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Procurement Bill [ Lords ] (Fifth sitting)

Debated on Tuesday 7 February 2023

The Committee consisted of the following Members:

Chairs: † Clive Efford, David Mundell

† Bhatti, Saqib (Meriden) (Con)

† Blackman, Kirsty (Aberdeen North) (SNP)

† Burghart, Alex (Parliamentary Secretary, Cabinet Office)

† Clarke-Smith, Brendan (Bassetlaw) (Con)

† Duguid, David (Banff and Buchan) (Con)

† Eshalomi, Florence (Vauxhall) (Lab/Co-op)

† Evans, Chris (Islwyn) (Lab/Co-op)

† Fletcher, Nick (Don Valley) (Con)

† French, Mr Louie (Old Bexley and Sidcup) (Con)

† Gibson, Peter (Darlington) (Con)

Greenwood, Lilian (Nottingham South) (Lab)

† Jones, Gerald (Merthyr Tydfil and Rhymney) (Lab)

† Marson, Julie (Hertford and Stortford) (Con)

Randall, Tom (Gedling) (Con)

† Russell-Moyle, Lloyd (Brighton, Kemptown) (Lab/Co-op)

† Tracey, Craig (North Warwickshire) (Con)

Whitley, Mick (Birkenhead) (Lab)

Sarah Thatcher, Huw Yardley, Christopher Watson, Committee Clerks

† attended the Committee

Public Bill Committee

Tuesday 7 February 2023

[Clive Efford in the Chair]

Procurement Bill [Lords]

Clause 41

Direct award in special cases

I remind the Committee that Hansard colleagues will be grateful if you could send your speaking notes to hansardnotes@parliament.uk. Please switch all electronic devices to silent. Tea and coffee are not allowed to be consumed during sittings.

I beg to move amendment 13, in clause 41, page 28, line 27, at beginning insert “Subject to subsection (4A),”.

This is a paving amendment for Amendment 14, which would prevent the award of direct contracts to excludable suppliers when the supplier was excluded as a threat to national security.

With this it will be convenient to discuss amendment 14, in clause 41, page 28, line 38, at end insert—

“(4A) If the supplier is an excludable supplier by virtue of the discretionary exclusion ground in paragraph 14 of Schedule 7 (threat to national security), the contracting authority may not award the contract to that supplier.”

This amendment would prevent the award of direct contracts to excludable suppliers when the supplier was excluded as a threat to national security.

It is a pleasure to serve under your chairship again, Mr Efford.

Amendments 13 and 14 reiterate our amendments 15 to 19 to clause 29, which we debated last week. We think that competitive and due process should be followed as much as possible, and that the bypasses enabled by clause 41 should be used as little as possible. Although we understand why direct awards might be needed, we believe that they must be used with caution.

One element of the clause that we find troublesome is the provision on excludable suppliers and the public interest test. The rationale for direct awards can be related to defence, as under paragraph 18 of schedule 5, and the matters listed in the “overriding public interest” test in clause 41(5) are serious. We understand why the Government may look to bypass many of those grounds should the issues be serious enough, but we do not believe that it should ever be the case that threats to national security are awarded contracts, in particular under direct awards.

Previously in Committee, we attempted to move national security concerns from discretionary to mandatory grounds. We feel that the necessary amendment would require us to go beyond the public interest test for excluded suppliers and exclude suppliers with national security concerns across the board. The fact is, as we go further up the food chain of security sensitivity, the risk to our country from exposing our supply chain to national security threats becomes more severe.

To take the public interest test on constructing, maintaining or operating critical national infrastructure, we understand that that is of the utmost importance for the country, but we should not expose our network to security threats if the need for such a test is so great. The risk of doing so is catastrophic. It could mean malign surveillance in vital infrastructure undermining our entire security system and the fundamental safety of the state. In such cases, there must be a clear instruction for contracting authorities to look for alternative provisions that do not put the state at risk.

We feel that our amendments address such proportionality concerns. They would ensure that we never turn to national security threats for procurement, preventing the threat that those could cause to critical infrastructure. The Minister will say that we need flexibility in the system and that decision makers can assess the threat where necessary, but the reality is that we cannot expect procurement officers to be national security experts and to spot every threat that could be present with a supplier with national security concerns.

It is worth bearing in mind that, in high-pressure situations when wrong decisions can have hugely damaging unintended consequences, proper and strong legal checks and balances are critical, even at urgent times. Again, we may want to remember what happened during the covid pandemic. The National Audit Office investigation into Government procurement during covid-19 found:

“General guidance issued by the Crown Commercial Service recommends that awarding bodies publish basic information about the award of all contracts within 90 days of the award being made. Of the 1,644 contracts awarded across government up to the end of July 2020 with a contract value above £25,000, 55% had not had their details published by 10 November and 25% were published on Contracts Finder within the 90-day target.”

The result was that £10 billion-worth of PPE was written off, with auditors rebuking the Department of Health and Social Care for its management of taxpayers’ money during the pandemic. The Government are now locked in legal battles with the companies that failed to deliver on their contractual obligations. In the first quarter of 2022-23, the Government are still disputing 176 contracts worth nearly £3 billion. It is fair that even in an emergency we must abide by solid procurement principles if we are to avoid unintended consequences that put public finances and our national security at risk.

I think it is fair to say that we cannot be so arrogant as to assume that this would not be done inadvertently. During her speech on Second Reading, which I have alluded to already, the hon. Member for Rutland and Melton (Alicia Kearns) highlighted several issues that point to the need for tightening up in this area. She said:

“At the moment I have local authorities from around the country writing to me saying, ‘Alicia Kearns, can you please give me advice on whether or not we as the local council should procure from this company?’ That cannot be the way we do this. We must ensure local government is not the entry point for hostile states.”

She added:

“Finally, on supply chains, public authorities need to be able to investigate, and we must ensure that this goes high enough up the chain. Canadian Solar is looking to build a solar plant in my constituency. It sounds lovely—'Canadian Solar? What a great company’—but when we actually look into it, it is GCL-Poly, a Chinese-owned, Chinese-run company that is complicit in Uyghur genocide. We must ensure that the burden to investigate is properly addressed.”—[Official Report, 9 January 2023; Vol. 725, c. 363.]

I do not want to say that all these companies are necessarily a national security threat and need to be addressed by the Bill, but the points made by the hon. Member for Rutland and Melton and others show how easy it is for suppliers that may be of concern to the state to slip through the cracks. All these things concern us, and they should concern the Minister. With such risks present, I do not think there can ever be a proportional use of a national security threat in direct award procurement.

My hon. Friend is making very good points. We have the Committees on Arms Export Controls, which scrutinise not just Government sales but commercial sales abroad. Is there not a case for a similar Committee, or for the existing Committees to have a wider scope, to look at imports that might be national security threats? Would that not be a way to shine some light on this?

I thank my hon. Friend for that point, and I hope that the Minister responds to it. It shows the many different angles from which, inadvertently, we could see national security threats coming into the country. We must make sure that we avoid that. We need to look at the issue of national security threats when we are directly awarding procurements.

There is very little in the clause in legal terms preventing the use of national security threats in direct awards; as my hon. Friend highlights, there is no guarantee that they will not be used. Our amendments 13 and 14 would prevent threats from entering the system via direct awards. I hope that the Minister will support them.

It is a pleasure to serve under your chairmanship again, Mr Efford, as we enter the third day in Committee. We are making good progress through the Bill, and we hope to make even better progress today.

Amendments 13 and 14, tabled by the hon. Member for Vauxhall, seek to prevent contracts from being directly awarded to suppliers that pose a risk to national security. As we have discussed, national security is of the utmost importance, which is why we have chosen to strengthen the protections in our rules by introducing a new discretionary exclusion ground for suppliers that pose a risk. As I have already explained, the provision has to be discretionary, because there will be situations where a supplier poses a threat in one context but not in another.

The amendment envisions circumstances where a direct award justification applies, meaning a competitive award is not feasible. That would include where there are no other suitable suppliers, or where there is an extreme and unavoidable urgency. It is in precisely those situations that it is vital for contracting authorities to retain an element of discretion in the national security exclusion ground; that element of discretion does not in any way lessen the obligation on authorities to consider whether exclusion is appropriate for the particular contract given the risk posed by the supplier.

Those considerations will of course be informed by the publication of guidance produced in partnership with national technical authorities such as the Centre for the Protection of National Infrastructure and the National Cyber Security Centre. I have complete confidence that contracting authorities will use the discretion appropriately. I respectfully ask that the amendment be withdrawn.

Question put, That the amendment be made.

I beg to move amendment 103, in clause 41, page 29, line 10, at end insert—

“(5A) Where a direct award justification applies, before making a direct award to a supplier a contracting authority must satisfy itself that no preferential treatment has been conferred on the supplier by virtue of any recommendation made by a Member of the House of Commons or the House of Lords.”

With this it will be convenient to discuss the following:

Amendment 104, in clause 44, page 30, line 23, at end insert—

“(c) any connections between the supplier and any—

(i) registered political party,

(ii) Ministers of the Crown, or

(iii) Members of the House of Commons or House of Lords

where such connections are of a nature likely to be relevant to the direct award of the contract.”

