Procurement Bill [HL]

Baroness Scott of Bybrook Excerpts

Committee stage
Wednesday 6th July 2022 Grand Committee

Moved by

[Baroness Scott of Bybrook]

20: Schedule 2, page 81, line 6, leave out sub-paragraph (2)

[Baroness Scott of Bybrook (Con)]

My Lords, I start by clarifying what utilities are covered in the Bill. Utilities are defined in it as public bodies, public undertakings or certain private undertakings that carry out utility activities. Public undertakings differ from public bodies in that they do not have functions of a public nature; their activities are more economic and commercial in nature. While it is no longer one, before the Government sold their shares in 2015 Eurostar International Ltd was a public undertaking.

The Bill covers private utilities only where they have been granted a special or exclusive right to carry out a utility activity. These are rights that have been granted by a statutory, regulatory or administrative provision and that substantially limit other entities from carrying out those activities. Rights are not special or exclusive when granted by following a competitive procedure or where the opportunity was adequately publicised and the rights were granted on the basis of an objective, non-discriminatory criterion.

Private utilities which enjoy “special or exclusive rights” are effectively in a monopoly position and therefore they could, however unlikely it is, engage in preferential treatment that, for example, favours their own affiliates or strategic partners and discriminates against other suppliers bidding for the contracts. The Bill applies to utilities only where they are carrying out the utility activities set out in Schedule 4: specifically, gas and heat, electricity, water, transport services, ports and airports, the extraction of oil and gas, and the exploration for or extraction of coal or other solid fuels.

The two government amendments in this group are minor and technical in nature. Amendment 20 to Schedule 2 is consequential on government Amendment 231, which amends Clause 35(6) to ensure a single definition of utility is applied to the whole Bill. In Schedule 2, paragraph 28(2) is therefore no longer required. The definition at Clause 35(6) is exactly the same as that contained in the deleted sub-paragraph (2).

Amendment 24 amends Clause 5(1) to define a utilities contract as a contract

“wholly or mainly for the purpose of a utility activity”.

The addition of “wholly or” is to reflect the reality that a utility contract can include solely or predominantly utility activities. This amendment to the terminology ensures consistency with the approach to mixed procurement used elsewhere in the Bill; for example, with Clause 8(1) on light touch contracts, where the same principle applies. I beg to move.

[Lord Purvis of Tweed (LD)]

I am grateful for the Minister’s explanations. Her colleague the noble Lord, Lord True, previewed some clarification regarding the Post Office, so perhaps she was forewarned. I have two questions for clarification, further to what she said.

The more specific question relates to freeports, which I raised in the technical discussion this morning. I would be grateful if the Minister could respond now, but if not I would be happy if she does so in writing. There are a number of areas of government policy—I am not debating the rights and wrongs of this—which have activities linked to the provision of utility services but which are not directly, wholly or mainly a utility service. I am concerned, for example, about whether the more commercial activity of freeports, which are government policy and have the benefit of being linked with a utility but do not provide utility services, may well be exempted. That would not bring about the level of transparency in the thresholds that I believe there should be. I am still scratching my head about the status of freeports.

The element raised earlier by the noble Lord, Lord True, on postal services is concerning. I am particularly interested in the status of Post Office Ltd. The noble Baroness, Lady McIntosh of Pickering, raised Parcelforce. I understand that Royal Mail and Parcelforce have a relationship with Post Office Ltd, and they provide different services. I understand that the Post Office is not considered a Schedule 4 utility, but clarification on whether it is covered under the public undertaking elements would be helpful. I ask because postal business of the Post Office is included under the procurement chapter, referred to by the noble Lord, Lord True, and annexe 16A of the UK-Australia agreement, as are postal services, which relate to letters, parcels, counter services and other such services. The classification under the WTO which the annexe uses links with the pick-up, transport and delivery services of letters, newspapers and journals, whether for domestic or foreign markets. I am not entirely clear about the status of that when it comes to Royal Mail services. They are covered within the procurement chapter of the Australia agreement, but I am not sure of their status in this Bill.

This speaks to the wider point that we are now in the realm of having to look at each of the 24 agreements in the schedule. Any authority or likely bidder for any of these works will have to study all these FTAs and all the procurement chapters, in addition to the EU-UK TCA, this legal framework, and the Scottish and Welsh ones. At the very least, we are now replacing one system with 25—or more likely with 27. That means it is not a more efficient way of covering it.

Finally—I asked earlier, because it is not clear in the impact assessment, and Ministers might write to me on this—now that the Government are clarifying their position in the Bill on those that are covered, not covered and the exemptions, I would like to see an update on the information about the likely number of contracts and the values in all these categories. I would be grateful for that information and for clarification on the Post Office.

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[Baroness Hayman of Ullock (Lab)]

My Lords, I must say, I find the utilities section of this quite confusing in some areas. The more clarification we can get from the Minister, the better. It is not just this bit; it is the fact that it is cross-referenced a lot right across the Bill and is impacted by so many other pieces of legislation, including internationally.

We talked with officials about the Australia trade agreement this morning; the noble Lord, Lord Purvis, raised this. I am still slightly confused as to how that all links together. Rather sadly, after the discussion, I went and found the relevant parts and read them. The Bill talks about universal service obligations, postal monopolies, exclusive suppliers and specified collection, transport and delivery services. I know that the Minister is not able to come back to us on this now but I would appreciate some kind of written explanation of how this all works together and what the implications are of having that kind of reference to postal services in a trade agreement. What impact does that have on future procurement legislation? Will the Procurement Bill have an impact on future trade agreements in this area? Personally, I find this quite confusing; it would be extremely helpful to have it laid out in a crystal-clear fashion so that we do not end up with this kind of confusion and the debates we are having.

I will not repeat all the things that noble Lords said when they talked about having more clarification on Schedule 2. I will just briefly come back to cross-referencing throughout the Bill. In the previous debate, we talked about the committee report, which again mentions Schedule 4, the utility activities exposed to competition, the provisions of the WTO agreement—the GPA—and so on. For me, a lot of this is about having a clear understanding of which utilities lie in this group and which lie in that group; which utilities will have to follow certain rules; which will be exempt; and how they will be exempt. I would appreciate proper clarification on all those areas because this is a lot to take in; a lot of it needs to be right as well.

I appreciate that I have asked the Minister to do quite a complicated task but, in Committee and certainly ahead of Report, that sort of information and clarification would be extremely helpful.

[Baroness Scott of Bybrook (Con)]

I thank noble Lords. We have listened—I thought that we explained the Australian postal services to the noble Lord, Lord Purvis, in our debate on a previous group—but obviously further questions still need to be addressed. As the noble Baroness, Lady Hayman, clearly said, the issues of utilities’ groupings and the rules that apply to each group are not yet clear enough. I know that will take extra time for everybody but I suggest that we pull together another meeting purely on utilities and their interaction, particularly with the trade agreements that are in place now and future trade agreements that could be in place.

