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Carbon reduction and central government contracts

Jenny Beresford-Jones looks at the imminent prospect of Supplier Carbon Reduction Plans being assessed in large government contracts.

On 30 September PPN 06/21 – on taking account of Carbon Reduction Plans in the procurement of major government contracts - comes into effect. The policy is part of the drive to hit the government’s “net zero” greenhouse gas emissions target by 2050.

When does the policy apply?

The policy applies to central government contracts where the anticipated value is over £5 million ex VAT. It applies to frameworks and dynamic purchasing systems where it is anticipated that any contract awarded under them will exceed £5 million ex VAT in value. "Central government" here means government departments, their executive agencies, and non-departmental public bodies.

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The policy applies to all in-scope procurements that are commenced (i.e. advertised in the Find a Tender service) on or after 30 September 2021. There is no need to apply the policy to procurements already in train before that date.

What is the impact of the policy on an in-scope procurement?

As part of the selection criteria, authorities will require suppliers to:

  • provide a Carbon Reduction Plan (“CRP”) in the form and covering the elements set out at Annex A to the PPN which sets out the supplier’s commitment to achieving net zero by 2050; and
  • set out the environmental management measures the supplier has in place which will be used during the performance of the contract.

The detailed guidance sets out how the selection criteria should be evaluated. In particular:

  • suppliers are only to be excluded where there is a total failure to engage with the policy/provide the CRP which meets the Technical Standard (published as a separate item of guidance);
  • new entrants to the market (trading for less than 12 months) should not be disadvantaged and should simply confirm their commitment to reaching net zero by 2050 and commit to publishing their CRP as soon as possible; and
  • as with all selection stage assessments, verification will take place with the successful supplier once the contract has been awarded.

There is an express statement that there is no need for an authority to apply this PPN where it is irrelevant or disproportionate to do so. The detailed guidance sets out some “exceptional circumstances” where it may not be relevant nor proportionate to apply the PPN. These include the situation where the market concerned is struggling to such a degree that applying the PPN (1) will put delivery of public services at risk or severely compromise value for money, or (2) where there is a civil emergency. The FAQs contain more detailed guidance on this, so well worth a read.

The selection questions and the template CRP may not be amended.

Relationship to Social Value

The PPN FAQs remind us that the Social Value Model introduced in PPN 06/20 also covers the assessment of suppliers’ commitments on climate change and the environment. However, PPN 06/20 is aimed at the award stage, where the social value model criteria are used to assess the tender.

This policy is looking at the selection stage, at the environmental credentials of the supplier (rather than at the particular tender).

If you would like to learn more about the Social Value Model, our webinar on it is free to view here.

Actions to take

  • Central government authorities should take steps to identify contracts covered by the PPN, and ensure that the relevant selection criteria/evaluation methodology are included in the procurement documents. Any decisions not to apply the PPN should be carefully documented and justified. Other authorities could consider whether they wish to apply the policy and use the template selection criteria/CRP on an voluntary basis.
  • Suppliers wishing to compete for in-scope central government contracts should familiarize themselves with the CRP and think about how they can complete it to the technical standard required. Consortia should be aware that every member of the consortium needs to have a CRP and be assessed on it. Suppliers will wish to factor in the time needed to prepare the CRP, bearing in mind that it is the individual bidding entity which will need to provide this in respect of its own business. A CRP prepared on behalf of a whole group will not usually be sufficient, according to the FAQs.

Jenny Beresford-Jones is a Professional Support Lawyer at Mills & Reeve. This article first appeared on the firm’s Procurement Portal.

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