Commercially Connected Shorts - 19 February 2025

This week we look at:

• Public sector: National Procurement Policy Statement – what it means for the public and private sectors
• Commercial: Deregulation of UK commercial agency not on the cards
• Consumer: US & UK evolving regulations on consumer subscription contracts
• ESG: Further call for the UK to update its approach to modern slavery

National Procurement Policy Statement – what it means for the public and private sectors

On 13 February 2025, the Government published its National Procurement Policy Statement (‘NPPS’) for England which comes ahead of the Procurement Act 2023 (‘PA 2023’) becoming operational on 24 February.  It was the need to update the NPPS which drove the Government to delay the commencement of the PA 2023 from October 2024 to this February. 

English public bodies are obliged to give consideration to the NPPS in all procurements (save for framework and dynamic market contracts, Defence contracts and exempted contracts). So, what does the revised statement contain? In summary:

• An obligation to have regard to delivering value for money and drive economic growth. Small and medium-sized enterprises (‘SMEs’) and voluntary, community and social enterprises (‘VCSEs’) should be given a “fair chance” to participate in procurements
• A requirement for contracting authorities to consider working across organisational boundaries to deliver social and economic value and enable local and regional growth. Specific reference is made to ensuring suppliers are active in their ESG commitments with anti-bribery, modern slavery, environmental considerations and prompt payment highlighted
• Collaborating to deliver best value (where appropriate, tapping into established frameworks) and ensuring contracts are procured and managed effectively. The Government’s Playbook series of guidance is promoted alongside its free training programme to upskill teams in addition to benchmarking commercial capabilities against professional standards such as
  • the Commercial Continuous Improvement Assessment Framework produced by the Government Commercial Function with NHS England
  • the National Procurement Strategy Toolkit produced by the Local Government Association
  • the Cyber Essentials standard for cyber security
  • the Government Security Function’s guidance on Tackling Security Risk in Government Supply Chains

Other measures promised in the NPPS include:

• starting April 2025, government departments and their affiliates must set spending targets with SMEs and (from April 2026) VCSEs and report progress annually. Regular checks will ensure smaller suppliers are paid within 30 days. See PPN 001 February 2025
• reform of the way social value is taken into account in central government procurements (from 1 October 2025). This includes applying a 10% minimum weighting for social value, advertising local job opportunities (where relevant to the procurement) and for the commitments to be captured in contract terms. See PPN 002 February 2025
• reserved competitions for low value local authority contracts to enable bids from small business and social enterprises
• a Digital Commercial Centre of Excellence bringing together digital and commercial expertise to “make it possible to buy once and well”
• deploying AI where possible to cut bureaucracy
• updating the Sourcing Playbook and consulting on the introduction of a new public interest test for contracting authorities to formally assess at the outset of a procurement whether work should be outsourced or be done more effectively in-house

Key takeaways from these announcements are:

• SMEs and VCSEs should look to the opportunities of contracting with the public sector to grow
• Suppliers to review their compliance and ESG approach as this looks likely to have increased focus in public procurements
• The importance of prompt payment to support supply chains – is your organisation doing all it can in this regard?
• Now is the prime opportunity for public procurement teams to refresh and upskill their knowledge and approach – there is a wealth of guidance from Government to support in this process

UK: Deregulation of commercial agency not on the cards

On 13 February 2025, the Government published its response to last summer’s consultation (launched by the previous government) on the deregulation of the Commercial Agents (Council Directive) Regulations 1993 ((‘CARs’). 

It concludes:

• the CARs will continue in effect without amendment
• there is insufficient evidence to indicate that the freedom to negotiate contracts was restricted and a significant issue

Perhaps unsurprisingly, the responses were “polarised”.  70% of respondents were agents who felt that the CARs function well for them and are well understood (aligning with EU law), offering protections during contract negotiations with principals - who are often larger businesses than the agents themselves.  Whereas some principals and neutrals argued that the CARs restricted the free negotiation of contracts between commercial agents and principals, only apply to goods and not service contracts and are too weighted in the agents favour.

