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.