Procurement Bill [HL]

Lord Lansley Excerpts

2nd reading
Wednesday 25th May 2022 Lords Chamber

[Lord Lansley (Con)]

My Lords, I am very glad to follow the noble Lord, Lord Stevens. He very helpfully reminded us that we might legislate but it is the Government’s job to execute. The ability with which the execution of policy is carried out is a fundamental part of this. I might also say that, as the noble Lord unfortunately discovered in the particular respect he mentioned, we can legislate but if we leave loopholes we allow the Government to drive coaches and horses through them from time to time. That is why we sometimes have to look very hard at Bills to make sure they very clearly express Parliament’s intentions. Important and detailed as this Bill is—the way my noble friend Lord True very clearly set out the Bill’s intentions was most helpful —as the noble Baroness, Lady Hayman, said, we want constructively now to engage with that and to seek to improve the Bill before we send it to the other place.

In terms of interests, I am a director and adviser to LOW Associates, which is a beneficiary of procurement contracts with the European Union. I have looked quite carefully: we have a number of contracts with the European Commission and we advise on European procurement. Although that gives me experience in this respect, I do not think it gives rise to any direct conflict of interest—but I make the declaration in case anybody wants to check it out.

The noble Lord, Lord Stevens, is absolutely right. Where the NHS is concerned, “light touch” should not mean without proper transparency, processes and the ability to understand what is being bought and why. Indeed, there has been some activity in the NHS that should be paralleled across government. Procurement is increasingly seen as an essential part of the quality of management. That is happening through things such as Getting It Right First Time and the benefit of the report from the noble Lord, Lord Carter of Coles, on procurement in the NHS, which included building a procurement profession inside the NHS, which hardly existed. Right across government, we need chief procurement officers to be seen as often as important as chief financial officers in getting the quality of service and value right.

Because this is Second Reading and time is necessarily short, I will mention just two things—there will be further detail on the Bill—that I want to raise in this debate and that I hope to follow up in Committee and on Report. The Chancellor the Exchequer, in his Spring Statement in March, said that

“over the last 50 years, innovation drove around half the UK’s productivity growth, but since the financial crisis, the rate of increase has slowed more than in other countries. Our lower rate of innovation explains almost all our productivity gap with the United States.”—[Official Report, Commons, 23/3/22; col. 341.]

It is clear from the research that innovation and procurement are intimately related in an economy. Procurement, as a mechanism for fostering innovation in an economy, is probably more important than the grant-led systems that we often focus on. We often operate on the supply side, saying, “We must have more scientists, start-ups and grants for innovation”, but actually we need to remember that the demand side may have at least equal impact, because demand pulls through innovation. The home market—the UK market—in particular can be of additional and significant importance to innovative suppliers, enabling them to establish and bring forward innovation in an economy. Innovation needs to be an essential part of our procurement process.

I acknowledge that the objective of procurement is not innovation but to secure quality and value in public services and to do so in a transparent and fair way. But the consequences of procurement to society are terrifically important. What the noble Baroness and the noble Lord, Lord Fox, were saying about social value is terrifically important. We should acknowledge and understand the externalities of procurement, and, through the legislation, we should tell the public contracting authorities that they should take account of them. There was an interesting exchange on this.

The Government’s national procurement policy statement, published in June 2021, acknowledged that the national priority is social value. In that context, “social value” was defined as

“new businesses, new jobs and new skills; tackling climate change and reducing waste, and improving supplier diversity, innovation and resilience.”

This relates to the point that the noble Lord, Lord Stevens, was making, and to my own point about innovation. These things are all in there, but they are not in the Bill, because the day after the Bill comes into force, the Government could write a new national procurement policy statement.

My initial submission at Second Reading is that government should be very clear that the procurement objectives include not only public benefit but social value, and the latter must be defined in the national procurement policy statement in the ways that we specify in the Bill. I hope to include all those points, including the issues relating to climate change, supply chain resilience and the importance, from my point of view, of procurement-led innovation in the economy.

I will make one other point about treaty state suppliers—this is not the point that was previously made. The International Agreements Committee, of which I am a member, is scrutinising the Australia and New Zealand free trade agreements, which are the first of their kind. The Trade (Australia and New Zealand) Bill has been introduced in the other place, and the purpose of this legislation will be to repeal that when the time comes. So, at the same moment, we have a Bill at each end, with one repealing the other—why is that the case? Looking at the Explanatory Notes to the Bill in the other place, I see that it is clearly because the Government expect that Bill to pass rapidly and this one to pass slowly. Therefore, the consequence is that they need that legislation quickly but will subsequently repeal it using this legislation. This is the way that such legislative matters proceed.

My problem is that Schedule 12 to this Bill simply repeals that legislation. So, if we were to amend the Trade (Australia and New Zealand) Bill at any point in the future, it could—or, in fact, would—be repealed by government by virtue of Schedule 12, so any debate on the Trade (Australia and New Zealand) Bill is pointless. I hope that we make sure that that does not happen. We must therefore have a serious debate about whether we are happy for future free trade agreements with procurement chapters to be implemented solely by secondary, rather than primary, legislation. We had this debate on the Trade Act, and I think that we will need to come back to it.

Overall, this is an important Bill, very well introduced by my noble friend—

[Lord Wallace of Saltaire (LD)]

There are only 11 schedules to my copy of the Bill.

[Lord Lansley (Con)]

Forgive me—it was actually added to Schedule 9. But I am referring to paragraph 3 in Schedule 11, on repeals. None the less, I welcome the Bill and look forward to our debates on it.

Procurement Bill [HL]

Lord Lansley Excerpts

Committee stage
Monday 4th July 2022 Grand Committee

[Baroness Hayman of Ullock (Lab)]

My Lords, where do I start? This is a really important and long-awaited Bill, so it is incredibly disappointing that, after so much time, the Bill was not fit to have been published when it was. With all these amendments, it is quite different from what we debated at Second Reading, even if many of the amendments are technical and there to tidy up. The Government really should have thought about this and got their act together before the Bill was published in the first place.

I know that the Minister is someone we can work with constructively on Bills—I appreciate that—but the Government’s incompetence over the weekend and the way this has been done challenge our ability to work together constructively. That is something else that disappoints me personally. As the noble Lord, Lord Fox, pointed out, it puts too much pressure on staff, who were expected to try to pull this Bill into shape over the weekend.

I reiterate completely what the noble Lord, Lord Fox, said about providing proper Explanatory Notes rather than annexe A, which was very thin on information and, in some cases, did not cover everything that the amendments were about. I spent most of the weekend trying to get my head around a lot of these amendments and cross-reference with the annexe. This is an important Bill and a lot of it is technical. I am not a procurement law expert, so I need support in the Explanatory Notes to understand exactly what is happening and what the amendments will do. When we are cross-referencing and trying to make sense of things, it is hard. As a member of the Opposition, let me say that this is not just about holding the Government to account; as I said, it is about working constructively to make legislation better. The Government have not helped us to do this.

My plea to the Minister is that we really need to move on from this and make sure that we can scrutinise Bills in a much better way. We are where we are with the Procurement Bill.

I totally understand and support what the noble Lord, Lord Fox, said about objecting to some of the amendments, because all this has been deeply unhelpful. Okay, we will do only three groups today, but at some point we have to get stuck in. It took me over two hours yesterday to go through all the amendments in group 1—group 2 has about three times that number. If we are going to do this properly, and actually look at the amendments rather than take the Government’s word on what is in them, it will be very time consuming.

I am afraid I am going to share with noble Lords some of what I did yesterday. It needs to be spelled out how complicated and confusing it is when we try to manage something such as this. Obviously, I started with group 1 and the proposed new Clause 1, which is about procurement and covered procurement. I read the amendment. I did not really understand what covered procurement it is, so I looked at section 5 of annexe A, which is just definitions; there is no further information. I still do not really understand the implications of changing this terminology. That is something we need to get across to the Government. We need to know exactly what is happening. This also has an impact on Amendments 55, 301, 405, 406, 408, 411, 416, 453 and 454. This affects many parts of the Bill, so we have to understand what is going on here.

I then looked at Amendment 172 to Clause 30, which would delete the word “procurement” and insert

“the award of a public contract”.

Apparently this is in annexe A, sections 3 and 8. Section 3 just says “replaces references to associated supply with associated person and expanding the concept”, but again, why? Why is that important? Why do we have to do that? Section 8 is about ensuring clarity on how a contracting authority must treat a supplier. Why do those changes do that? What is the purpose behind changing the terminology?

We have talked about the devolved Administrations. Amendments 282 to 285 to Clause 51 are about Northern Ireland. This is covered by sections 26 and 27 of annexe A, which say that “contract deal notices in respect of light-touch regime contracts must be published in 180 days.” Again, there is no proper explanation of how that affects Northern Ireland and what it means for the way it carries out procurement.

Moving on, I came to Amendments 342, 349, 356, 378, 380 and 383, which also refer to Northern Ireland, and Amendments 392 and 433, which refer to Wales. But the annexe also mentions Wales for the amendments that are supposed to be about just Northern Ireland, so it does not cover everything that the amendments say they do. I had had about four cups of coffee by this point just to try to keep going.

Amendments 377, 381, 385 and 387 would insert the word “was”, but the parts of the Bill they would amend already have the word “was”. Again, I am really confused about why we need another “was”.

Amendments 379, 382, 386 and 388 would insert

“as part of a procurement”.

If that is something that needed to be spelled out, I find it extraordinary that it was not written in in the first place.

Amendment 389 would delete subsection (10), which says:

“This section also does not apply to … defence and security contracts, or … private utilities.”


That is not tidying up or technical; it would delete a subsection that says something. I ask the Minister: what does that actually mean? What does it do? Why is that subsection being deleted? What is the purpose behind it?

Amendment 390 would delete a paragraph that reads,

“the value thresholds in subsection (2)”.

Again, it is not a tidying-up but a deletion. What does this actually mean? I am sure I am confusing everyone here because they do not have the Bill in the right places in front of them—I could read out the actual page numbers, if noble Lords want.

Amendment 391 would delete “in subsection (7)” on page 46, line 9. Why are those words being deleted? What is the purpose behind it?

Amendment 395—there are a lot like this—would delete “supplier” and add “person”. If this terminology was wrong, why was it not picked up so much earlier, when the Bill was being first drafted?

Amendment 424 would delete

“the award of a contract”

and insert “procurement”. Again, if that is the terminology that should have been used, why was it put in wrong in the first place?

In Amendment 425, “unless it is awarded” is to be deleted and “other than procurement” inserted. Those do not really seem the same to me, so what is the point of that change? What are the Government trying to do?

Amendment 426 would delete paragraph (c) on page 50, line 18:

“in relation to the management of such a contract.”

Why do we need paragraph (c) deleted? What is the purpose of it? Annexe A does not tell us any of this information.

Amendment 437 says:

“Page 53, line 3, leave out paragraphs (a) and (b)”.


Why are we deleting paragraphs (a) and (b)? What is the purpose and what are the consequences?

Amendment 438 says:

“Page 53, line 17, leave out ‘or services’ and insert ‘, services or works’”.


That seems the sort of thing that should have been drafted correctly in the first place.

Amendment 439 says:

“Page 53, line 26, leave out from ‘procurement’ to end of line 27”.


That is also the same in Amendment 462. Again, it looks to me like something that should have been done properly in the first place.

Amendment 440 says:

“Page 53, line 37, at end insert”,


and noble Lords can see the words on the Marshalled List—there is a lot there, and I really do not think that anyone wants me to read it all out. Again, this is not a technical adjustment but inserts quite a substantial amount of text. What are the implications? These may all be marvellous changes that benefit the Bill, but the point is that we do not know because we do not understand what is going on here.

Amendment 463 would delete subsection (8) on page 57, line 7. Amendments 439 and 462 do the same thing. What is the purpose of deleting subsection (8)?

I will not cover Amendment 528, because it has been moved to a different group. Noble Lords will be glad to know that I have only two left.

