Procurement Bill [HL]

Baroness McIntosh of Pickering Excerpts

Committee stage
Monday 4th July 2022 Grand Committee

[Baroness Noakes (Con)]

I shall finish by offering a comment on another amendment in this group. Amendment 5, in the name of the noble Lords, Lord Wallace of Saltaire and Lord Fox, is a bit like déjà vu all over again.

The Member’s explanatory note says it is probing why ARIA is excluded from the scope of the Bill. The noble Lord, Lord Fox, is well aware from his involvement in the passage of the Advanced Research and Invention Agency Act that it is excluded because Parliament has already decided to exclude ARIA from procurement regulations. I know he did not like it then and he clearly does not like it now, but it is clear government policy that has been approved by Parliament in order that ARIA can be a nimble research body, free to pursue its aims without being shackled by a lot of unnecessary bureaucracy. Nothing has changed since that Act was passed.

[Baroness McIntosh of Pickering (Con)]

I am delighted to follow my noble friend with a few brief remarks. I say at the outset that I regret that I was unable to contribute to Second Reading. I shall limit my remarks today to my arguments probing why Clause 2 and Schedule 2 are part of the Bill. This raises a more general question as to why we actually need the Bill, as I understand that we are already in the GPA. We have had a number of Statements about this and discussions in this regard with the Minister responsible for trade, my noble friend Lord Grimstone. I would be grateful if my noble friend could elaborate on what I am about to put to him.

As I understand it, the purpose of the Bill is twofold: first, to reform the UK’s public procurement regime following our exit from the EU; and, secondly, to create a simpler, more transparent system that better meets the country’s needs rather than being based on transposed EU directives. I understand that we are to have a separate exercise where we go through all the retained EU law, when we come to what is euphemistically known as the Brexit freedoms Bill, to decide which of those retained EU directives we may wish to keep.

My understanding is that much of what is before us today, as my noble friend has explained, is already covered by the World Trade Organization Agreement on Government Procurement—the GPA, as it is called. The aim of that agreement is to mutually open government procurement markets to those party to that agreement. The threshold values are, curiously, almost identical to the thresholds that had to be met through our membership of the European Union, which was roughly €136,000. We are now looking at £138,760 as the threshold for the general agreements for goods; for services, it is the same amount and, for construction, it is £5 million-plus.

As my noble friend Lord Lansley rightly assumed, I am trying to ascertain through this debate the way in which public contracts can be defined. I am assisted in this regard by paragraph 16 of the Explanatory Notes, which sets out that:

“The Public Contracts Regulations 2015 will be repealed and new rules on procurement will be set out in the new regime. Most central government departments, their arms-length bodies and the wider public sector including local government, health authorities and schools will have to follow the procedures set out in the Bill in awarding a contract with a value above set thresholds to suppliers.”


If, for example, there is a public procurement contract for food, for vegetables and meat, for a local school, hospital, prison or some other public body, what is the procedure that will have to be followed after the adoption of the Bill and, more specifically, the regulations that will flow from it?

That is the specific question that I would like my noble friend the Minister to address. How will public procurement for contracts over the threshold be treated? For the purposes of the Act, will they be treated differently from those that already apply under the GPA? How will the contracts apply for those that are under the magic threshold of £138,760? In effect, will the same procedures apply as before we left the European Union? I am particularly interested in food, fruit and vegetables, for the reason that we were all told this was going to be a benefit—a Brexit dividend from leaving the European Union—but I am struggling to see how this dividend will be delivered in this regard. When these contracts are put out for tender, whether they are above or below the threshold, how will that procedure apply? Can those that are under the stated threshold be awarded to local suppliers without being put out for international tender, or could we have Spanish or, indeed, African companies applying to deliver these?

I admit to being confused, because we were told that this was something that would happen after we left the European Union, and I am still struggling to see how these contracts are going to happen. We were told that it would boost local growers in this country to have these contracts put out for tender once we were no longer in the European Union. I look forward, with great anticipation, to my noble friend the Minister’s reply.

[Lord Fox (LD)]

My Lords, up to her final couple of sentences, I was going to recommend that the Minister listen very closely to the advice from the noble Baroness, Lady Noakes. This group of amendments essentially carries on the theme of what is in and what is out, which is the existential theme of almost everything we are debating that is not a government amendment. In that respect again, it is a welcome set of amendments and I think, all joking aside, that the noble Baroness’s points are really important points for the Minister to clear up. I do not understand where we are on this and if the noble Baroness, Lady Noakes, does not then it probably is not understandable.

--- Later in debate ---

[Lord True (Con)]

I am not sure that the First Minister is looking for a federation.

Where a procurement is being undertaken by one or more local authorities that are in the business of carrying out procurement for others, as when they form a consortium to undertake several procurements over a period of time, those authorities would constitute whatever we call it—a centralised procurement authority, for the purpose of the Bill—without the need for the amendment. Conversely, where a group of local authorities come together to undertake joint procurement on a one-off or ad hoc basis, they are entitled to do that as joint procurement under Clause 10(4)(a).

There are other aspects in relation to local authorities. The Government have a clarifying amendment in the megagroup that comes up next, which I hope will also give some reassurance to noble Lords opposite that we want freedom for local authorities—although they will have to have regard to the priorities and national procurement strategy, as any other body will. Ultimately, they will remain accountable to their electorates for their own procurement decisions.

I was asked about how integrated care boards fit into the Bill. I understand that we are still in discussion with the Department of Health to agree what matters are within the health and care procurement rules. This will be debated later on in the Bill; I hope to come forward with more clarification on that.

Finally, a lot of general matters were raised relating to Clause 2, not only by my noble friend but by the noble Lord, Lord Coaker, opposite. My note-taking was running out a bit but I will obviously pick up as much as I can of the remarks and write further.

[Baroness McIntosh of Pickering (Con)]

I was delighted that the noble Lord, Lord Coaker, was able to pursue some of things that I touched on. What concerns me most, particularly given what my noble friend the Minister said about the earlier amendments in this group, is that I am at a loss to understand why we need this Bill if so much of it is already set out in the GPA or in existing law. Can my noble friend explain the role of the thresholds, particularly in the provision of food to public authorities?

[Lord True (Con)]

My Lords, we need the Bill because we need a national procurement structure. I hear what my noble friend says but there has been agreement across the Front Benches and from the Liberal Democrats that we need to establish a framework that will last. People may have different views on whether it diverges enough or not at all from the arrangements we have—doubtless that will be explored—but we need to have such a framework and a body.

Clause 2, which is probed, classifies three types of contracts that are public contracts. The first category covers contracts for the supply of goods, services and works, provided that they are not subject to an exemption. I was asked about how each of those exemptions was arrived at. I cannot answer on all of them here but I can certainly provide information to the noble Lord. The second category covers frameworks—that is, contracts providing for the future award of other contracts. The third is concession contracts, which we will discuss.

I turn to the concerns around what Schedule 2 is about. It sets out the types of contracts where the contracting authority does not need to apply the rules for the contract award procedure; they are exempted from the procurement rules. The Bill needs to ensure that contracting authorities have the freedom to carry out the most appropriate procurement where the rules in the Bill might otherwise be unsuitable, for example where it is necessary to protect national security interests and the procurement is too sensitive to advertise; where the contract award procedures are governed by other legislation, as in rail services, which are currently awarded under a separate regime operated by the Department for Transport; or where it is necessary to protect the Government’s ability to make public policy interventions, such as on broadcasting content.