Procurement Bill [HL]

Lord Aberdare Excerpts

2nd reading
Wednesday 25th May 2022 Lords Chamber

[Lord Aberdare (CB)]

My Lords, my interest in this large and complex Bill relates to how it will affect the ability of small businesses, particularly in sectors such as construction and engineering services, to access public procurement opportunities. Of course, this is one of the Bill’s stated policy objectives.

The six principles on which the Bill is based are welcomed by small businesses in these sectors. However, as ever, the proof of the pudding will be in the eating—will the Bill deliver what it sets out to do, and will it foster the sorts of good practices and professionalism that the noble Lord, Lord Maude, tellingly emphasised from his deep experience? I was also struck by a phrase used by the noble Baroness, Lady Brinton, asking how the arrangements in the Bill will actually work “in practice”; that will be the nub of the Bill’s success. Many of the measures required to create the new public procurement culture envisaged in the Transforming Public Procurement Green Paper do not feature in the Bill itself; presumably, they will be introduced in subsequent secondary legislation.

The importance of procurement in bringing about needed culture change in the construction sector is recognised in the levelling-up department’s recent Guidance on Collaborative Procurement for Design and Construction to Support Building Safety and in the Cabinet Office’s Construction Playbook. One of my concerns during the passage of the Building Safety Bill was about how such guidance would be put into practice, so I hope to hear from the Minister what regulation, oversight and monitoring mechanisms are planned to ensure that this Procurement Bill achieves its policy goals. The Green Paper speaks of a “Procurement Review Unit”; I wonder what role that will play and why it does not appear in the Bill.

The new system proposed in the Green Paper and embodied in the Bill introduces many new approaches and terminologies that small businesses already finding it difficult to access public procurement may find it hard to get to grips with. The Green Paper also speaks of a

“programme of learning and development to meet the varying needs of stakeholders”

during the six-month lead-in period. Can the Minister confirm that this will include access to relevant training and support for small businesses seeking to learn the rules of the game in order to access public contracts? What plans are there to promote the early engagement of contractors and their supply chains in the tendering process? What plans are there for the pre-market engagement of civil servants so that they can gain an understanding of emerging trends and technologies before going to tender? Clause 17’s requirement for contracting authorities to consider dividing procurements into “lots” is welcome for small businesses, but what are the levers to ensure that this actually happens, and what are the remedies if it does not?

Small businesses often need to use commercial framework providers to access public procurement. This can add significant costs, often 10% or more, to their market prices, and these costs are not entirely visible to them. So how do the Government plan to ensure transparency in the fees charged by such providers? Will the

“central register of commercial tools”

mentioned in the Green Paper require publication of these fees and charges so that SMEs that use such tools can understand the true costs of doing so? How will the Bill help to deliver the gold standard recommendations of Professor David Mosey’s review of public sector construction frameworks?

As the noble Lord, Lord Mendelsohn, mentioned earlier, onerous and unfair contract terms and payment practices are another significant barrier to small businesses accessing public sector contracts. The Green Paper included proposals to give small businesses at all levels in the supply chain

“better access to contracting authorities to expose payment delays.”

It also proposed that public bodies look at the payment performance of any supplier in a public sector contract supply chain.

The Government’s response confirmed their intention to introduce these proposals into legislation, as does the Bill’s impact assessment. Can the Minister confirm that this is still the plan and how it will be implemented? Like the noble Lord, Lord Mendelsohn, I welcome the clauses in the Bill which apparently extend 30-day payment terms right down the supply chain. However, prompt payment initiatives have a history of ineffectiveness, so I would like to know how the Minister plans to ensure that this does not happen this time and what sanctions may be imposed on late payers.

SMEs are often pioneers in their sector: innovating, training and providing real social value impact. As we have heard, social value is another important aspect of the Green Paper which has not surfaced in the Bill. I am glad to say that Wales is leading the way with its Draft Social Partnership and Public Procurement (Wales) Bill. SMEs may be precluded from such innovation if they are not engaged until after tenders have been awarded at the upper tiers of the supply chain. The Bill’s emphasis on a value-led, rather than a price-led, approach to procurement—MAT rather than MEAT—is welcome, as long as it becomes more than a neat new acronym. Public sector contracting authorities need to move to awarding contracts at the price that maximises innovation, investment and training, thereby avoiding the scenarios of paying twice or squeezing the margins of suppliers, which ultimately result in behaviours highlighted by the building safety crisis, whereby lowest cost has been prioritised over quality and safety outcomes.

Much of what I have said relates to measures not specifically covered in the Bill as it stands, so I hope that the Minister will tell us what plans he has to publish draft regulations which address some of these areas in the course of the Bill’s passage. I welcome the Bill and I hope that the Minister will be able to give some reassurance that the proposed new system will include the necessary regulation, oversight and monitoring mechanisms, not just to enable small businesses to play a much larger and more valuable part in future contracts, including in construction, but to ensure that they do.

Procurement Bill [HL]

Lord Aberdare Excerpts

Committee stage
Wednesday 6th July 2022 Grand Committee

[Baroness Brinton (LD) [V]]

My Lords, I declare my interests as a vice-president of the LGA and as a disabled person. I am speaking to Amendment 141, which would ensure that contracting authorities must follow accessibility principles as defined under the UN Convention on the Rights of Persons with Disabilities, or UNCRPD.

The Public Contract Regulations 2015 set out the rules for technical specifications in Regulation 42, saying that it must include “accessibility for disabled persons” as core to characteristics including quality, environmental and climate change performance levels, whole-life design, performance and safety—indeed, many of the things that this Bill is covering.

So, in theory, Amendment 141 should not be necessary. However, Regulation 42(9), on the technical specifications, says that:

“Where mandatory accessibility requirements are adopted by a legal act of the EU, technical specifications shall, as far as accessibility criteria for disabled persons or design for all users are concerned, be defined by reference thereto.”


There are three other sets of regulations—the Utilities Contracts Regulations 2016, the Concession Contracts Regulations 2016 and the Defence and Security Public Contracts Regulations 2011—which all also confirm the conformity with the EU procurement directive. I spoke at Second Reading about that directive.

The very helpful briefing from the RNIB sets out the technical concerns about how we need to ensure that accessibility rules are embedded in legislation following Brexit. This amendment is needed because we must have clear rules for accessibility criteria for people with disabilities and the principles of universal design, as defined under the UN CRPD.

This Government repeatedly say that they were proud to get Brexit done. They also say, proudly on their website, that they want

“disabled people to fulfil their potential and play a full role in society.”

In 2017, however, the UN published its Concluding Observations on the Initial Report of the United Kingdom of Great Britain and Northern Ireland, which was less than complimentary about the UK Government’s progress in abiding by the CRPD. In paragraphs 6(a), 6(d) and 6(e), the UN refers to:

“The insufficient incorporation and uneven implementation of the Convention across all policy areas and levels within all regions, devolved governments and territories under its jurisdiction and/or control … The existing laws, regulations and practices that discriminate against persons with disabilities … The lack of information on policies, programmes and measures that will be put in place by the State party to protect persons with disabilities from being negatively affected when article 50 of the Treaty on European Union is triggered.”


It goes on to say in paragraph 7(c) that the UK should

“Adopt legally binding instruments to implement the concept of disability, in line with article 1 of the Convention, and ensure that new and existing legislation incorporates the human rights model of disability across all policy areas and all levels and regions of all devolved governments and jurisdictions and/or territories under its control”.


There are 78 paragraphs in this UN report setting out what we must still do to comply with the UN CRPD; the Government are due to report back by 8 July 2023. In other parliamentary debates, Questions, Statements and legislation, Parliament is being told time and again by this Government that they want to meet those requirements because complying with the UN CRPD is an absolute priority.

