Procurement Bill [HL]

Lord Davies of Brixton Excerpts

Committee stage
Wednesday 13th July 2022 Grand Committee

[Lord True (Con)]

I agree with the noble Lord, Lord Coaker. This has been an extremely interesting and thought-provoking debate, and I thank noble Lords for it.

There have been various strands in this debate, one of which is the last one alluded to by the noble Lord. There appears to be a suspicion in some minds about whether this lies in the may/must thing and whether there will be a national procurement policy statement. We have published a draft statement, which I will come back to later in my speech. I will not read any of it out, because the noble Lord, Lord Hunt of Kings Heath, was kind enough to read out some of it—although I do not think that he quoted this specific bit—about

“contributing to the UK Government’s legally-binding target to reduce greenhouse gas emissions to net zero by 2050”.

I know that noble Lords are saying, “Oh well, yes, but, et cetera”—

[Lord Davies of Brixton (Lab)]

The Minister referred to that document as a “draft statement”. My understanding is that it is a non-statutory document, which is something slightly different. Is it a draft of what we are going to get later this year?

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[Baroness Worthington (CB)]

I remember well when we were debating the then Climate Change Bill how important it was to include a list of conditions that needed to be taken into account when setting the climate change budgets, including economic competitiveness and all sorts of other things. All we are asking for here is to have a reciprocating set of policies to ensure that the same things happen the other way around. I do not mean to be provocative, but there is a purpose for having a Government, and it sometimes feels as if the people in government do not really want to be there. If you are in government, you have levers, so use them.

[Lord Davies of Brixton (Lab)]

On a serious note, I add the example of pension schemes. The Government have laid a series of responsibilities on pension schemes to have regard to matters such as climate targets. The Government have accepted the principle of doing it this way and the Minister seems to be ignoring that.

[Lord True (Con)]

In the real world, we are dealing with a Bill which relates to contracting authorities. The counterparties to contracting authorities are would-be suppliers. The more one lays a duty on contracting authorities to do something, the more a small business which is seeking to enter the procurement process will have to come forward with pages and pages of compliance documents. Noble Lords may think that is not the case. On a personal note, my wife, who is far greater than me, runs a small business. When she started, the compliance requirements were about an inch thick, but now they are much thicker. The danger is always that, in the desire to do good, one ends up creating barriers to entry.

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[Lord Scriven (LD)]

My Lords, I have added my name to Amendment 528C, which my noble friend Lady Brinton has already spoken to. Like her, I am a little perplexed about the Government’s view, according to the Minister, that public sector procurement should be based on value for money and that there should be a co-ordinated approach to public sector procurement so that businesses understand the rules in which they are working but also have flexibility, yet the health service seems to be excluded from that.

For the convenience and understanding of the Committee, we need to look particularly at Section 79 of the Health and Care Act 2022, which says:

“Regulations may make provision in relation to the processes to be followed and objectives to be pursued by relevant authorities in the procurement of”


services. Relevant authorities in this legislation are: NHS England; NHS England foundation trusts; an NHS trust established under Section 25; interestingly, a combined authority, which is a combination of local authorities; and a local authority in England. A relevant authority is not just an NHS body; it is a relevant authority if it is purchasing or procuring

“(a) health care services for the purposes of the health service in England, and (b) other goods or services that are procured together with those health care services.”

Ministers have said previously from the Dispatch Box that all that the provision applies to is the provision of healthcare services in England. They have not spelt out that it also applies to other goods or services that are procured together with those for healthcare services. If, for example, a care village was being procured where there was predominantly a capital spend on housing and where services for healthcare were to be procured at the same time, which set of procurement rules would apply? Would it be the rules within this Bill, those within the Health and Care Act, or a combination of both?

It is important that Section 79 of the Health and Care Act says that

“Regulations under subsection (1) must, in relation to the procurement of all health care services to which they apply, make provision”


for the following:

“(a) ensuring transparency; (b) ensuring fairness; (c) ensuring that compliance can be verified; (d) managing conflicts of interest.”

There is nothing about value for money, yet the Minister has said repeatedly at the Dispatch Box in this Committee that the Government’s view is that public procurement should be based on value for money. If that is the view of the Government—not of the Cabinet Office, but of the Government—why is value for money not in the Health and Care Act as a factor for public procurement of healthcare provision in England and other goods or services that are procured together?

There is a gaping hole which is not clear. It is so deep that I do not think the Minister can explain the contradiction between this Bill and the Health and Care Act in terms of procurement provision. So, particularly on joint procurement in something like a care village, which provision would apply? If the Minister cannot answer that very clearly from the Dispatch Box, I feel that this is going to come back on Report. Clearly, there is confusion not just in terms of legislation but for those businesses which wish to be part of a contract for a joint provision between health and other services.

My final question is this: why is it that combined authorities in a local authority in England are in the Health and Care Act but it says here that local authorities will be driven by the provisions in this Bill? Which one would a local authority have to adhere to in terms of the confusion that is around it?