The annexe says that Amendment 540 is to define expressions. It inserts “covered procurement” and “debarment list”. What does “covered procurement” mean? Why does it reference the “debarment list”? That is similar to Amendments 542 and 543.

I will finish there. I just wanted to get across to the Committee and the Minister how very confusing this is and how little back-up information we have. We want to work constructively with the Minister. We want this to be a good Bill. For goodness’ sake, we just need to be able to get it sorted.

[Lord Lansley (Con)]

My Lords, I am the bearer of a simpler brain than the noble Baroness, so I may not cast too much helpful light, but I will do my best. I come to this more in general terms than trying to work from the specific to the general.

I thank my noble friend very much for taking out Amendment 528. I was going to ask him to do that, because we should consider the health service issues together, including Amendment 30 relating to the scope of the light-touch contracts.

--- Later in debate ---

[Lord True (Con)]

My Lords, I listened carefully to the noble and learned Lord’s remarks. We will take them away. I have said that I will withdraw the amendment.

My noble friend Lord Lansley was accurate in divining the Government’s intention with this. The intent is to distinguish between the fully regulated—I will not use the word “covered”—and the less regulated.

[Lord Lansley (Con)]

I am sorry to interrupt my noble friend, but I am glad that I was not misdirecting myself.

On the noble and learned Lord’s point, I understood what it meant only when I looked at what “public contract”, as defined by Clause 2, means. Once one looks at Clause 2, it becomes very straightforward to check it. I looked at Clause 1 and realised that it is not a national covered procurement policy statement but a national procurement policy statement. None of the amendments change that bit, which told me that what we are dealing with here is the Government proposing that there should be a mechanism for talking about procurement in its broadest sense, while intending to regulate procurement in a slightly narrower sense by regulating everything above the value threshold. This did not seem intrinsically confusing to me once I understood what it is we are trying to do here.

[Lord True (Con)]

I do not think that, in public remarks that will be recorded for all eternity in Hansard, Ministers should ever agree to the idea that anyone might be confused by the crystalline words that come before the Committee, but I must say that I did not, at first blush, understand these proposals when they were put forward and laid. I understand the objective, and think that both the noble and learned Lord and my noble friend have understood and divined it. We believe that it meets the requirement but, in the light of what your Lordships have said, I am sure that we can reflect on that. I will withdraw this amendment so that we can come back to it.

My advice from legal advisers is that this amendment adequately achieves the objective we sought. As to the elegance of it, I am not going to go into a disquisition of other circumstances in which “covered”—

--- Later in debate ---

Moved by

[Lord Lansley]

3: Clause 1, page 1, line 21, at end insert—
“(3A) A university is not a public undertaking for these purposes.”

[Lord Lansley (Con)]

My Lords, I am glad to have the opportunity, by way of Amendment 3, to probe—I think it is literally that—how the Bill is to be interpreted in relation to the activities of various organisations. I am using universities as a way of trying to understand how it works. Clearly, universities are charter bodies. I assume they are not included in a definition of public authorities, since they do not exercise an authority of a public nature. That is question No. 1.

Question No. 2 is: if they are not a public authority under Clause 1, are they a public undertaking in that they are

“funded wholly or mainly from public funds”

or

“subject to contracting authority oversight”?

Are they subject to such an oversight? Is the Office for Students such a contracting authority? I suspect it might be, and might have oversight. Is the intention that universities, purely by way of an example, should be included in the definition of public undertakings for these purposes? If they are, I come back to Amendment 3 and say: perhaps they should not be because, as charter bodies, they are self-governing institutions and, I would have thought, can be perfectly comfortable outside the scope of the legislation.

I will not comment on other amendments in the group, other than to say that they afford an opportunity, not least for my noble friend Lady Noakes—I think she is not intending that hers be moved—to explore the way in which public contracts are to be defined, the extent to which there are exempted contracts within those and the rationale behind the listing of the exempted contracts in Schedule 2. I will leave that to my noble friend. Suffice it to say that I am, as my noble friend the Minister said, generally in a position of us trying to regulate less rather than more and to get to the point where people are clear where they are pursuing things competitively, where they are self-governing institutions and where they have other forms of accountability. Where we are not required by our international obligations or other reasons to impose regulatory requirements on them, we should try to avoid doing so. I would be grateful if my noble friend if he uses the example of universities as a way of helping us understand how the specific provisions in Clause 1 are to be interpreted. I beg to move.

[Baroness Noakes (Con)]

My Lords, I have a number of probing amendments in this group and throughout the Bill. The majority of them have been inspired by Professor Sanchez-Graells of the Centre for Global Law and Innovation at the University of Bristol Law School. I am grateful to him for sending me his research-based analysis of the Bill, which listed 50 areas to explore further. Noble Lords will be relieved to know that I have whittled this down to a smaller number of probing amendments.

In this group I shall speak to Amendments 4, 8, 9, 23 and 29 in my name. Amendment 4 is a probing amendment in relation to the definition of “public authority” in Clause 1. Subsection (2) includes authorities or undertakings

“subject to contracting authority oversight”,

which is defined in subsection (4). That says “contracting authority oversight” exists

“if the authority is subject to the management or control of … a board more than half the members of which are appointed by a particular contracting authority.”

My amendment probes whether this is the right definition.

The Bill’s definition appears to turn on whether board members are actually appointed by a contracting authority. Company boards are appointed by shareholders, so who is appointed by whom depends on whether the shareholders exercise their voting rights in any election of directors. A contracting authority may own a majority of shares and hence be capable of appointing a majority, or even all, of the directors but may not in fact exercise its rights, whether by accident or design. Nevertheless, the authority will be capable of voting for board appointments and would, in normal parlance, be treated as having control. Most definitions of “control” in other legislation use that concept and I suggest that the Bill would be better drafted on the ability to control, rather than on what votes have taken place in the past.

My Amendments 8, 23 and 29 probe why the Bill, with its admirable aim to consign EU procurement code to history for the UK, has persisted in using language that can only have been derived from the EU and is not part of UK usage. I raised this at Second Reading. When I searched online for “pecuniary interest”, which is the particular phrase used, the only references that came up were to declarations of pecuniary interests in connection with standards in public life. The term is used in that way in secondary legislation dealing with local authorities. It never seems to be used in the context of contracts.

My amendments propose replacing “pecuniary interest” with “consideration”, which is a term that has a long-standing pedigree in contract law. An alternative could be to remove the words entirely, as it is not clear why it is necessary to restrict contracts that state a consideration, monetary or otherwise.

My last amendment in this group is Amendment 9, which probes another term that is used in Clause 2. A contract within the scope of the Bill is one for the supply of goods, services or works to a contracting authority. The context in which I tabled this amendment was to see whether it covered contracts where a contracting authority contracts for services to be provided to some other person; for example, where social care services are procured. This is clearly the intention of the Bill, but I am not clear that it has been drafted to achieve that.

On reflection, I query whether the words “to a contracting authority” were at all necessary in the clause. It may be a hangover from the EU rules, which we have by no means escaped with this Bill. Every time words are put into legislation, there is a question about what they mean or do not mean. This came up earlier when the noble Lord, Lord Fox, was speaking. It is important to be clear that we use words only when we absolutely have to and that they have definite meaning.

--- Later in debate ---

I am sorry to speak at such length, but a large number of matters were raised and, if I have missed any, I apologise to colleagues in the Committee; we will pick them up in correspondence.

[Lord Lansley (Con)]

My noble friend should not feel he has to apologise for responding to colleagues in Committee who raised a number of points. That is precisely what we are here for, and we are grateful to him for that; he did so extremely well, and it helped us to realise some of the important links in the Bill, how it is structured and why it is structured as it is. For example, the fact that we have for a long time been signatories to the Agreement on Government Procurement, the GPA, has been reflected in EU legislation; in the absence of EU legislation or carrying it forward as retained EU law, we want our own legislation, but the GPA does not apply in the United Kingdom unless we legislate for it. That is how our domestic legislation works, and we have to have a structure to do that.

Coming back to my Amendment 3, I had not understood that the GPA itself was the basis for the interpretation of whether universities are public authorities for these purposes. Happily, I do not think it will distress universities too much, as it is a continuation of their existing situation. When we look at exempted contracts, we see that research and development and employment contracts are out, which are probably their two main elements of expenditure. I should think they would be perfectly comfortable with that.

On that basis, I will not detain the Committee any longer. I beg leave to withdraw Amendment 3.

Amendment 3 withdrawn.

Procurement Bill [HL]

Lord Lansley Excerpts

Committee stage
Wednesday 6th July 2022 Grand Committee

[Lord Hunt of Kings Heath (Lab)]

My Lords, as this is my first intervention, I remind the Committee of my presidency of the Health Care Supply Association. I have Amendments 82, 92 and 141 in this group, none of which have much to do with each other, but that is part of the mysteries and delights of grouping.

Amendment 82 is particularly concerned with the challenges facing charities seeking to obtain contracts from public authorities. I am very grateful to NCVO and Lloyds Bank for their briefing on this matter. While all types and sizes of charities experience challenges relating to the commissioning and procurement of public service contracts, smaller organisations often face considerable barriers. Yet a large proportion of the voluntary sector is actually fundamental to the delivery of public services. There are many examples, but we know, for instance, that the voluntary sector is the leading provider of services—according to research commissioned by DCMS—in relation to homelessness, and there are many other services where we are absolutely reliant on the voluntary sector.

However, there is a real problem in the huge amount of work that needs to be done to assemble information and make bids. Advance notice of tender opportunities is important for charities. We know that many of them have far fewer resources than private companies to support bid-writing, so they need time to plan. They also want to take time to work with service users or other charities to develop an offer, and that cannot be rushed. When commissioning services for people, especially those experiencing a range of intersecting challenges, a market does not often exist, so preliminary market engagement is critical for understanding what people need and how those needs could be met.

All my amendment seeks to do is create a presumption that contracting authorities should have ample notice through a planned procurement notice, unless there is a very good reason not to do so. This would allow the necessary time, particularly for smaller charities, to prepare bids.

My Amendment 92 is about the need for rigour and accountability in procurement. It starts from the requirement set by Her Majesty’s Treasury to ensure that the investment of public money, especially large sums, is done objectively and in a way that those who have to authorise the investment can rely on. It also deals with the principle of transparency and would ensure that business cases are routinely published.

My understanding is that it is already required under Green Book guidance from Her Majesty’s Treasury, particularly for major projects managed in the government portfolio, that at least a summary of the business case has to be published within four months of contract award. The Green Book, which has been regularly updated by the Treasury as circumstances require, describes in great detail the rigorous process that needs to be followed. The principle is that if you do not abide by this, you will not get approval for the expenditure of resources. Much in the Green Book is based on the need for a proper business case and I believe it was also envisaged that the business case would be published.

The problem is that regulation and good practice are too often ignored in the public sector. I think athere is less appetite for proper enforcement of that guidance. All campaigners can do to raise concerns about a particular tender process is go for judicial review, which, as we all know, can be very expensive.

My particular interest is the NHS. When I was a Health Minister, which seems a very long time ago, there were very strict rules about spending and investment by trusts. If public money was sought for a major procurement or programme then a strong authorisation path led from region to department, and often to the Treasury itself. Some of that remains, but what is missing is that the former strategic health authorities ensured that the required processes were followed properly and intervened when they were not. They also ensured that the public were consulted, but much of that has foolishly been thrown away. That means that it has become much harder for the public to hold decision-makers to account.

It is very noticeable that, last month, the Public Accounts Committee published a report on the Department of Health’s 2020-21 annual report. It commented that the department

“has regularly failed to follow public spending rules and across the Departmental Group there is a track record of failing to comply with the requirements of Managing Public Money. The Department is required to obtain approval from the Treasury before committing to expenditure where such authority is needed. The Treasury has confirmed that £1.3 billion of the Department’s spending in 2020–21 did not have HM Treasury consent and was therefore ‘irregular’. The Treasury has stated that ‘in the vast majority of cases’ this was because either the Department and/or the NHS had spent funds without approval or in express breach of conditions.”