I give two extremely brief illustrations of the failings, which are obvious to me as a disabled person but may not be to others. They would be resolved with a clear and legally binding requirement for accessibility criteria. The first is a bus driver on a publicly funded route, contracted by a council, who refuses to accept a wheelchair user because that driver still has the power to ignore the law and does not want to ask people to move out of the wheelchair space. The second is that a large number of DWP offices and those of their subcontractors —which are used for the assessment of individuals for their access to benefits, whether specifically disability benefits, universal credit or any other benefit—often have steps or stairs and no lift. There continue to be regular reports in the press of disabled people being marked as “no shows” at interviews when they could not access the building, which then results in them being penalised and not receiving the benefits. That is shameful. It also presumes that there would be no staff with disabilities who need to access the buildings, which is just unacceptable.

That is why we need Amendment 141. I look forward to the Minister’s explanation of how this Bill will meet the UN CRPD in relation to all matters on public procurement.

[Lord Aberdare (CB)]

My Lords, I have added my name to Amendment 82, in the name of the noble Lord, Lord Hunt of Kings Heath. As at Second Reading, my contributions in Committee will mainly reflect the interests of small businesses, including in the construction sector, and other smaller providers such as charities and social enterprises; of course, one of the Bill’s aims is to increase access to public contracts for such smaller organisations. I am grateful for the briefings that I have received from the engineering services alliance Actuate UK, from the NCVO and from the Lloyds Bank Foundation.

I will try not to repeat the arguments so strongly made by the noble Lord, Lord Hunt, but small businesses and charities often struggle to compete effectively in competitive tendering processes. They do not have teams with specific bid-writing expertise, so it is often chief executives or managers within the businesses who have to prepare proposals on top of their existing full-time and front-line roles. The process of completing pre-qualification questionnaires and invitations to tender is often onerous and complex, requiring considerable time and resources. Tenders are often launched with little or no warning and with tight timescales. Greater lead-in times and awareness of when tenders will be published would better help small businesses and charities to prepare and subsequently compete for relevant contracts.

The existing wording in Clause 14(1) allows for better practice, confirming that contracting authorities are able to publish a planned procurement notice. But your Lordships will know that being able to do something within legislation does not mean that it actually happens. Amendment 82 seeks to beef up the wording by replacing “may publish” with “must consider publishing” to place a greater onus on contracting authorities to publish a planned procurement notice. I feel that even this requirement is rather a low bar, as well as being extremely difficult to monitor or enforce. My preference might be simply to replace “may publish” with “must publish”.

The amendment also states that a planned procurement notice must be considered whenever “no significant barriers exist” and

“no detriment to service recipients would occur”.

Again, I might have preferred a more positive criterion spelling out that such a notice specifically should be published when this would enable a diversity of suppliers, including of course small businesses and charities, to participate in the contract. I hope the Minister will be able to tell us how the Government plan to ensure that small businesses and charities will receive proper notice of tenders that might be suitable for them, preferably through a requirement for planned procurement notices to be published in most circumstances.

This is just one aspect of ensuring that smaller contractors are involved early enough in the process, not just to be aware of and prepared for tenders for which they might be able and suitable to bid, but also when appropriate to bring their own skills and innovation abilities to influence the shape of the overall bid. Early contractor involvement is something I may come back to later. I welcome the amendments from the noble Lord, Lord Lansley, which also seem to point in this direction. Meanwhile, I am happy to support the noble Lord, Lord Hunt, in his Amendment 82.

[Baroness Worthington (CB)]

My Lords, I declare my interest as co-chair of Peers for the Planet and will speak to Amendments 85 and 87 in my name in this group. I also apologise as this is the first time I have spoken on this Bill, having not been present at Second Reading, but I read the debate with great interest.

I have tabled amendments to this Bill with three goals in mind: first, to try to embed a consideration of the climate change crisis facing us and the environmental goals we must meet into primary legislation. It is important that this appears on the face of the Bill rather than in a yet to be approved policy statement to show the long-term leadership and clarity around tackling these issues, given that public procurement is such a huge lever on both these issues. Secondly, I am seeking to put climate and nature-positive procurement processes in from the very outset of preliminary market engagement and embed it throughout the award criteria setting process to appointment. Thirdly, I want to bring greater transparency to the process and visibility so that all can see how this important lever is being deployed.

The Climate Change Committee highlighted in its recent progress report to Parliament the importance of ensuring that all procurement decisions by all government departments are aligned with our net-zero goals. My amendments seek to address this recommendation. I look forward to hearing the Minister’s thoughts and ask if he would agree to meet myself and other supportive Peers to discuss whether these amendments might be supported.

Amendments 85 and 87 relate to Part 3 of the Bill, under Clause 15, “Preliminary market engagement”. They aim to bring in an ambition to the new procurement regime to positively reward and incentivise those suppliers who are innovating and providing climate-positive and nature-positive sustainable products and services. I am very grateful for the interventions of the noble Lord, Lord Lansley, who I think is seeking to achieve a similar goal: to open this market to new entrants and providers. We cannot stay with the status quo; we must see a transition of our economy towards a more sustainable future. This offers government at every level a very important lever. I hope that it would bring economic benefits for business and wider society if we were to do this.

I am very grateful for the cross-party support of the noble Baronesses, Lady Verma, Lady Boycott and Lady Parminter, on these two amendments.

Procurement Bill [HL]

Lord Aberdare Excerpts

Committee stage
Monday 11th July 2022 Grand Committee

[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.

--- Later in debate ---

[Lord Wigley (PC)]

My Lords, I am delighted to follow the noble Baroness. I support Amendment 38 moved by the noble Baroness, Lady Neville-Rolfe, and support very strongly the points that she and, more recently, the noble Baroness, Lady Noakes, have made. They relate to the pressing need to ensure that the burden on small businesses tendering for public contracts is addressed. This issue has arisen under other amendments, and I have no doubt that we need to get this nailed one way or another on Report. It is an important question.

We all draw on our experience. My experience, immediately before coming to the House of Lords after I had left elected politics, was when I chaired the board of Bangor University’s Bangor Business School. It related to the small business sector. These issues arose time after time. Some colleagues may be aware that way back, before entering full-time politics, I was involved in the manufacturing industry. I had two incarnations, the first of which was with large supernational companies, Ford, Mars and Hoover, when I was financial controller. Although those three corporations were not generally involved in public sector contracting, their approach to any question of contractual relationships was highly professional with relevant legal advice in-house and with the resources to buy in specialist advice when needed.

My second incarnation, which I undertook as a serving MP in the 1980s, was to chair a small company from its creation to when, after 11 years, it merged with a larger American-owned company to form a significant new entity employing 200 people at Llanberis in my constituency. We built—the hard way—the acorn from which that grew, raising our own capital locally and starting up by employing just one person full-time, an engineer to build automated diagnostic equipment for the medical sector.

In competing for contracts, we had to beat competitors that were much larger and with far greater resources and in-house expertise. A small company such as ours had a serious uphill struggle to compete on anything like a level playing field. We did so by being fleet of foot, resilient and flexible and by engaging proactively with potential customers. But it is unrealistic to expect SMEs to be in a position to compete on a level playing field with suppliers which have professional resources in depth. The danger is that such SMEs will be scared away from tendering for public sector contracts where the bureaucratic imposition is totally unreasonable for such small-scale operators.

In this context, the amendment is particularly relevant. If our company had not succeeded with the early contracts, we would not have grown to employ some 50 people, as we did at the point when the merger took place. Had we fallen by the wayside in that highly competitive situation, we would not now have the Siemens company that took over our successful company now employing more than 400 people at Llanberis, and with a further expansion a real possibility soon.

I support these amendments because I feel that there needs to be some mechanism written into the Bill to counterbalance the inevitable bureaucratic safety net which public sector bodies build with their procurement procedures. Providing some lower level of bureaucratic imposition on SMEs could make the difference between those companies, on the one hand, being suffocated out of the competitive arena by impositions that they cannot handle and, on the other hand, securing contracts which enable them, in the fullness of time, to grow, given the impact that that might have on our economy.