The outcome of the consultation is perhaps no surprise given the current government’s commitment for closer ties with the EU and the benefits of commonality in approach between cross border agent and principal relations. Whilst it may not be welcome news for some principals, the approach under the CARs is now relatively well known, and so confirmation after a short consultation that they will be retained does at least bring certainty.  

The opportunity, however, for Parliament to bring greater clarity to the question of when or how the supply of software may fall within the CARs has been lost. Here, there remains some ambiguity following a series of decisions in the High Court, Court of Appeal and by the European Court of Justice (in a ruling made post-Brexit, on a reference made from the UK pre-Brexit), where – tentatively - the position appears to be that software supplied electronically with a perpetual licence to use it, or on hardware, would be classed as goods and caught by the CARs, whilst SaaS (software as a service) where no perpetual licence exists would not.

Prepared in collaboration with Chris Buddle

US & UK: Evolving regulations on consumer subscription contracts

Subscription contracts, common in digital markets, have faced criticism as many consumers forget to cancel their free trials and end up paying for unwanted subscriptions. To address this, the US already has significant federal and state laws in place and is planning more measures. Meanwhile, the UK is progressing legislative changes to implement similar protections.

Although both jurisdictions are making significant efforts to shield consumers from the downsides of subscription contracts, their approaches differ markedly. Businesses operating in both regions must adapt to these stricter regulations to avoid substantial fines. Staying proactive to ensure compliance includes:

• updating subscription policies
• simplifying cancellation processes
• obtaining clear consumer consent
• reviewing automatic renewal practices to comply with applicable laws

Some of these changes will take time and will incur additional costs that need to be managed by impacted businesses. Keeping an eye on guidelines issued by regulatory bodies will help businesses understand what to expect. Globally, businesses should anticipate similar trends and prepare to adapt.

For more on the key differences in approach between the UK and US see: Consumer Subscription Contract Regulations | Eversheds Sutherland

With thanks to Catherine Detalle, Wendy A. Hansen, Eve England, Ronald W. Zdrojeski and Kirath Bharya

Further call for the UK to update its approach to modern slavery

On 11 February 2025, the Independent Anti-Slavery Commissioner published its Strategic Plan for 2024-2026 (as required under the Modern Slavery Act 2015). The Plan outlines three primary objectives: Prevention, Protection, and Prosecution and emphasises the need to incorporate the perspectives of those with lived experiences into anti-slavery policies and initiatives and enhance our comprehension of modern slavery.

Amongst the concluding list of actions are commitments to:

• strengthen the UK's policy response to forced labour in domestic and global supply chains
• advocate for mandatory human rights due diligence legislation in the UK
• collaborate with businesses to improve compliance with the Modern Slavery Act 2015 and promote best practices
• encourage public bodies to voluntarily adopt the transparency provisions required by modern slavery legislation for businesses
• work with the UK Government, devolved administrations, and the NHS to support and monitor the implementation of key recommendations from the December 2023 Review of the risk of modern slavery and human trafficking in NHS supply chains
• advocate for an update to the UK's 2014 Modern Slavery Strategy
• prioritise prevention in the development and implementation of modern slavery strategies across the UK
• promote collaboration across the government to ensure modern slavery is considered in the development of broader policies such as safeguarding, poverty, and migration

This Plan broadly echoes the calls from the House of Lords Select Committee last year for the Government to review its approach to Modern Slavery and legislation or be left behind the EU and international measures on this subject.  To date, the Government have committed to review how legislative and non-legislative measures will best tackle forced labour and increase transparency in supply chains (albeit with no timetable).  An inquiry into Forced Labour in UK Supply Chains closed on 14 February (so that report will be published in due course), and with this strategic plan, it appears this is a topic  we will hear more on in the coming year (warranting a mention in the 2025 King’s Speech perhaps??)