Amendment 111, in clause 44, page 30, line 25, at end insert—

“(4) Any Minister, peer or senior civil servant involved in recommending a supplier for a contract under section 41 or 43 must make a public declaration to the Cabinet Office of any private interest in that supplier within 5 working days.”

This amendment would implement the recommendation of the National Audit Office that any contracts awarded under emergency provisions or direct awards should include transparency declarations.

These amendments arise mostly, although not entirely, as a result of what happened with PPE during covid. I would be less inclined to move the amendments if the Government had shown any contrition about the situation we find ourselves in. They tend to stand up and say, “Well, we needed to procure things in a rush, so we have no regrets about the situation.” It would be much better for them to stand up and say, “We needed to procure in a rush, but lots of mistakes were made along the way and therefore we believe that we need to do better next time.” A full investigation would also be helpful.

The situation we find ourselves in is this: a significant amount of PPE, of significant value, was unusable; the VIP lane has been considered unlawful; and those who made recommendations—one person, certainly, who made a recommendation—have personally benefited from Government contracts that were awarded. In the light of that situation, it is incredibly important that the procurement rules we set up ensure that such a situation cannot happen again—that there is both a requirement for the people making direct awards to satisfy themselves that no preferential treatment has been given on the basis that the person has been recommended by a Member of the House of Commons or the House of Lords, and that, should there be any connections between the supplier and a registered political party, Ministers of the Crown or Members of the House of Commons or House of Lords, that information is laid out in the transparency notice.

That is not asking too much. We all have a register of interests that we are supposed to keep up to date—the ministerial one slightly less often, or very much less often, than that for MPs. Asking for a higher level of transparency, when we know that those links occur, is not asking too much.

The Conservatives have a tendency to point to the fact that, “Well, we have people in the House of Lords who have come from business, therefore of course they will continue to have business interests.” I am not suggesting that they should not—that is absolutely fine—but we should be transparent about it and we should know if a contract has been granted to somebody who will benefit as a Member of the House of Lords. Is the supplier, or the person receiving the procurement contract—the beneficial owner—a peer or a Member of the House of Commons? Are they linked, in some way, to a political party?

We know from Sky’s investigation that a number of Members of Parliament receive money from companies. That is registered, but there is no requirement in the Bill, as it stands, for it to be noted; there is no requirement, when the contract is being given, for that which is open and registered already. Members of Parliament have to register if they receive a certain amount of money from a company, so it should follow that, if the company is being given a procurement contract, it is registered as part of the transparency notice. That should be noted up front.

That is not asking too much, particularly in relation to amendment 104, which is specifically about transparency notices and ensuring that that stuff is clear. It should not be too much work for anyone doing the transparency notice. Absolutely, it will create a little bit of extra work, but all they will need to do is cross-reference the registered interests, and then put that in the transparency notice so that we are all aware of the links.

The hon. Lady is raising some important points about how mistakes were made during the covid period. It is important to note, however, that those same mistakes were not made in Labour-controlled Wales or SNP-controlled Scotland, where transparency seemed to be much higher and fast-track schemes were not implemented. Is there a case for greater light to be shone in this place, where the rot seems to have truly set in?

I absolutely agree. In fact, that adds to the case that we should be willing for there to be an investigation. It shows that, actually, we can do it right and in such a way that individuals do not benefit from that.

I thank the hon. Member for giving way. I look forward to her supporting Scottish Conservative calls for transparency on certain procurements—of ferries and suchlike—by the Scottish Government.

The hon. Member said that it should not be too much to ask. I have heard that argument many times about making amendments, not just to this Bill but to others. She said herself that the registers of Members’ and Ministers’ interests already exist. Does she not feel that making “shouldn’t be too much to ask” amendments to any Bill risks diluting its effect?

I do not think that that is the case. We should not have such an issue that we need journalists, such as those at Sky, to shine a light and make those links. There should be a requirement for that transparency to be in place. Although we have the registers of Members’ and Ministers’ interests, they stand alone and are separate from the procurement contracts. If we end up in situations where people are benefiting significantly, having that in the transparency notice is important.

The hon. Member makes a valid point. Does she agree with my concern that only the other week the Paymaster General said that Ministers’ interests will be updated, but not until May, whereas we as Members have to update our entry in the Register of Members’ Financial Interests within 28 days? Why the delay?

I absolutely agree. The former Chancellor and chairman of the Conservative party, the right hon. Member for Stratford-on-Avon (Nadhim Zahawi), did not update his list of ministerial interests for a significant period after he was put into his role. In fact, some of the most egregious issues did not come to light properly until he updated the list of ministerial interests in January, some three months after he became the party chairman.

I agree that the lack of transparency is a significant issue, and I was disappointed in the Government responses. They do not seem keen to move on the register of ministerial interests being updated more regularly. Surely, given the amount of Executive power in this place and the post-Brexit creep towards increasing the amount of ministerial or Executive power—taking power away from Members—it is even more important for ministerial interests to be registered.

Does the hon. Member agree that the proposal would be in the interests of a governing party that is facing so many scandals—from Baroness Mone to the Randox lobbying affair—that have almost brought down Prime Ministers? It would help to protect the Conservative party from some “bad apples”, as Conservatives might put it.

I agree and would add to that: how many former treasurers of the Conservative party who have given significant amounts to the party have just happened to end up in the House of Lords? Who knows how that has happened? We know that there are people in this House and in the other place with significant business interests, and the amendment is not a criticism of that; it is not a negative thing, but it is about ensuring transparency.

The nub of the issue is that people have been appointed to the House of Lords and, in a particular case—I do not want to mention the name—they are not then taking an active part in proceedings in the other place. We could mention a number of peers who have hardly spoken since they were appointed, or not spoken at all. Rather than using that position to serve the Executive of this country, they have used it to lobby for contracts from the Government. That needs to be stamped out. Does the hon. Member agree that it is now time to look at how we appoint people to the Lords, and perhaps remove appointment to the Lords from the honours system altogether?

I absolutely agree. Each former Prime Minister is able to put forward whoever they want to the House of Lords, so we end up in this situation of having 850 peers and counting. The numbers are increasing drastically because the Government keep putting in more people to balance the politics in that place.

On the amendment, it is important for the Government to be willing to consider how best to improve transparency. So far, they have shown no willingness to improve transparency or to accept that there have been issues and that mistakes have been made. We need to change the system.

The UK has fallen in Transparency International’s corruption index, which has nothing to do with the Financial Action Task Force one. The FATF index is about corruption when it comes to money laundering, but Transparency International’s is about corruption in the public sector. It looks specifically at such issues as breaches of the ministerial code—in particular, ones that have not been investigated—and the scandals we have seen and continue to see.

The Prime Minister cannot keep sacking people who breach the code; we need to change the system so that they never get to that position in the first place—so that they can never commit the egregious breaches of trust we have seen and can never profit as individuals as a result of their position in this place or the other place. If the rules and systems are changed—which they clearly need to be—the Prime Minister will not need to sack people, because they will never be able to breach the rules and will never be able to profit as individuals simply as a result of their links to this place.

I will push amendments 103 and 104 to a vote when we come to that point and am happy to support amendment 111, tabled by the Labour Front-Bench team.

We fully support amendments 103 and 104, tabled by the hon. Member for Aberdeen North, which consider how we embed transparency into the system of direct awards. The two amendments highlight why we need additional layers of scrutiny to address glaring areas of conflict of interest in respect of Members of both the Commons and the Lords. It is vital to have additional checks in place.

Throughout the proceedings on the Bill the Minister has talked about the principle of impartiality, and said that the Bill will make VIP lanes, such as those we have seen, illegal and that it is all going to be fine. But that is just not the case. We need only to look at the pandemic to see why we desperately need to make sure that our procurement system is more agile and more transparent. The Tory VIP lane exposed a weakness in the system.

We must remember that we are talking about taxpayers’ money. We are at a time when so many people are feeling real difficulty in their choices and are seeing their household incomes reduce. Council and social housing tenants dread their rents going up. A number of councils have already highlighted how they are going to increase their council tax, including a borough in south London that is proposing to increase council tax by 15%.

Taxpayers’ money was wasted on contracts that were not fit for purpose and wasted as profits for unqualified providers. Worryingly, the Government have written off £10 billion of public funds that were spent on PPE that was either unusable, overpriced or undelivered, and it is worth bearing in mind that we are still spending £700,000 of taxpayers’ money a day on storing unused gloves, goggles and gowns. That money could pay for spaces in after-school clubs. It could pay for 19,000 full-time nursery places. It is public money.

The Bill does not pass the Mone or Paterson test; that waste could still be allowed to happen, over and over again. Handing more power to Ministers in respect of direct awards is not the way we want to go. We support the two amendments, because it is important that we empower local authorities to be able to ask the necessary questions when it comes to conflicts of interest. The current procurement system is not working, and we need to include new checks.

The amendments could be further strengthened by placing the onus on individual Ministers, civil servants and special advisers to make the necessary declarations but, as we have seen, when the onus is on them, they still do not make those declarations. Essentially, they have to be dragged kicking and screaming. We are in a situation in which we will not see the declarations of Ministers’ financial interests updated until May, if we are lucky. Anything could happen before May.

