Procurement Bill [HL]

Baroness Thornton Excerpts

Committee stage
Wednesday 13th July 2022 Grand Committee

On Amendment 49, tabled by the noble Baroness, Lady Worthington, as we have discussed, the Government’s view is that it would not be appropriate to include wider policy objectives such as she proposes in primary legislation for public procurement.

[Baroness Thornton (Lab)]

Can the Minister please explain why the term social value is not in the Bill?

[Lord True (Con)]

My Lords, as I have just said, we believe that the additional objective of maximising social value would be a duplicate, as it is embraced in “public benefit”.

[Baroness Thornton (Lab)]

I am sorry, but the Minister has said that there is no definition of public benefit, and that is quite right. However, there is a legal definition of social value. It exists and is on the statute book, so why are the Government not using “social value” in the Bill?

[Lord True (Con)]

My Lords, again, I have set out the argument. The noble Baroness disagrees but I am not going to repeat a third time the reason why we think maximising social value is unnecessary and would be a duplicative addition. Each procurement is different and what is appropriate, for example, for a large-scale infrastructure project is not for smaller transactional procurements.

Furthermore, procurement policy should be aligned with wider government policy and, as such, the publication of a national procurement policy statement is based on the strategic policy priorities relevant at the time. It would not be appropriate, in our submission, to include in the Bill priorities which can and probably will change —we have heard that they will—based on an Administration’s objectives. It is always important that policy priorities are included in individual procurements only where they are relevant to the subject of the contract.

On Monday, for example, noble Lords on all sides gave those of us on the Front Bench, I freely confess, a hard time in discussing the importance of minimising bureaucracy to facilitate SME participation in procurement. I took that away as a powerful call, which I have said we will discuss. As I think I have already indicated outside the Chamber, the Government are keen to meet and consider these points.

The paradox is that seeking to include extraneous requirements, which this and other amendments in the group risk, could make it harder for small businesses to bid for public contracts. One cannot talk the small business game, which noble Lords did strongly and fairly, while adding compliance requirements that make things harder for small businesses and help larger organisations to corner the market.

We think that Amendments 48 and 52 in the names of the noble Lords, Lord Hunt and Lord Coaker, and the noble Baroness, Lady Hayman, are unnecessary and potentially unhelpful to contracting authorities in attempting to impose on them an obligation to have regard to improving the economic, social, environmental and cultural well-being of the relevant area in and throughout all their procurement activities. In particular, they would place unnecessary burdens on them in relation to areas where this is of limited relevance and, again, open them up unnecessarily to the risk of legal challenge.

I wonder whether we would all agree—in fact, I do not have to wonder; I know that we would not all agree—on what carrying out procurement in a “socially responsible way” means. In a sense, that is implicit in the challenge from the noble Baroness opposite. We all might have rather different understandings of what that requires. Imposing a legal obligation of such potential breadth on contracting authorities is, we submit, exposing contracting authorities to unnecessary risk and complexity. Contracting authorities will be able to take account of measures that improve the economic, social and environmental well-being of the relevant area—this may differ from local authority to local authority, for example—where it is relevant to the subject matter of the contract. The Bill already allows this, which is absolutely in line with the Government’s levelling-up agenda.

On Amendments 53 and 58 in the names of my noble friend Lord Lansley and the noble Baroness, Lady Worthington, as I said in our debate on an earlier group, the term “public benefit” is deliberately undefined; consequently, it is intended to be a flexible concept that gives contracting authorities a degree of discretion. Again, local authorities may have different views from place to place on what the most urgent benefit in their area is. Although all the proposed economic, environmental and social additions, including creating new businesses, jobs and skills, and reducing geographic disparities in the United Kingdom, might be facets of public benefit in different circumstances—I do not challenge that—we do not believe that it would be helpful to elaborate them in the Bill.

It might also be unfair to small contracting authorities to impose an obligation to consider the reduction of geographic disparities in the United Kingdom; they might be more concerned about disparities up the road. Doing so risks excluding other matters that might be more valid in specific circumstances. The Government consider that contracting authorities are better placed to make that decision in the individual circumstances at hand. We want contracting authorities to think about the extent to which public money spent on their specific contracts can deliver greater benefit than it otherwise would. I think that there is agreement in the Committee on that point. As I have said, each procurement is different; for example, what is appropriate in delivering a giant infrastructure project is not appropriate for smaller procurements.

I turn to Amendments 59 and 59A from the noble Lord, Lord Wallace—

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I believe totally in social justice and in our small and medium-sized enterprises. I will continue to fight from these Benches for the interests of those businesses, because they have suffered so badly, particularly during the last two or three years. It is also an opportunity for us to be able to put them in a much firmer position. The Minister, during the debate on the previous group of amendments, was very kind enough to agree to meeting the noble Lord, Lord Knight. I hope that the same opportunity to meet with the Minister will also be given to me and the noble Baronesses, Lady Worthington, Lady Parminter and Lady Young of Old Scone.

[Baroness Thornton (Lab)]

My Lords, I will speak very briefly to Amendment 75A in my name. I thank the noble Baroness, Lady Bennett, my noble friend Lady Hayman and the noble Earl, Lord Devon, for putting their names to this amendment.