At the same time, I remember freeports coming up in the first Committee debate. I do not have any further information but we will get that information and discuss it. If required, we will send a letter afterwards confirming everything we have discussed so that noble Lords have that in their packs.

I have good news for the noble Lord, Lord Wigley. I can assure him that this Bill will not change anything from the current regime with regard to Welsh water. I will not try to say it in Welsh because I am not very good at it. I hope that this assures him that everything is fine in Wales.

I think that the noble Lord, Lord Berkeley, brought up freeports on the first day of Committee. We will invite him to have a discussion on that.

These were minor and technical amendments that seem to have grown into something much bigger but they serve to clarify the Bill and ensure consistency on the provision of utilities contracts. I therefore hope that noble Lords will support them.

Amendment 20 agreed.

Procurement Bill [HL]

Baroness Scott of Bybrook Excerpts

Committee stage
Monday 11th July 2022 Grand Committee

[Lord Coaker (Lab)]

My Lords, good afternoon. When the noble Baroness, Lady Noakes, leads a group of amendments, I often end up agreeing with her; it is a bit of a surprise sometimes. Amendment 30, which the noble Baroness has moved, goes to the heart of it, as do all the amendments, because of the lack of clarity about what Clause 8 really means and what is meant by light-touch contracts. It is a really important job of this Committee to try to tease out a little bit more detail.

As the noble Baroness, Lady Noakes, probes in her amendment, why are they not more narrowly defined? There is also an argument for asking why they are not more widely defined. I think the noble Baroness—she will no doubt correct me if I am wrong—is seeking to understand the Government’s thinking and how they have arrived at their conclusions. I think that is what all the various amendments from the noble Lord, Lord Wallace, the noble Baroness, Lady Bennett, and so on, are about.

In speaking to these amendments, I too am seeking clarity from the Government on what this clause means. I will start with the most obvious point. I have read the Library briefing, which refers to the Government’s own memorandum to the Delegated Powers and Regulatory Reform Committee on light-touch contracts, and will quote a couple of things that I think are relevant to all the amendments in this group, including lead Amendment 30 from the noble Baroness, Lady Noakes:

“The light touch regime is a facet of the existing rules … and has fewer rules regulating how a procurement is conducted for these contracts. This is reflected in the bill by a series of exceptions of obligations under the procurement regime for the relevant contracts.”


I will be frank: what does that actually mean? Which rules are not applied? There was one set of rules before, under the light-touch regime, which at one point the Government were not going to include in the Bill. That then moved to light-touch contracts, but we are told by the Government that there are fewer rules.

It would be helpful to know what the difference is. What are the fewer rules which the Government have explained to the Delegated Powers and Regulatory Reform Committee? The noble Lord, Lord Wallace, made the point that what we are all struggling with is that Clause 8(1) says what “light touch contract” means and then that it will all be done by regulation. In fact, it is a bit like knitting fog to try to understand exactly where we are coming to and what we are doing.

The Government also said in their memorandum to the Delegated Powers and Regulatory Reform Committee, which, again, is relevant to all these amendments:

“Whilst the scope of what is to be included in the power is known, it is not practicable for the bill to include a long list of detailed CPV codes to indicate which categories of contracts may benefit from the light touch regime. In addition, both CPC and CPV codes may evolve over time, which would … require amendment to the bill. The power will be used to ensure that the scope of what is included with the light touch regime does not extend beyond what is permitted for the UK by reference to the GPA and/or other international trade agreements.”


Again, we are trying to understand what that really means for the light-touch regime which the Government are seeking to bring in as a result of Clause 8 and associated regulations. Some clarity on that would help to answer the questions from the noble Baroness, Lady Noakes, about why it is not more narrowly defined and why it is defined in the way it is. That would help us to understand the Government’s thinking behind much of the clause.

The amendment from the noble Baroness, Lady Noakes, gets to the heart of what we are discussing: how the Government have arrived at their position. However, in particular, Amendment 34 from the noble Lord, Lord Wallace, and the noble Baroness, Lady Bennett, raises a very important point about ensuring that light-touch contracts will involve various other services and bodies and that they are properly considered for such contracts.

Time and again, at the heart of previous groups, this group, and no doubt groups of amendments to come is a general debate on what a Procurement Bill should or should not include and how far the Government should or should not interfere with the operation of the market. What the noble Baroness, Lady Noakes, is trying to get at, and what I believe is really important, is some of the ways in which this clause has been put together, so that we understand what exactly a light-touch contract is and the difference between the light-touch regime and the light-touch contracts in this Bill, and the Government’s thinking on what regulations may come forward in due course so that, as a Committee, we can consider whether they have got the balance right and whether this makes sense. The noble Lord, Lord Wallace, made the point that this clause is wishy-washy—one bit says this and another says that—and the Government’s get-out clause all the time is that it will be sorted out by regulation. This really is not the way forward for primary legislation.

[Baroness Scott of Bybrook (Con)]

My Lords, I will start with a question from the noble Lord, Lord Coaker. I will probably not answer it in a way he understands, but I will give it a go and we will probably have more discussions on this as we go forwards.

The services currently identified via these CPV codes, as the noble Lord talked about, are outside the scope of the GPA, albeit within scope of some national treatment provisions in certain international agreements. As such, these could arguably be subject to even less regulation, but we think we have the balance right to ensure competition where possible, value for money, and appropriate transparency and fairness. That is the background to this. The Green Paper proposed removing the separate light-touch provision entirely, but it was clear that this was a popular concept, recognising that these types of services warrant special treatment with a light touch. If they were subject to the full regime, we would be adopting a more stringent approach than that taken by any other European country. That is why we have put them in, and we think that is correct. I am sure we will have more discussions on that.

Before we turn to the amendments, because they were slightly separate, I will answer the questions of the noble Baroness, Lady Brinton, and the noble Lord, Lord Wallace, on how this Bill interacts with the Health and Care Act. At Second Reading, concern was raised regarding the interaction between the Health and Care Act 2022 and the Procurement Bill. I hope that my noble friend’s letter of 8 June allays these concerns. To confirm, the intention is that the provisions in the Procurement Bill will be disapplied for a tightly defined subset of healthcare services that will instead fall within the provider selection regime. The provider selection regime has bespoke rules which commissioners of healthcare services in the NHS and local government will follow when procuring healthcare services in their area, and only where delivered directly to patients and service users.