I draw the Committee’s attention to amendment 111, which we think further addresses the aims of amendments 103 and 104. We have an opportunity to learn from past mistakes and to tighten the freedom of Ministers to award direct contracts. It is about hardwiring transparency into our system. That should be a good thing and something we should all support. Instead, it seems the Minister wants to continue to have a back door and a VIP entrance. We must be clear that the Bill offers us a chance to clear that up.

The facts and figures speak for themselves. Some £3.4 billion of taxpayers’ money, in the form of contracts, went to Conservative donors and friends. A former Conservative Minister lobbied for Randox, which then provided 750,000 defective tests that had to be recalled, all while he was being paid £100,000 on top of his salary. Globus (Shetland), a business that has donated £400,000 to the Conservative Party since 2016, received £94 million-worth of PPE contracts.

Millions of people struggled during covid-19. The Government did some good things—including the furlough scheme to help people not to lose their jobs and the support for businesses—but a large group of people missed out on any money, including the 3 million people who form ExcludedUK. For those people who paid their taxes, submitted their returns and did not receive any money to have seen contracts dished out to friends, when those contracts were not even viable, was a slap in the face. When millions of people struggled during covid-19, it was not fair for them to have seen friends and donors of the Tory party prosper. As it stands, the Bill would continue to allow that to happen.

Our amendment 111 takes an important step, with amendments 103 and 104, towards addressing the situation, by asking Ministers to act, ensure genuine transparency in the system and restore trust in public money. This is about trust in the system. A number of members of the public do not trust our system; this is about restoring some of that trust and ensuring that, after years of waste and mismanagement, we do not find ourselves in this situation again.

Our amendment is based on a proposal by the independent National Audit Office and would mandate that:

“Any Minister, peer or senior civil servant involved in recommending a supplier for a contract under section 41 or 43 must make a public declaration to the Cabinet Office of any private interest”.

I hope we all agree that that is a straightforward, pragmatic proposal. It is not about layers of bureaucracy for business; it is about layers of additional scrutiny on Ministers to help to give the public confidence that another PPE Medpro scandal will be stopped and that we will not see a situation in which handfuls of millions of pounds of public money are redundantly spent on equipment that we cannot use.

The three amendments would outlaw VIP lanes once and for all, ensuring that we stop corruption. They would introduce a timeframe for transparency around declarations so that we can have information about conflicts of interests, instead of it being drip fed through the media or journalists. They would ensure that these scandals are not allowed to build up gradually over months and continue the erosion of trust. I hope the Minister agrees that Members of Parliament and the Government should have nothing to hide. If there is nothing to hide, they should support these reasonable amendments, which will help us to clean up our procurement system.

Conflict of interest in direct award contracts is clearly an extremely important topic. Amendment 103 would require a contracting authority to satisfy itself, before making a direct award, that no preferential treatment has been conferred on the supplier by virtue of any recommendation made by a Member of this House or the House of Lords. We understand—indeed, we agree with—the intent behind the amendment, but the Bill already covers such a scenario via robust requirements for contracting authorities to ensure equal treatment and address conflicts of interest. The bottom line is that if a conflict of interest puts a supplier at an unfair advantage, they must be treated as an excluded supplier and cannot be given a direct award.

Amendments 104 and 111 relate to the highlighting of political connections to political parties, Ministers of the Crown, Members of the House of Commons or House of Lords, or senior civil servants. As Members will have already heard, the Bill includes significantly greater transparency around direct awards than we have had in the past, via the new transparency notice in clause 44 and elsewhere. The conflicts provisions have been strengthened against the current procurement rules. A key change is the requirement in clause 82(5), which I will address in a future sitting, for contracting authorities to confirm that a conflicts assessment has been prepared, reviewed and revised as necessary when publishing a relevant procurement notice, which will include the transparency notice for direct awards.

The assessment must include details of any actual or potential conflict of interest identified in the procurement, and steps must be taken to mitigate such conflicts. That would include any political party affiliations the supplier has to any person acting for or on behalf of a contracting authority, and to anyone who influences a decision in relation to a covered procurement. In addition, in accordance with clause 84(4), if a contracting authority is aware that there may be even the appearance of a conflict, it must address that.

Minister and peer private interests would be recorded in the Register of Members’ Financial Interests as usual, and any donations to political parties in excess of £7,500 must be reported to and published by the Electoral Commission. It is right that the contracting authority placing the contract should have the ultimate responsibility to uphold high standards of integrity and transparency, and appropriately manage any actual, potential or perceived conflicts of interest. Additionally, the Bill has ringfenced situations in which direct award is permitted, and enhanced transparency will avoid any expansive interpretation by contracting authorities, which will doubtless be challenged if a competition could have been run.

I agree that it is of the utmost importance to ensure that no supplier receives unfair advantage due to a private interest, whether related to a party, Minister, peer or civil servant. I reassure the Committee that the Bill is clear on that. Clause 81(3) states that if a conflict of interest puts a supplier at an unfair advantage, and if steps to mitigate cannot avoid that advantage, the supplier must be excluded. The Government are committed to managing conflicts of interest in all contracts, not just direct awards. We have demonstrated that in the strong provisions throughout the Bill. I respectfully request that the amendment be withdrawn.

I thank the Minister for his response. I would like to press the amendment to a vote.

Question put, That the amendment be made.

Question proposed, That the clause stand part of the Bill.

With this it will be convenient to discuss that schedule 5 be the Fifth schedule to the Bill.

Clause 41 permits a contracting authority to award a contract without first running a full competitive procedure when a justification in schedule 5 is met. The World Trade Organisation agreement on Government procurement contains grounds for limited tendering, on which the justifications are based. They will be familiar to those who use the current regime, and include justifications such as intellectual property, exclusive rights or technical reasons that mean that only a single supplier can deliver the contract.

Direct award may also be permitted where practicalities in the market make competition unfeasible—for instance, when buying commodities such as oil, where demand dictates the price, or when the contracting authority can obtain advantageous terms due to insolvency. There are also defence-specific provisions, and a new ground for light-touch contracts—for example, in adult and children’s social care—which allow for direct award due to “user choice” where the beneficiary of the contract or their carer has a legal right under other legislation to choose the supplier.

Overall, the Bill is clearly designed to support fair and open competition in order to secure the best outcome for the public interest. However, sometimes competition is not possible. For example, a supplier may own intellectual property rights that mean that only it can supply a particular good. Alternatively, competition may not be possible for technical reasons when the application of a particular legislative regime means that a contract can be awarded only to one specific provider. For example, the Children and Families Act 2014 may require special educational needs provision to be delivered by a particular supplier; or extreme and unavoidable urgency, such as the procurement of short-term recovery services following an unexpected flood, may render competition unviable. In such cases, limited exceptions to the requirement for competition are justified to ensure the effective and prompt delivery of critical services.

In respect of cases in which a contracting authority relies on one of the specified grounds, the Bill introduces a requirement for a transparency notice other than the very specific user choice exemption. That important new safeguard brings welcome transparency and accountability, and facilitates pre-contractual challenges if anyone fears foul play. Additionally, before publishing a transparency notice, the contracting authority must undertake a conflicts assessment in accordance with clause 82.

As the Minister outlined, these clauses relate to the provision of direct awards. Sadly, their abuse under the Government has done untold damage to the public interest, as I highlighted earlier. The current system does not work, and it is disappointing that the Government have failed to take this opportunity to learn from those mistakes. The Minister just said that competition is sometimes not possible, but taxpayers’ money must be treated with respect, not handed out in backroom deals or as a passport to profiteering.

I highlighted the case of PPE Medpro, but it is just the tip of the iceberg of the scandals we have seen unfolding over the past few years. We know that the companies that got into the VIP lane were 10 times more likely to win a contract, and that they did not go through the so-called eight-stage process of due diligence, as Ministers have now admitted. We also know that businesses that had the expertise to procure PPE and ventilators were not awarded contracts. That is worrying.

It is also worrying that no company was referred to the VIP lane by a politician of any party other than the Conservative party. It did not have to be that way. There could have been more transparency and faith in the system. At that time, Governments across the world were dealing with the covid emergency without wasting billions of pounds of taxpayers’ money and relying on backroom deals.

According to the watchdog, the Welsh Labour Government managed to prevent health and care bodies from running out of PPE. It said:

“In contrast to the position described by the…National Audit Office in England, we saw no evidence of a priority being given to potential suppliers depending on who referred them.”

The Welsh Government were able to create an open and transparent PPE supply chain—why were we not able to do that in England? The question that the Committee needs to ask is how we act to prevent a repeat of the waste that we saw during the pandemic.

This is about faith in politics. At a time when people are questioning politicians and Ministers, we have to restore that faith. This Bill gives us an opportunity to fix that. It is disappointing that the Minister has dismissed some of that and has failed to engage properly on the issue of VIP lanes. I hope he will respond constructively to ensure we fix the current system, which is not working.

Question put and agreed to.

Clause 41 accordingly ordered to stand part of the Bill.

Schedule 5 agreed to.

Clause 42

Direct award to protect life, etc

I beg to move amendment 108, in clause 42, page 29, line 29, at end insert—

“(5) Subject to subsection (6), regulations made under section (1) may remain in force for no longer than three months.

