "national priority" to drive economic growth.

There is also a strong focus on making it easier for these organisations to bid for public sector work. The government aims to "remove the barriers to participation" that small businesses and charities often face when competing for contracts.

The changes come under the Cabinet Office’s National Procurement Policy Statement, which is part of the Procurement Act 2023.

The statement sets out the government's strategy for public procurement, explaining how it should help "raise living standards in every part of the United Kingdom" while supporting UK firms in competing for contracts.

Boosting jobs and innovation

Public procurement is seen as a key tool in the government’s wider economic strategy.

The new policy statement says: "Public procurement is a key lever in achieving the government’s missions by sourcing goods and services that deliver value for money, including social and economic value across the commercial lifecycle that drives sustainable economic growth and benefits local communities, raising living standards in every part of the United Kingdom."

Under the 'economic growth' priority, it calls for public sector buyers to "drive economic growth and strengthen supply chains by giving SMEs and VCSEs a fair chance at public contracts, creating high quality jobs and championing innovation."

The 'value for money' section reinforces this, setting out three key ways for contracting authorities to ensure procurement delivers wider benefits:

• Supporting SMEs and VCSEs by giving them better access to contracts, leading to job creation and economic growth
• Delivering social and economic value by working collaboratively across different organisations
• Strengthening commercial skills within the public sector to ensure effective procurement and contract management

A shift from previous policies

This latest procurement guidance marks a departure from previous approaches. The last National Procurement Policy Statement, published under the previous Conservative government, did not specifically encourage commissioners to prioritise local small businesses and charities when awarding contracts.

The new statement, however, makes it clear that directing public spending towards these organisations is now a government priority.

By giving them greater opportunities to secure contracts, the hope is that they will help drive local economic growth, create jobs and bring wider social benefits.

With these changes coming into effect, charities and small businesses could see a significant boost in their ability to compete for public sector work.

Whether this leads to lasting benefits remains to be seen, but the intention is clear: the government wants to "maximise every opportunity" for smaller organisations to thrive in the public sector marketplace.

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