The scope of the provider selection regime will be supported by reference to the common procurement vocabulary—CPV—codes, which will help procurement personnel to determine which regime applies. As the provider selection regime will sit alongside the reforms introduced by the Procurement Bill, DHSC and the Cabinet Office are working together to ensure that the two regimes remain clear and coherent. The Procurement Bill, and therefore the light-touch contract provisions, will continue to apply to healthcare or health-adjacent services that are not delivered to patients but support the infrastructure of the NHS. Light-touch contracts will also continue to include all services procured by authorities other than NHS bodies and local authorities. I hope that helps.

There was another question from the noble Baroness, Lady Brinton, about how the PSR interacts with the new reforms in the Procurement Bill. The PSR will cover the procurement of healthcare services that are delivered to patients and service users, as I have said, and only when they are arranged by relevant healthcare authorities, including NHS bodies and local authorities. The Procurement Bill will not apply to these but will cover all other goods and services.

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[Lord Wallace of Saltaire (LD)]

My Lords, could we ask for some clarification on this, perhaps in a letter? Probation services are obviously a personal service that falls outside healthcare. Personal tutoring was raised by my colleague the noble Baroness, Lady Bennett. If this is to be a wider sector than purely health and social care, we would like a little more guidance as to how wide it might go.

[Baroness Scott of Bybrook (Con)]

I understand. We will make sure to get that guidance well before Report.

Amendments 33, 34 and 35, tabled by the noble Lords, Lord Wallace and Lord Lansley, and the noble Baroness, Lady Bennett, relate to Clause 8(4). This subsection identifies features that may constitute light-touch contracts and complements the regulation-making power to determine light-touch contracts in Clause 8(2). The noble Lord, Lord Wallace, included a probing amendment to delete Clause 8(4)(a). However, recognising that Clause 8(4) is an indicative list, the relevance of the provision is to identify that light-touch services are often unlikely to be of cross-border interest. I hope that that makes sense; if not, we can discuss it further.

This is still a useful identifying feature of light-touch contracts and helps readers of the legislation to understand why some contracts have light-touch rules. Set against subsections (4)(b) and (4)(c) of Clause 8, subsection (4)(a) identifies that the services are not exclusively domestic. We are content that Clause 8(4) is appropriate as drafted.

Amendment 34, proposed by the noble Lord, Lord Wallace, and the noble Baroness, Lady Bennett, requests an addition to Clause 8(4), which aims to ensure that local authorities, social enterprises, not-for-profit organisations, mutuals and charities are properly considered for such contracts. Similarly, Amendment 35, proposed by the noble Lord, Lord Lansley, has been put forward to include a consideration that

“the suppliers of such services consist of small and medium-sized enterprises and few larger enterprises.”

Clause 8(4) does not dictate how contracting authorities award light-touch contracts. We already have adequate provision in the Bill to support these groups to obtain public contracts—for example, reserved contracts, the introduction of a new user choice direct award ground, and maintaining significant flexibility to tailor award criteria for light-touch contracts. We think that we strike the right balance in the Bill by creating opportunities for these sectors while maintaining fair treatment of all suppliers in the awarding of public contracts.

Amendment 207, proposed by my noble friend Lady Noakes, would make the time limit at Clause 33(5) equal to the maximum duration for such a contract. The intention behind the change is to prevent a public sector mutual from being repeatedly awarded a contract for the same services by the same contracting authority.

It is not considered appropriate to align the time limit with the maximum duration permitted under the clause. It should be noted that there is no obligation on the contracting authority to award contracts that were run for the full five years’ duration allowed, or indeed that use the reserved contracts provision at all. In fact, stakeholder feedback indicated that the existing provision under the Public Contracts Regulations 2015 is underutilised due to its tight restrictions.

Public sector mutuals are usually organisations that have spun out from the public sector and most often deliver services to their local communities rather than nationally. It is therefore feasible that a reserved competition may result in a sole compliance tender, especially if the purpose of the contract is to provide services for the single local authority, which is likely often to be the case. If the restriction time limit were to match the maximum duration time limit, this could prevent the reserved competition from resulting in compliant tenders and require a new and unreserved competition to be run, which may not be in the best interests of the public.

The clause currently empowers the contracting authority to manage this risk when considering the procurement strategy, using its knowledge of the market and supported by guidance. If the time limits were to align, it would require more complex drafting of Clause 33 explicitly to enable this risk to be overcome within the time of restrictions. As I have said, if the restriction is too long, it may result in the reserved competition receiving no compliant tenders, given, I repeat, that public sector mutuals are usually organisations that have spun out from the public sector. Therefore, I respectfully request that these amendments are not pressed.

[Lord Aberdare (CB)]

I am somewhat baffled by subsection (4) of the light-touch contracts clause. The noble Baroness has rejected several suggestions that criteria might be added to it regarding what light-touch contracts might be used for, on the grounds that it already provides sufficient scope. There are three criteria in the clause and all that the clause says is that the authority must consider the extent to which they are met. Does that mean that they are good criteria or bad criteria? If a supplier is from outside the United Kingdom, does that mean that one should favour them or not? I find it completely baffling.

[Baroness Scott of Bybrook (Con)]

My Lords, it is up to the organisation that is procuring. That is exactly what we are saying; we are freeing up that procurement process.

[Baroness Noakes (Con)]

My Lords, I am not sure that we have advanced very much on either of the clauses. I thank all noble Lords who have taken part in the debate, particularly the noble Baroness, Lady Brinton, who raised a number of good points about the interaction with NHS contracts, which I had simply not appreciated, not having followed the most recent NHS legislation. I agree with her that the interaction of the two codes is likely to be confusing to all those who come across it and, with respect, I do not think that my noble friend made that any clearer in her answer. Nevertheless, we will come to that later on in the Bill and I am sure that it will be teased out again.

On Clause 8, the main thrust of my amendments was to try to find out what was likely to be covered under light-touch contracts. I am still no clearer at all. I have heard that the “have regards” in subsection (4) are appropriate as drafted but have not heard any argumentation as to why. I have heard quite a lot about how it is really up to the contracting authority to decide what it wants to take account of, and that whether it is good or bad to have overseas suppliers is up to the contracting authority.

I am quite unclear what the Government are intending by this light-touch contract regime. I have no idea at all what they are going to allow to be specified under the regulations, which is what I was trying to tease out by saying that it should be confined to health and social care. That was a placeholder to say, “Tell me what you’re going to put in them”—but I am afraid my noble friend did not tell me what she is going to put in them.

So I am left probably slightly less satisfied with Clause 8 than I was when I tabled my amendments to probe what was in it. I will of course consider very carefully what the Minister has said between now and Report, and we may have further conversations about it, but I politely suggest to her that the Government appear to be in a bit of muddle about what they are expecting from light-touch contracts. Are they simply saying, “We’ll create this power and let contracting authorities tell us what they want to do, and then we’ll have some regulations and do what we like with it”—because that is what the clause allows—or are they intending to restrict the scope in some way and, if so, in what way? That is all still waiting to be teased out, in addition to the issues raised about interaction with the NHS.

