Public Procurement (Amendment etc.) (EU Exit) Regulations 2020

Lord True Excerpts

Monday 16th November 2020 Grand Committee

Moved by

[Lord True]

That the Grand Committee do consider the Public Procurement (Amendment etc.) (EU Exit) Regulations 2020.

Relevant document: 31st Report from the Secondary Legislation Scrutiny Committee

[The Minister of State, Cabinet Office (Lord True) (Con)]

My Lords, procurement by the Government and public sector bodies represents a significant part of the UK economy. It is essential to the day-to-day running of government and should be appropriately regulated. The Government are committed to ensuring the continued functioning of this important marketplace when we leave the EU.

This statutory instrument will ensure that the UK will meet the requirements of the withdrawal agreement and the Northern Ireland protocol and replaces the earlier statutory instruments that did not take these matters into consideration. This legislation is essential to provide legal clarity for public procurement and certainty going forward, as we look at the possibilities for wider procurement reforms, which may be brought into domestic legislation.

The majority of this SI is unchanged from the Public Procurement (Amendment etc.) (EU Exit) Regulations 2019, as amended by a second SI made in 2019, instruments that were debated in both Houses before being signed. Those instruments however, addressed deficiencies in a no-deal scenario. This instrument consolidates the first 2019 SI as already amended, incorporating further changes and new provisions, where relevant. The amendments made by this instrument do not amount to a material change in procurement policy. They will ensure that the UK’s procurement system continues to function as intended at the end of the transition period. UK contracting authorities will be able to continue to procure goods and services without substantial changes in the process. In that way, the Government are ensuring that those entities can continue to be able to obtain value for money for UK taxpayers.

The instrument makes amendments to the three sets of regulations that implement the EU directives on awarding contracts and concessions in the public and utilities sectors outside the field of defence and security. Your Lordships debated a separate instrument amending the Defence and Security Public Contracts Regulations last week. Where this instrument differs substantially from the 2019 instrument is that it seeks to provide a level of continuity for procurement procedures which began before the end of the transition period. Procurements that fall within this category, including orders from ongoing contracts, will continue in substance to follow the unamended procurement regulations. We do not expect that there will be many procurements which fall into this category; however, it would be difficult to measure these exactly. A number of new technical amendments have also been included in this instrument.

This instrument makes it clear that specifications with an information and communication technology component can continue to refer to the common technical specifications recognised by the EU Commission. This is an extremely dynamic area of technical specifications, and the EU’s process for recognising them is based on accepted best practice that the UK Government have been instrumental in developing. We have decided that, pending a mechanism to identify these domestically, retaining the reference to the EU’s standardisation process is deemed the best solution.

The thresholds that govern the award of public contracts came into effect in the UK on 1 January 2020, and the sterling figures in this instrument reflect those updated figures. The procurement of certain legal services by a lawyer as defined by the lawyers’ services directive are excluded from the procurement regulations. So that EU lawyers do not receive preferential treatment over those from third countries, this instrument amends the definition of lawyer to mean a person practising as an advocate, barrister or solicitor in any part of the UK or in Gibraltar. That includes those Swiss lawyers entitled to practise under their domestic designation in accordance with the Swiss citizens’ rights separation agreement.

This instrument also makes various amendments to the procurement regulations to reflect recent amendments made to other domestic and retained direct EU legislation —for example, in relation to the acceptable formats for advanced electronic signatures, and the applicable rules for determining the origin of products. To enable the procurement regulations to reflect technological developments and full and ongoing interoperability in electronic invoicing, a power has been conferred on the Minister for the Cabinet Office to make regulations to substitute a different e-invoicing standard, a different reference from the same standard or make changes to specific syntaxes for e-invoices.

The instrument disapplies rights derived from Article 18 of the Treaty on the Functioning of the European Union and parallel provisions in other agreements, to the extent that they are not disapplied in other domestic regulations. Retaining these rights would leave a lack of clarity as to whether EU parties within the scope of Article 18 of TFEU would have additional rights in the UK compared to non-EU countries. For example, suppliers from the EU may be provided with additional rights compared to third-country suppliers.

The UK has been invited to accede to the government procurement agreement, or GPA, in its own right. This instrument repeats the contingency arrangements set out in the 2019 EU exit statutory instrument, in case we are unable to legislate for GPA accession, resulting from any delay to the Trade Bill. One of the amendments ensures continued guaranteed access, rights and remedies on current terms for suppliers from existing GPA parties who would no longer have the guaranteed access, rights and remedies that they currently enjoy. This will mitigate the risks of a short gap in GPA membership by facilitating continued market access. Due to delays to the Trade Bill, we have also included a similar measure to this in relation to certain bilateral trade agreements between the EU and third countries to which the UK is currently party via its membership of the EU. This will keep alive the existing obligations towards suppliers from countries with which the EU has, before the end of the transition period, entered into a trade agreement with provisions relating to public procurement by which it is bound. The period in the 2019 EU exit SI was set to 18 months. This has been reduced to 12 months in this instrument to reflect the progress made in the Trade Bill.

In summary, this instrument seeks to ensure that the current public procurement regimes will continue to function after the end of the transition period, and to implement the relevant sections of the withdrawal agreement. It does not seek to make major policy changes or introduce new frameworks; instead, it makes largely technical changes to correct the deficiencies that will naturally emerge within our legislation at the end of the transition period. Left unamended, the existing regulations would not work as intended, and the EU exit regulations made last year in the context of a no-deal scenario would come into force. This would amount to a breach of our international obligations as well as a cause of confusion and uncertainty for procurers and suppliers, hampering the public sector’s ability to obtain value for money from procurement. I commend the regulations to the Committee and beg to move.

