Defence and Security Public Contracts (Amendment) (EU Exit) Regulations 2020

Lord Thomas of Gresford Excerpts

Tuesday 3rd November 2020 Lords Chamber

[Lord Thomas of Gresford (LD) [V]]

I am conscious of the fact that we are dealing with a major sector, if not the major sector, of British industry. These draft regulations amend regulations made last year which amended the 2011 regulations, which brought into domestic law the requirements of a European directive. There must be someone whose bread and butter is procurement in the Ministry of Defence and who might follow it all.

However, my first question to the Minister is: why has the Ministry of Defence retained these confusingly amended DSPC regulations 2011? “We need legal certainty—a solid legal bedrock”, the noble Baroness said. This is a complicated maze with which bidders for contracts must grapple. Why has the ministry not brought before us a clean and transparent set of new regulations to govern procurement for our defence needs in the brave new world about to dawn on 1 January? Why are we carrying into the future a body of law which looks to the European directive and the European Court of Justice for its interpretation? “The principles remain unchanged”, said the noble Baroness, Lady Goldie, to us a moment ago.

My second question is this: according to the Explanatory Memorandum, one purpose of these regulations is to validate “ongoing public procurement procedures” that have been launched but not concluded before the end of the implementation period. To get some idea of the scale of what we are dealing with, how many contracts or framework agreements or applications are we engaged with? Is it five, 10, 100 or 1,000? How many application procedures are expected to be launched between now and the end of the implementation period? Is there a scurrying to get these procedures launched in the next 58 days or will the MoD be waiting for the new year?

Thirdly, what does the future hold? In the debate of March last year, to which my noble friend Lady Smith contributed, the noble Earl, Lord Howe, promised that we would not fall off a cliff but, to my mind, we are heading pell-mell for Beachy Head. I understand that businesses in the EU 27 will have their hitherto-guaranteed right of access to UK public procurements and will be tendering for government contracts on the same basis as other countries worldwide, but what about other bidders? Are Russia, China, Korea or the US envisaged? There are a limited number of arms-exporting nations. What about reciprocity? Please can the Minister confirm that we have reciprocally lost guaranteed access to EU defence procurements?

Finally, does Her Majesty’s Government, freed from the shackles of Europe, envisage that they will be able to prop up the British arms industry with state aid? Of course, this would put it in a far more competitive position and is no doubt a main reason why state aid seems to be the stumbling block in the current stuttering negotiations with Monsieur Barnier. Where does state aid come in the Government’s calculations for future defence procurement? How much has our pending breach of international law, compounded by Boris Johnson’s failure to respond by today to the EU Commission’s letter before action, damaged the trust worldwide that bidders can place in this Government’s commitment to meet our contractual obligations?