I turn to my Amendment 207, which is in connection with Clause 33. I think I heard the Minister say that the Government’s intention was to prevent repeated contracts. That is not necessarily what this measure achieves, except that it tends to prevent a repeated contract if it is of shorter duration. If the initial contract is for three years, they almost certainly do not have a time window to be involved in tendering for a repeat of three years, because of the three-year prohibition—whereas, if they take a contract for five years, that three-year prohibition on retendering will have expired before the retendering comes up again. My noble friend simply did not answer that question, so again I am no clearer about what the Government are really trying to do. Are they trying to stop repeated contracts or allow them? They are allowing them for longer contracts but not for others, which does not seem to make sense.

We have all summer and quite possibly a lot of the autumn between Committee and Report to consider what we need to probe further on Report, but I hope the Minister will be taking back the Hansard of this discussion to her officials and looking at the points that have been raised but not dealt with in her response. However, this is Committee, so I beg leave to withdraw the amendment.

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Moved by

[Baroness Scott of Bybrook]

32: Clause 8, page 6, line 35, after second “the” insert “appropriate”

--- Later in debate ---

I finish where I started: in the end, the Government will need to review all this—the various clauses and the bits that they will end up with when this becomes an Act—and, whether six years later or less, try to understand what difference has been made as a result of the Bill. This group of amendments, like many of the other groups that will be debated and discussed, is crucial for the success of the Bill and for the objectives that we all want to achieve.

[Baroness Scott of Bybrook (Con)]

My Lords, I thank your Lordships for a really interesting debate. A lot of what has been said about support for small and medium-sized enterprises, social enterprises and voluntary organisations is something that the Government also support and, through the Bill, have been trying to support even more. After we finish Committee, we need to meet interested noble Lords and talk more about these issues because they are important to the Committee, as I can tell, but also to the Government. I make no promises, but we should be using all the knowledge in the Committee as we discuss it further.

In that context, I will answer a few questions. I say to the noble Baroness, Lady Brinton, that I am sorry if I did not quite get to the interface with the Health and Care Bill. I will try to get a bit further but I am afraid I do not think I can go as far as she wants. All public authorities will be covered by the Procurement Bill in relation to health except those that will come under the regulations made under Clause 108. There should therefore be no gap in procurement regulations between the two. On health issues, regarding entities under health procurement, further work is going on at the moment in both departments, and we will come back to the noble Baroness as things move forward.

I turn to the amendments in this group. I note that other non-government amendments have been tabled, some of which address prompt payment and relate to SMEs but are also about social values, which have been quite a big part of this debate. Those will be covered at a later stage so I will not cover them; my noble friend the Minister will do so, some of them probably in the next group.

Amendment 38 would impact Clause 10, Amendments 97 and 100 would impact Clause 18 and Amendments 290 and 295 would impact Clause 54. Each of these amendments has been proposed by my noble friend Lady Neville-Rolfe, and I thank her for them. They would enable contracting authorities to exempt businesses, based on their size and turnover, from certain obligations set out in the Bill. Public sector procurers are required to determine the most advantageous offer through fair and open competition, and the Bill sets out that the buyer should contract with the bidder offering the most advantageous tender. We want to focus on getting the best value for the taxpayer by opening competition to all businesses of all sizes.

That is not to say that we are not keen to open public procurement, as I have said, to more SMEs; in fact, quite the opposite. First, we are committed to ensuring that the new procurement regime is simpler, quicker and cheaper for suppliers, which particularly benefits SMEs and social enterprises, ensuring lower barriers for entry to the market. Secondly, bidders will have to submit their core credentials only once to a single platform, making it easier, especially for SMEs, to bid for any public contract. The single transparency platform means that suppliers will be able to seek all opportunities, including a pipeline of future opportunities, in one place.

Thirdly, the Bill will ensure that prompt payment flows down the supply chain, making it more attractive for SMEs to get involved. Fourthly, contracts below the threshold listed in Schedule 1 can be reserved for suppliers based in the UK and/or small suppliers where it is good value for money to do so. Thus, the Bill represents good news for SMEs.

While we share the noble Baroness’s keenness to support SMEs in getting access to public procurements, we cannot do that by simply exempting them from procurement rules altogether, as her amendment to Clause 10 would do.

Amendment 50, also proposed by my noble friend Lady Neville-Rolfe, would require the procurement objectives in Clause 11 to make explicit the obligation on contracting authorities to have regard to the importance of keeping the burden on SMEs associated with tendering as low as possible. While we support this goal, there are risks in legislating in such stark terms. Contracting authorities must keep an open and fair playing field for all bidders. While we take steps which facilitate access, in particular for SMEs, it would not be wise to encourage the procurement community to believe that some form of active discrimination in favour of SMEs was appropriate.

That said, we have taken significant actions to level the playing field for SMEs without actively discriminating. Some of these I have mentioned, but I add that we have reformed commercial tools, such as frameworks. This will allow longer-term open frameworks, which will be reopened for new suppliers to join at set points, so SMEs are not locked out, and the new concept of dynamic markets—

[Lord Scriven (LD)]

Does the Minister accept the feeling around the Committee that, while we accept that things are moving forward, they are not strong enough? On the framework issue, one of the provisions in the Bill is that a fee has to be paid every time is contract is let. That does not help. Once you get into the detail, there are barriers to the progression of SMEs. What we are not asking for is a system which supports only SMEs; we are asking for a more risk-based assessment, based on what the risk is of the procurement amount, to release some of the normal procedures and bureaucracy that is required to give them a view. One of the issues that the Minister can perhaps look at between now and Report is a more risk-based approach to public sector procurement rather than a one-size-fits-all which, on the whole, the Bill still is.

[Baroness Scott of Bybrook (Con)]

I agree with a lot of that and I think it is something that we will discuss further. I thank the noble Lord for his ideas.

This will allow a longer-term open framework which will be reopened for new suppliers to join at set points, so SMEs are not locked out, and the new concept of dynamic markets which, like the current dynamic purchasing system, will remain always open to new suppliers. All these will provide greater opportunity for SMEs to join and win work.

Amendment 75B, tabled by the noble Baroness, Lady Thornton, would insert a clause into the Bill on market stewardship, meaning contracting authorities must consider the impact of procurement on small and medium-sized businesses, social enterprises and voluntary organisations. They would also need to consider how to improve the diversity of their supply chains including, but not limited to, these organisations.

