Implementing Net Zero: Taking account of Carbon Reduction Plans in the Procurement of Major Government Contracts

The Government recently published the Procurement Policy Note 06/21. This will require suppliers bidding for major government contracts to provide a Carbon Reduction Plan at the selection stage and commit to achieving Net Zero by 2050, writes Clare Mendelle and James Goldthorpe.

When do the provisions of PPN 06/21 apply?

The provisions of PPN 06/21 apply to procurements by Central Government Departments, their Executive Agencies and Non-Departmental Public Bodies when procuring goods, services or works with an anticipated contract value greater than £5 million per year which are subject to the Public Contracts Regulations 2015. The provisions must be applied to relevant procurements launched on or after 30 September 2021.

There are some situations where it would not be proportionate to apply the PPN, such as in a civil emergency, but such circumstances are exceptional.

What will suppliers have to do?

When bidding for in-scope contracts, potential suppliers will be required to provide, and publish on their website, a Carbon Reduction Plan using the template included in the PPN.

To meet the Government’s Technical standard, suppliers will be required to:

• Include an organisational commitment to reaching Net Zero by 2050;
• Meet reporting requirements for reporting on their emission of different forms of greenhouse gasses;
• Set out their current carbon footprint; and
• Detail the environmental management measures they will implement during the performance of the contract.

Where a supplier does not complete the CRP in a way which meets the Government’s Technical Standard they will be excluded from the procurement.

Where a supplier is successful, they will be required to review and update their Carbon Reduction Plan annually to reflect their efforts to reduce emissions in line with their commitments.

What will contracting authorities be required to do?

To prepare for these new requirements, contracting authorities should look to their procurement pipeline to determine when and how they will be required to implement the provisions.

Contracting authorities should also familiarise themselves with:

• The template Carbon Reduction Plan (annexed to PPN 06/21);
• The Technical Standard for completion of Carbon Reduction Plans; and
• The Government’s Guidance note on adopting and applying PPN 06/21.

The Impact of these provisions

In response to the political imperative to ‘build back better’ following the pandemic, 2021 will see £37 billion of public contracts brought to market as the Government attempts to kickstart the recovery through public sector investment. In this context, the adoption of a public procurement process which transposes ambitious climate change targets to private sector entities could have a profoundly positive impact – allowing the public sector to lead by example in the delivery of an urgent and necessary Green Recovery.

Clare Mendelle is a Professional Support Lawyer and James Goldthorpe is a Paralegal at Sharpe Pritchard LLP

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