(6) A Minister of the Crown may by regulations provide for the continuation in force of regulations made under subsection (1) for a period of no longer than a further three months.

(7) A Minister of the Crown may exercise the power in subsection (6) more than once in respect of the same regulations made under subsection (1).”

This amendment would restrict the time in force of regulations allowing direct award of contracts to protect life or public order to no more than three months, but provide a power to extend their time in force, by three months at a time, by further regulations (which would be subject to approval by Parliament under clause 118(7)).

Clause 42 permits a Minister of the Crown to award a contract during an event that is deemed to be a threat to life, health, or public order or safety. The explanatory notes state:

“The purpose of this clause is to ensure procurements during an emergency event (like the Covid-19 pandemic) can be conducted as quickly and transparently as possible, even if the circumstances leading to the event are foreseeable (which may rule out the extreme urgency justification for direct award contained in Schedule 5).”

We all understand that emergency powers were needed during covid-19, and we do not oppose the sort of power that is in the Bill to keep the country as safe as possible in the event of another pandemic or a major emergency. As alluded to in the explanatory notes, the power builds upon the extreme urgency justification in schedule 5, and covers the gaps where events cannot be covered under that schedule. During the covid-19 pandemic we saw that removing the scrutiny of the non-direct procurement procedure can bring major problems. It is worth reiterating the figures that are clear for all of us to see: almost £10 billion of public money went towards PPE that was written off. In answer to a written question in November, the Government confirmed that they are paying £770,000 a day—the figure that I quoted earlier—to store PPE in places such as China. Think what we could all do with such an amount of money in our respective constituencies.

We should not treat procurement during the pandemic as a model of good practice; we should look at learning from those mistakes. As the Bill is introduced, we should not let those patterns continue and just conduct current practices in the same way. It is critical that the use of these powers should not be the norm. Competitive awards must be the default under the direct procurement system, and these powers should be exercised only in the most severe circumstances. Therefore, we have questions about the meaning of subsection (2) and the limits of what is deemed necessary.

The explanatory notes say:

“Subsection (2) provides a definition of what would be deemed “necessary” (i.e. to protect life or public safety). This intentionally limits the discretion afforded to the Minister in subsection (1). Additionally any regulations made under this section would need to be compliant with the United Kingdom’s international obligations, which will in practice ensure that the interpretation of ‘necessary’ is not too broad.”

What does that mean in practice, though? What international obligations would govern how broadly the clause should be applied? On a cursory reading,

“necessary to … protect human, animal or plant life or health”

could be as trivial as tackling the scourge of cats getting stuck up trees. I am sure that, as the explanatory notes say, the interpretation of “necessary” should not be too broad. I hope that the Minister can outline the Government’s explanation and give hon. Members some guidance, to help to put our minds at ease for Report stage.

I question, too, whether the clause is limited to tackling novel or temporarily sensitive issues, or whether it could be used to apply to problems we face constantly and are well known. We all understand that situations may arise in which we may need these powers—in response to a national emergency or a disease such as covid. However, we would be sceptical about their use for something such as a standard winter flu, where surges and needs can be predicted and procured for well in advance. We note that the higher bars are put into place to protect against misuse, and they may tackle some of the problems we have already touched on. For example, regulations must be made via clause 118 affirmative procedures and must be agreed by Parliament. Although these raised bars are welcome, our experiences from covid-19 show us that we can and should go further to ensure that these powers are not abused. In particular, the temporal measures involved in this clause can be beefed up. That is essentially what amendments 103, 104 and 108 would do. Amendment 108 would add a sunset clause to the powers under clause 42 and ensure that every three months Parliament had to approve the use of these powers.

Subsection (4) states:

“A Minister of the Crown must—

(a) keep regulations made under subsection (1) under review, and

(b) if the Minister considers that direct award under section 41 is no longer necessary, revoke the regulations.”

We saw during the pandemic how emergency powers were in place for far longer than some deemed necessary, and prevented extra layers of scrutiny of direct awards. As I have already highlighted, that had consequences in terms of taxpayers’ money, which is still being spent on PPE that is not needed. As the explanatory notes explain, procurement may need to be carried out quickly in an emergency; but after three months, we should be far more aware of the problems we face. Although emergencies may stay unpredictable, the knowledge available to Parliament and to decision makers at the start of an emergency will be significantly less than what we will know later. Parliament should have a say when more knowledge is available about that emergency. It should have a say on whether the powers are still necessary and proportionate to the emergency. The answers can change, so it is right that the House has the ability to respond. In addition, the further we go into an emergency, the more aware we are of the needs of our services to tackle the problems presented and the more confident we can be in carrying out our procurement.

The amendment does not put onerous obligations on the Government, but it ensures that Parliament has proportional oversight over the powers it grants the Government via the affirmative procedure. I hope Members will agree that it is right that Parliament does not hand over power indefinitely, and I hope the Minister will consider supporting this amendment.

Amendment 108 seeks to include a sunset clause on the face of the Bill in relation to any regulations made under clause 42, plus a prohibition on multiple uses of this power.

The fact that the regulations are subject to the made affirmative procedure gives the House a great deal of power. If the House does not wish to accept open-ended regulations, it will not have to. The scope of clause 42 is already suitably confined and restricted to prevent any abuse. The power can be used only in extremely rare scenarios. The regulations will have to be tailored to respond to the situation and their duration kept to the minimum. Further, any regulations made will have to be in compliance with our international agreements, which in practice will help ensure the scope is not too broad.

Any regulations made under this clause must be kept under review, and if the Minister considers that direct award is no longer necessary, the regulations must be revoked. For the avoidance of doubt, the use of the made affirmative procedure means that if regulations are not approved by Parliament, they will lapse after 28 days. Any regulations would likely be time limited through a sunset provision or subject to parliamentary review after a duration deemed appropriate in the context of the emergency event. If they were not, it would be open to Parliament not to approve them. We cannot see that Parliament will be satisfied with open-ended regulations permitting the procurement of goods or services beyond what is necessary to protect life in an extreme emergency event. As such, we respectfully suggest that the amendment is not required.

Clause 42 introduces a new power for a Minister of the Crown via statutory instrument to allow contracting authorities to award contracts directly within specific parameters. The power is crafted deliberately narrowly so that regulations can be made only where it is considered necessary to protect human, animal or plant life or health, or to protect public order or safety. The “extreme urgency” ground in regulation 32 of the public contracts regulations reflected in schedule 5 will be suitable for nearly all situations. But in rare cases, this may need to be overridden via Government direction to rapidly procure what is necessary for the protection of life.

The first Boardman review of covid-19 procurement suggested giving relevant Ministers the power to designate situations as a “crisis”, provided certain criteria were met, naturally with appropriate safeguards. The clause looks to implement these recommendations and aid emergency contracting. The current ground relies on individual contracting authority assessments and cannot be used if the need for urgency is caused by the authority itself or is foreseen. Regulations made in these circumstances would allow contracting authorities to procure with confidence, quickly and within specific parameters to deliver the essential goods or services.

In the extremely rare event that regulations under clause 42 are needed, there are already significant safeguards in the Bill. As I mentioned, the making of any secondary legislation will be subject to the scrutiny of the made affirmative procedure. The regulations will come into force immediately but will require approval from both Houses within 28 days. Without this approval, the regulations will cease to have effect. There is no limit on the regulations’ duration, allowing them to be tailored to the situation. Parliamentary scrutiny will ensure that the scope of the regulations is appropriate.

The obligation to publish a transparency notice prior to awarding a direct award contract remains even when relying on any such regulations. These new mandated notices demonstrate our intent—seen throughout the Bill—to drive further transparency into the procurement regime. We hope that clause 42 will never need to be used, but if direct awards are necessary to protect life or public safety in an ongoing emergency situation, the mechanism under the clause will significantly improve the situation by allowing contracting authorities to procure in confined circumstances, speeding up decisions and ensuring consistency across the public sector. I respectfully ask that the hon. Member for Vauxhall withdraw her amendment, and I recommend that the clause stand part of the Bill.

Question put, That the amendment be made.

Clause 42 ordered to stand part of the Bill.

Clause 43

Switching to direct award

Question proposed, That the clause stand part of the Bill.

Sometimes, competitive tendering procedures do not go to plan. Clause 43 allows the contracting authority to switch from a competitive procedure to direct award where no suitable tenders are submitted and it becomes clear competition is not possible. There are only limited circumstances to determine that a tender is unsuitable, which are detailed in subsection (2)—for example, where the price is abnormally low, as we discussed the other day, if there is evidence of corruption or collusion, or if a procedural requirement has been materially breached in a manner that may put the tender at an unfair advantage.

The clause relates to the switching of contracts under very limited circumstances. The use of the clause is not ideal, but we understand that it may be necessary in certain circumstances. We therefore do not object to the clause.

Question put and agreed to.

Clause 43 accordingly ordered to stand part of the Bill.

Clause 44

Transparency notices

Amendment proposed: 104, in clause 44, page 30, line 23, at end insert—

“(c) any connections between the supplier and any—

(i) registered political party,

(ii) Ministers of the Crown, or

(iii) Members of the House of Commons or House of Lords

where such connections are of a nature likely to be relevant to the direct award of the contract.”—(Kirsty Blackman.)