If the noble Baroness, Lady Noakes, was still in the position she held on financial management in the Department of Health, that would not be happening.

My amendment would ensure that there is a proper business case and that it should be publicly available before crucial decisions are taken. If the Minister says that it is already required, the fact is that parts of the public sector are not listening. I hope that this debate will be helpful in ensuring that the Treasury and government departments look at this very closely in the future.

My third amendment follows a briefing from the RNIB and concerns the fact that, in replacing the existing legislation, the Bill overwrites requirements that are of particular significance to 14 million disabled people in the UK because they ensure that publicly procured goods and services are accessible to everyone. It is pretty unclear at the moment how the current Bill will replace that regulatory framework, and my Amendment 141 seeks to re-establish a requirement that contracting authorities have due regard to accessibility criteria for disabled people.

In June last year several organisations, including the RNIB, wrote to the Cabinet Office seeking assurances that accessibility for disabled people would be maintained in public procurement legislation. Responding, the then Minister, the noble Lord, Lord Agnew—who has certainly shown how you should resign, in style and with full transparency and visibility to your Lordships’ House, although I do not think he quite managed the grace of the noble Lord, Lord True, in his very perceptive remarks yesterday—said that the Government are committed to ensuring that accessibility for disabled people is maintained as part of public procurement legislation, and that the new regime will ensure that specifications take into account accessibility criteria and design for all users. Despite that, the only reference we can find to accessibility is in Clause 87(2), which states that any electronic communications utilised as part of the public procurement exercise must be

“accessible to people with disabilities.”

This is partly probing—finding out the government response to it. If the Minister argues that the public sector equality duty under the Equality Act is sufficient, we will argue that it is not sufficient because we have seen contracting authorities failing to consider their obligations and procuring inaccessible products. This amendment is only a start, but I hope the Minister will be sympathetic to the issue.

[Lord Lansley (Con)]

My Lords, before I speak to my Amendments 84 and 88, I will just say that, while I do not think it is a registrable interest or a conflict of interests, my experience in these things is largely derived from my work, over a number of years now, advising LOW Associates SRL in Brussels, which has a number of contracts with the European Commission and other European agencies. We have participated in procurements on a number of occasions each year in the European context. That gives one quite a lot of experience of the system we are moving from and some of the ways it can be improved. I put that on the record.

My noble friend and other noble Lords may recall that at Second Reading the most important point I made—it is one I will return to on a number of occasions, including when we talk about the procurement objectives and the national procurement policy statement —is that procurement by the public sector is a very large element of economic activity. The way in which it is conducted can have a significant and beneficial impact on productivity in the economy if the issues of innovation are properly incorporated into the consideration of how procurement is undertaken and who the suppliers to public authorities are.

In a sense, the noble Baroness, Lady Worthington, is trying to do the same kinds of things in Amendments 85 and 87. We are maybe trying to approach it in slightly different ways. The same will be true in relation to the procurement objectives.

I hope that in responding to this debate my noble friend can at least give us a sense that we can work together to try to ensure that the promotion of innovation is one of the central aspects of how contracting authorities go about their process of delivering best value, and that the broader externalities of procurement, through promoting innovation in the economy, are realised. They are significant.

Procurement Bill [HL]

Lord Lansley Excerpts

Committee stage
Wednesday 13th July 2022 Grand Committee

Tabled by

[Baroness Noakes]

60: Clause 12, page 9, line 2, leave out “may” and insert “must”

Procurement Bill [HL]

Lord Lansley Excerpts

Committee stage
Monday 18th July 2022 Grand Committee

Tabled by

[Lord Lansley]

86: Clause 15, page 11, line 16, after “suppliers” insert “, especially among small and medium-sized enterprises,”

[Lord Lansley (Con)]

I thank my noble friend Lady Noakes for the splendid way in which she addressed my amendments last week, for which I am most grateful.

Amendment 86 not moved.

Procurement Bill [HL]

Lord Lansley Excerpts

Committee stage
Monday 24th October 2022 Grand Committee

[Lord Fox (LD)]

My Lords, as the noble Viscount set out so speedily, this new concept of dynamic markets is so new that a lot of it did not even make it into the original Bill; it had to be brought in as amendments. Thereby hangs a concern—not with the concept of a dynamic market, which I will come to shortly, but with how this is being put together, the sum of the parts and how it will work. It is difficult to see exactly how this will work in practice from the noble Viscount’s presentation that we just heard, the Bill itself and the original White Paper. That is my concern.

It would be helpful if the noble Viscount came back to us in writing with a simple message as to how this will work. How, for example, does it welcome innovation rather than shut it out? I will give an example. Whether a dynamic is based around process rather than outcome makes a difference, so how will these rules manage dynamic markets that actually deliver constant innovation? How will they be refreshed? How will the system work so that, rather than having the power of incumbency, if you like, which is often what happens with procurement, power will be pushed around to allow innovation, new entrants and new people to work within this dynamic?

We can call something dynamic but how is it dynamic on an ongoing basis if I use this market to buy things or services on a daily basis? Essentially, that is my concern: all these amendments are tinkering around technically with process but, because of the way this has been put together in pieces, will it actually work? Can the Minister come back with some assurance as to how this is supposed to work? How will it be constantly renewed? How will he ensure that it is open to new entrants throughout the life of that dynamic? How will individuals know that they are able to keep entering that market? Tenders will not be going out, so what is the process? If I have a small or medium-sized business, how do I find out about dynamic markets that might suit my product or service set? I am concerned about those kinds of mechanisms and processes.

[Lord Lansley (Con)]

I had not intended to intervene but I am getting a bit confused here. In the Public Contracts Regulations 2015, Regulation 34 describes a dynamic purchasing system. First, I am trying to understand the difference between the dynamic purchasing system that existed in the regulations we are replacing and this apparently entirely new dynamic market; I am not quite clear what it is. Secondly, the dynamic purchasing system in the regulations is an entirely electronic system. This one is not necessarily so.

[Lord Fox (LD)]

I think it is.

[Lord Lansley (Con)]

I hope it is but it does not say so, whereas the 2015 regulations make it clear that it is. I wonder whether this will be an entirely electronic system.

[Baroness Hayman of Ullock (Lab)]

I shall be extremely brief as the noble Lord, Lord Fox, has already covered a lot of the concerns that your Lordships feel. Following on from that, we need some clarification around the issue, as the noble Lord, Lord Lansley, just said, of whether it is or is not entirely electronic. How is that going to operate? What are the conditions of membership? We need some clarification on the detail of how the dynamic markets are going to work. Perhaps the Ministers opposite could write to the Committee with some clarification about the operation of the system ahead of Report. That would be very helpful.

--- Later in debate ---

[Lord Lansley (Con)]

My Lords, I will speak to my Amendments 247, 248 and 249 in this group. This is my first chance to make what I regard as a substantive contribution and to welcome my noble friend to her Front-Bench responsibilities. Speaking as a poacher these several years, our loss is the Government’s gain—and hopefully the Committee’s gain, too; as the noble Baroness, Lady Hayman, quite rightly said, the fact that my noble friend has already evidenced interest in the Bill is a positive signal to start off with.

I will not go on at great length. I declare an interest in that my wife’s company, with which I work, has been involved in a number of framework contracts. They are all in Brussels and nothing to do with the UK Government. They relate to the European Commission, to NATO and so on.

Without going on at length about framework contracts, everybody can see why they might be a useful thing for contracting authorities to use. They enable them to establish a group of suppliers who have the necessary credentials, capacity and so on, and they are then able to call them off at relatively short notice for these purposes. Everybody can understand that. The problem is that this is not always how they are used. What often happens is that you end up with something that is a speculative framework; we have experienced a number of occasions where no subsequent work has been offered under that framework, so all the original work in relation to that framework was nugatory. Sometimes, the frameworks need subsequent further competitions and a range of suppliers that have all been included in the framework. The subsequent competitions are, frankly, no less onerous than the original competition would have been, the only difference often being that they are done at much shorter notice than the original tenders were required to be. That can impose all kinds of difficulties, especially on SMEs. I declare an interest: our company is an SME in the European procurement context.

So why these amendments? My amendments—particularly, for this purpose, Amendments 247 and 248 —are about at least trying to intrude the idea that the original framework competition ought to rank suppliers. Then, the suppliers who are ranked have some idea of how this is going to work. I have seen the positive benefit of that since, from time to time, we have engaged in this and it has become clear that the contracting authority is going to have what it describes as a cascade. A cascade outcome for a framework competition leaves suppliers in a much clearer position as to their future potential work because you learn that, if a requirement is likely to come forward, it is going to be offered to the number one supplier first. If they do not want to take it, it will cascade down, so you do not have to engage in a lot of additional activity.

I saw no evidence that this description of frameworks entertains cascade-style framework competitions. I thought it should so I tried to write something that did not mandate a cascade, but at least allowed for that possibility. Happily, one of the things that I also thought that cascade help you to do is focus more on the original framework competition as a basis for the subsequent selection of suppliers. That is why, when my noble friend comes to introduce Amendment 246, I will be particularly glad to see proposed new subsection (3G), which says that the competitive selection process that might be undertaken subsequent to the framework for the selection of suppliers should be

“only be by reference to one or more of the award criteria against which tenders were assessed in awarding the framework.”

It therefore entrenches the original framework competition in terms of the way in which subsequent contracts are to be offered.

The point of my Amendment 247 is to introduce that concept of the ranking of suppliers for the cascade. It would therefore move the reference to an objective mechanism for supplier selection under Amendment 248 into the subsequent subsection. Amendment 248 would also address another concern I had: when a contracting authority is making an award of a contract using a framework, it often has a wider range of potential suppliers with different capacities and so on. If there is going to be a supplier selection, it should always give suppliers an opportunity at least to tell the contracting authority what their credentials, capacity, quality and potential value may be. It may exclude value if they say they can only use the price that has already been supplied, for example for staff and so on, but none the less, credentials and capacity to meet a specific requirement should always be something that suppliers are given an opportunity to show. I am not sure that, without this measure, an objective mechanism for supplier selection actually means that. I do not know what “objective mechanism” means in this context. I am hoping that Amendment 246 gets us to a much better place. If it entails any kind of competition, that has to be done by reference to the original award criteria.

Procurement Bill [HL]

Lord Lansley Excerpts

Committee stage
Wednesday 26th October 2022 Grand Committee

Moved by

[Lord Lansley]

268: Clause 50, page 31, line 6, leave out from “publish” to end of line 7 and insert “performance indicators in respect of the contract, which must include at least three quantifiable measures and such further factors and measures as the contracting authority considers justified in relation to the requirements and value of the contract.”

[Lord Lansley (Con)]

My Lords, this is quite a large group, led by Amendment 268, and it encompasses a number of issues all of which relate to the structure of contracts and how contracting authorities enter into agreements with their suppliers. I will not attempt to speak to anything other than my five amendments, save to say that the first, Amendment 268, originally went alongside Amendment 269, which has subsequently been withdrawn but was in the name of my noble friend Lady Neville-Rolfe. Were it still there, I would have said that I have some sympathy with what she says, as there can be circumstances in which a contract, in effect, looks for one item of delivery. Therefore, in my view, one quantified key performance indicator may be appropriate and the requirement to have at least three would be unnecessary. The point is that contracts should have key performance indicators.

My point in Amendment 268, which starts this group so I am able to move it, is to replace the reference to “key performance indicators” with “quantifiable measures”. I entirely admit that we know where we are with KPIs, everybody has them and so on. The trouble is that KPIs can be non-quantifiable and qualitative. That is not what we are looking for here. There is a risk that, if we are not precise about it, they will not be quantifiable, and quantifiable is what we are looking for. I do not think key performance indicators should be subjective; they should be objective and demonstrably proven. Suppliers have a significant benefit where that is the case.

That is Amendment 268, and it is more or less probing. Many of my amendments in this group are intended to ask my noble friend and the department whether they will take account of these points in the way they draft the national procurement policy statement in the guidance that follows.