[Lord Aberdare (CB)]

My Lords, many of my amendments and those to which I have added my name relate to the issue of promoting greater access to public procurement for small businesses, but for whatever reason none of them has come up in this group, so I will just make two brief points.

First, I very much support all the amendments in this group. I wonder whether they will successfully address the large-supplier focus of procurement hitherto and whether they will be enough to bring in those much smaller suppliers, many of which could make a real impact on the provision of, for example, personal services at a local level but which are often excluded on the ground of having too small an income or no track record of delivering high-value contracts, even when the contracts that they want to deliver are far lower than that and they have delivered them at that level. So I suppose my question to the Minister is: how will the contracting authorities––local authorities or whatever—be dissuaded from imposing, or persuaded not to impose, thresholds and contract terms that actually deter or prevent some of those smaller enterprises from bidding? We have heard a lot about opening things up to small businesses, but unless you put restraints on the contracting authorities, those opportunities may not work.

Secondly, I very much welcome the amendment in the name of the noble Baroness, Lady Noakes, although it was spoken to first by the noble Baroness, Lady Brinton. It seems to me that one of the elements that is lacking from the Bill is any indication of how its provisions will be monitored and enforced. How will we know that it is working? I strongly support the review proposed in Amendment 534. Six years seems to be rather a long time to wait, but on the other hand this process will take time to work through.

Beyond that, I hope the Minister says something about how the Government intend to monitor the effect and impact of the Bill, specifically including whether it is actually succeeding in unleashing the energy, dynamism, innovation and entrepreneurship that come from smaller suppliers, and what mechanisms there might be to resolve the issue if it turns out that is not happening. I do not think we can rely on the courts, and certainly these small businesses do not have the will, resources or even time and energy to pursue issues such as this in court. So what mechanisms might the Government be able to use when the system does not seem to be working?

Procurement Bill [HL]

Lord Aberdare Excerpts

Committee stage
Wednesday 13th July 2022 Grand Committee

[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.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I have several amendments in this group: Amendments 69, 70, 76 and 79. It was interesting to hear the comments from the noble Baroness, Lady Boycott, about hospital food. She may not know that I am president of the Hospital Caterers Association. I must come to its rescue: it does a fantastic job, given the budget it is given. What she may not know is that in the Health and Care Act there is a section which mandates Ministers to set standards for hospital food, following the hospital food review. The issue will be whether there is enough resource with which to fund the standards that Ministers will set. As part of this Bill, the noble Baroness might like to look at amending the Health and Care Act to ensure that there is consistency of approach, because she has made a very important point indeed.

We are continuing this debate about the relationship between the Bill and sustainability and environmental outcomes, and the Minister has been responding. His first response was at Second Reading, when he accepted that the Bill does not include any specific provisions on the target to achieve net-zero carbon emissions by 2050, but he went on to say that contracting authorities will be required to have regard to national and local priorities, as set out in the national procurement policy statement.

The problem is that the existing national procurement policy statement, published in June last year, is full of ambiguity. If I were a procurement director, I would find it very difficult to find my way through all these objectives, some of which are in a tension with each other. I think the Minister’s response will be, “Ah, but that’s the flexibility we want to give to public bodies to make their decisions themselves”. The problem is that in translating that you still come back to the point that the Government are not, at the end of the day, prepared to use procurement sufficiently to ensure the implementation of their sustainability and environmental policies.

Paragraph 10 of the national procurement policy statement sets out:

“Contracting authorities should have regard to the following national priorities in exercising their functions relating to procurement. The national priorities relate to social value; commercial and procurement delivery; and skills and capability for procurement.”


Additionally:

“All contracting authorities should consider the following national priority outcomes alongside any additional local priorities in their procurement activities: creating new businesses, new jobs and new skills; tackling climate change and reducing waste, and improving supplier diversity, innovation and resilience.”


Paragraph 11states:

“Achieving value for money in public procurement remains focused on securing from contractors the best mix of quality and effectiveness to deliver the requirements of the contract, for the least outlay over the period of use of the goods or services bought. But the Government wants to send a clear message that commercial and procurement teams across the public sector do not have to select the lowest price bid, and that in setting the procurement strategy, drafting the contract terms and evaluating tenders they can and should take a broad view of value or money that includes the improvement of social welfare or wellbeing, referred to in HM Treasury’s Green Book as social value.”


Paragraph 12 states that the award criteria can be incorporated

“for comparing final bids and scoring their relative quality, to encourage ways of working and operational delivery that achieve social, economic and environmental benefits”.

This includes tackling climate change and reducing waste; contributing to the UK Government’s legally binding target to reduce greenhouse gas emissions to net zero by 2050; reducing waste, improving resource efficiency and contributing to the move towards a circular economy; and identifying and prioritising opportunities in sustainable procurement to deliver additional environmental benefits, for example enhanced biodiversity, through the delivery of the contract.

Paragraph 13 makes it clear:

“Public procurement should be leveraged to support priority national and local outcomes for the public benefit. This Statement sets out the national priorities that all contracting authorities should have regard to in their procurement where it is relevant to the subject matter of the contract and it is proportionate to do so”.


But here is the rub. Paragraph 15 states:

“Taking additional social value benefits into account effectively is a balance with delivery of the core purpose of the contract. Contracting authorities should ensure that they do not ‘gold-plate’ contracts with additional requirements which could be met more easily and for better value outside of the contract compliance process, particularly where legislation has already determined that such provisions do not apply, for example by imposing requirements in the Equality Act 2010 on the private sector that are only meant to apply to the public sector”.


Paragraph 14 says:

“There should be a clear link from the development of strategies and business cases for programmes and projects through to procurement specifications and the assessment of quality when awarding contracts. This is in line with Green Book guidance which makes it clear that the procurement specification should come from the strategic and economic dimensions of a project’s business case, and that commercial experts should be involved in the development of the business case from the start”.


The question I would ask is this: if you were a finance director or a procurement director in the public sector, what would you make of it? One has to see this in the context of having been through a decade—in fact, longer than a decade—of austerity where short-term fixes are much more common than longer-term sustainability investments.

I turn to the NHS, where I have some experience, and where I could certainly point to some really good examples of sustainability policies. In theory the intent in the Bill, as I see it, is to place greater emphasis on wider value than lowest price. But what this ignores, certainly in the NHS context, is the financial and economic reality that exists on a day-by-day basis. In an environment where savings are demanded in-year and budgets set annually, the overpowering financial incentive is to achieve cost improvement programmes. These savings filter down through the NHS financial system and become a target for finance directors and procurement directors who generally report to the finance director. While I am sure that if we had some finance directors in front of us, they would say that they strive to focus on long-term value, this requires a less tangible and measurable saving than the fact that product A costs less than product B.

In an NHS environment that is financially driven, targeted and appraised for striving to deliver savings targets in-year, and where the most measurable saving is lowest price, it is clearly going to be challenging to move away from that. This experience is probably reflected across much of the public sector; indeed, other parts of the public sector would probably say that the NHS has had it easier. Those of us in the NHS would of course say, “That’s because we need more money”, but the fact is that if the NHS is finding it difficult, other sectors are going to find it very difficult indeed.

My amendments are simply aimed at seeing sustainable development principles incorporated within the national procurement policy statement and the Wales procurement policy statement. At the end of the day, there really is an issue here, is there not? Whatever procurement policy is set out, public authorities will have challenging decisions to make. My own view is that, because of the way in which this has been put together, and potential future national procurement policy statements, public bodies are going to be left with very ambiguous statements where they do not quite know what they are expected to do. The Minister says, “Ah, but that’s flexibility”. I say that it undermines the wider goals towards which our procurement policy should be driven.

--- Later in debate ---

[Lord Aberdare (CB)]

I thank the Minister for that answer and for getting to it at the third time of asking, by which point I was almost bursting with excitement as to what he was going to say. I am not entirely clear why the Bill seems to take frameworks and dynamic markets out altogether but I will study what the Minister has said and endeavour to understand. I thank him for getting there in the end.