I have previously touched on how the Bill benefits SMEs and would also like to highlight Clauses 32 and 33 to your Lordships, which enable contracting authorities to reserve certain contracts to supported employment providers and public service mutuals. We indeed recognise the importance of diverse supply chains and the benefits to the delivery of public services, and that is why in Clause 63 we require that 30-day payment terms will apply throughout the public sector supply chain, regardless of whether they are written into the contract, ensuring SMEs and other organisations receive prompt payments and the increased liquidity they bring.

Amendment 86, tabled by my noble friend Lord Lansley, would make explicit obligations on contracting authorities to consider small and medium-sized enterprises in preliminary market engagement. Contracting authorities are able, under the new legislation, to design their preliminary market engagement in a way which gives consideration to SMEs, but too many obligations on contracting authorities will discourage them conducting this engagement. I therefore suggest this amendment is not needed.

My noble friend Lady Neville-Rolfe’s Amendment 534 proposes a new clause that seeks to make legislation obliging a Minister of the Crown to carry out regular reviews to consider the Act’s performance in relation to the award of contracts to SMEs. I draw to noble Lords’ attention that the Government do capture SME spend data for those SMEs contracting either directly or in government supply chains.

Procurement Bill [HL]

Baroness Scott of Bybrook Excerpts

Committee stage
Wednesday 13th July 2022 Grand Committee

[Baroness Hayman of Ullock (Lab)]

My Lords, this is an important group of amendments, which focus on what we believe work in this country should look like. There are a number of amendments in the name of my noble friend Lord Knight of Weymouth, to which I was pleased to add my name. He introduced them in his usual way—eloquently, knowledgably and passionately. I thank him for that.

We believe that a commitment to good work standards in procurement, in response to the new challenges faced in the labour market that noble Lords have talked about, is an extremely important and appropriate part of what we need to be looking at. We know that Scotland introduced a commitment to fair work first and my noble friend Lord Hendy talked about its introduction by the Welsh Government, so this is not new or untried. Other parts of the United Kingdom are looking at how best to achieve this and we think that the Treasury should also be looking at it. It should be not just about procurement but much broader: how do you underpin good work?

My noble friend Lord Knight of Weymouth’s amendments clearly recognise that procurement can be a powerful tool to support public policy goals and targets, beyond just ensuring value for money. We have heard about the Institute for the Future of Work and its research that shows that creating and protecting good-quality jobs provides resilience and promotes well-being and prosperity at every level. Again, that supports the Government’s levelling-up agenda. My noble friend Lord Knight also mentioned how it would increase productivity in this country. Surely that is an ambition that the Government and the Minister share. We believe that promoting good work is a public good that advances national, economic, social and health interests and priorities.

The noble Baroness, Lady Bennett of Manor Castle, spoke in support of my noble friend Lord Knight’s amendments. She made a couple of important points about how work intensity has increased while, at the same time, work security has decreased in this country. I agree with her on the issue of outsourced contracts. That is something that we have to look at because, as the noble Baroness rightly said, quality of work is related to quality of life, because we spend so much time at work.

The noble Lord, Lord Clement-Jones, spoke to a number of amendments and focused particularly on AI, automation, the impact of new technologies and their potential disruption to jobs. There has been some good research on this, which we need to take account of as we develop legislation. It would be interesting to hear the Minister’s thoughts on how that could be managed in this Bill or perhaps through other means.

My noble friend Lord Hendy also had a number of amendments in this group and I thank him for his detailed and careful introduction. A lot of this is incredibly important. He spoke about previous and other legislation and how we need to bring it up to date in this Bill. That is incredibly important if we are to get the best legislation that we can. He was quite right when he said that we need to use procurement to improve the lot of Britain’s workforce and ensure that we have high standards.

We all need to pay attention to the point that my noble friend made about P&O Ferries because, as he explained on his Amendment 186, we need some buffer or means to manage bad employers—as you could simply call them—as opposed to good employers. The Government condemned the actions of P&O Ferries, as I am sure the Minister did. If there is anything that we can do with the Procurement Bill to stop that kind of behaviour happening again, we should take clear advantage of it. The noble Baroness, Lady Bennett of Manor Castle, also supported the amendment.

I am sure that the Minister would support the fact that we are trying to improve the quality and security of the British workforce. I will be interested to hear his thoughts on the debate.

[Baroness Scott of Bybrook (Con)]

My Lords, I am sorry to disappoint. The following amendments are concerned with placing additional requirements on contracting authorities so that their procurements create good jobs and opportunities in local areas. I will address the issues in turn.

Amendment 54, tabled by the noble Lord, Lord Knight, whom I thank for his extremely interesting opening remarks, the noble Baronesses, Lady Hayman and Lady Bennett, and the noble Lord, Lord Hendy, seeks to include a new procurement objective in Clause 11, requiring contacting authorities to have regard to the importance of local “good work” when carrying out a procurement. We believe this is unnecessary. Under the Bill, contracting authorities will already be able to give more weight to bids that create good-quality jobs and opportunities for our communities, where this is relevant to the contract being procured and is not discriminatory. This is absolutely in line with the Government’s levelling-up objectives and means better value for money.

Additionally, the concept of “good work” includes a wide range of matters, such as union representation and access to facilities for career guidance and training. Including this provision would have the effect of slanting public procurement away from SMEs and VCSEs, which this Government have worked hard to champion in the Bill, and in favour of large employers with significant resources and a highly unionised workforce. That is very much the opposite direction of travel to the policy behind the Bill.

Amendment 67 was tabled by the noble Lords, Lord Knight, Lord Hendy and Lord Clement-Jones, and the noble Baroness, Lady Hayman. I thank the noble Lord, Lord Cement-Jones, for not only taking us into the future but looking at what is starting now and what has been going on for quite a few years to create a different workforce from the one we have now. He talked about something that we will have to discuss further in both Houses—both the opportunities and the challenges to the workforce that we see today. That is probably not for this Bill, but I can see much further work being done on the issue.

The amendment seeks to include in the national procurement policy statement the creation and protection of “good work”. We have already set out in previous debates the rationale for not including policy priorities in the Bill and why instead the national procurement policy statement is a more appropriate vehicle for this.

Amendment 104, tabled by the noble Lords, Lord Knight and Lord Hendy, and the noble Baroness, Lady Hayman, seeks to lay out a new rule in the Bill which would allow contracting authorities to request information from a supplier submitting a tender about good work standards and practices. This amendment is not necessary: the Bill already allows contracting authorities to set the criteria against which they wish to assess tenders and it is open to them to include these matters within those criteria. Any bidder will therefore have to submit information setting out how they meet the chosen criteria. Including a specific power for contracting authorities to require such information could call into question the ability of contracting authorities to request other information relevant to the assessment of tenders.