Amendment 270 also relates to key performance indicators and is linked to a point we discussed on Monday, which is that the structure of the relationship and contract entered into with suppliers should relate to the original tender and the specifications in it. The amendment says that the key performance indicators “must relate” to the tender. Likewise, I hope that my noble friend will say that the Government understand that and that that is their intention. Otherwise, we run the risk that people will enter a competitive selection process, win that process and negotiate a contract but, suddenly, the contract asks them to do things that were not in the original specification. That should not be the case.

My third amendment in this group is Amendment 364. As one reads the Bill, one may come across something and think, “How does that work?” This relates to changes in the contract and the definition in Clause 69 of “substantial modification”. The first definition is that the term of the contract is increased or decreased

“by more than 10 per cent”.

Most contracts are expressed in terms of months and years, and 10% is an awkward measure: “10% of an 18-month contract is 1.8 months—let’s work that out in days”. Can we not write this is in a slightly simpler way? One-sixth has the benefit, in my view, of making a substantial modification slightly more than 10%— 16% or thereabouts—but the point is that it is readily transferrable into months and years, particularly months. So, if a contract for 18 months is modified by more than three months, you know where you stand; it is dead simple. The purpose of the amendment is to suggest that it could be done a little more simply.

My final two amendments are Amendments 397 and 400, which relate to the termination of a contract and to Clause 72. The clause states:

“every public contract … can, if a termination ground applies, be terminated by the contracting authority”,

and a list is then given of the termination grounds. I do not know whether this has been left out deliberately, or because it does not appear in the public contract regulations, or because it is intended to be part of general terms and conditions anyway and therefore does not need to be specified in legislation. But force majeure is, I think, a termination ground for a contract, so I am not sure why it is not mentioned. The point is that it should be mentioned—and if it is, there is a problem with it.

I declare an interest, and in doing so revert to what I was saying earlier about the European Commission. This issue arose for us—my wife’s company—during the pandemic. We were contracted to supply a number of events and when the pandemic hit, or shortly thereafter, some of them had to be cancelled. Members will not be surprised to hear that, under those circumstances, a significant amount of expenditure had been incurred, including cash expenditure on locations, suppliers, venues and so on. The term of the force majeure written into the European Commission’s standard contract was that, at the point at which force majeure is notified, payment for the services provided is required. As noble Lords can imagine, initially, they said, “Well, you haven’t provided those services. Those events haven’t happened and we won’t be having them.” I will not bore noble Lords with all the detail, but the net result was that we lost money. We did not lose as much as we had feared because we had a negotiation, but, according to the letter of the contract, they could have said, “You’ve spent tens of thousands of euros on events that will not now take place, but because they are not taking place, you’re at risk and you will meet the cost.” This a very large public authority expecting an SME to take the hit. We did discuss it and they did come round, but I do not think that that arrangement is sensible.

I cannot imagine that our experience is in any sense unusual. During the pandemic, thousands of businesses must have had exactly the same kind of force majeure complication. In public contracts, the force majeure contract should say what I suggest in the amendment: that, under those circumstances, when the termination ground is notified, there should be a requirement to meet the expenditure

“necessarily incurred in relation to the contract”

up to that point.

I will be happy if my noble friend the Minister is able to say, as with the other amendments, that these are interesting points and she will take them away and look at how the guidance or the statement might reflect them for the future. I beg to move Amendment 268.

[Baroness Thornton (Lab)]

My Lords, my speech is a good way of following the excellent introduction to this group of amendments by the noble Lord, Lord Lansley. I start by thanking my noble friend Lady Hayman of Ullock for putting her name to Amendment 276A and the noble Baroness, Lady Bennett, and the noble Earl, Lord Devon, for putting their names to both Amendments 269A and 276A.

As the noble Lord, Lord Lansley, said, Amendment 269A is dealing with the key performance indicators, and it adds a line that I hope the Minister will find useful:

“including at least one indicator in relation to social value.”

This would mean that all public sector contracts over £2 million would have to include a key performance indicator on social value. This would ensure that social values are included in all public sector contracts over £2 million and would send a clear signal to the private sector in particular. It would also ensure—similar to Amendment 477A, which we discussed on Monday—that contracts with social value commitments are monitored effectively and transparently.

Amendment 276A concerns transparency and “open book accounting”. It would insert a proposed new clause that I hope the Minister will see as helpful, given that she has spoken already in Committee about transparency and its importance in the spending of public funding. It says:

“All suppliers bidding for public contracts must declare the expected profit and surplus they expect to generate through the contract.”


In childcare, for example, the top 10 providers have made £300 million in profit, despite the standards of care falling and local authority budgets being under such pressure. We know this because the newspapers have reported on the conditions in which we have found cared-for children. During Covid, when we had PPE, a number of companies were making significant profits from these contracts without the need to report to the contract what margin they were prepared to make. I believe that this prevented the state adequately protecting our public money.

This amendment would mean that, on all government contracts, the supplier would have to report what profit or surplus they were expected to generate from the contract and then report back each financial year on how much profit or surplus they had generated—although I do not believe that this would solve the problem of people charging the state too much money for goods and services, and there is still a risk that companies could cost-shift artificially to reduce their declared profits. This may well leave the taxpayer in a better position to understand the true costs of contracts and would advantage providers such as social enterprises and SMEs, which are more likely to be investing the money received from contracts back into their businesses than extracting public money as profit. That is an important point because charities and social enterprises are bound by their rules to complete their accounting in two or three ways, which would include the social value of the contracts they are fulfilling.

--- Later in debate ---

[Baroness Neville-Rolfe (Con)]

And a three-month review. The point about inflation is that if you build it in—this is a wider economic point—and then it goes up further, you can get an inflationary spiral. We have to try to find a way for people to come together and think about how we can best handle that, and I think the current system does that well. That is certainly my own experience, having been involved in procurement on both sides of the divide.

You can write in three-monthly reviews, but the difficulty is that this is an all-embracing Act and putting that into the Bill could lead to a lot of extra meetings and reviews that might not fit in with simplicity. But obviously this is Committee and we will be reflecting further on the right thing to do. I thank my noble friend for, as always, pursuing her point with such clarity and doggedness.

Finally, this is not in my script but I would like to confirm that I and the team are looking back at the undertakings made on earlier days in Committee to make sure that balls are not dropped. I confirm that we will be arranging meetings on the SME angle, even though I am not able to champion them. I have already had a round table with SMEs and the official team to see what can be done. I do not want to overpromise, but we want to do our best. I respectfully request that the various non-government amendments be respectively withdrawn or not moved.

[Lord Lansley (Con)]

Thank you. That was a long group so the reply was necessarily substantial, and we are most grateful for that. I was happy to have the confirmation that KPIs must be quantifiable. I am still slightly uncertain whether 10% works very easily—maybe it would have been easier to express it as one month in a year or something like that to deal with time—but still I am grateful.

If the question of force majeure is taken up through the general terms and conditions, I just ask that it requires the system, as it were, to say that we have standard terms and conditions and, as a result of some of the debates on the Bill, we also need to look at our general terms and conditions, and how things are to be expressed in future. As far as Amendment 268 is concerned, I was grateful for the Minister’s response and I beg leave to withdraw the amendment.

Amendment 268 withdrawn.

--- Later in debate ---

Moved by

[Lord Lansley]

436: Clause 81, page 52, line 40, at end insert—
“(3A) Regulations may only be made under this section in relation to international agreements which have been laid before Parliament under the Constitutional Reform and Governance Act 2010.”

[Lord Lansley (Con)]

The lead Amendment 436 in this small group is in my name. These three clauses are about putting into the Bill a list of who the treaty state suppliers are. They introduce Schedule 9, which sets out that long list of countries with which we have international trade agreements that give rise to access to procurement opportunities for them here and us there.

Turning to Amendment 436, I do not disagree with the Government wanting to use secondary legislation to implement international trade agreements’ procurement requirements. I think that is a perfectly reasonable thing to do, because there will be a string of them, and amendments to them; changes to the general procurement agreement; and new agreements being entered into—all of which would lead to a tedious amount of primary legislation. Therefore, having secondary instruments is perfectly reasonable. As we will see later in the Bill, that the secondary instruments are subject to the affirmative procedure is also important.

We have to understand—I speak as a member of the International Agreements Committee—that there is a relationship between these processes and the scrutiny by Parliament. Essentially, treaties are laid under the Constitutional Reform and Governance Act. We then have a period of time in which to report to the House. I think our normal expectation is that the House would have an opportunity to look at any issues raised by the International Agreements Committee, in our case, either for information or for debate, before the point at which it is likely to have to decide whether there would be any reason to object to a draft of a statutory instrument of this kind. That would not be the case if the relevant agreement were not laid under CRaG. Noble Lords might say, “Surely they all are”, and indeed the reply from the Minister might be that they all will be. That would be a very useful thing for the Minister to say—I am not trying to lead the witness in advance—because they are not always.

--- Later in debate ---

[Baroness Neville-Rolfe (Con)]

I think the greatest brains behind me have not managed to answer the noble Baroness’s question—she has bowled another good ball. Perhaps we can add that to the list for our discussions.

With that, I hope that the noble Lord will withdraw his amendment.

[Lord Lansley (Con)]

My Lords, only 110 amendments to go, so, with the benefit of that promise of further discussions, I beg leave to withdraw Amendment 436.

Amendment 436 withdrawn.

--- Later in debate ---

[Lord Wigley (PC)]

I congratulate the Deputy Chairman of Committees on that “Just a Minute” miracle. I will speak to Amendment 491 standing in my name and those of the noble Baroness, Lady Humphreys, and the noble and learned Lord, Lord Thomas of Cwmgiedd.

We return to the question of the relationship of Wales to the rest of the provisions of the Bill, which we touched on way back in May or June. It was certainly a very long time ago. A certain amount of water has gone down the river since then, but none the less, the representations made by the Welsh Government to the UK Government at that time, as well as to those of us serving on this Committee, are still matters that need to be finally aired before we move out of Committee.

I note, as it is relevant to Amendment 491, that the Government did not move Amendment 490. If I am right in my understanding of that, the content which Amendment 491 seeks to amend is not changed. Amendment 491 therefore stands in relation to the Bill as it was originally formulated. I am grateful for that clarification.

The Welsh and UK Governments have, by and large, worked very closely together on the Bill, and there has been quite a close meeting of minds and a considerable amount of harmony. However, there is one matter which the Welsh Government have raised with us. The Minister concerned is seeking an amendment to the definition of the WCAs, with a view to ensuring that the clauses work more fairly in relation to some cross-border procurements—single procurements which relate to both Wales and England. The Minister in Cardiff wrote to the Minister for Brexit Opportunities and Government Efficiency on 18 May, raising this question, and discussions thereafter took place. None the less, to the best of my knowledge, there has been no amendment to the Bill that has met the question about procurement relating solely to Wales or of whether it should read, in the words of Amendment 491, “wholly or mainly”.

We are talking about the awarding of

“a contract for the purpose of exercising a function wholly in relation to Wales”.

The question is whether we put in “wholly or mainly” relating to Wales. That amendment is needed for the Bill to work effectively. One only has to think of certain of the procurements that the Welsh Government, or an agency on their behalf, are making, which may be having an effect both in Wales and over the border. One thinks of procurement in relation to water and rivers, for example, where the river runs from Wales to England. Quite clearly, in making a procurement one cannot be absolutely certain whether the product or service that is being procured relates solely to Wales, or to Wales and England. One thinks of certain aspects of the health services along the borders where that again will arise.

It seems sensible to put in the words “or mainly” to ensure that the Welsh Government, or anyone else who is concerned with this, do not get caught in a tangle about what is covered by the Bill and what is not.

Given that there has been such a close working relationship between the Welsh and UK Governments on this matter, I am surprised that there has not been a meeting of minds. If there has been some non-legislative agreement that has covered this, that we may not know about in this Committee, I would be glad if that was pointed out. I am not speaking to the other amendments in this group because they do not seem to be dealing with the same point. I would be glad to have the Minister’s response in relation to Amendment 491. I beg to move.