[Lord True (Con)]

Well, I did try to get there but I had an intervention, then another intervention. It would be discourteous not to respond to—or be provoked by, as some may feel—the odd intervention. Is that not the give and take of debate, which is what our blessed Parliament is all about? If I have given the noble Lord incorrect advice, I will correct it, but what I have read out is the legal advice that I have been given.

Amendment 78A tabled by the noble Lord, Lord Wigley, provides that a Minister of the Crown may not introduce a Bill in either House of Parliament to amend or omit Clause 13, which relates to the Wales procurement policy statement, unless, as the noble Lord explained, Senedd Cymru has resolved by a majority of those present in voting to approve it. This is an uncongenial part for the noble Lord: the effect of this amendment would be to fetter the power of this and any future Parliament. The Government therefore cannot accept this amendment. However, as I mentioned earlier—he was kind enough to allude to this—we respect the devolution settlement and the competence of Wales on this matter. I have placed that and the degree of co-operation we have with the Welsh Government on the record in Hansard. That due respect for the devolution settlement is something that the Government aspire to see continue in this case, but we cannot accept the lock that he requests in the amendment.

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[Baroness Brinton (LD) [V]]

My Lords, I start with my usual apology that the rules for remote contributors mean that I will be commenting on amendments that have not yet been spoken to by their authors. I have one amendment in this group, Amendment 528C, which has been signed by my noble friend Lord Scriven, to which I will return.

I support Amendments 101A, 528A and 528B which set out the arrangements for procurement, taking into consideration low-income countries and ask that particularly during a public health emergency, not only a pandemic, they should meet certain criteria that are higher than usual.

The World Health Organization’s report, The COVID-19 Pandemic: Lessons Learned for the WHO European Region, recommends as its fifth area for action:

“Strengthening procurement systems, supply chains, operational support and logistics”.


The reason why that it is one of the key recommendations is, I am afraid, the chaos that happened in the early months of the pandemic and the frankly shameful behaviour of some of the wealthy countries which disregarded the fact that Covid was a worldwide virus and that all countries needed access to key goods and services to deal with it—whether PPE, kit for testing, or vaccines as they came on stream.

This Committee is not the place to go into the detail of that; I suspect that most Members of your Lordships’ House will have it fresh in their memories from the last two years. However, I hope that the UK pandemic inquiry will look at our Government’s behaviour, including the taking of vaccines from the vaccine fund COVAX, which was designed specifically to support countries that could not afford either the development or the cost of vaccines in those early days, and, in particular, the blocking of a TRIPS waiver for intellectual property, which prevented low-income countries manufacturing their own vaccines. These amendments would ensure that any future Government must reflect carefully on their role in helping low-income countries have fair access to the tools that they need to manage any major future health emergency.

Amendment 528C is a probing amendment that seeks to remove the provisions in Sections 79 and 80 of the Health and Care Act for NHS England to have its procurement rules set by the Secretary of State for Health and Social Care using a statutory instrument. On earlier occasions in Committee, I asked Ministers a series of questions to which I really hope we will receive answers today. Prior to this, each response from the Dispatch Box, in essence, laid out the differences between the arrangements under the Bill and those in Sections 79 and 80 of the Health and Care Act, which we know already. I will not repeat the details of the likely problems that this will cause in the complex interface of what is and is not covered by the Health and Care Act; it certainly is not as clear-cut as the sections would imply. Much more fundamentally, the reason I have tabled this amendment is to try to elicit answers to the two following questions.

First, why should a body such as NHS England, which procures contracts for £70 billion a year of taxpayers’ money, have procurement rules that are not consulted on widely or taken through the same scrutiny available under the legislation process that this Bill—for all its failings and problems—must continue to go through? During the passage of the Health and Care Bill, no Minister seemed to be able to explain why, and the same is true for this Bill. The £70 billion was specifically for NHS England. The total NHS departmental spend on health in 2019-20 was in excess of £160 billion, so I suspect that the real clinical and associated spending is significantly higher than the £70 billion I quoted. It is the Government’s largest budget after social protection—that is, benefits and pensions—yet the Health and Care Act sets out a procurement regime that is much less visible and accountable than that proposed by the Government in this Bill.

Secondly, is it appropriate that procurement arrangement processes for such a large amount of taxpayers’ money should be determined by a Secretary of State using Henry VIII powers? Not only is this process much less transparent, and it cannot hold Ministers to account, but the capacity is there for a future Secretary of State to change the procurement process much more quickly than under the processes of this Bill. It was helpful during the passage of the Health and Care Bill that the Government bowed to the strong report of the Delegated Powers and Regulatory Reform Committee, which said that at the very least it must be upgraded to be subject to an affirmative procedure. But frankly, Members’ suspicions were aroused by the original proposals that it should be subject to a negative procedure.

During the passage of the Health and Care Bill, the noble Earl, Lord Howe, said:

“We are grateful for the input of the Delegated Powers and Regulatory Reform Committee in advising us on this. In summary, these regulations will allow the NHS to procure healthcare services in a way that reflects the reality of those services without unnecessary bureaucracy and with the ultimate goal of providing value for patients, taxpayers and the population in the vital health services they need.”—[Official Report, 3/3/22; col.1028.]


For the last three and a half days, we have been debating in detail unnecessary bureaucracy and the ultimate goal of providing value for taxpayers, clients and the population in the vital public services they need. I am still struggling to understand why the second-largest public spender in this country is able to use this unaccountable and untransparent procedure. I hope that the Minister will specifically explain to the Grand Committee why this route was chosen for the NHS. If the Minister cannot answer this, will he meet those of us who are interested— I have already asked him twice for meetings—so that we can discuss this prior to Report?

[Lord Aberdare (CB)]

My Lords, I have Amendments 120 and 129A in this group. I will also speak to Amendment 119 in the name of the noble Lord, Lord Mendelsohn, and my noble friend Lord Best’s Amendment 131. Perhaps Amendments 119 and 120 should have come up on Monday, when we were discussing SMEs.

Amendment 120 seeks to address the barriers faced by smaller providers and charities through specifications that disqualify or discourage them from bidding. These typically stem from process taking precedent over purpose, or from narrow or mistaken interpretations of procurement rules. Lloyds Bank Foundation research has found numerous examples of disproportionate thresholds being imposed—some of which we heard about on Monday—including requiring suppliers to demonstrate income unrelated to the size of the contract being tendered for, requiring evidence of having previously delivered contracts much larger than the one tendered for, or unreasonable insurance requirements.

Excessive requirements at the pre-qualification questionnaire—PQQ—and invitation to tender—ITT—stages can also act as significant barriers. To cite one example: a youth association applying to be added to a framework of suppliers linked to the troubled families initiative had to complete a 49-page PQQ and 99-page full tender. Greater clarity is needed about what a proportionate approach looks like.

My Amendment 120, which the noble Lord, Lord Mendelsohn, has also signed, seeks to add a requirement for contracting authorities to include consideration of the impact of conditions on the ability of a broad range of suppliers, including smaller businesses and charities, to access public contracts as part of their assessment of proportionality. Without this, there is a danger that smaller providers will continue to be disqualified on technicalities or by arbitrary barriers, even where they are well placed to deliver the service or are already doing so.

I have also added my name to Amendment 119 from the noble Lord, Lord Mendelsohn, which would allow for conditions requiring suppliers who seek to participate in a contract to be

“signatories of good standing on the Prompt Payment Code”.

All too often, we hear from small businesses of the Prompt Payment Code being honoured more in the breach than the observance, even by businesses that have signed up to it. Making adherence to the code allowable as a condition of participation seems an eminently sensible way of giving it stronger teeth and I hope that the Minister, who has been so responsive in his willingness to look seriously at many of the good ideas proposed by members of this Committee, will look at this one as well.