[Lord Davies of Brixton (Lab)]

My Lords, I want to make a point about proportionality. It arises under the amendment in the name of the noble Lord, Lord Aberdare, and runs through much of the Bill. In a sense, I am asking a general question but hanging it on the hook of Amendment 120. It is a point of some concern to small organisations; we are talking here about small charities and local voluntary organisations. In much of the debate, people have referred to businesses and enterprises, but this will also apply to local voluntary organisations and charities, which clearly do not have the resources or staffing to deal with the scale in the way that an organisation such as Oxfam, for example, could. They have their local job to do; to a certain extent, spending a lot of time drawing up a bid to provide a service will be a diversion from their work. Proportionality must have a role in assessing a contract. I am intrigued and ask the Minister to give some indication of an overall perspective on proportionality as it affects local organisations, charities and voluntary organisations.

[Lord Wallace of Saltaire (LD)]

My Lords, with apologies for missing some of this debate, I will speak briefly to my Amendment 129, which relates to Clause 22 and the incompatibility of subsections (2) and (5). Clause 22(2) states:

“In setting award criteria, a contracting authority must be satisfied that they … are sufficiently clear, measurable and specific”.


Clause 22(5) then sets out those “clear, measurable and specific” elements. In paragraphs (a), (b) and (c), it is indeed specific: they deal with

“the qualifications, experience, ability, management or organisation of staff”

et cetera. However, over the page, Clause 22(5)(d) sounds as if the drafter was late, tired, exhausted and gave up. It refers to

“price, other costs or value for money in all the circumstances.”

I am sorry that the noble and learned Lord, Lord Hope, is not here to tell us how one might legally interpret “in all the circumstances”.

What we have drafted as an amendment is one that is as specific as paragraphs (a), (b) and (c) on what those circumstances might be. It sets out the standard phrases that have been used in the Government’s previous documents and draft statement. I merely suggest to the Minister and those behind him that paragraph (d) simply is not fit for purpose as it stands. The phrase “in all the circumstances” should not be in a Bill of this sort. It either needs to be cut or to be expanded to the sort of specificity that (a), (b) and (c) include. My amendment suggests what that might be.

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[Lord True (Con)]

My Lords, I thank noble Lords for another interesting debate that I have enjoyed listening to. Some thoughtful points have been made. I must say at the outset that Ministers are responsible for many things but we are not responsible for groupings. We just get told what we must do. It would have been quite possible, through the usual channels, to agree to de-group those amendments and put them separately but, as we say, “Them’s the breaks”.

Notwithstanding the illogicality that has been pointed out, I will address what is before us. By the way, I thank the noble Baroness, Lady Hayman of Ullock, for what she said about the official Bill team, who support us all in Committee on the Bill. I fully endorse what she said. Many of them are here to hear it; if they are doing their job, they will probably notice it in Hansard but, none the less, I will make sure that they do.

Amendment 101A, 528A and 528B, tabled by the noble Baroness, Lady Hayman of Ullock, and the noble Lord, Lord Coaker, and Amendment 528C, tabled by the noble Baroness, Lady Brinton, and the noble Lord, Lord Scriven, cover health and procurement, as we just discussed. I candidly acknowledge that, sometimes in life, there are minor frustrations. I know that the Committee is understandably wrestling with the issue. My noble friend Lady Scott—I am sorry, I always call her Jane—tried to answer the question asked by the noble Baroness on two occasions but I will come on to say what we have tried to do about this; indeed, I will now read out the answer that I have been given.

These amendments would significantly extend the rules in Clause 18 by imposing additional requirements on authorities to have regard to a range of health sector-specific issues when awarding contracts for the research, development or supply of health services or health products. As we have already touched on at various points in the debate, contracting authorities need to make procurement decisions on a case-by-case basis. It would not be appropriate to include wider policy objectives, such as those suggested, in primary legislation. This could jeopardise the achievement of value for money and make it harder for small businesses to bid for these health services and health products contracts.

Amendment 528C would override the healthcare procurement regulation-making powers set out in the Health and Care Act and make the Bill apply instead to all healthcare purchasing—the challenge set out by the noble Baroness, Lady Brinton. The position is that the Department of Health and Social Care is currently preparing regulations, following public consultation, which will implement a new provider selection regime specifically designed for the procurement of healthcare services delivered to individual patients and service users. Obviously, noble Lords will have the proper opportunity to scrutinise and debate the implementation of these powers when they are laid in Parliament, through the affirmative procedure.

On the question raised by the noble Lord, Lord Scriven, the recent DHSC consultation on proposals for its new provider selection regime acknowledges the need for integrated procurement for health and social care services. Existing procurement legislation recognises and provides for mixed procurement approaches, and relevant details will be included in the DHSC’s forthcoming regulations and guidance. Parliament will have the opportunity to scrutinise these under the affirmative procedure.

