Procurement Bill [HL]

Lord Moylan Excerpts

Committee stage
Monday 11th July 2022 Grand Committee

Moved by

[Lord Moylan]

37: Clause 10, page 8, line 5, leave out “this Act” and insert “section 11 (procurement objectives)”
Member’s explanatory statement
The effect of this amendment would be to limit obligations on contracting authorities to compliance with the procurement objectives in section 11.

--- Later in debate ---

[Lord Moylan (Con)]

My Lords, in moving Amendment 37 I will speak also to Amendment 460 in my name, which is closely linked to it. They work to a similar effect.

The purpose of these amendments is to go back to the question of what we are trying to achieve in this Bill—what its purpose is. I think we all agree that we want honesty, transparency and value for money in public procurement, in broad terms. However, as I said at Second Reading, it seems that what we are achieving is the bureaucratisation of honesty, whereas we should be focusing on the principles. We are creating a great beneficial bonus for lawyers, as was identified by the noble Lord, Lord Fox, earlier in Committee.

The key to real-world management of procurement is flexibility: to be able to respond to circumstances as they change during a tender. The current system, as I said at Second Reading, operates by setting up some conditions at the beginning over which the contracting authority has very great control. However, the system operates with great rigidity after that, so that it is very difficult to respond to changing circumstances in the course of the tender, or to surprising tenders that might be received.

I gave some examples at Second Reading, particularly the great non-existent iconic London bus shelter. I will detain noble Lords with a couple of further examples because I have been contacted since then by a former local government officer, for whom I have great respect, with two examples from the water sector. One related to a contract in which—I cannot supply the names—the officers had set up in advance the very precise and clear criteria by which to analyse the tenders they received for a waste collection contract. When one of the tenderers said “For certain types of waste, we will pay you in order to collect it”—which can make sense for certain recyclers—the whole assessment system effectively collapsed because it had not contemplated that sort of bid. As far as I am aware, everything had to be scrapped and started again, whereas a sensible approach would have allowed it to be flexibly adapted.

The second was a case where the local authority decided to take a relaxed “Let’s see what the market comes up with” approach to the tender—which can be appropriate as well—which was also for a waste collection contract. Unfortunately for the local authority, the cheapest bidder proposed collecting waste from households only once every four weeks—which was why it was the cheapest bidder. Of course, that was neither environmentally nor politically acceptable, but what could the authority do about it at that stage? All it could do was put pressure on the second-lowest bidder, which had sensibly proposed a two-week collection cycle, to cut its price to make it competitive with the four-week people. That duly went through. The two-week collection was awarded the tender, and within a matter of months the contract had effectively collapsed because, of course, the company could not make it work at the price it had been obliged to agree.

So why is there no flexibility in the system once the initial conditions have been set up? The practical reason is that the moment you say, “This is daft. We should be able to do something about it”, the people whom I described in my Second Reading speech as the high priests of procurement will turn up and say, “Ah, but if you do that, a disappointed bidder may sue you for failures in the process.” That is why you are tied at the outset with iron hoops to the process that you have set in motion.

What we need is a Bill that focuses on principles rather than on process. These two amendments do that by preventing disappointed bidders from suing a contracting authority for process faults; they could sue only for breach of the objectives set out in Clause 11. I remind noble Lords that those are to do with: delivering value for money; maximising public benefit; sharing information; acting with integrity and being seen to act with integrity; and equal treatment of tenderers.

It is important to explain that the approach I am proposing is not necessarily tied to Clause 11, because certain noble Lords are proposing that the Bill be augmented with a further set of principles—the amendment in the name of the noble Baroness, Lady Hayman of Ullock, adds a set of principles to the objectives in Clause 11. My amendment is perfectly compatible with her approach. If the House decides that the objectives for the Bill and the principles underlying it are not sufficiently and adequately expressed in Clause 11 and that further objectives and principles are required, on Report my amendment could be adapted to fit in with those principles. In this particular debate, I am staying neutral on the various proposals for how to develop the principles; I am totally neutral on the noble Baroness’s amendment, because mine would fit with it if that is the direction that the House and the Government wish to take. It is important to bear in mind that I am not tying this explicitly to Clause 11.

It is also important to bear in mind something else that I said. This is not a Bill for combating fraud, corruption or malfeasance in public office. All those things are criminal offences. If a contracting authority commits those offences, it will be prosecuted not under the terms of this Bill but under the relevant provisions of the criminal law—and quite properly. What this Bill does is create a huge bureaucratic minefield for contracting authorities in which disappointed tenderers can sue for some sort of compensation or damages—not that they do so very often, but it is a chilling factor when it comes to the flexibility that contracting authorities should rightly have.

Now, some people would say that this would radically alter the whole approach of the Bill. I think it is a fairly radical alteration of the Bill’s approach, but I speak with some experience when I say that it would also make it a workable Bill. I hope that my noble friend, if he or she is not immediately inclined to agree, will at least explain why this approach does not commend itself to Her Majesty’s Government.

[Baroness Hayman of Ullock (Lab)]

My Lords, I shall speak to my Amendments 43 and 51 in this group and comment on the other amendments. I thank the noble Baroness, Lady Bennett, for supporting Amendment 43. Amendment 43 would reintroduce the procurement principles that were laid out in the procurement Green Paper and put them in the Bill.

The procurement Green Paper stated that the principles of the new regulatory framework for public procurement should be consistent with the Treasury’s Managing Public Money and the seven principles of public life as set out by the Committee on Standards in Public Life. The Green Paper states:

“The Government proposes that the following interdependent principles should be included in the new legislation.”