Amendment 116, tabled by the noble Lords, Lord Knight, Lord Hendy and Lord Clement-Jones, and the noble Baroness, Lady Hayman, requires extensive quantities of information about contracting authorities’ good work policies and measures to be included in the tender notice. I have set out already the Government’s objections to including significant requirements on contracting authorities in relation to this and other similar matters. Public procurement needs to be focused on achieving value for money. We do not consider that it would be appropriate to embed obligations on policy objectives such as “good work” in the tender notice or indeed elsewhere throughout primary legislation for public procurement.

Amendments 186, tabled by the noble Lords, Lord Hendy, Lord Hain and Lord Monks, and the noble Baroness, Lady Bennett, and Amendments 315 and 319, tabled by the noble Lords, Lord Hendy, Lord Hain, Lord Monks and Lord Woodley, seek to introduce new exclusion grounds in relation to breaches of labour rights. Employers who seriously violate the rights of their workforce are not fit to compete for public contracts. The Bill expands the range of serious labour violations to be considered as part of the mandatory grounds for exclusion, for example the failure to pay the national minimum wage and offences relating to employment agencies.

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[Lord Hendy (Lab)]

Why would breaches of ILO conventions not apply to bidders in this country if they apply to bidders from outside this country?

[Baroness Scott of Bybrook (Con)]

As that is a legal question, I shall get a legal answer for the noble Lord, and I will certainly write. I thought I had answered him, but I will make sure that that is clearly written legally.

On the TCA, with respect to Articles 387 and 399 of the EU-UK Trade and Cooperation Agreement, procurement law does not grant rights to workers and, as such, the exclusion grounds are not inconsistent with the UK’s obligations under those articles. The rights protected by these provisions are provided elsewhere in national laws, none of which are affected by the Bill. The exclusion grounds are not intended as a means of enforcing labour rights; rather, exclusion is a mechanism to ensure that contracting authorities do not award contracts to suppliers that pose a risk.

I am confident this will enable contracting authorities effectively to protect the rights of workers delivering public contracts, especially when combined with other changes we are making to strengthen the exclusions regime, such as the inclusion of serious labour misconduct in the absence of a conviction as a discretionary ground for exclusion; requiring assessment of whether the exclusion grounds apply to subsidiaries of the supplier; and extending the current time limit for discretionary exclusion grounds from three years to five years.

Amendments 292 and 297, tabled by the noble Lords, Lord Hendy, Lord Hain, Lord Monks and Lord Woodley, remove the requirement for contracting authorities to consider the risk of the circumstances giving rise to an exclusion ground recurring in applying the exclusions regime. Exclusion is not a punishment for past misconduct; that is for the courts to decide. Exclusion is a risk-based measure and, as such, suppliers should be encouraged to clean up their act and given the right to make the case that they have addressed the risk of the misconduct or other issues occurring again. This might be through better training, stronger compliance controls or dismissing the staff involved in any misconduct. It is for contracting authorities to decide whether the evidence they have seen is sufficient to reassure themselves that the issues in question are unlikely to occur again.

Amendment 519, tabled by the noble Lord, Lord Hendy, proposes to use Clause 104 of the Bill to omit Section 17(5)(a) and (b) from the Local Government Act 1988. It would remove the prohibition on relevant authorities, as detailed in Section 17(5)(a) and (b) of the 1988 Act, to consider in relation to public supply or works contracts the terms and conditions of a contractor’s workers and the employment status of their subcontractors.

The Bill provides for a range of labour violations to be considered as part of the grounds for exclusion, which must be considered for every supplier wishing to participate in each procurement within the scope of the Bill. These matters will be subject to further debate, possibly later today, when the Committee considers the exclusions and debarment regime in the Bill. I am sure my noble friend Lord True will have more to say on that.

The purpose of Clause 104 in the Bill is, first, to ensure that authorities to which Section 17 of the Local Government Act 1988 applies are not prevented by that section from complying with their duties under this Bill; and, secondly, to enable a Minister of the Crown or the Welsh Ministers to make regulations to disapply, when required, a duty under Section 17. The clause ensures that authorities covered by the 1988 Act can take advantage of domestic procurement policies that may be implemented during the life of the Bill.

Clause 104(1), which amends Section 17(11) of the Local Government Act 1988, directly achieves this. However, it amends Section 17 only to the extent necessary to ensure that the relevant authorities are not prevented by virtue of the section from complying with the Bill. It would not be appropriate to use the Bill as a vehicle to make further amendments to the 1988 Act, as proposed by the noble Lord, Lord Hendy.

Amendment 535, tabled by the noble Lords, Lord Knight and Lord Hendy, and the noble Baronesses, Lady Hayman and Lady Bennett, creates the concept of “good work”, relied upon by the other amendments in this group. In the light of my responses on substantive amendments, there is little I can usefully add on this amendment. I therefore respectfully ask that noble Lords do not pursue these amendments.

[Lord Knight of Weymouth (Lab)]

My Lords, I am grateful for the response and to those who took part in this relatively short debate. The arguments were well made, and I think the Minister at the Dispatch Box, the noble Baroness, Lady Scott, agrees with the basic premise. As ever with these things, I was not surprised but disappointed at the response.

My noble friend Lord Hendy made a really good case about the importance of punishing bad labour practice. Recalling P&O Ferries is important; these cases come along and it always ends up feeling like too little too late. This is an opportunity to act more proactively and actually put something into statute.

On the amendments in my name, I was grateful to hear about the UNISON report, as I was not aware of that. I was grateful to hear that the Labour Administration in Wales are getting on with something like this. It is good to hear, as ever, the insights from the noble Lord, Lord Clement-Jones, on AI and algorithmic accountability and regulation. I will need to think about that. I was really pleased to hear the Minister say that she thought more needs to be done on that.

In closing, I offer this up to the Minister: before we come to Report, is it worth having a chat? I listened carefully to what she said about the impact on SMEs from the way we frame some of this. If she is interested in having a meeting to discuss how we can achieve something on the good work agenda in this Bill, probably including David Davis, because I think he is minded to table similar amendments when it goes to the other place, we would be delighted to do that. Perhaps, with the noble Lord, Lord Clement-Jones, tagging along too, we can start to sketch out what we might be able to do on algorithmic regulation in this Bill or in future legislation. On that basis, I withdraw my amendment.

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[Lord True (Con)]

I would be happy to. There were a lot of amendments. I do not want to break down and not continue, but I have about four more minutes to go. With the Committee’s permission, would my noble friend—

[Baroness Scott of Bybrook (Con)]

Would my noble friend like me to take over his speech, as he is coughing?

[Lord True (Con)]

Yes please.

[Baroness Scott of Bybrook (Con)]

My Lords, Amendment 131, tabled by the noble Lord, Lord Best, would prohibit contracting authorities applying relative assessment methodologies for price, costs or value-for-money award criteria, with the aim of preventing “race to the bottom” behaviour by suppliers and helping contracting authorities achieve safe, quality and value-for-money outcomes.