Amendment 129A to Clause 22, which is in my name, seeks to ensure that the advantages of flexibility in setting award criteria are not undermined by post-award negotiations or other price and cost uncertainties which could affect, or even invalidate, value-for-money considerations used in awarding contracts. To avoid this, the amendment requires the contract to include

“an objective mechanism for determining price and cost after contract award and before the goods, services or works are supplied.”

Only through such a mechanism for confirming value for money being put in place at the time of a contract’s award is it possible to secure maximum supplier contributions to improving value and reducing risks, including through the early appointment of specialists. This is an aspect of early supply chain involvement and having an objective post-award process to achieve the benefits associated with it.

To give an example, those benefits were illustrated by the innovations, cost savings, reduced carbon emissions and local business opportunities agreed by the Ministry of Justice with the supplier and specialists engaged on its Five Wells prison construction project after their appointment and before commencement of work on site; this project featured as a case study in the Construction Playbook. So I hope that the Minister will consider this amendment carefully as a way of ensuring that value for money commitments are met in the procurement of any goods, services or works.

Procurement Bill [HL]

Lord Aberdare Excerpts

Committee stage
Monday 18th July 2022 Grand Committee

[Lord Aberdare (CB)]

My Lords, I added my name to Amendment 445, tabled by the noble Lord, Lord Hunt, and I shall make a couple of points in addition to what he has said.

Clause 84 requires pipeline notices to be published where the contracting authority expects to pay more than £100 million under relevant contracts in the coming financial year. However, this will be required only for contracts with an estimated value of more than £2 million. This threshold will do very little to improve transparency or, indeed, preparedness and competitiveness for SMEs and charities. According to research by the Federation of Small Businesses, over the past three years almost half—48%—of public sector contracts applied for by SMEs were worth below £25,000 and nine in 10, or 89%, were worth below £100,000.

My second point is that the amendment merely requires contracting authorities to consider publishing a pipeline notice where this would be likely to enable a wider range of providers to participate, thus improving the quality and value for money of services tendered. This would surely be a useful, if relatively mild, way of promoting greater awareness of the importance of engaging more small businesses, charities and social enterprise in public contracts. It deserves support.

[Lord Mendelsohn (Lab)]

My Lords, I rise to support Amendment 445, which I was also pleased to sign. The noble Lord, Lord Hunt, made a very good case for why it would be so useful for charities and the noble Lord, Lord Aberdare, extended that. I wish to extend it further to reinforce the point that the importance of the pipeline notice is that it provides guidance for the authorities to take a risk that, in a sense, goes slightly beyond the principle that no one got fired for choosing IBM. If we are trying to get the best service, we must look for the right opportunities and the right people, not just in the context of charities, or even small businesses. Those especially penalised are microbusinesses, freelancers or even start-ups in the commercial sector, not-for-profits and social enterprises. All are massively disadvantaged by tendering for any contract. Many have more than enough skill to be able to do it, and many of the people who provide the backbone for those areas are people who accomplished it very comfortably in larger companies. The effective use of pipeline notices is a strong signal that the Government expect all contracting authorities to make a judgment that will help all those sorts of businesses and those people who can provide excellent and outstanding service. They deserve the opportunity to do so.

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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.

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[Lord Aberdare (CB)]

My Lords, I have added my name to both of the amendments in the name of the noble Lord, Lord Mendelsohn. Until he performed his remarkable imitation of a human ping-pong ball, I was all ready to introduce the amendment on his behalf. I am very relieved that he made it back from the Schools Bill just in time and has relieved me of the necessity of saying almost anything at all, other than to give full support to his amendments.

These two amendments would ensure consistency and complementarity between the provisions of this Bill and those of the code, while also having the positive effect of encouraging more potential suppliers of government contracts to sign up to the code and, indeed, to abide by its requirements. I very much support the noble Lord in everything he has said and in saving me the trouble of saying it.

[Baroness Stroud (Con)]

My Lords, I rise to introduce Amendment 353, tabled in my name and in the name of the noble Lords, Lord Alton and Lord Coaker, and the noble Baroness, Lady Smith, demonstrating cross-party support for this amendment. I also want to underline my gratitude to the Government for seriously engaging with this amendment to the Bill; I know that we share a desire to mitigate the two key risk areas in public procurement which this amendment covers, and I am grateful for their engagement.

Amendment 353 seeks to give the Government two things: first, it seeks to provide the tools to monitor and control the UK’s dependency on authoritarian states; and, secondly, it seeks to ensure a consistent approach to modern slavery across all government procurement. So let us look at how it seeks to monitor and control the UK’s dependency on authoritarian states first. Clause 1 places a burden on the Secretary of State to create regulations that reduce the dependency of public bodies on authoritarian states. There is no agreed definition of what constitutes an authoritarian state in UK law or regulation, therefore Clause 2 adopts the categorisations contained within the Integrated Review of Security, Defence, Development and Foreign Policy, allowing for the legislation to adapt to contemporary geopolitical developments in line with the latest iteration of the review. The countries this amendment would currently apply to as threats are Iran, Russia, North Korea, and, as a systemic competitor, China.

It should be noted that Clause 1 applies to all goods and services which originate in whole or in part in one of the named countries. The amendment is constructed to apply not solely to entire products but also to their constituent parts. So, for example, where a solar panel has been constructed in the UK but relies on polysilicon from another region of the world categorised as a threat or a systemic competitor, that solar panel would, therefore, be within scope of these regulations.

Clause 3 sets out what must be included in the regulations. So, proposed subsection (3)(a) provides for an annual review of dependency to be published by the Government, while proposed subsection (3)(b) requires the Government to define “dependency” and to establish acceptable levels of dependency across industries. Proposed subsection (3)(b) also seeks to appreciate that the risks associated with dependency vary across products and industries. For example, reliance on one region for semiconductors presents very different challenges for resilience from reliance on another region for PPE. So proposed subsection (3)(b) allows the Government the flexibility to take these nuances into account.

Yet the risks of economic dependency are not the only relevant matter here. The second part of this amendment, proposed new subsections (4) and (5), addresses a separate issue: the question of modern slavery in the supply chains of publicly procured goods. The presence of modern slavery in supply chains is clearly unacceptable. This has rightly been acknowledged by the Department of Health and Social Care, which has already taken steps in the Health and Care Act to eradicate from its supply chains goods which have been “tainted”—its word—by slavery. Proposed new subsection (4) adopts substantially the same language as Section 81 of the Health and Care Act, passed earlier this year. The requirement to bring regulations to, in the Department of Health and Social Care’s words, “eradicate” from public contracts goods and services “tainted” by slavery now stands as part of that Act.

When the Health and Care Act regulations are drawn up and passed, those procuring health equipment will have to apply different human rights standards from those procuring goods and services on behalf of other departments, as things currently stand. The main intention of this amendment is to ensure that the UK Government speak with one voice and apply these standards across government. It seems odd for us to be unwilling to procure goods from Xinjiang for the NHS but comfortable doing so for Defra. This is about correcting a loophole in the law and seems to be a matter of simple common sense.

In addition, paragraphs (d), (e) and (f) of proposed new subsection (5) provide improvements on the current modern slavery framework. I particularly commend to the Minister (5)(d), which will improve standards of disclosure and transparency by requiring firms to provide evidence and trace their full supply chain if necessary. Requiring public disclosure of supply chains will considerably improve compliance when compared with the current audit measurements. This is because it is difficult to conduct a credible audit in an authoritarian state. In this context, it is better to know where companies are sourcing from, rather than have an auditor who has no ability to get accurate information.

In conclusion, the two risk areas of economic dependency and modern-day slavery cut to the heart of our character as a nation. We want to stand as a beacon for liberal, democratic values around the world. To do this, we need to ensure we retain the autonomy to act in line with our values by reducing dependency on authoritarian states. We need to ensure that we are living consistently within our values by ensuring there is no modern slavery in our supply chains. The Department of Health and Social Care has shown the way; this amendment enables the rest of government to come into line.