Question put, That the amendment be made.

Amendment proposed: 111, in clause 44, page 30, line 25, at end insert—

“(4) Any Minister, peer or senior civil servant involved in recommending a supplier for a contract under section 41 or 43 must make a public declaration to the Cabinet Office of any private interest in that supplier within 5 working days.”—(Florence Eshalomi.)

This amendment would implement the recommendation of the National Audit Office that any contracts awarded under emergency provisions or direct awards should include transparency declarations.

Question put, That the amendment be made.

Question proposed, That the clause stand part of the Bill.

Our approach in the Bill is clear: transparency is not optional. Clause 44 introduces a mandated requirement to publish a transparency notice when a direct award ground is going to be used. That goes further than the current voluntary notice. Direct award should, of course, be the exception and will be allowed only on the basis of specific and limited grounds set out in legislation. When direct award is relied on, the obligation will mean visibility, further demonstrating our drive to ensure transparency in public procurement.

As the Minister outlined, the clause covers transparency notices. Although we welcome the limited measures that the Bill takes to move towards transparency—for example, by obligating authorities to issue a transparency notice before awarding a contract—those are small baby steps that barely scratch the surface of what is required. Transparency should be a must; it is not a “nice to have”. It is about restoring public trust and it ultimately saves money. Lack of transparency in the procurement system reduces competition and increases costs, leaving the taxpayer to shoulder the burden. The adoption of open and transparent contracting makes good financial sense and will help to lead to a more competitive procurement system, ultimately, as I mentioned, saving on costs.

Transparency needs to be extended to Ministers. I have spoken at length about what we saw during the pandemic and the lack of transparency. Amendment 111 would go a long way to truly ensuring that Ministers, Lords and civil servants take transparency seriously.

The hon. Lady will have heard me say that we are mandating transparency like never before, and that all her concerns are already dealt with in the Bill.

Question put and agreed to.

Clause 44 accordingly ordered to stand part of the Bill.

Clause 45

Frameworks

Question proposed, That the clause stand part of the Bill.

This considerable group covers award under frameworks. Clause 45 sets out that a framework is a public contract designed for the future award of contracts to a supplier or suppliers. Frameworks are not the answer for every purchasing need, but they have their place and can result in significant savings, both financially and in time. As a framework is a public contract, it must be awarded in accordance with the procedures set out in the Bill. Once a framework is awarded, subsection (1) allows contracting authorities to award future public contracts in accordance with the framework.

Subsection (3) states that contracts can be awarded under a framework only following a competitive selection process, unless subsection (4) applies. Subsection (4) sets out the circumstances in which a framework can provide for the award of contracts directly to suppliers who are party to the framework, without any further competition. These are where the framework is with only one supplier, or if the framework sets out the core terms of the future contract and an objective mechanism for supplier selection.

Subsection (5) requires that each framework must state the goods, works or services that can be procured under it, the mechanism for defining the price, the estimated value of the business that will be procured through the framework, and the process to award further contracts. Subsection (5) also requires that the framework must state the duration of the framework, the contracting authorities that are able to use the framework, and whether the framework is an open framework. Currently, all frameworks lock suppliers out for their duration as there is no mechanism to open them up, and we are changing that under the Bill.

The provisions ensure that all frameworks will contain basic information about the scope and estimated value of the framework to clearly set out the parameters in which the framework can be used, and to avoid frameworks being used in a manner that unduly or unfairly closes off markets to competition.

Subsection (6) prohibits the award of a contract under a framework to an excluded supplier. Subsection (7) allows for fees to be charged under a framework when a supplier is awarded a contract under a framework. Subsection (8) means that a framework may not be used to award a concession contract, nor may a framework be used to set up another framework. Subsection (9) disapplies certain parts of clause 45 to frameworks that are light-touch contracts.

Clause 46 sets out the process by which contracts can be awarded under a framework through a competitive selection process. Subsection (1) allows for a competitive selection process to include conditions that suppliers have to satisfy to participate. Subsection (3) prohibits conditions that require the submission of annual audited accounts by suppliers who are not already required by law to have their annual accounts audited. It also ensures that alternative evidence can be used when assessing the supplier’s financial capability and that insurances need to be in place only at the point of contract award. That is a major win for small and medium-sized enterprises, removing a substantial barrier that has often held them back from entering into procurement.

Clause 47 sets out rules on the maximum term for frameworks. It provides that the maximum term for a defence and security framework and a utilities framework is eight years. For all other frameworks, the maximum term is four years. Subsection (4) defines a defence and security framework as a framework that provides for the future award of only defence and security contracts. It also defines a utilities framework as a framework that provides for the future award of utilities contracts only. The longer term reflects the complexities of the defence and utilities markets, where procurements may require such longer terms.

A longer term than the four and eight-year maximum terms is permitted under subsection (2) if the contracting authority considers that this is required due to the nature of goods, services or works to be supplied. For example, a longer term may be needed where investment is required by suppliers under the framework that will take longer than four or eight years to recoup, or where contracts have a long lead time and therefore cannot be awarded within the requisite time period. Where a contracting authority relies on the provision allowing for a longer term, subsection (3) requires the contracting authority to publish the rationale for seeking a longer term in the tender or transparency notice for the framework.

Clause 48 implies a term into every framework that allows the contracting authority to exclude a supplier that is an excluded supplier or which has, since the award of the framework, become an excludable supplier from participating in a selection process for the awarding of a contract under a framework.

Clause 49 provides for the new concept of an “open framework”, which is a framework for the award of future contracts that is reopened to allow new suppliers to join at set points during its life. That will be particularly useful in early-adopter markets, such as cloud computing services, where new suppliers can be added as they enter the market. Open frameworks are a new and significant improvement on the current regime.

Open frameworks must be reopened at certain minimum points to avoid closing off the market to new suppliers for long periods of time. Subsection (2) requires that an open framework must provide for the framework to be reopened at least once in the first three years of its life and at least every five years thereafter. The total duration of an open framework is limited to eight years. That means that an open framework must be reopened at least once at the three-year point but could be reopened more frequently or earlier than the three-year point.

An open framework can be with a single supplier, but if that is the case, subsection (6) limits the term of that framework to four years. That effectively ensures that the framework reverts to being a closed framework, to avoid restricting the market to a single supplier for longer than would be permitted under a closed framework.

Clauses 45 to 49 cover the framework arrangements that are in place and widely used across the public sector, helping to provide efficiency savings in procurement contracts. We feel it is important that there are powers in the Bill to allow for their existence, but we have concerns about the nature of the frameworks. We should make sure that we include strong terms to prevent any detrimental effects that they can have on procurement.

A big problem with the frameworks is that they can lock out suppliers and prevent the breakthrough of innovative and efficient suppliers in our system. That is outlined and emphasised in the Government’s impact assessment:

“The use of frameworks is established in the public sector, however stakeholders raised concerns around lengthy frameworks essentially locking suppliers out of a market for a number of years, without the opportunity to re-bid. This is particularly of concern for SMEs who may benefit from a place on a framework to assist business growth and gain experience in delivering contracts for the public sector.”

The Minister touched on some of that, but the Bill should look to reduce those concerns.

We also have concerns about some of the changes in language in relation to the term limit, which the Minister outlined. Currently, most frameworks have a term limit of four years. It is good to see that carried through in the Bill, even if there is an increase to eight years for defence, security and utilities. However, there seems to be a change to the contracts, whereby some of the terms can be extended. In the Public Contracts Regulations 2015, the time limit exception states:

“The term of a framework agreement shall not exceed 4 years, save in exceptional cases duly justified, in particular by the subject-matter of the framework agreement.”

However, clause 47 states:

“Subsection (1) does not apply if the contracting authority considers the nature of the goods, services or works to be supplied under contracts awarded in accordance with the framework means that a longer term is required…If a contracting authority relies on subsection (2) in awarding a framework with a term exceeding four or eight years, the contracting authority must set out its reasons in the tender or transparency notice for the framework.”

I would be grateful if the Minister confirmed what the difference is between those two terms. Will the clause make it easier or harder for contracts to be extended? If it makes it easier, as he suggested, will he tell us the justification behind the change? As we mentioned, there have been concerns about locking out suppliers through the frameworks, so we should be cautious about why the Government would seek to weaken provisions that prevent locking out. Clarity from the Minister on that point would be helpful.

I welcome the Minister’s comments on the new open frameworks procedure in clause 49, which has the potential to reduce time limits by unburdening contracting authorities from running the tender for a framework from scratch, but will he outline how often he would expect a typical framework to reopen? The legislation sets out a maximum of three years in the first instance, and then five years in the second. However, the explanatory notes state:

“This allows for the open framework to be re-opened on a more frequent basis—for example, annually”.

Again, the Minister touched on some of that, but does he expect the reopening of frameworks on an annual basis, and will there be any incentives in the system to encourage annual reopening?

As the hon. Lady heard me say, the great new initiative in the Bill—open frameworks—means that we will not see companies being shut out for long periods of time, which is good. We have seen SMEs being locked out from accessing public sector markets for up to four years at a time, so we have introduced the new open framework and the utilities dynamic market tools to bring down the barriers. I think we can all agree that that is much to the good.