The objective of the Bill is to make public procurement more flexible for contracting authorities and suppliers, not less. In deciding how to assess tenders, contracting authorities must be able to determine what is important to them and the best means of assessing this. In some cases, price may be more important than others and, in particular, price assessment methodologies may be more appropriate in certain circumstances. I must also stress that contracting authorities will be very aware of the need for safe outcomes and that those cannot be compromised. To reiterate, we will publish guidance on assessment to help contracting authorities decide how best to assess tenders.

Amendment 147, tabled by the noble Lord, Lord Hunt, would require a Minister, within three years of the Bill being enacted, to undertake a review of the impact of the rules on how contracts subject to a competitive procedure must be awarded. In particular, the review must assess the impact of the change from “most economically advantageous tender”, commonly referred to as MEAT, to “most advantageous tender”, commonly referred to as MAT. On the delivery of social value, and whether the needs of service recipients have been met under contracts, the change from MEAT to MAT sends a much clearer message to contract authorities that the contracts do not have to be awarded on the basis of the lowest price. I can assure the noble Lord that the matters he refers to are within the scope of MAT, where they are relevant to the contract being procured.

Amendment 149, tabled by my noble friend Lord Lansley, would make explicit that contracting authorities may exclude a supplier where it has failed to explain satisfactorily why the price or cost proposed in its tender appear to be abnormally low. We discussed this point during a recent SI debate, and I welcome his contribution. I appreciate that tenders may appear abnormally low for a variety of reasons, some of which ought to concern contracting authorities. The Bill’s silence on this point is not intended to discourage authorities seeking to understand the proposed price and cost or interrogating suppliers where they appear to be abnormally low. Authorities are already under an overarching duty to award contracts to the most advantageous tender. This should be sufficient to allow for questions to be asked of suppliers about proposed price and costs, and authorities can structure their evaluation to ensure that tenders can be rejected where the authority has reason to believe a tender is abnormally low.

In summary, this Bill aims to deliver a simpler regulatory framework. It therefore does not include every possible action a contracting authority might wish to take in assessing the validity of tenders or awarding contracts. This approach is better than the existing EU approach, as it offers increased flexibility to design efficient, commercial and market-focused competitions, while reducing burdens for smaller firms. Therefore, I respectfully request that these amendments are not moved.

[Lord True]

My Lords, I thank your Lordships for your indulgence in letting my noble friend complete the speech. I am most appreciative. Thank you.

Amendments 84 and 85 not moved.

[Baroness Scott of Bybrook (Con)]

My Lords, I think this is a convenient point for the Grand Committee to adjourn on the Bill.

Committee adjourned at 8.44 pm.

Procurement Bill [HL]

Baroness Scott of Bybrook Excerpts

Committee stage
Monday 18th July 2022 Grand Committee

[Baroness Hayman of Ullock (Lab)]

My Lords, I thank the noble Baroness, Lady Noakes, for introducing her two amendments. As ever during Committee on this Bill, she has spotted where the nonsense lies and where problems could quite easily be resolved, if her wise words are listened and adhered to.

On her Amendment 96, I know my dear and noble friend Lord Coaker is very disappointed not to be having the must/may discussion with her today and that it has fallen to me, but it is an important point. Different terminology in different parts of the Bill impacts on what is expected. What does that mean? As the noble Baroness clearly demonstrated, if you follow that logically—all the way down the rabbit hole, to carry on the metaphor—it does not make sense any more. I think she has picked up something that could be sorted out straightforwardly and I would be interested to see whether the Minister agrees.

The noble Baroness’s second amendment, Amendment 107, on the lack of assessment and what is in the Explanatory Notes not being sufficient for what we need to know to feel secure about this clause, is again a simple amendment that makes a lot of sense. To me, it strengthens and provides clarity to the Bill. The noble Baroness made the critical point that these kinds of things have a different impact on multinationals from small businesses and, as we have said previously, charities and voluntary organisations. This is important.

The noble Lord, Lord Scriven, ably introduced the amendments in the name of the noble Lord, Lord Wallace. I hope the Liberal Democrat Front Bench manages to recover before we come back in September, but I thank the noble Lord for that. They are about terminology —what the words mean and what the impact of that terminology is on the Bill. As the noble Lord pointed out, there are no guidelines and criteria, and nothing specified about what “appropriate” means, nor on whose shoulders it falls to interpret what it means and whether that could be open to challenge. Again, they are small but important amendments and we support them.

There are a number of government amendments in this group. I have read through them and they seem straightforward, but I shall be interested to hear the Minister’s introduction.

[Baroness Scott of Bybrook (Con)]

My Lords, I seek to deal with amendments related to competitive procedures. I will start with the government amendments. Amendment 98 ensures that contracting authorities can choose not to assess tenders that do not comply with the procedure. This is different from improper behaviour in a procurement resulting in exclusion, which is addressed in Clause 30. As such, this amendment gives contracting authorities the discretion to exclude for procedural breaches that do not meet the higher threshold for improper behaviour and to ignore an insignificant breach, depending on the context. Government Amendments 99 and 103 are consequential to Amendment 98.

Turning to the Clause 19 amendments, Amendment 106 would replace

“a competitive tendering procedure other than an open procedure”

with “a competitive flexible procedure”, making it much easier to understand the two types of competitive tendering procedure. There are many consequential amendments to update this terminology, including Amendments 108, 109, 115, 132, 133, 155, 156, 157, 161, 188, 189, 192, 195, 199, 202, 213, 221 and 289.

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[Lord Aberdare (CB)]

I apologise for interrupting, but I just want to ask a question in relation to Clause 32. It is about supported employment provision, which has been raised with me by Aspire Community Works, an award-winning community enterprise working to promote social mobility.

Its concern is that the current drafting of the Bill represents a significant reduction in the ability of commissioning authorities to reserve contracts for supported employment, first by restricting them only to competitive flexible procedures—rather than open procedures, as is currently the case—and, secondly, by limiting their use only to supported employment providers rather than enabling other bodies to carry out such work within a supported employment setting—again, as is the case at present.

At Second Reading, the noble Lord, Lord True, indicated that the Bill

“continues the existing ability to reserve certain contracts for public service mutuals and for supported employment providers.”—[Official Report, 25/5/22; col. 858.]

This seems inconsistent with the Bill’s inclusion of the two restrictions I have mentioned. Can the Minister tell us, probably not now but subsequently, whether this is an intentional limitation on the use of reserved contracts or simply an oversight in drafting which I hope she will want to correct in view of the Government’s desire to enhance the role of social enterprises and SMEs in the procurement process? I have probably chosen the wrong time to raise this, but the Minister had just mentioned the relevant clause.