Procurement Bill [HL]

Lord Aberdare Excerpts

Committee stage
Monday 24th October 2022 Grand Committee

Moved by

[Lord Aberdare]

245A: Clause 44, page 27, line 14, leave out subsection (2) and insert—
“(2) A “framework” is a contract between one or more contracting authorities and one or more suppliers that provides for the future award of contracts by a contracting authority to the supplier or suppliers, including through a multi-party framework alliance.”Member’s explanatory statement
This amendment clarifies that sections 44, 45, 46 and 47 governing ‘Award under Frameworks’ include the practices of leading public sector framework providers such as Crown Commercial Service whose framework contracts for goods, services and works include multi-party instruments known as ‘framework alliances’ that are entered into by multiple contracting authorities.

[Lord Aberdare (CB)]

My Lords, I start by joining the chorus of welcome to the noble Baroness, Lady Neville-Rolfe, in her new ministerial post. It brings back happy memories since it was almost exactly seven years ago in this Room that I proposed an amendment to the then Enterprise Bill concerning the pernicious practice of cash retentions, to which the noble Baroness gave a positive commitment in response. I am delighted to be trying my luck again today.

Amendment 245A would simply extend the scope of Clauses 44 to 47 to cater for framework alliances. These are multiparty framework contracts entered into by multiple contracting authorities, which are increasingly being used by leading framework providers such as the Crown Commercial Service. Framework alliances are recognised and supported by the Construction Playbook, as well as by Constructing the Gold Standard: An Independent Review of Public Sector Construction Frameworks by Professor David Mosey, published by the Cabinet Office last December, whose recommendations are strongly endorsed in the 2022 version of the Construction Playbook.

The use of UK public sector framework alliances has been shown to deliver greater value, reduce risks and other improved outcomes as well as enhanced opportunities for small businesses. They have been adopted for UK public sector procurements of goods, services and works worth a total of more than £90 billion. They include important joint systems of supply chain collaboration and joint risk management that are well in advance of those adopted in jurisdictions outside the UK.

Amendment 245A would merely adjust the wording of Clause 44(2) to ensure that the definition of frameworks includes such multiparty framework alliances. I hope that the Minister will be able to assure us that these alliances will be covered by the provisions of this chapter of the Bill, even if not in the exact form of my amendment. I beg to move.

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[Baroness Neville-Rolfe (Con)]

My Lords, I thank the noble Lords, Lord Aberdare and Lord Scriven, and my noble friend Lord Lansley, for their kind words.

I will start with the government amendments, because even though this will not be in strict order, it will help to answer the other points that have been raised. Frameworks are a well-established commercial purchasing tool, used widely across the public sector. Having looked at some of the public responses, that percentage figure that was quoted is not worrying. Key is whether this is a sensible provision and whether we are reforming them in the correct way. The Bill makes a number of improvements to the effectiveness of frameworks, to increase flexibility, provide value for money, et cetera.

I am glad that the noble Lord referred to government Amendment 246 because it is quite a substantial and important amendment among the hundreds that I apologise for having tabled in Committee. It allows contracting authorities to set conditions of participation in a competitive selection process for the award of a contract under a framework. New subsections (3A) to (3F) impose restrictions on the use of such conditions to those which apply to conditions of participation in a competitive tendering procedure under Clause 21. These include limiting the conditions in various ways, for example, to those which are a proportionate means of ensuring that suppliers have the relevant qualifications, experience and technical ability to perform the contract, of ensuring that the conditions do not break the rules on technical specifications, and of requiring that equivalents must be allowed where particular qualifications are required. The question on proportionality is a good one. I do not have as good an answer for the noble Lord as I would like, so I will write to him on that point.

My noble friend Lord Lansley commended new subsection (3G). This restricts the basis on which proposals received as part of a competitive selection process under a framework can be assessed to all or some of the award criteria against which tenders the frameworks were assessed. This is to ensure that suppliers that have already been admitted to a framework do not have to meet entirely different criteria later. New subsection (3H) allows for the award criteria to be refined.

Government Amendments 251 to 255, and 258 to 260, relate to rules for frameworks for the future award of contracts. The remaining government amendments in this group deal variously with light-touch contracts, ensuring open frameworks work as intended, and with minor tidying-up changes.

Turning to the noble Lord, Lord Aberdare, the thing that we worked on together when I was last a Minister is still unresolved, so I feel a sense of guilt.

[Lord Aberdare (CB)]

The Minister did make some progress though.

[Baroness Neville-Rolfe (Con)]

I agree with the objective behind the noble Lord’s Amendment 245A. There is a need for this Bill to ensure that multiple contracting authorities may join to award a framework. Frameworks can result in significant savings, financially and in time, and they say that time is money. This is particularly the case where they are put in place for the benefit of more than one contracting authority, for example by centralised procurement authorities.

To that end, Clause 10 provides for contracting authorities to carry out procurements jointly and for centralised procurement authorities to put in place arrangements for the benefit of other contracting authorities. This enables them to delegate their obligations to run lawful procurements to centralised procurement authorities, in their capacity as specialists, or to jointly procure with them and remain responsible, together with their procurement partners, for the award of any resulting contract. The noble Lord will wish to look carefully at that, but I do not think that his amendment is necessary.

Amendments 247 and 248, tabled by my noble friend Lord Lansley, seek to add additional requirements for the award of contracts under frameworks, without a further competitive process. The first of these, a system based on the suppliers’ ranking in the competition for the award of the framework—the noble Lord talked of a cascade; we have talked of ranking—is certainly one mechanism by which contracts can be awarded under a framework without a competition. However, this is only one selection mechanism, and there are others. They might include a “taxi rank” system, where the next supplier on the list gets the work, or the supplier chosen could simply be the cheapest for that good or service, which contracting authorities might consider to be more appropriate for their requirements on that occasion. There is nothing in the Bill preventing contracting authorities from including rankings in a framework, but there is no need to require this for all frameworks.

The second requirement is to allow for the provision of additional information by suppliers in order to make an award without a competition. In this connection, I draw noble Lords’ attention to Clause 44(6), which allows contracting authorities to ask for additional information to ensure that call off competitions are effective. Sorry, that is a bit repetitive. This seems preferable to receiving large amounts of potentially unnecessary or irrelevant information and adding burdens to the award process, which we are all keen to avoid.

--- Later in debate ---

I respectfully request that Amendments 245A and 247 to 249 are not pressed. I will move the government amendments in my name.

[Lord Aberdare (CB)]

My Lords, I thank the noble Baroness for her response. I am encouraged that she agrees with the objective that framework allowances will be covered by the Bill. I will look at what she said and how she says that they will be covered, but my main objective with this rather simple amendment was to ensure that allowances were covered.

The noble Lords, Lord Lansley, Lord Scriven and Lord Coaker, raised a number of much more substantive amendments. I do not really feel able to respond on their behalf, but I was glad that the Minister said she would come back on the issue of proportionality, which is particularly important. I am sure the other noble Lords will look carefully at the issues of fees, cascading and so forth. I am happy to withdraw my amendment.

Amendment 245A withdrawn.

Procurement Bill [HL]

Lord Aberdare Excerpts

Committee stage
Wednesday 26th October 2022 Grand Committee

Finally, I commend the very sensible Amendment 361A, in the name of the noble Lord, Lord Aberdare. It deals with the fact that when a supplier acts against the interests of a subcontractor, the contracting authority should have a responsibility to make sure that the right thing is done. We have made a terrible error in that we have allowed ourselves to have regulations, but we have not made sure that we enforce them and create responsibilities. No responsibility means no accountability, and across all these things, it would be much better if we were much clearer about that from the very beginning. That is why these amendments are so important.

