Public Procurement (International Trade Agreements) (Amendment) Regulations 2022

Baroness McIntosh of Pickering Excerpts

Wednesday 15th June 2022 Grand Committee

[Lord Lansley (Con)]

My Lords, I am very glad to have the opportunity to say a few words about these regulations and I thank my noble friend for introducing them so clearly. As somebody who laboured long and hard on the Trade Act 2021, it is always a pleasure to see the powers being used. There may not be many such further events but it is interesting to see it being used in this case.

I must confess that the reason I looked at these regulations was that, as my noble friend will recall, at Second Reading of the Procurement Bill I raised the interaction between that legislation and the Trade (Australia and New Zealand) Bill, which had, of course, been introduced at the same time in the other place. I looked at this instrument and thought, “How does this relate to the Procurement Bill?” Like the Australia and New Zealand Bill, as far as I can see, the Procurement Bill will supersede these regulations when it becomes law. Schedule 9 to the Procurement Bill incorporates the UK-EFTA agreement into the list of treaty state suppliers. So far, so fairly straightforward: we need these regulations to give effect to the agreement in the intervening period.

However, there is an issue about what these regulations do, because they also amend public contract, concession contract and utilities contract regulations to include the further provision relating to abnormally low tenders. It is a question of whether the price or costs take into account the grant of subsidies. First, I ask: does the preceding EU-EFTA economic area agreement have the same language? It seemed surprising if it did, on the face of it, because existing regulations, which are part of the structure of EU regulation, already take account of whether—to cite Regulation 69 of the Public Contracts Regulations, for example—the abnormally low tender price is because of the possibility of the tenderer obtaining state aid.

I should have thought that, in the EU context, the question of state aid and grant of subsidy were regarded as effectively the same thing. I suspect, therefore, that EFTA countries are saying that the words “state aid” do not necessarily have the same meaning in United Kingdom in future as “state aid” did in the EU in the past. I may be wrong about that, but I should be interested to know whether that is the case.

Anyway, this additional provision in the regulations changes, for example, Regulation 69 of the Public Contracts Regulations, which relates to abnormally low tenders. I thought, “Let’s see how this is incorporated into the Procurement Bill”, but I cannot find it. So, my other question is: how will that Bill incorporate the provisions of, for example, Regulation 69 relating to abnormally low tenders into the structure of our regulation in future? I am happy to be guided by my noble friend on that, not least because it will no doubt give us an opportunity to learn a bit more about how the Procurement Bill itself will work in future. Subject to those questions, I am glad to take the opportunity to welcome the regulations and support my noble friend.

[Baroness McIntosh of Pickering (Con)]

I, too, am pleased to speak to some of the issues before us this afternoon and thank and congratulate my noble friend on bringing forward the regulations. My noble friend Lord Lansley has eloquently addressed a number of issues on the relationship between this instrument and the public procurement Bill. But there is also the broader context of our new relationships with the EU and, now, with the three countries before us this afternoon. What is generally understood by “state aid” and has our policy towards them changed in that regard?

Perhaps the thing that concerns me most is this. My noble friend spoke about the GPA, the global procurement agreement to which we have signed up, and mentioned that it is worth £1.3 trillion to the UK economy. When the Trade Bill was passing through—I also took an interest in that at the time, and my noble friend Lord Grimstone spent hours trying to allay our concerns in this regard—it was curious that any public service was obliged to declare a contract worth, I think, €130,000 and to put it out for tender.