[Baroness Scott of Bybrook (Con)]

It is certainly not the Government’s intention to exclude those groups of providers. In fact, we want to encourage them and make things easier and more transparent for them. I will take a look at Hansard and discuss the issues in Clause 32 with the team. We will make sure that, perhaps in those groupings throughout the summer period, we discuss these issues further; I will make a note to do that. It is absolutely our intention not to make this more difficult for those groups but to make it easier, so we will look at how we can do that if this clause makes things more difficult.

In Clause 33, Amendments 200 and 201 would clarify that, where a supplier does not qualify for the reserved contract, the contracting authority can exclude that supplier at any point in the procurement process. Amendments 203 and 204 to Clause 33 are simply to improve the drafting, as I said.

Amendment 206 would make it clear that suppliers will fail to be eligible for reserved contracts only where they have signed a “comparable contract”, as defined in subsection (7), within the previous three years, not just because such a contract was awarded to them. It ensures that there is no risk of a supplier being penalised where a contracting authority had decided to award a contract to a supplier but, for whatever reason, the contract did not progress.

I turn next to Clause 34. Amendment 209 clarifies that competitive flexible procedures can allow for the exclusion of a supplier from both participating and progressing in the procedure where the supplier is neither a member of a dynamic market, nor a part of a dynamic market—for example, a category of goods or services. The current provision refers only to “the exclusion of suppliers”, and this change clarifies that this means participation and progression in the procurement by, for example, progressing to the next stage of a multi-stage procurement. Amendments 214 and 215 are consequential to this amendment.

Amendment 262 in Clause 48 changes “virtue of” to “reference to” for ease of reading.

Amendment 341 removes the more general reference to “procurement” in Clause 56, to clarify that notification of exclusion is required in all competitive tendering procedures.

Finally, Amendments 427 and 428 are technical amendments to Clause 78: the first to ensure drafting consistency across the Bill and the second to reflect the fact that Northern Ireland and Wales have derogated from this provision and so do not require the threshold-altering powers in subsection (4).

I turn now to Amendment 96, tabled by my noble friend Lady Noakes, which questions why a supplier “must” satisfy the conditions of participation in Clause 18(3)(a) to be awarded the contract, while in Clause 21(6) contracting authorities only “may” exclude the supplier from participating or progressing in the competition. I reassure noble Lords that the two clauses work together: suppliers must satisfy the conditions of participation in order to be awarded the ensuing public contract, and that is what is addressed in Clauses 18(3)(a) and 21(2). Clause 21(6) gives the contracting authority the flexibility to decide when to assess the conditions of participation, and at what point to exclude suppliers that have not met them. Having “may” in Clause 21(6) allows the condition to be assessed during the procedure. For example, when it comes to insurance requirements, a company may not have the full cover initially, but it may have the chance to obtain it before that contract is awarded. I hope that this makes it slightly clearer; if not, I am sure that we can discuss it further throughout the summer months.

I now turn to non-government amendments. Amendment 105 to Clause 19 from the noble Lords, Lord Wallace and Lord Fox—both of whom I hope will be better very soon—proposes to remove the competitive flexible procedure. The practical reality of procurement is that the open procedure is simply not appropriate in all circumstances. The government procurement agreement contains three procedures: open, selective and limited or direct-award tendering. The open procedure is popular where the requirement is well-defined and straightforward; price is likely to be the key feature. There is no pre-qualification of suppliers, any interested party can submit a tender and they must all be assessed.

We want contracting authorities to use the new competitive flexible procedure, which we could not have had when we were in the EU, to design fit-for-purpose procurements that deliver the best outcomes. This may mean including phases such as a prototype development when seeking innovative solutions. Contracting authorities will use it to limit the field by applying conditions of participation to take forward only those suppliers with the financial and technical capability to deliver the contract. Clause 21(1) requires these to be proportionate so as not to disadvantage smaller suppliers.

The competitive flexible procedure also allows for negotiation and discussion of the requirements, which is particularly important to ensure not only that the best value is obtained but that requirements are clearly understood. The ability to negotiate is severely limited under the current EU-derived rules.

Clause 19(3) requires the contracting authority to ensure that any competitive tendering procedure is proportionate, having regard to the nature, cost and complexity of the contract. Amendment 107 from my noble friend Lady Noakes proposes to make these considerations from the perspective of the supplier. We believe that these assessments are better considered by contracting authorities in the round following pre-market engagement. Otherwise it would be possible for prospective suppliers to challenge and assert that a procedure is not appropriate.

To counterbalance the flexibility given to contracting authorities to design a competitive tendering procedure, we wanted to ensure that procedures do not become overly convoluted or burdensome for suppliers. We believe that Clause 19(3) achieves this, as it will force the contracting authority to consider what is proportionate, without suppliers dictating the specifics of the procedure. I understand that my noble friend Lady Noakes requires more clarity, and I am sure we can do that if that explanation did not provide it.

[Lord Scriven (LD)]

I want to come back to the Minister’s explanation about the word “appropriate” and it being wide. I understand that there may be reasons why a fully open procurement would not be wanted. Amendment 105 deals with what is appropriate. The Minister raised an issue relating to prototypes. Clause 18(3)(a) states:

“In assessing which tender best satisfies the award criteria, a contracting authority … must disregard any tender from a supplier that soes not satisfy the conditions of participation.”


If it cannot do the prototype, it would be debarred. I think further clarification is required about the Government’s view about an appropriate situation in which a fully open tendering procedure would not be required.

[Baroness Scott of Bybrook (Con)]

It is obvious that the noble Lord, and probably all noble Lords, need more clarity about this. I do not have any further clarity at the moment, but we will make sure we provide that because it is obviously an issue of concern.

I have just been handed a note to avoid a Hansard correction. To correct something I said about the consistency of Clause 21, I need to refer to Clauses 18(3)(a) and 21(2), which both make clear that conditions of participation must be satisfied. I believe I said Clause 22(2) rather than Clause 21(2). I clarify that we were talking about Clause 21(2), not Clause 22(2).

The competitive flexible procedure also allows for negotiation and discussion of the requirements, which is particularly important not only to ensure that the best value is obtained but that the requirements are clearly understood. The ability to negotiate is severely limited under the current rules—I think I have got past that, but we will keep going.

Clause 19(3) requires the contracting authority to ensure that any competitive tendering procedure is proportionate, having regard to the nature, cost and complexity of the contract. Amendment 107 from my noble friend Lady Noakes proposes to make these considerations from the perspective of the supplier—we have been through all this, and we have agreed that clarity is what my noble friend Lady Noakes requires. Sorry, I went back in my speech. I was looking back because the noble Lord, Lord Scriven, had asked me to go back. I will now go forward.