I know that noble Lords have said that they not entirely satisfied with this. It is the situation that clinical services for individual patients are with the health service. My noble friend highlighted—as I said on day three in Committee—that we would write to the noble Baroness, Lady Brinton, on how the interface between the Procurement Bill and the health Act will work in practice, I reassure noble Lords that that is being prepared. We will seek to pick up many of the questions that noble Lords have asked on each day of the debate so far, in this area. That will be put before your Lordships before we get to group 14—I hope it is not group 13—or whenever we get to it. It is being done, but I have heard what noble Lords have said. I can tell the Committee that I am also writing personally to the Secretary of State for Health to seek further clarity on when the regulations will be available for scrutiny. I have heard the requests from your Lordships in this area.

I turn now to Amendment 118 tabled by my noble friend Lord Lansley, whose appearance varies today—I will not hurt him by saying it is improved today. This amendment would modify Clause 20 to require the tender notice to provide a period during which “suppliers may ask questions” and have the answer provided “to all potential suppliers”. Under the Bill regime, there is nothing preventing potential bidders asking for further information or clarification of matters within the tender notice or associated tender notice documents; in fact, this is standard practice in procurement procedures. There is a risk that including a specific provision to this effect might suggest that questions cannot be asked outside that window. We would not want to suggest that there comes a point at which interested suppliers can no longer ask questions of contracting authorities. With that in mind, I hope I have reassured my noble friend—when he comes to read this section—that the Bill already allows for the circumstances he wishes to see.

Amendment 119 and others relate to the Prompt Payment Code. Amendment 119 seeks to require being a signatory to the Prompt Payment Code to be used as a condition of participation in the award of a public contract. We are committed to ensuring prompt payment to suppliers. However, requiring that every potential bidder becomes a signatory to the Prompt Payment Code to participate in the procurement would be too onerous a requirement. Therefore, while we encourage suppliers to sign up to a Prompt Payment Code, we do not consider it proportionate for us to legislate for it in this Bill.

Amendment 120, tabled by the noble Lord, Lord Aberdare, would extend the consideration of whether conditions are proportionate for the purposes of subsection (1) to include the accessibility of the contract to as broad a range of suppliers as possible. This is an abiding theme in your Lordships’ Committee. The primary purpose of Clause 21 is to ensure that the suppliers that participate in the procurement are capable of delivering the contract, but also that these conditions are restricted to only those which are needed to deliver the contract.

The noble Lord asked what we are doing to stop unreasonable requirements of SMEs and others, and I include in this broad range social enterprises and charities. As I say, the intention of Clause 21 on conditions of participation is to prohibit disproportionate or unreasonable requirements being put on contracts that would end up excluding SMEs. The authority must be satisfied that conditions of participation consider only the legal and financial capacity and technical ability of the supplier to perform the contract in question, and that there are proportionate means of doing so. We will look carefully at the noble Lord’s words. That is the intention behind Clause 21, but we will bear in mind what he said.

On the previous day of Committee, we discussed the importance of creating opportunity for SMEs and others. There was a broad ask from your Lordships. We think the clause as drafted helps with that, as conditions are pared back to focus on delivery. I have already committed to holding an engagement during the Recess about what more we can do to support SMEs. In the meantime, we consider that this amendment is not required, but we will give it some reflection. Is “reflection” a parliamentary word? It sounds like a word that one of the right reverend Prelates might use.

[Lord Davies of Brixton (Lab)]

Will the Minister make it clear: when he says SMEs, does that embrace small charities and voluntary organisations, which I know are anxious about their situation under the process?

[Lord True (Con)]

Yes, my Lords, I believe I did say that. In parliamentary terms, I am reiterating what I said. SMEs cover, for the purpose of this, voluntary organisations, social enterprises and charities. I think I have made clear my profound personal belief that these are part of the vital warp and woof of our society.

Amendment 121, proposed by noble Lord, Lord Wallace of Saltaire, aims to ensure contracting authorities take reasonable steps to verify that the supplier and any subcontractors are able to deliver the contract. Although we absolutely agree that contracting authorities need to do this in practice, we do not think it is necessary to add this provision into legislation, as the very operation of procurement is geared to this—the setting of conditions of participation, award criteria and evaluation processes, to name a few. While, as part of the Bill, we are improving supply chain visibility, we do not want to overengineer—noble Lords must have heard me say this too many times—legislative requirements for contracting authorities to investigate these matters in every procurement process as a box-ticking exercise.

Amendment 122A, which was proposed by the noble Baronesses, Lady Thornton and Lady Bennett of Manor Castle, and supported by others, would give the Minister the ability to exempt contracting authorities from the tests that must be satisfied when setting award criteria in order to allow policy priorities to take precedence to create additional public value. The Delegated Powers and Regulatory Reform Committee might have something to say about such an amendment if it were put forward by a Minister. It sounds very much as if certain rules need not apply in this particular place or contract. It certainly has a whiff of the dispensing power that the Glorious Revolution was designed to do away with, although I know noble Lords will say there is too much Henry VIII in too much legislation. So, in a technical sense it would be a difficult thing to do, but we think it would be undesirable.

We want all award criteria to be clear, measurable, relevant, non-discriminatory and proportionate to avoid unnecessary burdens on suppliers. We believe that this, together with our plans to publish a national procurement policy statement, which we debated earlier, and the requirement for authorities to maximise public benefit, will be sufficient. I have heard scepticism, but we believe that is the case.