From September, government contract suppliers will be required to have a carbon reduction plan when bidding for contracts that are valued at £5m per year.

The government recently published a Procurement Policy Note (PPN) establishing that during the procurement process, all central government departments (including their executive agencies and non-departmental public bodies) should require that bidding suppliers must set out their emission reduction plans to be carbon zero by 2050 and how these measures will be utilised during the performance of the contract.

The policy is a part of the government’s ‘Net Zero’ target, a campaign that intends for the UK to reduce its carbon emissions by 100 per cent by 2050.  The criteria will be applied to procurements advertised from 30 September 2021.

Ian Fishwick, Chairman of Adept Technology Group, sits on the Cabinet Office’s SME Panel and told UC Today that the selection of £5m as the criteria figure was “no accident”.

“The new rules will apply to any contract that spends more than £5m per annum,” he stated.

“It’s not an accident that they’ve picked that level because there are prompt payment rules that are applied to government contractors that if they have more than £5m a year, they’ve got to pay suppliers on time, etc. The Cabinet Office doesn’t want lots of different definitions of ‘what are the special contracts that need to be looked at slightly differently’.

“The devil is always in the detail is these things and one of the roles that we play on the SME panel is to look at new ideas and the implications of implementing them.”

The PPN only applies to framework agreements and dynamic purchasing systems where it is expected that the individual value of any contract to be awarded under the framework or purchasing system is greater than £5m per year.

This is a cause for concern, according to Fishwick, who said that there needs to be clearer guidance on whether the PPN applies at the framework level or the contract level and how the policy will actually be implemented and who it affects.

“The bulk of all the contracts that go through frameworks…are small value ones. The volume of contracts that will be more than £5m is actually quite small,” he elaborated, adding that when it comes to the high-value contracts, it generally tends to be four or five of the  “big players” that bid on them.

“What you want is for that requirement for a carbon reduction plan to in the big volume contracts themselves rather than the frameworks. For example, the Network Services [framework] has got about 60 suppliers, but you might only have five companies bidding on the really big contracts. What you don’t want is 60 companies trying to create carbon reduction plans, even though they’re never going to get involved in the big stuff – you really want to target the five who are.

“It’s that kind of implementation detail that has to be finalised now – that will make a big difference as to whether all suppliers have to worry about their emission plans or just the ones who go for the high-value contracts”

Fishwick added that it was a “laudable” move by the UK government, but that it has been carefully timed to coincide with hosting the G7 summit in June and COP26 in November.

“This is the 26th meeting of COP, the most famous of which is probably COP21 in 2015 which we all know because of the Paris Climate Accord, which was the first time that nations around the world agreed that [carbon emissions] are a big problem and signed up to plans that tighten every five years,” he explained.

“So the UK is really running with all sorts of initiatives to try to get ready for November, and effectively claim world leadership on climate change concepts.”

 

 



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