--- Later in debate ---

[Lord True (Con)]

My Lords, I thank all those noble Lords who have spoken in the debate, and for their general welcome for these regulations. I will obviously try to answer at least some of the points made, but a number of them have been extremely detailed and not ones of which I have had prior notice. Where I cannot answer, I will obviously follow the usual conventions.

I was taxed about this being the third version of a procurement EU exit SI; I sought to explain in my opening speech the reason why. As I thought that I had explained, the previous two SIs were prepared for no deal, while this SI is to reflect the obligations in the withdrawal agreement and is within the powers provided under the European Union (Withdrawal) Act. It can correct deficiencies caused by our exit from the EU and it acts to implement the withdrawal Act. It is not dependent on the deal’s outcome.

Crown dependencies are not members of the EU and therefore are not subject to the public procurement regulated by the EU. The exception is Gibraltar, where the EU directive has been implemented. That is why Gibraltar is specifically included.

I am not going to follow the rather more political comments about alleged aspects of procurement. It is clear that a number of noble Lords are close readers of aspects of the press. No doubt a number of journalists will be gratified by the reference to allegations in the press. What I say on behalf of Her Majesty’s Government, and so far as I am concerned, is that no one would defend any form of impropriety in public life. That is a fundamental position to which all political parties have subscribed and, I trust, will subscribe. As the noble Baroness opposite generously observed, a number of the allegations relate to the procurement of PPE and other materials in the early stages of the Covid outbreak. In repeating what I have said—that no one will defend any improper or inappropriate action—I am sure that there will, quite rightly, be a long and continued examination of these aspects and allegations.

The reality is that the Government have been working tirelessly to protect people and save lives. Our approach has meant that we have secured 32,000 million items of PPE for now and in the future, as well as developing the biggest testing system per head of population of all the major countries in Europe. We have processes for carrying out proper due diligence for all government contracts. The noble Baroness asked for more specific information about this and we take these checks extremely seriously. For contracts relating to equipment such as PPE, we have a robust process in place ensuring that orders are of high quality and meet strict safety standards, but I am happy to provide her with further information.

I was asked about the devolved Administrations. Noble Lords will know that I attach great importance to them personally. I assure the noble Lords, Lord Wigley and Lord Hain, and the noble Baroness, Lady Hayter, that the devolved Administrations were consulted on the amendments to the procurement regulations and that they agreed with this SI. They support it and were, I am advised, involved in the drafting.

On the undertakings that the noble Lord, Lord Wigley, asked me about, those covered previously will continue as before. Essentially, that is the overall purpose of the statutory instrument before us.

I was asked about the GPA. Obviously, the UK currently participates in the GPA via its EU membership. The UK needs to the accede to the GPA in its own right to maintain legally guaranteed access to the public contract opportunities that the GPA provides. The offer that we have made to GPA parties maintains our existing commitments in the UK part of the EU schedule. As noble Lords know, the withdrawal Act aims to ensure as much continuity as possible. The UK has approval to join the GPA in its own right and a number of international agreements with procurements chapters have been signed. Therefore, all suppliers should continue to be treated equally and fairly through open competition. We expect a smooth transition, having received agreement for UK accession from January 2021. I acknowledge, as I did in my opening remarks, that delays to the Trade Bill have led to the instrument having a 12-month contingency to avoid any gap.

On advertising GPA opportunities to British firms, a national portal is a requirement of the GPA. Each GPA party will have space to advertise its opportunities and suppliers will have open access to them. The e-notification service is free of charge and will be openly accessible.

The noble Lords, Lord Blunkett and Lord Wallace, the noble Baronesses, Lady Boycott, Lady Bennett and Lady Hayter, and others made important points about the nature of future procurement. One advantage of where we are and where we hope to go is that we will be able to govern our own approach. We will use opportunities offered by our exit from the EU to consider carefully long-term options for reforming the procurement rules. I am sure that my colleagues will keep in mind the issues that have been raised, such as social value and the environment. We cannot provide further details on the possible outcomes at this stage but I can tell the noble Baroness that the Green Paper to consult on the proposed future changes to the procurement rules is currently being prepared. The plan is to publish it before the end of this year. Any changes will obviously be subject to separate legislation, which will enable your Lordships to probe these issues further.

I agree that not all the material is absolutely central but obviously I agree with the importance of high-quality food. Long ago, I worked with my noble friend Lord Goldsmith, then the MP for my local authority area, to promote the importance of good-quality food in public sector bodies. The Government are extremely mindful of the importance of these issues.

I was asked about the definition of lawyers. I believe that I included some remarks about what “lawyer” meant in my opening speech but if that is not the case, we will let the noble Baroness, Lady McIntosh, know. I think that I answered that point.

We need to ensure that the public procurement regulatory regime will function after the end of the transition period, providing continuity and legal certainty for UK public procurers and suppliers and signalling to suppliers from GPA and other countries that those regulations will guarantee them continued access, rights and remedies.

I know that I have not been able to answer all noble Lords’ questions in this short time but I hope that I have given the Committee some assurance and clarified the implications of the amended legislation. I trust, therefore, that noble Lords will support this statutory instrument.

Motion agreed.