[Lord Lansley (Con)]

My Lords, these are different subjects, and before we turn to how regulations are to be agreed, I will turn to Amendment 527. It might be helpful if colleagues, if they have a moment, look at Schedule 11. Clause 107 sets out in Schedule 11 the repeals of legislation resulting from this legislation. The third item under “Primary legislation” says:

“An Act of Parliament resulting from the Trade (Australia and New Zealand) Bill that was introduced into the House of Commons on 11 May 2022.”


My amendment relates to whether it would be appropriate for the whole of that piece of legislation to be repealed if it were amended in the other place or in this House. As it stands at the moment, the Bill implements the procurement chapters of the two agreements. They will be implemented by their being added to Schedule 9. That is absolutely fine—it is not the issue. The issue is if the Trade (Australia and New Zealand) Bill is amended. It was not amended in Committee in the other place, but there is an amendment down on Report in the other place in the name of Nick Thomas-Symonds, for the Official Opposition, which adds a clause that says:

“The Secretary of State must publish an assessment of the impact of the implementation of the procurement Chapters within twelve months of the coming into force of Regulations made under section 1 of this Act and every three years thereafter.”


It probably will not be passed, but let us say for the sake of argument that an impact assessment was passed here—or an impact assessment or report on the impact was required here in relation to the Australia and New Zealand trade agreements more generally—into the Trade (Australia and New Zealand) Act. I think either House would then expect it to happen. However, it would probably not happen because the Procurement Bill will become the Procurement Act, and when it comes into force it would repeal the Trade (Australia and New Zealand) Act and all that is in it, regardless of whether it has been amended.

The point of my Amendment 527 is to repeal the provisions of the Act resulting from the Trade (Australia and New Zealand) Bill in so far as they were included in the Bill at its introduction. Therefore, if there is an amendment, it would not be repealed by virtue of this provision. That is the question. We are at the stage of having further conversations, and I would be very happy to have further conversations with my noble friends about this matter before we get to Report.

[Baroness Humphreys (LD)]

I will speak reasonably briefly to Amendment 491 in the name of the noble Lord, Lord Wigley, to which I have added my name. I thank the noble Lord for outlining the reasons for this amendment so clearly. I reiterate my thanks to the Cabinet Office and its civil servants, which I expressed earlier in Committee, for their constructive and positive engagements with Welsh officials. I know they have worked closely to ensure that Welsh policy objectives have been included in the Bill.

The issues that Amendment 491 highlights arise in Clause 99 and have been the subject of discussion between the two parties for some time. Like the noble Lord, Lord Wigley, I understand that the Welsh Minister for Finance and Local Government wrote to the Minister for Brexit Opportunities on 18 May to ask the UK Government to consider an amendment to the Bill to address her concerns. I hope that in the intervening five months, some agreement has been reached between the two parties.

As the noble Lord pointed out, this is a probing amendment designed to tease out, first, the problems that arise from the definition of Welsh contracting authorities and, secondly, the issue of ensuring that both clauses work more fairly in relation to some cross-border procurements. The definition of Welsh contracting authorities initially proposed by the UK Government was that of a “devolved Welsh authority”, as defined in the Government of Wales Act 2006. However, as the Welsh Government have pointed out, that does not accurately reflect all the contracting authorities in Wales that should be on the list of Welsh contracting authorities. Clauses 1 to 3 of the Bill now set out a broader definition of a devolved Welsh authority. However, there is still a concern that the breadth of contracting authorities that are not DWAs within the GoWA definition, but are to be treated as DWAs for the purpose of the Bill when they carry out a cross-border procurement, does not go far enough.

My real concern is about Clause 99(3)(b)(i), which provides for those contracting authorities that are to be treated as DWAs for the purpose of the Bill and bound by the Welsh rules where the authority is awarding a contract for the purpose of exercising a function wholly in relation to Wales—the point that the noble Lord, Lord Wigley, raised—but not for any other procurements, including cross-border ones. That word, “wholly”, means that the Welsh Government play no part in this. Ultimately, this means that, even if 90% of a cross-border procurement is for use in Wales, the English elements of the rules would apply. To me, that smacks a little of the lion wanting to take the lion’s share.

We on these Benches agree with the fairer and more pragmatic approach suggested by the Welsh Government: to follow Regulation 4 of the Public Contracts Regulations 2015 for mixed procurements. This would allow for cross-border contracts to be procured depending on the main geographical location of the contract; on which financial value was the highest; or on where the majority of the services, goods or works were being delivered. The Welsh Government have suggested that, where more than half of the procurements are to be delivered in Wales, the Welsh procurement rules should apply. They contend that, in the event of a 50/50 split, the English rules should apply. The insertion of the words “or mainly” following “wholly” in Clause 99(3)(b)(i) would achieve this end.

These proposals by the Welsh Government seem reasonable and fair. They would redress the balance between the two parties on cross-border procurement, and are supported by the Lib Dem Benches. I look forward to the Minister updating us on where officials are with these issues and hope that the spirit of positivity and co-operation that has characterised the negotiations on this Bill extends to the issues in Clause 99.

Procurement Bill [HL]

Lord Lansley Excerpts

Report stage
Monday 28th November 2022 Lords Chamber

[Baroness Noakes (Con)]

My Lords, I have Amendments 4 and 190 in this group. Some questions have been raised by the Benches opposite about whether I was here for the commencement of the debate. I assure the House that I heard every word of the Minister’s opening remarks from my place and I am not usually regarded as invisible in your Lordships’ House.

Before I get to my amendments, let me say that I have much sympathy with the amendments tabled by the noble Baroness, Lady Brinton. I think we have to stop the culture of exceptionalism for the NHS and bring it within the ordinary rules; other noble Lords have said why that is. We should allow an exception only if there is a very good case for it so I will be listening very carefully to what my noble friend the Minister has to say about that when she concludes this debate.

My amendments each cover a distinct issue. I will start with Amendment 190 because that is the easier of them. Noble Lords may have noticed that my noble friend the Minister has added her name to Amendment 190 and I am grateful for the Government’s support in dealing with a technical issue that I raised in Committee following the eagle-eyed scrutiny of the Bill by Professor Sanchez-Graells of the Centre for Global Law and Innovation at the University of Bristol.

The Bill had defined how to value contracts including VAT when the contracting authority paid for the goods or services that it was procuring but failed to deal with the converse situation when it received money, which can arise under a concession contract. Amendment 190 puts this right and so sums receivable under contracts will be valued including the related value added tax. I look forward to moving this amendment formally in due course.

Amendment 4 is an amendment to government Amendment 2. Amendment 2 has virtually rewritten most of Clause 1 but my amendment would have also been proposed in relation to the text of the Bill as introduced. It is about control and how to define it, which I raised in a couple of amendments in Committee.

A public authority is defined in the amended Clause 1(2) proposed by Amendment 2 as including a person who is

“subject to public authority oversight”,

which is in turn defined in amended Clause 1(3) as being

“subject to the management or control of … one or more public authorities, or … a board more than half of the members of which are appointed by one or more public authorities.”

Thus, if a board is involved, control is determined by the fact of appointments rather than the capacity to appoint members of the board. That is an unusual concept for those of us steeped in company or tax law.

The Clause 1 approach to control is in contrast to its use in determining whether vertical arrangements exist in order to qualify as an exempted contract under Schedule 2. The Schedule 2 definition has its own problems, which I spoke about in Committee, but its core concept is to use the Companies Act 2006 definition of control, which is based on capacity to control. I believe that the issues with Clause 1 and Schedule 2 were not satisfactorily dealt with when I raised these points in Committee, so I have returned to them today, to highlight that the Bill is not internally coherent in its approach to determining whether organisation A controls organisation B.

My solution is to import the Schedule 2 definition into Clause 1, save for paragraph 2(3) of Schedule 2. I personally think that sub-paragraph (3) is very odd in the context of Schedule 2, but it certainly does not belong to the approach for control in Clause 1. I have no intention of dividing the House on this matter and I am by no means confident of my drafting, but I believe that the Government should look again at the robustness and coherence of the approaches they have taken in the Bill.

[Lord Lansley (Con)]

My Lords, I have no amendment in this group, but I want to refer to government Amendment 34. I entirely agree with the proposition that the Bill enables public procurement to be put on a better path than it has been in the past. Many of those working in procurement across the public services have welcomed the Bill. As it happens, they also welcome the scrutiny we are giving it, because it is leading to improvements to the Bill. I did not attempt to count the number of government amendments we dealt with in Committee, but they were in the hundreds. In addition to those, I calculate that we have 153 government amendments on Report, so if it takes us a while, it is not our fault. None the less, it is a good job and it is right that we should do it. That is why I raise the following question on government Amendment 34.

My noble friend will recall that these amendments were not moved in Committee because there was some difficulty about what “covered procurement” was relative to “procurement”. At the time, I supported the Government’s amendments, because it seemed right to ensure that the broader scope of the Bill and the regulatory requirements encompassed within it should be applied to larger procurements and not smaller ones. I now support the insertion of “covered” before “procurement” in all the government amendments—except Amendment 34. Why do I single it out? Including “covered” means that procurements which are above the threshold and not exempt are subject to the Bill and the full range of its requirements—see Schedule 1 for the thresholds and Schedule 2 for the exemptions. Clause 2 makes it clear that public contracts are those that are above the threshold and not exempt. Okay, fine: “covered procurement” makes a distinction between those that are exempt and of lesser value and those that are of a higher value and included.

Clause 11 relates to procurement objectives. Procurement objectives are statements, not least by Parliament as well as by the Government, about what those who are engaged in procurement should regard as their responsibility. The essence of Clause 11 is that:

“In carrying out a procurement, a contracting authority must have regard to … delivering value for money … maximising public benefit … sharing information”—


so that people can understand the authority’s procurement policies and decisions—and

“acting, and being seen to act, with integrity.”

In my submission, these are not regulatory requirements; they are the basis on which contracting authorities should be behaving. We will come on to debate Clause 11 and will deal with its proposals then. But it seems to me that, however we end up stating in Clause 11 that these are procurement objectives for contracting authorities, they should apply to all contracting authorities and to all their procurements.

Interestingly, the Government resist this on grounds of flexibility. I am not sure in this context what that means: flexibility not to have value for money; flexibility not to act with integrity? But the Government have not disapplied the operation of Clause 12 and the national procurement policy statement. The Government want to have the power to apply the statement to all procurements, so we do not get “covered” in front of procurement in Clause 12(1) but we do get “covered” in relation to procurement in Clause 11. This must be wrong. It must clearly be right that not only the procurement statement but the objectives on which it must be based must apply to all procurements.

So I put it to my noble friend that this is not a technical amendment. There may be many that are technical amendments, but this is a substantive amendment that has an unhappy consequence that it would disapply the procurement objectives to a significant number of the lower-value procurement activities in the public sector. So when we reach government Amendment 34, I invite my noble friend not to move it. I hope that she will at the very least do that on the grounds that this should be revisited before Third Reading.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise briefly having attached my name to Amendment 173 in the names of the noble Baroness, Lady Brinton, and the noble Lord, Lord Scriven. I attempted to attach my name to Amendment 3, but somehow that transferred to government Amendment 2, which I am guessing everyone has already worked out was a mistake—part of the general confusion we have with this Bill. Perhaps it is just, as the noble Lord, Lord Lansley, outlined, that the flood of government amendments has overwhelmed the administration of Report.

The noble Baroness, Lady Brinton, and the noble Lord, Lord Hunt, have already set out the issues very clearly. The noble Lord, Lord Alton, gave us a masterclass, having made himself an absolute expert on the issues of procurement, particularly around Covid. I want to add one extra balancing thought to that. The issues of privatisation and contracts do not apply only to the procurement of materials; they apply to the procurement of services, including the clinical services to which the noble Lord, Lord Hunt, referred. It is important that this does not get lost.