The hon. Lady will also have heard me say that if a contracting authority is to go for a longer term than the four and eight-year maximum, it must be because of the goods, services or works that it will supply. Contracting authorities have to be clear and open about that, but we would expect them to do so only where there are specific reasons—for example, where it will take longer than eight years to recoup investment under the framework, or where contracts have a long lead time and therefore cannot be awarded within the requisite time period. Contracting authorities must have a rationale for that, and they have to be open. We think that the clauses cover that.

The hon. Lady will have seen that the maximum term provisions in clause 47 do not apply to open frameworks, which have a maximum duration of eight years. However, clause 49 requires open frameworks to be reopened for new suppliers to join at regular intervals—first, within the first three years of the framework, and not less than every five years thereafter.

Question put and agreed to.

Clause 45 accordingly ordered to stand part of the Bill.

Clauses 46 to 49 ordered to stand part of the Bill.

Clause 50

Contract award notices and assessment summaries

Question proposed, That the clause stand part of the Bill.

Clause 50 requires contracting authorities to publish a contract award notice before entering into a public contract. The notice will publish details about the outcome of the procurement process, alert the market to the fact that a contract is about to be signed and start the standstill period where it applies, which is a mandated or voluntary pause before the contracting authority can sign the contract. I will explain that further under clause 51.

Prior to the publication of a contract award notice issued under a competitive procurement, contracting authorities will be required to provide each supplier whose bid was assessed against the award criteria with an assessment summary containing information about the outcome of the assessment for the supplier’s own tender, to enable suppliers to understand why they did or did not win the contract. Unsuccessful suppliers will also be provided with a copy of the winning supplier’s assessment summary so that they can also see how their tender compared to the winning bid.

Clause 50 does not apply to contracts awarded under a defence and security framework, or to direct awards where the justification is that the contract is a user choice contract.

This is a simple clause relating to contract award notices and assessment summaries. We welcome these provisions and see it as a good step forward for suppliers and for transparency that each supplier that is not disregarded receives information about why their bid failed and why another bid was successful. That will help suppliers to improve their bids and to understand what a contracting authority desires.

We have spoken a lot about SMEs, and I think they will welcome the clause, because they often struggle to navigate the market and they may feel that the cost of failed bids is part of the reason. We await information on what will come from clause 93, but we will discuss that when we get to it. We are happy to support this clause.

Question put and agreed to.

Clause 50 accordingly ordered to stand part of the Bill.

Clause 51

Standstill periods on the award of contracts

Question proposed, That the clause stand part of the Bill.

Clause 51 covers the standstill period, which is a minimum eight-working-day pause following publication of the contract award notice before the contracting authority can enter into the contract. It gives unsuccessful suppliers, in particular, the opportunity to understand the feedback provided and raise legal challenges to the procurement process prior to the contract being signed, where they believe the procurement has been conducted unlawfully.

A claim notified during the standstill period triggers an automatic suspension of the procurement under clause 99, which preserves the potential for the challenging supplier to obtain the contract and protects the contracting authority from entering into an unlawful public contract. That mitigates the risk of a contracting authority paying twice—that is, paying the price of the contract plus compensation for a losing bidder with a successful claim—as after contract signature, the contracting authority is subject to post-contractual remedies under clause 101. That includes damages and the possibility of the contract being set aside—being declared void by the court.

If the standstill period passes without legal challenge, the contracting authority avoids the risk of a set aside claim under clause 101. A standstill period is not mandatory in all cases. Subsection (3) lists the types of contract where the contracting authority can elect to apply a standstill on a voluntary basis. Contracting authorities complying with a voluntary standstill period, which is also envisaged for contract modifications under clause 75, will receive the same protections as that obtained for a mandatory standstill.

Clause 51 is almost identical to similar provisions in the Public Contracts Regulations. As the Minister outlined, the standstill period will be welcomed and beneficial. The Opposition feel that the clause is necessary and that there is nothing controversial in it.

Question put and agreed to.

Clause 51 accordingly ordered to stand part of the Bill.

Clause 52

Key performance indicators

I beg to move amendment 4, in clause 52, page 35, line 23, leave out “£5 million” and insert “£2 million”.

This amendment would reinstate the threshold for the setting and publication of key performance indicators for major projects at £2m.

With this it will be convenient to discuss the following:

Government amendments 75, 78 and 80.

Clause stand part.

I outlined the importance of transparency and accountability in a previous debate on procurement. Our amendment 4 is an attempt to strengthen that further and to reinstate at £2 million the threshold for publishing contracts in major projects. I noted previously that the financial threshold was raised in the other place and that the Minister could not explain why £5 million was decided on. If the Bill is an attempt to make procurement more transparent, we have failed at the first hurdle.

On Second Reading, my right hon. Friend the Member for Ashton-under-Lyne (Angela Rayner), the deputy leader of the Labour party, said:

“Being granted taxpayers’ money is a privilege.”—[Official Report, 9 January 2023; Vol. 725, c. 353.]

I remind Government Members that their long-departed leader, Lady Thatcher, once said that it is not the Government’s money, but taxpayers’ money, and that every penny should be accounted for. I am looking at the Minister and hoping that I got that quote absolutely right—I am sure he will correct me if I did not. I believe that is true no matter the sum of money. Every pound represents the work of hard-working people across the country, and we—particularly those of us who serve on the Public Accounts Committee—should be mindful of that.

That is why contracts awarded at £2 million should have the same scrutiny as those worth more. Figures such as £2 million are often bandied about—we hear the value of transfers in sport—but that is still a considerable amount of money. If we are truly committed to reducing waste in procurement, we need more transparency throughout. Introducing key performance indicators at a lower threshold would signal to businesses that the UK requires value for money, and efficiency, from every procurement contract.

While I appreciate that the Government have stated that the changes to the threshold are to reduce any administration requirements, and to address concerns raised by the Local Government Association, the lack of transparency around how the threshold was decided has made me understandably cautious. Transparency and value for money must be priorities when spending taxpayers’ money. Increasing the number of contracts that are scrutinised by requiring key performance indicators would allow for transparency at all stages of a contract’s lifecycle and hold businesses to account on issues of social value.

When we are in the midst of a climate crisis, it is necessary to ensure that suppliers are actively working towards the UK’s net zero commitments. When industries across the country are facing a skills gap, it is necessary to ensure that businesses are committed to apprenticeships and training new generations. And while the country continues to face a cost of living crisis, it is necessary to ensure that jobs across the supply chain are protected.

There are few rarer treats than hearing an Opposition Member quote Baroness Thatcher. I am sure the hon. Gentleman will have reflected on, and enjoyed, the fact that she also said, “The problem with socialism is that you quickly run out of other people’s money.”

However, the hon. Member’s probing amendment is fair enough, and it is important that we discuss this issue. Hon. Members will recall that the Bill as introduced had a threshold of £2 million for the publication of KPIs on public contracts, but that the threshold was increased to £5 million in the House of Lords as part of a package of measures designed to reduce the administrative burden placed on contracting authorities, while still providing increased transparency in respect of larger public procurements.

The current financial threshold balances the need for transparency on KPIs with the costs and burdens of implementing the rules at a lower spend value. To reassure the hon. Gentleman, £5 million, which we have now fixed on, aligns with the thresholds that are used by central Government in the playbook for procurement. It is generally seen as the point where things become more complex. We thrashed out the number based on a lot of engagement with industry, and it was felt that that was an appropriate threshold to ensure that we were not including a lot of contracts with lower complexity.

Turning to amendments 75, 78 and 80, there are a number of places in the Bill where we apply financial thresholds that trigger obligations on a contracting authority. The Delegated Powers and Regulatory Reform Committee recommended that the affirmative procedure for secondary legislation should be applied for a number of those, and we made those amendments in the other place. That ensures greater scrutiny where there is a change in transparency requirements. We also indicated in our response to the DPRRC that we considered that the justifications for that applied equally to the amendment of the financial threshold for the setting and publication of key performance indicators. Amendments 75, 78 and 80 achieve this.

Clause 52 describes a requirement for contracting authorities to

“publish at least three key performance indicators”

for public contracts worth more than £5 million. That is a new requirement and it will ensure that we have visibility of how well individual suppliers are delivering in the public sector.

The clause is intended to bring transparency to the management of significant public sector contracts, allowing citizens and others to see how suppliers are performing. It should also ensure that companies that repeatedly fail to deliver do not win additional business—something that is not possible under the present procurement rules. The requirement does not apply if the contracting authority considers that KPIs are not an appropriate measure of contract performance in a given case. The example we give is of a contract for the one-off supply of goods. That is a one-time action and cannot be measured over time or by varying metrics.

The clause does not apply to the establishment of framework contracts—but it will apply to contracts awarded through the framework—utilities contracts awarded by a private utility company, concession contracts or light-touch contracts. A power is given for an appropriate authority to amend the financial threshold above which KPIs must be published. We have tabled an amendment to make the power to change the threshold subject to the affirmative procedure, so that if this Government or future Governments wish to adjust the threshold, they can easily do so, provided that they have Parliament’s consent.

