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.