I will refer to a study published in the Lancet public health journal by academics from the University of Oxford in June. It showed that outsourcing since 2012 had been associated with a drop in care quality and higher rates of treatable mortality. This is peer-reviewed research published in a very respected journal that shows that privatisation has had and is having a disastrous effect. To quote the authors of that study:

“Our findings suggest that further privatisation of the NHS might lead to worse population health outcomes.”


I think it would be unrealistic to expect the public to engage with the details of the kind of debate we are having this afternoon, but it is important, and I have no doubt at all that the public is gravely concerned to see that we have maximum transparency. Indeed, I think there is strong public support for reversing the privatisation of the NHS—but, wherever we are letting contracts for the NHS, we must have maximum transparency and clarity about the manner in which that is done.

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We have to be realistic about this. Of course contractors and suppliers must act with integrity—that point was made and I very much agree with it—but that is not a reason to change the whole shape of the Bill and put on contracting authorities new requirements that go very much wider than the sort of thing that we have debated. I hope the noble Lord can see the difficulties that the expansion of these obligations beyond covered procurement would create for contracting authorities, and I hope he will feel able not to press—

[Lord Lansley (Con)]

My noble friend used the important word “security” in relation to security contracts, but surely Clause 11 and the procurement objectives apply to security contracts that exceed the threshold set in Schedule 1. In what sense is it inappropriate for the objectives or principles set out in Clause 11 to be applied simply because those thresholds fall below about £5 million?

[Baroness Neville-Rolfe (Con)]

I should reflect further on this. Clearly, some parts of the Bill are carved out. We have discussed this in relation to the NHS and we will discuss it on Wednesday in relation to the Ministry of Defence. We have to be very careful about national security—there is agreement on that across the House. I have been advised that the sheer breadth of Clause 11 would have a damaging effect if we apply this right across the board on procurement, and I am disturbed about that. I am happy to look at that further and talk further to my noble friend Lord Lansley.

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[Baroness Bloomfield of Hinton Waldrist]

My Lords, this next group refers to utilities. Amendments 11, 13, 14, 17, 20, 21, 22, 169, 174, 180 and 184 relate to an exemption for utility activities exposed to competition. The amendments to Clause 5 and Schedule 4, and a consequential amendment to Schedule 2, are again in response to the concern of the DPRRC that the power to establish a procedure to exempt utilities subject to competition from the Bill amounted to a skeleton clause. The Government will replace this power with one that requires the exemptions to be made by secondary legislation under an affirmative procedure. This will afford Parliament greater scrutiny to review each exemption. The test to be satisfied for an exemption remains that there is fair and effective competition in the relevant utility market, and that entry to that market is unrestricted.

Noble Lords should note that Amendment 22 adds Part 2 to Schedule 4, which sets out the utility activities which are exempt from procurement regulations. These reflect exemptions that exist under the current regime, which are preserved by Amendment 169 in order that they are available under the Scottish procurement regulations.

Amendments 174, 180 and 184 ensure that the affirmative procedure applies to an exercise of the power.

Amendments 15 and 16 ensure that the definition of private utilities and contracting authority interact as intended and that a private utility is only a contracting authority in respect of the utility activities for which the utility has a special or exclusive right.

Amendments 18 and 19 revise the description of a utility activity in the transport sector in paragraph 4 of Schedule 4.

Amendments 56, 71 and 200 speed up procurements and reduce the burden for utilities using a utilities dynamic market—a UDM—by only requiring utilities to provide tender notices of upcoming procurements to suppliers on a UDM or appropriate part of a UDM, instead of having to publish notices. In practice, this means utilities can, for example, provide the tender notice to suppliers on the UDM as part of the associated tender documents as each procurement under the UDM is commenced.

In order to take advantage of this flexibility, the notice setting up the UDM must meet minimum information requirements, which will be set out in regulations under Clause 88. Utilities must specify in the UDM notice that only members of the UDM will be provided with tender notices. The notice setting up the UDM will be published continuously and will remain open so new members can join at any time. If accepted, they would then be entitled to receive tender notices.

Amendment 77 to Clause 48 will allow private utilities to adopt a voluntary standstill period to direct award contracts instead of a mandatory one. This means private utilities will take a risk-based decision on whether to apply a standstill period to a direct award procurement. It is in keeping with only regulating private utilities’ procurement to the extent necessary under our international obligations. I will turn to the amendment in the name of my noble friend Lord Lansley in my closing speech, having heard the points he raises. I beg to move.

[Lord Lansley (Con)]

My Lords, I am most grateful to my noble friend, not least because she referred to Amendment 169 in her helpful introduction to these amendments on utilities. Happily, we have reached the end of the Bill quite early on; that amendment relates to the very last page—page 118—where, in the present draft of the Bill, Commission decisions relating to public contract regulations, utilities and so on were to be repealed. Her explanation is interesting, in that it retains these European Commission decisions as retained EU law for the benefit of the Scottish regime. I am slightly perplexed as to why they were to be repealed in the first place since, presumably, the Scottish regime would have required them for this purpose regardless. However, that is just a question and it is only a matter of curiosity that I ask it.

My Amendment 23 is an amendment to government Amendment 22. As my noble friend made clear, the DPRRC said that this was a skeleton clause and was particularly unhelpful because it disguised the fact that policy had not been developed. I do not know whether that is the case or not; the point is that Ministers have come forward with a proposal for how these exemption decisions should work in relation to utility activities. I remind noble Lords that there are activities, and there are utility activities. The effect of Schedule 2 is to make it clear that certain activities should not be regarded as utility activities because they are in fair and effective competition and there are no restrictions on entry to that market. The decisions that were made were about electricity, gas and oil extraction, production and generation.

That being the case, the policy decisions in government Amendments 17 and 22, which my noble friend has explained, have the effect in Amendment 22 of saying, “These are the existing exemption decisions”. Government Amendment 17 says that, in future, Ministers can add to them or subtract from them by regulation. The point of my Amendment 23 is to ask, “When Ministers were reaching a view as to how these exemption decisions should be made in future, why did they not look at the Competition and Markets Authority, which we have as our own creature for the making of competition-related decisions, and put to it the job of determining whether a given activity in the utilities sector—actually, it would also be true in other sectors if exemption decisions were sought—is in fair and effective competition and there are no restrictions to the market?”

If my noble friend says, “Ah, but when Ministers make regulations, they will of course take advice from the Competition and Markets Authority”, I will be very happy. If she does not say that, however, I will be nervous, because what is the point of having the Competition and Markets Authority able to make such decisions in lieu of what used to be the European Commission’s responsibility if Ministers are going to pre-empt it themselves? I hope that she will be able to give me that reassurance about the use of the CMA for making competition-related decisions.

[Baroness Hayman of Ullock (Lab)]

My Lords, I thank the Government for tabling a lot of the amendments, which have helped to bring clarification around utilities; quite a bit of confusion was expressed in Committee. I also remind the noble Baroness, Lady Neville-Rolfe, who is not currently in her place, that she did say that we should be extremely careful about regulating private utilities in Committee. These amendments seriously have her stamp on them; I thank her for that. The noble Lord, Lord Lansley, made some important points. I hope that the noble Baroness, Lady Bloomfield, listened carefully and can give the reassurances that he requested.

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[Baroness Worthington (CB)]

My Lords, I will speak to Amendment 42 in my name in this group and in support of Amendments 46 and 47. I will keep my comments brief. We had a very good debate in Committee about what should go into the Bill in relation to the principles that will guide procurement. In my amendment, I sought to be as precise as possible and selected two specific issues relating to climate change and biodiversity loss. The reason for that is that it has been pointed out to me that society’s priorities shift over time and primary legislation should be regarded as very serious: you therefore should not put a long shopping list of things into it. However, on these two issues, I cannot imagine a time henceforth when we will not be concerned about the impacts of climate change or biodiversity loss. The Government have a huge lever for change to drive investments into solutions. It would be a great shame if we were not to make it very clear in the Bill that this lever is something that we are willing and want to use.

The more the public purse can create markets and drive investment, the more we can rely on the private sector to come forward with innovation. It will bring down the cost over time. If we do not use public procurement, we will be expecting more from our private sector, and it will debatable whether it will be able to enter into markets that are highly mature and overcapitalised. We are not talking about a level playing field here. If you want private solutions to come in, you have to support them either through government policy, through taxation or through procurement. This Bill is a huge lever that I hope we will pull.

Although I would be delighted to test the will of the House of Amendment 42, it is actually more important that we put these principles in on the operational aspects of this Bill, in which case Amendments 46 and 47, which relate to national policy planning guidance, are hugely important, and I support both of those amendments. I look forward to hearing those who speak to them and to the Government’s response.

[Lord Lansley (Con)]

My Lords, I am glad to follow the noble Baroness, Lady Worthington. I signed her Amendment 42 and I thoroughly agree with it. Indeed, I agree with all the points she made, including—I am grateful to her for saying it—the importance of focusing on the national procurement policy statement. In a sense, while it would be helpful for Clause 11 on procurement objectives to clarify what is meant by “public benefit”, there is always a risk that we either have a broad-ranging—no disrespect to it—but perfectly understandable series of statements, as in Amendment 33 moved by the noble Baroness opposite, or, as with Amendment 42, by narrowing it down, we somehow make people imagine that we have excluded these other terribly important objectives. My noble friend would doubtless say that the more we put into the procurement objectives, the more difficult it will be for contracting authorities to comply with competing considerations and so on. There is a lack of flexibility in that.

I thoroughly agree, therefore, with the proposition that we need to focus on the national procurement policy statement. The Government will publish that. As we know from other contexts, that is what the contracting authorities are going to look at. We know that the NPPS will include the Government’s strategic priorities, but we do not know what those are. The question then immediately emerges: is it proper for Parliament to have a view about that, or should we just say, “When the time comes, the Government will say what their strategic priorities are, and that’s good enough for us”?

Amendment 47 is limited in precisely the way the noble Baroness who signed the amendment said. It does not tell the Government to have a long list of strategic priorities. They may have their own strategic priorities but, during the Committee debates, noble Lords who were there will recall that there were some clear strategic priorities which the Committee wanted to see reflected in the Government’s statement. They included, perhaps most prominently, the environmental issues. One way of doing it which should cause the Government the least possible vexation is to do it by specific reference to the existing statutory targets set out in the Climate Change Act and the Environment Act—that is, to make it clear that they must ask contracting authorities to do the things that they are statutorily obliged to do in any case. They might say that that is unnecessary: actually it is not, because we all know that when these are reflected properly in the strategic priorities of the NPPS, the authorities will do it. If they are not reflected in the strategic priorities in the NPPS, they might be on statute but the authorities may well not do it. We have to make sure that they do it.

Turning to the second strategic priority in Amendment 47—requirements set out in the Public Services (Social Value) Act—I am glad that my noble friend Lord Maude of Horsham is in his place, because he will know that reflecting the strategic priority on that social value legislation is precisely one of the mechanisms for ensuring that social enterprises are given the priority they deserve. For example—I hesitate, in speaking to my noble friend, to cite this—but the European Commission document Buying for Social Impact, published in 2018, had a range of examples from across Europe, one of which was from Scotland. The Scottish example said that one of the implications of buying for social impact has been the use of not-for-profit and social enterprises in respect of public procurement. It is therefore a very effective way of bringing that to the forefront.

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[Baroness Neville-Rolfe (Con)]

My Lords, earlier today, we discussed government Amendment 34 on covered procurement, and, as promised, I have reflected on the contributions made by noble Lords. They will have noted that I left the Bill to my noble friend Lady Bloomfield for a while for this very purpose. I have looked at the implications of not proceeding with this amendment with my experts, and I still intend to move it. It is the Government’s view that, if it is not agreed, the objectives will still have to be considered for all procurements, including exempted procurements under Schedule 2, which would create the perverse situation I mentioned of needing to consider transparency in those exempted security contracts or—to give another example—contracts with law firms, which would include legally privileged information, and that would not be appropriate. It will also extend to small, low-value contracts, including those let by small authorities such as parish councils.