[Lord Aberdare (CB)]

My Lords, after that introduction I am not sure that I need to say much at all, but I will speak to Amendment 361A, in my name, and briefly in support of the amendments in the name of the noble Lord, Lord Mendelsohn, to which I have added my name, and to his Amendment 356A.

Amendment 361A is another of my probing amendments seeking to reinforce SME involvement in public procurement. It would give the public sector contracting authority the specific right to make a payment directly to a subcontractor when payment from a tier 1 contractor to that subcontractor for an undisputed invoice takes more than 30 days. The contracting authority would also have the right to offset any such payment it has made from moneys owed to, or already paid to, the tier 1 supplier. The aim is to provide the contracting authority with the flexibility to support the financial viability of the supply chain while avoiding unnecessary delays. The amendment creates a right, not an obligation, so the subcontractor cannot insist on such a direct payment. A previously existing and regularly used right would be restored.

During the 1970s and 1980s, when the UK economy last experienced high levels of inflation, public sector clients would often name a specific subcontractor to be used when tier 1 contractors were choosing subcontractors. They also had the right, when the subcontractor was not paid, to step in and pay the subcontractor directly to ensure that the delivery of the contract was not compromised and value for money was preserved. This was accompanied by a corresponding right to reclaim any such payment from the tier 1 main contractor. It was widely used in construction, where the public sector accounted for some 40% of demand in both construction and maintenance of public assets. Of course, this option is particularly important to encourage more SMEs to participate in public procurements. The fact that they can be paid directly by the client if there are problems or delays in payment by the main contractor can significantly boost their confidence in engaging in the procurement process.

There was a similar right introduced by the European Union through article 71.7 of EU directive 2014/24 on public procurement. I do not know why this directive was not transposed into UK law, nor why this direct payment practice, which the UK Government had, after all, pioneered and used themselves for decades, has not been readopted. Now, more than ever, with a volatile economic environment and high rates of insolvency among construction subcontractors, such a right could play an important part in building trust and liquidity in the SME supply chain. There is nothing stopping a client, whether public sector or commercial, from using direct payment, if this is allowed by the contract, but nor is there anything encouraging or motivating them to do so. This amendment would make clear the ability for direct payment to be used where necessary and would drive a fairer payment culture and greater transparency across the supply chain. I hope that the Minister will consider accepting the amendment, or at least undertaking some work to assess the impact of spelling out the possibility of direct payment as an option.

I have also added my name to Amendments 353B, 370A and 430A, tabled by the noble Lord, Lord Mendelsohn, which would represent another valuable step towards improving payment terms and practices for public contracts. I have very little to add to what he has so powerfully said. I understand that the role of the Small Business Commissioner as currently set out in legislation might make it difficult for her to be given the additional responsibilities implied by these amendments. However, I understand that the public procurement review service within the Cabinet Office operates a similar function in relation to public bodies, so perhaps an alternative approach for the Minister to consider would be to require unresolved payment disputes to be referred to them. If the Minister can come up with a better approach to resolving payment disputes in a timely way and ensuring that smaller suppliers receive the funds due to them, I would welcome that with enthusiasm equal to that which I have for the noble Lord’s amendments.

The noble Lord, Lord Mendelsohn, has also tabled Amendment 356A, relating to the BEIS payment performance reporting scheme, which I had not spotted to add my name to. It seems extraordinary that, whereas several thousand of the largest private contractors report every six months to their suppliers on a public database, public sector contracting authorities also report but only on their own individual website. There is no single place where individual small suppliers can understand the rather unimpressive payment behaviour that the noble Lord described of public sector clients, without going through an unbelievable search of numerous databases. I hope that the Minister will support the idea of bringing all this information together in one location and looking at some sort of enforcement mechanism for this reporting, along the lines of the “what get measured gets managed” quote that we have heard a number of times.

Most of the amendments that I have tabled or spoken to in Committee have related to achieving the Bill’s aim of increasing the number of small businesses participating in the public procurement process, particularly in the construction sector. During earlier sessions in Committee, Ministers told us several times that there will be meetings before Report to discuss what more the Government can do to promote the involvement of SMEs and of the voluntary and community sector. Indeed, the offer of such meetings was welcomed by the noble Baroness who is now herself the Minister. Can she confirm that such meetings are still planned and when they are expected to take place? We have heard a great deal in Committee about the need to increase the involvement of SMEs in public procurement. It would be good to review the overall approach that the Bill takes and how it will seek and indeed achieve this worthy result.

Procurement Bill [HL]

Lord Aberdare Excerpts

Report stage
Monday 28th November 2022 Lords Chamber

[Lord Wallace of Saltaire (LD)]

I rise to speak to Amendments 41 and 123, which are amendments to government amendments. We welcome Amendment 40 but, as the noble Lords, Lord Maude and Lord Lansley, have said, we need in the Bill to make sure that, as well as SMEs, social enterprises, mutuals and non-profits are eased and get around some of the barriers otherwise placed in their way. I hope that the Minister will be able to give a sufficiently strong assurance that this is what is intended for it not to be necessary to divide the House on this issue, and perhaps even to come back at Third Reading with an adjustment to the current Amendment 40.

In the Green Paper that started this process, the importance of social enterprise, mutuals and non-profits was clearly marked; it has now disappeared altogether. Many of us are conscious that there are those on the libertarian right who think that every form of economic activity should be in the pursuit of profit and that the idea that you can do anything without wanting to make a profit is absurd and against free market principles. The libertarian right in the United States, which clings to such theological doctrines, has begun to infiltrate parts of the Conservative Party and, I am told, was a visible presence at the Conservative Party conference—but I am confident that real Conservatives do not share that absurd theological view. They recognise that there are many areas, particularly in personal services and care, where the different approach that comes from mutuals and non-profits makes a considerable amount of difference. There have been a number of scandals in care homes run for profit in recent years. I speak with passion on this subject because I have had a relative in a charitable care home who was wonderfully well treated in the last few years of her life.

I hope that the Minister will be prepared to recognise that the importance of social enterprise and non-profits needs to be here, and that she will give absolute assurance that this is what the Government intend, and that they do not intend to leave them with the barriers that the Government intend to remove for SMEs.

[Lord Aberdare (CB)]

My Lords, my principal interest in the Bill has been whether it would achieve its stated objective of giving small and medium-sized enterprises a better chance to compete for and win public contracts, including SMEs providing specialist services in the construction sector, such as those represented by the Actuate UK engineering services alliance. So I very much support the government amendments in this group that seek to reinforce that objective, notably Amendment 40, explicitly requiring contracting authorities to take account of barriers faced by small firms and Amendments 57, 73 and 74, preventing unreasonable requirements for participation, such as providing audited annual accounts even for firms that do not otherwise need to produce them, or having insurance already in place before the award of a contract.

Other issues of importance to SMEs covered in Committee related to improving payment practices for public contracts and resolving payment disputes. However, since these are not specifically addressed in the amendments in this group, it might be more appropriate to raise them when we discuss the procurement review unit on Wednesday. However, I add my support to Amendment 41 in the names of the noble Lords, Lord Wallace and Lord Fox, adding social enterprises and not-for-profit companies to the beneficiaries of Amendment 40.

On that subject, I also thank the Minister for her recent letter confirming the Government’s commitment to resolving a concern I raised in Committee about whether the drafting of Clause 31, concerning reserved contracts to supported employment providers, actually delivers the Government’s intention to implement an approach fully equivalent to that currently in place. I know that community enterprises that use such reserved contracts are much reassured by the commitment given by the Minister and I look forward to the letter she has promised to confirm that the issue has been resolved, and how.

[Lord Lansley (Con)]

My Lords, I thank my noble friend for taking up the issue of SMEs, following not least the points she herself made in Committee. We thoroughly agreed with her and I think there was much consensus. I have two amendments in this group, which are by way of probing the issues a little. The first is Amendment 54. The two government amendments on SMEs relate, interestingly, to covered procurements in the first instance and then to below-threshold procurements separately. To that extent, putting it in the Bill and applying it to broader procurement seems to work in this case.