The overall picture is enhanced by the spend data reporting obligation in clause 70. I respectfully request that amendment 4 be withdrawn.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 52 ordered to stand part of the Bill.

Clause 53

Contract details notices and publication of contracts

I beg to move amendment 26, in clause 53, page 36, line 9, leave out “£5 million” and insert “£2 million”.

This amendment would reinstate the threshold for publishing the contracts in major projects at £2m.

As noted in the explanatory statement, the amendment would reinstate the threshold for publishing the contracts in major projects at £2 million. As I have pointed out, the Government seem to have chosen £5 million as an arbitrary figure. I will not repeat the points I have already made. We do not want to place an undue burden on small and medium-sized enterprises to have to employ costly legal advice to redact sensitive company information. However, I believe that, with sums of more than £2 million, it is completely reasonable to expect transparency.

Trust in Government spending is important to overall trust in Government, especially when they are spending sums of public money in the millions. It is not unreasonable for the public to expect transparency about where their money is being spent, and that the information is readily available and easily accessible. Although I understand the need not to make the process too arduous for smaller businesses, the proper balance must be found.

The revised threshold of £5 million seeks to ensure that a disproportionate administrative burden is not placed on contracting authorities and, as I have said, it reflects what we have in the playbook. The figure came out of a large amount of engagement with industry. There was recognition that it is around the £5 million threshold that we see additional complexity in contracts. That is why we think that the current financial threshold balances the need for transparency in these important matters with the costs and burdens of implementing the rules at a lower spend value.

It is important to stress, however, that contracting authorities will still be bound by a transparency obligation to publish contract detail notices for contracts above the agreement on Government procurement thresholds, which will contain information on which supplier has won the contract and other information about the contract award. I respectfully request that the hon. Gentleman withdraws his amendment.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Clause 53 requires contracting authorities that enter into a public contract to publish a contract details notice. This is a significant extension of transparency, which will allow interested parties to see details of public sector contracts. The contract must be published within 90 days of the contract being entered into or, in the case of a light-touch contract, within 180 days. The contract details notice will contain information on the goods and services procured, the value of the successful tender and the procurement method used.

The Welsh Government and the Northern Ireland Executive have decided to include a derogation from publication of a contract, which is their right.

Clause 53 sets out the need for the publication of contract details for all contracts over £5 million. According to the Government’s own figures, one in every three pounds of public money—some £300 billion a year—is spent on public procurement. Ultimately, the taxpayer deserves to know that money from the public purse is being well spent.

I know from my time on the Public Accounts Committee—sooner or later, we will start doing PAC bingo, as every time I stand up I seem to mention how long I was on that Committee. I was there for five years. I promise that I am not going to speak for five years, Mr Efford—

Fidel Castro was the master—I think 18 hours was his minimum. If you want me to do that, Mr Efford, I can. With lunch coming up, I think I would be the most popular member of the Committee.

I know from my time on the Public Accounts Committee that transparency leads to improved Government spending. There should be no place to hide poor contract decisions or, in the worst cases, possible cronyism. Unfortunately, there have been several scandals relating to procurement and Government spending. We have already heard this morning about the questions surrounding the procurement of PPE during the pandemic, which led, unfortunately, to the huge sum of £10 billion of public funds being spent on unusable, overpriced and even undelivered PPE.

At a time when so many families are struggling with the cost of living crisis, we cannot allow the public to feel that their hard-earned tax money is not being spent properly, and we all must work to restore public trust in Government procurement. The Government’s own “transparency ambition” document outlines a concerning failure to provide transparency in our procurement system. These reforms are long overdue and I am pleased that we are able to talk about them today. I think we can all agree that it is important that we increase trust in Government, and one of the key ways we can do that is through transparency. Labour would go further in government than the present Conservative Government. We would introduce a Ukraine-style publicly accessible dashboard of Government contracts tracking delivery and performance.

I am pleased that the Government have made some commitments to increasing transparency on large projects. The reforms—particularly the introduction of a number of new procurement notices covering the entire procurement lifecycle from planning through to contract expiry—are a welcome step forward. However, there are a few areas where we need clarity on implementation.

For example, at clause 53(2), the Bill states:

“A ‘contract details notice’ means a notice setting out—

(a) that the contracting authority has entered into a contract, and

(b) any other information specified in regulations under section 93.”

The Minister said on Second Reading that the Government

“will deliver world-leading standards of transparency in public procurement”—[Official Report, 9 January 2023; Vol. 725, c. 343.]

and that there is a

“statutory obligation on the Government to deliver a single digital platform to host this data.”—[Official Report, 9 January 2023; Vol. 725, c. 348.]

However, it is unclear what a contract details notice will look like in practice, and how much detail will be required—in other words, how much transparency will actually be provided. It seems strange that there is no outline of how much data will be provided and what form it will take. I worry that will allow for only the very basic details of public contracts to be provided. Could the Minister explain his understanding of what transparency notices will look like and what information they will be required to contain?

A concern raised by the Local Government Association is that the clause risks contradicting other pieces of legislation, which, in turn, risks the ability to achieve one single digital platform for procurement. The LGA has suggested that the Transport Act 1985, the Service Subsidy Agreements (Tendering) (England) Regulations 2002 and the best value transparency code may have an impact on the implementation of the Bill. Could the Minister tell us whether that has been resolved, or what plans the Government have to ensure that other legislation does not interfere with the implementation of the single digital platform?

Overall, I welcome the goals of the clause, but I feel that it requires closer attention to ensure that it is properly implemented.

11 am

I am happy to play bingo with the hon. Gentleman any time. One particular game that we might play is to call “Bingo!” every time the Ukrainian digital platform is mentioned, because it has been mentioned several times. And well might it be mentioned, because it is a model of good practice. The hon. Gentleman will have heard me say on several occasions that we were grateful to the Ukrainian Government for coming and advising us on the creation of our own digital platform, which he will also have heard me mention. That platform will be the harbour of transparency, enabling suppliers, contracting authorities, central Government, voters and the press to see what is going on and to hold people to account. It will be a great asset.

The precise details of what needs to be published are not fit to be put in the Bill and the requirements may change over time. However, we will set those details out in due course, and what will drive our considerations when we do so is the ability to hold suppliers and contracting authorities to account.

Question put and agreed to.

Clause 53 accordingly ordered to stand part of the Bill.

Clause 54

Time limits

I beg to move amendment 34, in clause 54, page 37, line 14, at end insert—

“The contract—

(a) being awarded is a utilities contract, or

(b) is being awarded by a contracting authority that is not a central government authority,

and is subject to a negotiated tendering period

No minimum period

The contract—

(a) being awarded is a utilities contract, or

(b) is being awarded by a contracting authority that is not a central government authority,

and tenders may be submitted only by pre-selected suppliers

10 days”

This amendment would set different minimum tendering periods where tenders may only be submitted by pre-selected suppliers (depending on whether the contracting authority and suppliers agree on a tendering period or not).

With this it will be convenient to discuss the following:

Government amendments 35 and 36.

Clause stand part.

Government amendments 34 to 36 are technical amendments to allow shorter time periods to be set by utilities and contracting authorities that are not classed as central Government authorities, which will be defined in regulations made under the Bill, for procurements where there has been a prior selection round.

Following completion of that prior selection round, utilities and non-central Government authorities will invite identified suppliers to submit their tenders. The amendments will mean that they can negotiate a suitable time limit with all suppliers or, in the absence of agreement, a minimum of 10 days will apply. This flexibility exists in the current regime and, in common with all minimum time limits in the clause, is GPA-compliant. It was not included in the Bill previously because certain trade agreements did not permit such flexibility. However, following very positive progress in negotiations, we are now confident that we can make the change.

We know from our engagement with industry groups that utilities and sub-central bodies such as local authorities are hugely supportive of the change, because they will benefit from reduced timeframes and faster procurements. This will ultimately result in quicker delivery to the public of goods and services from those entities, benefiting us all.

Clause 54 as a whole deals with time limits during competitive procurements. It is important that suppliers are allowed adequate time during the awarding of public contracts, for example to prepare and submit tenders or requests to participate in a procurement.

The clause sets out minimum time periods that must be met in different circumstances, in line with the requirements of the GPA. These are minimum time limits. Consequently, contracting authorities are also directed to wider considerations for setting time periods, such as the nature and complexity of the contract, the need for site visits, and avoiding unnecessary delays.

These amendments set out the minimum timescales that apply when a contract is only between authorities and pre-selected suppliers. As these suppliers are verified to be compliant with the conditions of participation, it is logical that they would need less time to prepare a bid and would not be caught off guard by the 10-day minimum period, or the negotiated tendering period if one can be agreed. I thank the Minister for his explanation about why this is necessary, which was helpful. However, I also share the desire to reduce some of the unnecessary bureaucracy on both the authorities and the companies involved.

We do not seek to oppose these amendments. However, in relation to clause 54 there are considerable concerns about the minimum time limits that contracting authorities must abide by within certain circumstances. It is right to strike the balance between bureaucratic obligations on contracting authorities and the need for suppliers to have sufficient notice to compile a tender. As we have already outlined, this is really important for SMEs, which may sometimes lack the necessary staff or may require greater time to consider the consequences of bidding for contracts and to assess the ability of their company to do so.