This amendment is consistent with the remarks I have already made in Committee: that there should be specific reference to “social value” as being part of public benefit in order to provide clarity to public bodies, companies and social enterprises; and that social value should be embedded in the procurement process through the appropriate guidance and reporting requirements for public bodies, which this amendment concerns.

This new clause would be added to the Bill mandating the Government to provide “guidance” to the public sector about “how to implement social value”. The Committee is aware that this is of great concern, given that the public policy—the legislative framework—is there for social value, and yet there is no mention of it in the Bill and no mention of how it might be implemented or how it might work with the procurement regime. I hope that we can resolve this matter between now and Report.

[Lord Aberdare (CB)]

My Lords, I have Amendment 71 in this group, which is a simple probing amendment seeking to understand why the Bill exempts contracting authorities from having regard to the national procurement policy statement for contracts involving frameworks or dynamic markets. I can find no explanation, in the Bill’s Explanatory Notes or elsewhere, why such arrangements should not be covered by the terms of the national policy statement, but perhaps the Minister will be able to give a simple answer.

A large number of construction-related public projects will be procured through frameworks and dynamic market contracts. A framework is an agreement with suppliers to establish terms governing contracts that may be awarded during the life of the agreement. The Government themselves acknowledge in the Cabinet Office’s Construction Playbook that framework agreements, as a means of longer-term strategic collaboration in construction, can provide the best medium through which procurement and contracting can deliver transformational improvements.

Last December, the Cabinet Office also published Constructing the Gold Standard: An Independent Review of Public Sector Construction Frameworks, based on an independent and objective review commissioned from Professor David Mosey of King’s College London. To quote the then Cabinet Office Minister:

“This review recognises the potential of frameworks as a powerful engine-room for implementing Construction Playbook policies that include strategic planning, integrated teams, continuous improvement and the delivery of better, safer, faster and greener project outcomes.”


The review states that the Civil Engineering Contractors Association

“identifies over 1,660 public sector construction frameworks procured between 2015 and 2019 with an aggregate value of up to £220 billion.”

Given that the national procurement policy statement will seek to define strategic priorities and set the parameters for better public procurement in line, I hope, with the gold standard prescribed by the review, why should contracting authorities be exempt from having regard to it in agreeing the terms of frameworks?

A similar question arises in relation to dynamic markets. At Second Reading, the Minister stated:

“The new concept of dynamic markets … is intended to provide greater opportunity for SMEs to join and win work in the course of a contracting period.”—[Official Report, 25/5/22; col. 929.]


Again, it is not clear to me why the terms of the national procurement policy statement should not also apply to dynamic markets—although I am quite prepared to believe that I may be missing something.

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Amendment 131 would mean that, in future, the other factors that generate value in a bid would receive a balanced evaluation, with the price being related directly to the quality of the individual bid. This would create the situation already envisaged in the Government’s playbooks and bid evaluation guidance but currently mostly ignored; it would be interesting to hear from the Minister how he expects that guidance and those playbooks to be better followed. By banning the use of relative price evaluation models, the amendment would transform the currently broken system that so unhelpfully leads to a bidding war based on price, not value. As the old adage goes, “Buy cheap, buy twice”. I hope that the Minister will take serious note of my noble friend’s amendment.

[Baroness Thornton (Lab)]

I have three sentences on my very tiny Amendment 122A. It asks the Minister to explain to the Committee why, on this important clause on award criteria, there is nothing to commit the Government to create additional public value, in line with their specific priorities—whether on P&O or school meals. It genuinely asks the Minister to explain that to the Committee.

[Baroness Noakes (Con)]

My Lords, my noble friend Lord Lansley has three amendments in this rather diverse group. The first is Amendment 118, which adds another requirement for tender notices under Clause 20. It would require the tender notice to provide a period during which potential suppliers can ask questions and get answers, which would then be shared with all potential suppliers. This procedure is often used in practice and it has advantages for both contracting authorities and potential tenderers, in clearing up any misunderstandings. For potential suppliers, it can clarify whether it is worth the time and effort of tendering. It allows suppliers that are not already familiar with a contracting authority to get up to speed. This would be particularly helpful for SMEs, as it would provide a relatively low-cost way to establish whether bidding for a contract is right for their business.

I have a slight concern that the amendment’s requirement to share answers with “all potential suppliers” might be onerous, but this is a probing amendment and I hope that the Minister responds positively to the idea behind it.

My noble friend’s second amendment is Amendment 123, which amends the provisions of award criteria in Clause 22. Under this amendment, the award criteria must enable innovative solutions to be offered in meeting the purposes of the tender. This returns us to one of my noble friend’s themes for this Bill—namely, that public procurement must foster innovation. It is much easier for a public procurement to specify the detail of what is to be delivered than the objectives or purpose of a contract, but good procurement would positively encourage innovative solutions, because innovation is the key to unlocking value for money for the public sector. I hope the Minister agrees with the aims of this amendment, as well.

Lastly, my noble friend Lord Lansley’s Amendment 149 seeks to amend Clause 26 by creating another reason for excluding suppliers, where no good reason is offered for a low tender price. The “most advantageous tender” rule in Clause 18 does not require the acceptance of the lowest-priced tender, but that will often be the outcome. This amendment is designed to provide encouragement to contracting authorities to understand why a tender price is abnormally low and to eliminate those that are lowballing on the basis that they gain a contract and then, later, find some way to negotiate up the price. This unfortunately happens in real life, sometimes.