For these reasons, and those I set out earlier, I move Amendment 34. Should your Lordships disagree, the House can make its view known.

[Lord Lansley (Con)]

If that is the argument, why will the national procurement policy statement be applied to all procurements and not just covered procurements?

[Baroness Neville-Rolfe (Con)]

As we have discussed, the national procurement policy statement is wide-ranging. In the Bill, we have tried to set up a framework and lots of rules for contracting authorities to try to ensure that they are adopting procedures that will improve and simplify procurement, which, as we all agree in this House, is not in the state it needs to be in. We believe that not moving Amendment 34—that is, not restricting procurement in certain respects—will lead to a great deal more difficulty for contracting authorities, particularly in these exempt areas. We have looked at the exemptions carefully and, contrary to what I think my noble friend thinks, individual procurements would have to be considered in a much more detailed way as a result of the perverse effect without this amendment.

As I said, should your Lordships disagree, the House can make its view known, should it wish. I beg to move Amendment 34.

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[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.

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Moved by

[Lord Lansley]

47: Clause 12, page 9, line 11, at end insert—
“(3A) The strategic priorities to be included in the statement must include, but are not limited to—(a) achieving targets set under the Climate Change Act 2008 and the Environment Act 2021,(b) meeting requirements set out in the Public Services (Social Value) Act 2012,(c) promoting innovation amongst potential suppliers, and(d) minimising the incidence of fraud, waste or abuse of public money.”Member’s explanatory statement
This amendment would require that the priorities listed in the amendment are among the strategic priorities in relation to procurement included in the National Procurement Policy Statement.

[Lord Lansley (Con)]

My Lords, Amendment 46 does not in any sense pre-empt Amendment 47, since Amendment 47 adds specific text to the Bill relating to the Environment Act, the Climate Change Act, the Public Services (Social Value) Act, and the promotion of innovation and the minimisation of fraud, waste and abuse of public money. It does so, as my noble friend said in the group we have just discussed, by putting it in the Bill and what is currently in the national procurement policy statement does not suffice. I move Amendment 47 and beg leave to test the opinion of the House.

Procurement Bill [HL]

Lord Lansley Excerpts

Report stage
Wednesday 30th November 2022 Lords Chamber

My final point comes back to an earlier one: how much time and effort has the department anticipated for each procurement body to have to familiarise itself with each schedule arrangement in each trade agreement? At the moment, each procuring authority will need to check each of the treaty sections on procurement, whereas in the past it was simple and all compiled inside the EU scheme. I do not think we are convinced that it was all GPA anyway, as much as officials have said so; there are deviations. The Minister talks about impediments and blocking up the system. This could well be an inadvertent blocking of the system that the Minister might like to address. I beg to move.

[Lord Lansley (Con)]

My Lords, I am glad to follow the noble Lord, Lord Fox, who has asked some interesting questions to which I will be interested to hear the answers. I suspect the answer is that if a contracting authority has a requirement and sets out various specifications in its award criteria, it would be able to carry on as long as it does not discriminate between potential suppliers from other treaty states.

[Lord Fox (LD)]

With respect, I am not sure that Pepper v Hart works for the noble Lord saying that. We are looking to see what the Minister has to say on this. The noble Lord is very kindly helping on that.

[Lord Lansley (Con)]

Anyway, I am on my feet not to try to answer the noble Lord’s question but to explain Amendment 167. Those present in Committee will recall that debate. There was some degree of uncertainty. Again, I appreciate my noble friend’s time and attention on the issue in the conversations we have had about it.

I will just explain the amendment’s purpose. Under Section 8 and Schedule 9, there is a process for the future whereby procurement-related chapters in future free trade agreements can be added to the Schedule 9 list and, by extension, give access to UK public procurement opportunities by statutory instrument. I agree with that. Because the Bill will achieve that effect, in the Government’s view it can repeal the Trade (Australia and New Zealand) Bill, because the purpose of that Bill is to bring into effect the procurement chapters of the Australia and New Zealand free trade agreements. That will no longer be necessary once this Bill has added them to Schedule 9 and it comes into force.

There are two issues. The first is timing. It was clearly the Government’s expectation that the Trade (Australia and New Zealand) Bill would have proceeded more rapidly through the other place—that it would be here and be concluded well before this Bill completes its passage into law, and that the sequencing would therefore work very straightforwardly. That might still be true, although the Trade (Australia and New Zealand) Bill completed Committee in the other place but has not yet been timetabled for Report. It is going more slowly than was originally intended. As I think noble Lords said in our debate on Monday, perhaps the Minister could attempt to explain the delays in the legislative process. Oh no, it was at Questions: my noble friend Lord Markham was not at liberty to explain the delays in the Government’s legislative programme, which was very sensible on his part. We cannot be sure that the Bills will be that way round but, in any case, it is more likely that the Trade (Australia and New Zealand) Bill will proceed before this Bill completes its passage. Let us hope that is the case.

The second and, in my view, more important question then comes into play. What if the Trade (Australia and New Zealand) Bill were to be amended? For example, there is an Opposition amendment tabled for Report in the other place, the effect of which would be to include impact assessments for a number of years on the Australia and New Zealand trade agreements—so, in fact, it is not restricted to the question of procurement but is about the overall impact of the two FTAs.

The effect of this Bill, as it is drafted in Schedule 11 on page 117 at the back of the Bill, would be to repeal it anyway. We would be in the unhappy position, if we carried on as we are, that we might amend the Trade (Australia and New Zealand) Bill and then find that that amendment, whatever merit it may have, would be repealed by virtue of the Procurement Act in due course. This is not a satisfactory outcome. Will the Minister tell us that the Government are now aware of this potential problem, subject to the passage of events and that, if it should turn out that the Trade (Australia and New Zealand) Bill is amended, the Government will commit to facilitating that any such amendment is not repealed by virtue of the provisions in the Procurement Act?

My amendment would avoid that possibility, because it would repeal only those provisions that were in the Bill when it was introduced on 11 May this year. If the Government cannot accept that, I hope that my noble friend will at least say that the Government will facilitate whatever measure is necessary—because whichever is the second Bill can change the first Bill, because Parliament cannot bind itself. So, almost by definition, the Government will have a mechanism—if they are willing to use it—to put things right using the second Bill. I hope my noble friend will give that reassurance.

[Baroness Hayman of Ullock (Lab)]

My Lords, both the amendments in this group ask for clarification and information from the Minister on the exact status of the trade agreements and how they are going to operate. I think the loophole that the noble Lord is trying to close is something that we need to think about very seriously, because we do not want to have trade agreements that then start to unravel. That is one of the big concerns around this.

In Committee, we had a quite extensive debate around this. I asked the Minister a specific question on Schedule 7 and I thank her for her detailed response, which I think it is worth drawing to the attention of the House. Schedule 7 says that a discretionary exclusion ground applies to a supplier whether the conduct occurred in or outside the United Kingdom. The question I wanted confirmed was whether Schedule 7 covered procurement opportunities that came through trade agreements.

The response from the Minister was that the conduct overseas, as referred to in Schedule 7, does cover anything that happens within procurement coming out of a trade agreement. I was very grateful for her clarification on this and thought that I should draw it to the attention of the House. It is a very helpful clarification of the remit of the Procurement Bill as far as trade agreements are concerned. However, it would be helpful if the Minister was able to provide reassurance, explanation and clarification on the questions raised by the amendments from the noble Lords, Lord Purvis and Lord Lansley, so that we all know exactly where we are, particularly around the Australia and New Zealand trade agreement.

Procurement Bill [HL]

Lord Lansley Excerpts

Consideration of Commons amendments
Monday 11th September 2023 Lords Chamber

[The Minister of State, Cabinet Office (Baroness Neville-Rolfe) (Con)]

My Lords, in moving this Motion I will speak to Amendments 1, 4, 5, 81 and 82. I am very pleased to bring this important Bill back to the House today for consideration of amendments made in the other place. It is, I believe, a key Brexit dividend, making it possible for us to develop and implement our own procurement regime, which will be simpler, more transparent, better for small businesses and better able to meet the UK’s needs. I thank noble Lords on all sides of the House who contributed to the lengthy discussion on the original Bill, first introduced to this House in May last year.

In the other place, we made a number of important changes to the Bill, including a debarment appeals process, clarification of the City of London’s status under the Bill, at its request, and provisions to address trade disputes relating to procurement. Importantly, we also took significant steps to strengthen national security provisions in the Bill, creating a new mechanism that will allow us to protect public procurement from risky suppliers. We also committed to removing Chinese surveillance equipment from government departments’ sensitive sites and dedicating additional resources within the Cabinet Office to scrutinise suppliers for potential national security threats. It is now crucial that we take the Bill through to Royal Assent, so that we can implement its many useful provisions.

This first group of amendments focuses on procurement rules for healthcare services and the national procurement policy statement. They overturn amendments made to the Bill on Report in this House. Amendments 1, 81 and 82 are necessary to ensure the proper functioning of the Bill and the regulation of healthcare procurements. Engagement with the NHS has identified the requirement for a bespoke regime for healthcare services to drive the integration of healthcare and the development of better, more joined-up patient pathways through healthcare systems. This responds to the idiosyncrasies of the health system, as identified by those who work in it.

The forthcoming provider selection regime is a free-standing regulatory scheme of procurement rules which commissioners of healthcare services in the NHS and local government will follow when arranging healthcare services in their area. Parliament accepted this when passing the Health and Care Act 2022, which was debated for many days in this House. The DHSC published the results of its latest consultation in July and aims to lay the regulations in Parliament this Autumn. It would be incredibly unhelpful at this critical stage for both schemes, when both the healthcare regulations and the Procurement Bill are on the cusp of delivery, to start attempting to unpick it all. Doing so would add unacceptable and entirely avoidable costs and delays to both programmes for no tangible benefit.

Amendment 1 removes from the definition of a public authority in Clause 2(2)(a) the words “including the NHS”. This addition is unnecessary because it clearly meets the test for a public authority set out at Clause 2(a), which is that it is publicly funded. This is backed up by the fact that the relevant NHS bodies to be covered by this Bill as central government authorities are identified in draft regulations to be made under the power at Schedule 1(5). These regulations were consulted on over the summer and have been welcomed in this regard. Setting out the list of central government authorities in regulations is appropriate, as updates are needed from time to time as organisations inevitably change. Moreover, the NHS is not a single legal entity and does not have a clear meaning in law, so the naming of the NHS as a public authority in Clause 2 would have reduced clarity.

I turn now to Amendments 81 and 82. The version of what was then Clause 116 inserted on Report in this House needed to be removed and replaced with a provision that enables the DHSC to proceed with the provider selection regime. This is crucial for the reasons I have already set out, and I emphasise that this House will have the opportunity to scrutinise the new affirmative regulations when they are laid. I hope that I have been able to provide the noble Baroness, Lady Brinton, whose Motions 1A and 81A deal with these matters, with sufficient reassurances and that she will not press her amendments today.

Amendments 4 and 5 removed two amendments from Report stage in the Lords relating to the national procurement policy statement. These required that, prior to publishing an NPPS, the Minister must give due regard to a number of specified principles and mandated the inclusion of a number of priorities in the NPPS itself. In respect of the first amendment, the noble Baroness, Lady Hayman of Ullock, has subsequently tabled a modified version of it—in Motions 4A and 4B in lieu—which, as before, would require the Minister drafting the NPPS to have regard to a set of principles. The modification suggests a set of principles more in line with those we have already established in Clause 12, and I am happy to set out the Government’s stance on this issue now.

The Government recognise that these principles are important to procurement, which is why they are already reflected throughout the Bill. For example, value for money, integrity and maximising public benefit are set out as procurement objectives in Clause 12, which I have already mentioned. Contracting authorities must have regard to these when carrying out procurements, and transparency requirements already run throughout the Bill.