I shall remind noble Lords of the interdependent principles: they are public good, value for money, transparency, integrity, fair treatment of suppliers and non-discrimination. We absolutely support these principles, as I am sure all noble Lords do, because they are crucial for good business practice. Will the Minister say why these principles are not in the Bill as expected, particularly when we consider that, in the consultation on the Green Paper, the majority of the more than 600 respondents supported the principles for procurement being in the Bill? If we look at the Government’s response to the consultation, they said:

“The Government intends to introduce the proposed principles of public procurement into legislation as described.”


What has changed since then? Why now are those principles not in the Bill?

We believe that these principles are an integral part of procurement and a vital tool for setting out what this legislation wants to achieve and how its success will be judged. In the Bill as currently drafted there is a notable absence of mentions of equality or protected characteristics. The public sector equality duty requires public bodies to have due regard to the need to eliminate discrimination, advance equality of opportunity and foster good relations between different people when carrying out their activities. This includes promoting equality and eliminating discrimination through public procurement as well as ensuring that the PSED is adhered to by those with whom public bodies contract.

Furthermore, this is important domestic legislation that asserts that international obligations on procurement in the UK entered into must be compatible with social objectives. We are concerned that the UK has signed a trade agreement with Australia that potentially threatens the inclusion of social criteria in procurement rules. The UK-Australia agreement states that social and labour considerations can be used in the government procurement process only when based on objectively justifiable criteria. This means that social criteria could be challenged by Australian companies via their Government as unjustified. Furthermore, the World Trade Organization’s government procurement agreement that the UK has acceded to does not contain social criteria for procurement. We believe that the current positron needs to be revised and that these principles should be clearly in the Bill.

Moving on to my Amendment 51, it would add proportionality to the procurement objectives. The Procurement Bill covers a wide range of goods, works and services and a range of scales from tens of thousands of pounds to hundreds of millions, but it can be implemented effectively only if proportionality is applied throughout the process. Ensuring the Procurement Bill is proportionate is also key to achieving two of the Government’s key aims in this legislation: to improve value for money and to open up the market to smaller providers, including charities. Proportionality is crucial to the effective procurement of person-centred public services through ensuring that resources are not wasted on overly complex processes when they are not necessary and that the most appropriate provider to run the service can be procured rather than being excluded because of their size or where this is disproportionate to the scale or nature of the contract. Proportionality is referenced in the legislation, but only in specific parts, yet we believe it is relevant right across the entire process.

NCVO, which represents over 17,000 voluntary organisations, charities, community groups and enterprises across England, and the Lloyds Bank Foundation have drawn attention to the fact that this Bill will impact on the services and support that people access. We therefore believe that it is important to ensure that it is appropriate for the commissioning of procurement of people-centred services that are delivered by a range of service providers that also include charities. Charities are often well placed to deliver these services because they are embedded in local communities. They are trusted by local people and often able to reach those whom other services fail to reach.

--- Later in debate ---

[Lord Moylan (Con)]

My Lords, my noble friend the Minister has a difficulty with his throat, and I commiserate with him on that. He also has a difficulty with the Bill. He wants to have a Bill which is highly prescriptive, but his answer to those who wish to amend it is that that would make it too prescriptive. The question is: what are the bounds of prescription, and has he given an adequate defence of them? It may be the heat, but I suspect we are condemned this afternoon to receiving a series of responses from Ministers which are not as adequate and embracing of our original ideas as one might hope.

It has been a very important debate because it is about the principles underlying the Bill. My noble friend said that there was a degree of confusion and contradiction in the debate. There is often confusion in debate when you have a broad range and number of topics to discuss, but I do not think there was any contradiction if one understands that the debate on principles has been taking place on two levels. The first is about what the principles should be—whether they should involve what the noble Baroness, Lady Hayman of Ullock, has suggested should be incorporated and whether they should involve a certain interpretation of value for money. We all agree that has to be an element of it, but what does that actually mean? That has been the tenor of part of the debate. I have said that I intend to remain neutral in a sense on that question.

The second level on which we have been debating the principles is: on the assumption that we can agree what the principles are, what role do they then play? What purchase or leverage do they give in the procurement process? In particular, should they be a basis on which disappointed contractors should be able to nitpick through this procedural Bill in order to bring complaints when, in my view, it would be better if they were limited to doing that only if the broad principles of the Bill—which we might have agreed on—had been breached? The noble and learned Lord, Lord Hope of Craighead, clearly grasped that point, and the noble Baroness, Lady Hayman of Ullock, heartily agreed that we should ensure that there is a degree of flexibility in the tendering process so that unforeseen circumstances that lead to idiotic outcomes can be handled in a sensible way.

My noble friend Lady Neville-Rolfe made a similar point, but I am going to quibble with her very slightly, because she used the word “frequent” in reference to frequent legal challenges to procurement processes. In my experience, they are not very frequent, because what happens is that precise attention to the detail of the process is often prioritised over sensible outcomes in order to avoid those legal challenges in the first place. The structure of the approach that we are taking often leads to poor outcomes in procurement terms precisely to avoid legal challenges, but we congratulate ourselves on having gone through a successful procurement even though we have a suit with a pair of trousers with one leg shorter than the other, or something like that.

[Baroness Neville-Rolfe (Con)]

On the business of frequent challenge, I think it would be quite useful to have some information before we discuss this again. My experience—I have worked in the industry, although admittedly not as an executive—is that there are quite a lot of challenges, and they absorb a lot of resources. However, if they are rare, that is important as well.

[Lord Moylan (Con)]

I heartily second that call for information.

To conclude, my noble friend the Minister said that he thought that flexibility in response to the sort of circumstance that I am describing is desirable. To that extent, he agreed in principle with me and with my noble friend Lady Neville-Rolfe, and it is for him, as we go forward, to show how he intends to instantiate that in his own amendments, so as to give us that sensible, practical outcome. In the meantime, I beg leave to withdraw the amendment.

Amendment 37 withdrawn.