Amendment 54 would specifically include a reference to the capability of small and medium-sized enterprises in relation to preliminary market engagement, which may well be a place where SMEs in particular need to be supported, because they often do not necessarily have all the credentials and capabilities to hand. The second is an amendment to government Amendment 188, which defines “small and medium-sized enterprises” in thoroughly familiar terms to all of us who deal with these things. I tabled my amendment because the origin of the definition is essentially in European Commission regulations.

The reason that the Commission, in addition to the head-count calculation, adds turnover or revenue requirements is that SMEs have to be assessed by reference to that for the purposes of state aid and subsidy control. In this instance, subsidy control or state aid is not relevant, so, when it comes down to capability, the only issue that really matters is head count. Indeed, the Commission itself, in the regulation it put forward, makes it very clear that head count is the “main criterion”. I think it would be better to rest only on that, rather than to include the necessity for contracting authorities to look at turnover or revenue.

Procurement Bill [HL]

Lord Aberdare Excerpts

Report stage
Wednesday 30th November 2022 Lords Chamber

I do not expect the Minister to accept my dismissal of the relevance of this arcane, antiquated constitutional doctrine, but I hope that the House and outside constitutional experts, on further consideration, will unite in rejecting this attempt to limit parliamentary sovereignty over the Executive.

[Lord Aberdare (CB)]

My Lords, I shall speak briefly on Amendment 97, which the noble Lord, Lord Wallace of Saltaire, has just introduced, concerning the procurement review unit. I am grateful to the Minister for organising a very helpful meeting recently outlining the Government’s thinking on the role of the PRU. This is not envisaged as a statutory body, so does not currently feature in the Bill, but it will have some important functions relating to SME engagement in public procurement, such as fostering much-needed culture change in the construction sector and promoting SME access through means such as training, transparency and, above all, better payment practices for public contracts.

These include making 30-day payment terms apply throughout the public sector supply chain, with the 30-day period measured from when an invoice is first received rather than when it is deemed valid. Contracting authorities will be required to publish their payment performance every six months. The payment performance review scheme, PPRS, run by the Cabinet Office, which has been underresourced in the past, will be given extra capacity, staffing and weight. The current system, based on reporting the volume of invoices paid within 30 days, can allow late payment of large sums to be drowned out by a high volume of lower-value instant payments. To give a truer picture, I hope the Minister might consider requiring the value of payments made within 30 days to be reported, as well as the volume.

The PRU will also carry out proactive spot checks to assess compliance with payment terms throughout the supply chain. The Minister might explore the possibility of using technology to track payment times, which might ultimately lead to more real-time transparency of payment performance. I understand that many construction firms already use technology to produce their payment reports.

These are all very welcome aspects of the Government’s plans for the procurement review unit. I hope the Minister will put them formally on record in her response, thereby averting, or at least reducing, the need for Amendment 97 to include the PRU in the Bill.

I end by congratulating the Minister on her piece in the Times on Monday confirming her commitment to making it easier for small firms to compete for and win public sector contracts. I hope the Times readership will actively support us in holding her and the Government to that commitment.

[Lord Alton of Liverpool (CB)]

My Lords, I can be brief. I thoroughly support everything that the noble Lord, Lord Scriven, said to us in moving his amendment. I do not need to repeat arguments that I placed before your Lordships earlier this week on Monday, in December last year, and then again in January and March this year, and even in the Question that we had just before our proceedings on PPE, which continues to be stored in the People’s Republic of China at a cost to us of some £770,000 every day.

I am extremely grateful that the Minister responded so quickly after our debate on Monday with a letter that I received this morning. For the purposes of the record, I will read out one paragraph. She wrote:

“You made a number of points about PPE contracts which have been found to have underperformed. I also understand you have asked written questions … on these matters. I appreciate your desire for more information on this and I will be writing to the Secretary of State highlighting both your views and those expressed by others in the House.”


That is a very welcome response and I am grateful to the noble Baroness for going to that trouble.

I have sent a copy of our Hansard from Monday to my noble and learned friend Lady Hallett, who is chairing the public inquiry to which the Minister referred during our debate on Monday. The Minister said that lessons would be learned, and that the Covid inquiry would

“cover procurement and the distribution of key equipment and supplies, including PPE”.—[Official Report, 28/11/22; col. 1593.]

I am grateful to her for that.

I have only one other point. On Monday, I raised the issue of repayments. That is not something that can wait for the several years it might take the public inquiry to make its recommendations. I refer the Minister to my two questions about defaulting PPE suppliers and the actions that will be taken through the faulty contract PPE recovery unit. I also asked about individual settlements, which, as she said, are protected by commercial secrecy. I asked

“how will Parliament and the public be notified about money returned to public funds by defaulting PPE suppliers through the actions of the faulty contract PPE recovery unit?”—[Official Report, 28/11/22; col. 1581.]

How will that work? Can the Minister illuminate us a little further? If she cannot, would she be prepared to put pen to paper in a follow-up letter to me as a result of today’s debate? I am grateful to the noble Lord, Lord Scriven, for giving us the opportunity to explore this issue further.

--- Later in debate ---

[Baroness Noakes (Con)]

My Lords, I support the single digital platform which is now covered by government Amendment 129 in this group, but I have one caveat. The benefits of the platform, in terms of efficiency—having all the procurement details in one place—will be undermined if contracting authorities are required also to publish tender information in other ways. That is what lies behind my Amendments 166 and 168 in this group. Like some of the amendments I spoke to on our first day in Committee, these have been suggested by the Local Government Association. I am grateful to my noble friend Lord Moylan for adding his name to them.

These amendments propose two additional repeals within Schedule 11, the repeal schedule. Subsections (4)(b) and (5) of Section 89 of the Transport Act 1985 require local authorities to issue notices of tender individually to anyone who has given written notice that they wish to be notified. Amendment 166 would repeal that, because it should no longer be necessary. Amendment 168 would repeal Regulations 4 and 5 of the Service Subsidy Agreements (Tendering) (England) Regulations 2002 so that information on tenders will no longer be required, for example, to be published locally, including in local newspapers.

I hope my noble friend will see these two amendments as supporting the importance of the digital platform. I also hope that she will be able to assure the House that the Government will ensure that later legislation will not be allowed to undermine the platform by adding new and additional requirements, once it is up and running.

[Lord Aberdare (CB)]

My Lords, I suggested earlier that the Government might explore the greater use of technology to track payment times. I also very much support the proposals in government Amendment 129 regarding a single digital platform for publishing notices, documents and other information, and I wonder if it might in due course be extended to provide a mechanism for monitoring and tracking payment performance.

While I am on my feet, I thank my new noble friend the Minister for her kind words earlier. I also point out to the noble Lord, Lord Moylan, that I was not earlier proposing an amendment to the Bill for improving payment practice, but merely speaking in support of the Government’s plans for the procurement review unit and seeking confirmation of those plans on the record. I am sorry that he is unfortunately not in his place here for me to draw that to his attention.

Procurement Bill [HL]

Lord Aberdare Excerpts

Consideration of Commons amendments
Monday 11th September 2023 Lords Chamber

[Lord Aberdare (CB)]

My Lords, I played a very small part in the Committee stage of this Bill, mostly seeking to protect and promote the interests of small and medium-sized enterprises, and I welcome its provisions in that regard.

I take this opportunity to welcome Amendments 8 and 9 from the Commons and to thank the Minister, her colleagues and her officials for getting them included in the Bill. The Bill as it originally stood had the unintended effect of reducing the scope of existing provision for reserving certain contracts for supported employment providers. These amendments ensure that no such reduction will occur. I am most grateful to the Minister for listening to the concerns raised by Aspire Community Works—itself a supported employment provider—to address and, indeed, resolve this issue.

Amendments 2 and 3 agreed.