[Lord Lansley (Con)]

Before we proceed further in relation to Clause 12, will my noble friend confirm that the procurement objectives in Clause 12 relate to covered procurement only—that is, procurements that are in excess of the threshold—and therefore does not include exempt contracts, whereas the national procurement policy statement applies to all procurement?

[Baroness Neville-Rolfe (Con)]

If I may, I will come back to that when I have finished presenting. I did ask that question today; I do not think there is that much difference, but I will come back to my noble friend.

There are other specific requirements in the Bill that place obligations on contracting authorities regarding the fair treatment of suppliers and non-discrimination in decision-making. On value for money, I know there is concern from across the House that it is often interpreted to mean lowest cost. We have sought to address this through the move from most economically advantageous tender to most advantageous tender at Clause 19, which stakeholders tell us is a powerful signal in this regard.

Including a similar set of principles in respect of the NPPS risks creating duplication and confusion when we are looking to simplify the regime. However, while the NPPS should focus on the priorities of the Government of the day, many of them are already reflected in the current non-statutory NPPS introduced by this Government, and we have consistently demonstrated our commitment to them through measures such as the strengthening of social value policy following the collapse of Carillion and the procurement policy on carbon reduction introduced in 2021. In addition, the Public Services (Social Value) Act 2012 will continue to exist alongside the new regime established by the Bill. I hope that this will satisfy the noble Baroness.

The second amendment made by this House added a sub-section which required the inclusion of specific priorities in the national procurement policy statement relating to achieving targets set under the Climate Change Act 2008 and the Environment Act 2021, meeting the requirements set out in the Public Services (Social Value) Act 2012, promoting innovation among potential suppliers and minimising the incidence of fraud. I believe that these issues are already addressed in the Bill—for example, in Clause 12—or elsewhere outside of this legislation. For example, the Public Services (Social Value) Act 2012 requires contracting authorities to consider the economic, social and environmental well-being of an area when planning specified procurement, and there are additional obligations imposed by the Environment Act 2021. From 1 November 2023, Ministers will be under a statutory duty to have due regard to the environmental principles policy statement when making policy and will be subject to this duty when preparing the NPPS.

Finally, the scope and extent of the NPPS needs to be flexible, and these things should not be set in stone. Noble Lords have highlighted net zero, social value and innovation, but new challenges arise, such as the security threat from the Russia-Ukraine war. The Government of the day need to be able to respond to each major new challenge in an appropriate manner, without needing to change primary legislation. I beg to move.

Amendment to the Motion on Amendment 1

--- Later in debate ---

[Baroness Hayman of Ullock (Lab)]

My Lords, Amendment 4A in this group is in my name. My amendment in lieu would insert a number of priorities and principles into the Bill. I will be fairly brief because we discussed these issues at length both in Committee and on Report but we felt that they were important enough—and were considered important enough by noble Lords during those debates—to bring the amendment back once again.

My amendment asks that due regard be given to a number of priorities and principles. The first is “maximising public benefit”. Public benefit is mentioned in the Bill but we feel that it is too vague, which is why we want to pin it down more within another amendment. Maximising public benefit would include

“the achievement of social value, through the securing of environmental objectives”;

many noble Lords were concerned at the lack of environmental objectives in the Bill. It would also include

“promoting innovation amongst potential suppliers”.

We also think that it is important to have

“value for money, by having regard to the optimal whole-life blend of economy, efficiency and effectiveness that achieves the intended outcome of the business case”.

In our previous debates, the Minister spoke strongly about the importance of value for money, so I hope that she understands why the second part of our amendment is clearly important and would strengthen the Bill.

The next part of my amendment deals with transparency. We think that it is important that we act

“openly to underpin accountability for public money”,

tackle corruption and ensure that all procurement is fully effective in achieving this. We also think that good management should be in place in order to have proper integrity, prevent misconduct and exercise

“control in order to prevent fraud and corruption”.

Importantly, we have added in “fair treatment of suppliers”. I thank the Minister for her work on improving the Bill for small and medium-sized enterprises, but we feel that more could be done to ensure that

“decision-making is impartial and without conflict of interest”.

The final part of my amendment concerns non-discrimination—that is,

“ensuring that decision-making is not discriminatory”.

The reason why we have had such a debate about this matter is that the principles were originally in the Government’s Green Paper and were consulted on. Our concern is that those principles were then left out of the Bill even though the objectives were included. So, my amendment would bring those principles back into the Bill.

We believe that social and public value are important requirements for any contracting authority to consider in order, for example, to encourage anyone contracting to work with local suppliers; to encourage contractors to reduce their CO₂ emissions; to encourage the hiring of more apprentices; and to encourage greater diversity. We believe that, if the Government are to deliver their ambitions of levelling up and net zero, it will be important to include these principles in the Bill. We know that social value is included in the national procurement policy statement—the Minister made much of the NPPS in our previous debates—but it is not referred to in the Bill. We also know that public benefit is mentioned in the Bill, but it is not clear to us how social value would sit within that framework. How will it all come together to ensure that it works for the public benefit? We know that the NPPS will include the Government’s strategic priorities but, again, we do not know clearly what those are. Further, the Bill does not mention innovation, which is why it is an important part of my amendment. As the noble Lord, Lord Lansley, said when we previously debated the Bill:

“When our current Prime Minister was Chancellor of the Exchequer, he put innovation at the forefront of his economic approach to improving productivity”.—[Official Report, 28/11/22; col. 1619.]


So why not include it in this Procurement Bill?

As the Minister said in her previous response to similar amendments, innovation and competition have an important part to play here. Procurement should be an enabler of innovation. It is important that there is clarity around these principles and objectives. How will innovation be part of it, for example? The Bill will shortly become legislation. We must revisit these concerns and we want to persuade the Minister to consider very carefully what we have been saying and why we are saying it. From her responses, we do not believe that at previous stages there was adequate explanation of how all this would operate. Good sentiment from the Government and the Minister, and promises around an NPPS we have not seen, are not sufficient to ensure that we have the best procurement legislation possible, which we all want to see. Our amendments would help achieve that end.

Sadly, the Minister has again disappointed me with her introduction on these issues, although I thank her for all the work she has done as we have progressed so far. It is my intention to move my amendment.

[Lord Lansley (Con)]

My Lords, I will contribute on Amendments 4A and 4B in particular. As noble Lords will recall, the structure of Amendment 4A, as an amendment in lieu of the Commons Amendment 4, incorporates to an extent some of the issues raised in the strategic priorities that your Lordships sent to the Commons to be included in the national procurement policy statement. I will explain how that works in a minute.

Like other noble Lords, I am grateful for the time and effort that my noble friend the Minister has given to listening to what we had to say. On Commons Amendment 5—which would get rid of the reference to “strategic priorities”—I was focused on innovation, as she knows. Innovation is essential to the quality and effectiveness of procurement. Also, public procurement is a substantial part of this country’s economic activity. If it promotes innovation, it can make a significant difference to our overall economic performance and to reconciling our productivity problems. The fact that, in the absence of Amendment 4, the Bill would make no reference to innovation is such an omission that, on those grounds alone, Amendment 4A should be added back to the Bill.

When we tabled our amendment, the noble Earl, Lord Devon, the noble Baroness, Lady Worthington, and I tried to ensure that the national procurement policy statement was clear about what we regarded as enduring strategic priorities. We have backed off from that. My noble friend and the Minister in the other place were clearly told that we must have maximum flexibility. I still do not understand why the Russian invasion of Ukraine might mean that public procurement in the United Kingdom should not have regard to social value; none the less, leaving that to one side for a moment, I accept that there is an ideological commitment in government to the idea that everything that government does must be so flexible that you cannot even predict some of the basic principles within it.

We have dropped the strategic priorities; we have made them principles. As the noble Baroness, Lady Hayman, rightly has it, we have moved from “must include” to “have regard to”. Therefore, Ministers are not constrained to include in the statement innovation, the achievement of social value, the achievement of environmental objectives or, for that matter, transparency, integrity, fair treatment, non-discrimination and value for money. However, the idea that any of these things would be left out of a national procurement policy statement is wholly unacceptable.

I come back to the essential question: what are we trying to do? We are trying to set the framework for contracting authorities to undertake public procurement. From our point of view, the statement should include whatever the Government think it should include but it should not exclude such basic central principles of public procurement. We have only to ask ourselves what conclusion we would draw if the Government were to send a draft of an NPPS to Parliament which left these things out. In my view, we would have to reject it. What is the benefit of that? Better to put it in the Bill now, make it clear to Ministers and, frankly, officials, that it should be in the statement so that, when the draft of the NPPS comes, we can tick the box, send it forward and approve it.

The noble Earl, Lord Devon, will add matters on social value. I just say that we may have left the EU public procurement regime but, when you look at the centrality of social value to public procurement in other jurisdictions across Europe, the idea that you would not seek social value through public procurement seems wholly unacceptable.

I was quite struck by the paucity of argument presented in Committee in the other place when our amendment to the Bill was deleted. In addition to:

“It needs to be as flexible as possible”,—[Official Report, Commons, 31/1/23; col. 54.]


which was predictable, what irritated me especially, as my noble friend on the Front Bench is now aware, was that references to integrity, transparency and value for money are already in the Bill, in Clause 12. The Committee in the other place clearly paid no attention to the Bill in front of it, since Clause 12 relates to covered procurement. As we noticed in our debates in Committee, the national procurement policy statement is not confined to covered procurement. It extends to all procurement by government, though not including the NHS, which for these purposes seems to be excluded from “public authorities”, which is a curious definition in itself.

We knew that the NPPS was wider. The Committee at the other end seemed somehow to imagine that covered procurement was enough, but it excludes everything under about £112,000 in value. Therefore, many small procurements would not be affected by it. It simply is not acceptable. We need to go back and ask the Commons to think again about the exclusion of such central principles from the national procurement policy statement. It has been a long time coming back. We are nine months on from the point at which we sent the Bill to the Commons. We took some time getting it to the point that we did. Noble Lords will recall that on the first day in Committee we received 50 government amendments, this clever idea of covered procurement arising only at that point and not in the original draft of the Bill.

To make a final, acerbic comment, I find it somewhat astonishing that during the passage of the Bill the Government have been able to make many hundreds of amendments that they chose to make. At this stage, we are asking for only a small handful that the Lords want to make. The Government at this point might just bend and accept those amendments.

[The Earl of Devon (CB)]

My Lords, I regret that due to professional commitments I was unable to contribute as much as I would have liked to earlier stages of the Bill. However, I added my name to two amendments on Report, both of which focused on the importance of recognising social value in the development of the national procurement policy statement. I am grateful to the noble Lords who led on those amendments with such success—the noble Baronesses, Lady Hayman and Lady Worthington, and the noble Lords, Lord Coaker, Lord Fox and Lord Lansley—a truly cross-party team.

The recognition of social value now returns for our consideration with Amendments 4A and 4B. I am again grateful to the noble Baroness, Lady Hayman, for taking the lead and so succinctly gathering in one place the essential priorities and principles to which regard should be given. Chief among them from my perspective is public benefit through the achievement of social value.

I should at this stage disclose my membership of the APPG for Social Enterprise and explain that I was privileged to chair its inquiry into the performance of social enterprise during the dark days of the pandemic. The conclusions of that report were compelling, revealing without doubt that social enterprises—that is, enterprises committed to the delivery of social value alongside more commercial ambitions—performed considerably better during the pandemic than their competitors, be they charities or strictly commercial enterprises. Social enterprises were more resilient, lighter on their feet and more diverse in their employment and service delivery. They delivered a lot more of the smaller contracts—which, as the noble Lord, Lord Lansley, identified, would not be covered by Clause 12—and they performed better economically.

Where they performed much worse than their competition was in their ability to secure support and funding from local and central government through public procurement. We noted that this was a particular issue in England, as compared with Wales and Scotland, because in those jurisdictions social enterprises and social value are identified as priorities within their public procurement strategies. With this amendment we will achieve the same and ensure that the delivery of social value is a priority for government. I urge that it is supported.