We must also bear in mind the article 11 time periods of the World Trade Organisation’s general procurement agreement, which sets out minimum deadlines in line with the deadlines in the Bill. That is a step forward. We recognise that the Government’s hands are somewhat tied on this issue, but we should not wish to breach any international agreements. We therefore feel that the current amounts strike the right balance between bureaucracy and providing everyone with a fair chance to bid, so we do not intend to oppose them. As I have highlighted, we welcome the provisions in clause 15, which also interact with this part of the Bill. Trading off time limits in this part of the Bill for a pre-engagement notice is a sensible choice that benefits everyone, and we are happy to support the second part of this provision in the clause.

Amendment 34 agreed to.

Amendments made: 35, in clause 54, page 37, line 35, at end insert—

“‘central government authority’ has the meaning given in paragraph 5 of Schedule 1 (threshold amounts);

‘negotiated tendering period’ means a tendering period agreed between a contracting authority and pre-selected suppliers in circumstances where tenders may be submitted only by those pre-selected suppliers;”.

This amendment would define terms used in Amendment 34.

Amendment 36, in clause 54, page 38, line 2, at end insert—

“‘pre-selected supplier’ means a supplier that—

(a) has been assessed as satisfying conditions of participation before being invited to submit a tender as part of a competitive tendering procedure, or

(b) in the case of a contract that is being awarded by reference to suppliers’ membership of a dynamic market, is a member of that market;”.—(Alex Burghart.)

This amendment would define a term used in Amendment 34.

Clause 54, as amended, ordered to stand part of the Bill.

Clause 55

Procurement termination notices

Question proposed, That the clause stand part of the Bill.

Clause 55 requires contracting authorities, except private utilities, to publish a procurement termination notice as soon as reasonably practicable after making a decision to terminate a procurement. Each time a tender or transparency notice, which initiates a procurement, is published it creates a data record of the lifetime of that procurement and any resulting contract. Failure to confirm that a procurement has been terminated will result in the suppliers not being aware of a cancellation and in permanently incomplete data records and inaccurate records on our central platform, because the number of ongoing procurements will incorrectly include terminated procurements, which is unhelpful for anyone monitoring and using that data. A procurement termination notice is required to ensure that the data record and the full story of the procurement are concluded.

I thank the Minister for outlining that. The clause is simple. It ensures that when a tender or transparency notice is published, there must be a notice if the contracting authority does not award the contract. The clause is necessary, and we are happy for it to stand part of the Bill.

Question put and agreed to.

Clause 55 accordingly ordered to stand part of the Bill.

Clause 56

Technical specifications

I beg to move amendment 37, in clause 56, page 38, line 24, at end insert—

“(za) the standard adopts an internationally-recognised equivalent, or”.

This amendment would allow procurement documents to refer to a UK standard if the standard adopts an internationally-recognised equivalent.

The Committee will be delighted to hear that Government amendments 37 to 41 to clause 56, which concerns technical specifications, are very technical amendments. They will help to ensure that the Bill’s requirements in relation to standards, certification and accreditation are clear and fully align with how standards work in practice and the Government’s policies in those areas.

We are committed to openness and international trade, so contracting authorities must use international standards, or international standards that the British Standards Institution has adopted via a British standard, before using specific UK standards. We need to ensure that standards are appropriate, and we have strengthened the onus on the supplier to demonstrate that when claiming that it possesses an equivalent to standards requested by contracting authorities. In addition, the amendments make clear that contracting authorities can request evidence to verify that a standard has been met. That may include conformity assessments from certification bodies accredited by organisations such as the United Kingdom Accreditation Service, or UKAS.

The amendments help to clarify some of the technical provisions relating to the presentation and meeting of United Kingdom standards, as referred to in subsection (5). The Minister said that they are technical amendments. It is fine that we have technical provisions that have reached this stage without amendment, but we will be happy to hear clarification from the Minister this morning. We do not intend to oppose the amendments.

Amendment 37 agreed to.

Amendments made: 38, in clause 56, page 38, line 26, leave out paragraph (b).

This amendment is consequential on equivalent provision being made by the new subsections inserted by Amendment 39.

Amendment 39, in clause 56, page 38, line 29, at end insert—

“(3A) If the procurement documents refer to a United Kingdom standard, they must provide that tenders, proposals or applications that the contracting authority considers satisfy an equivalent standard from another state, territory or organisation of states or territories will be treated as having satisfied the United Kingdom standard.

(3B) In considering whether a standard is equivalent to a United Kingdom standard for the purposes of subsection (3A), a contracting authority may have regard to the authority’s purpose in referring to the standard.

(3C) A contracting authority may require certification, or other evidence, for the purpose of satisfying itself that a standard is satisfied or equivalent.”

This amendment would clarify how a contracting authority is to assess whether tenders, proposals or applications satisfy equivalent standards to United Kingdom standards (including that it may require evidence).

Amendment 40, in clause 56, page 38, line 36, leave out “such matters” and insert

“the matters mentioned in subsection (4)”.—(Alex Burghart.)

This amendment would clarify that the requirement in subsection (5) only applies where the matters mentioned in subsection (4) are referred to in the procurement documents.

I beg to move amendment 8, in clause 56, page 38, line 38, at end insert—

“(5A) For all procurement which is intended for use by natural persons, whether the general public or staff of the contracting authority, the technical specifications in the procurement documents must, except in duly justified cases, be drawn up so as to take into account accessibility criteria for disabled persons or design for all users.”

This amendment would reproduce on the face of the Bill requirements for accessibility criteria for disabled persons which are included in the Public Contacts Regulations 2015, which this Bill will replace.

Amendment 8, in the name of my hon. Friend and neighbour the Member for Battersea (Marsha De Cordova), addresses the fact that the Bill overwrites requirements that ensure publicly procured goods and services are accessible to everyone and has no clauses specifically relating to accessibility for disabled people or replacing the current regulatory framework for accessibility. Accessibility is included only in clause 94, with regard to electronic communication and in the recommendation. While the reference to accessibility in clause 94(2), which states that any electronic communications utilised as part of the public procurement exercise must be

“accessible to people with disabilities”,

is a welcome addition, it does not address concerns to ensure that public funds are used to drive improved outcomes for disabled people. The Bill does not include any reference to the need for public procurement exercises to take account of accessibility.

Amendment 8 would create a new provision in the Bill to ensure that publicly procured goods and services meet a minimum standard of accessibility. Currently, regulation 42 of the Public Contracts Regulations 2015 states that the specifications for procurement must be

“drawn up so as to take into account accessibility criteria for disabled persons or design for all users.”

The amendment would simply reproduce that existing requirement in the Bill, ensuring that the current regulatory framework for accessibility is maintained.

Legal experts do not believe that the public sector equality duty under the Equality Act 2010 is sufficient. That is recognised by the current system, which incorporates both the public sector equality duty and regulation 42 of the Public Contracts Regulations to ensure that goods and services are accessible to everyone. Even with regulation 42, contracting authorities continually fail to consider their obligations and procure inaccessible products. Accessibility for disabled people must be maintained at the heart of any new public procurement legislation.

In early 2020, the then Prime Minister wrote to every Government Department calling on his Cabinet to increase opportunities and improve access to services for disabled people. From publicly procured ticketing machines to online consultation software, the Bill offers a great opportunity to meet that expectation and ensure that Government services are accessible to all. I hope the Minister will agree that this amendment would help to ensure we do not go backwards on disability rights in procurement.

Amendment 8, tabled by the hon. Member for Battersea, with whom I had the pleasure of serving on the Work and Pensions Committee a few years ago, seeks to ensure that in procurements where the end product is intended to be used by people, the technical specifications account for the needs of people with disabilities. I very much want to reassure the Committee that the UK already has legal obligations that dictate how technical specifications are drawn up in these circumstances, with disability accessibility and even broader considerations covered by the public sector equality duty under section 149 of the Equality Act 2010.

The existing procurement regulations are derived from EU procurement directives, which were designed to be applied to member states where domestic laws do not adequately provide for accessibility requirements, as the Equality Act does. When applied to procurement, the Equality Act requirements are more pervasive than regulation 42 of the Public Contract Regulations 2015, and there is no need unnecessarily to replicate EU provisions when our domestic law is fit for purpose. Indeed, the Equality Act goes further than regulation 42, covering other protected characteristics and applying to the whole commercial lifecycle more broadly than just technical specifications.

Although we do not think this amendment is necessary, the Government remain committed to ensuring public procurement drives better outcomes for people with disabilities, and I recognise that implementation is currently patchy. We welcome engagement with charities and organisations supporting people with disabilities, to help ensure that disability accessibility is improved and effectively considered by contracting authorities in public procurement. As a consequence, I respectfully request that this amendment be withdrawn.

I understand the Minister’s concern and his admission that the Government will consult those disability charities, but does he agree with me that, as it stands, there are currently no requirements for goods and services to meet that standard of accessibility?

The hon. Lady will have heard me say that the legal duty that exists within Equality Act 2010 goes further than the EU procurement rules that we are getting rid of. It goes further than the EU procurement directives, so there is no loss of obligation in the creation of the Bill.

I am very happy to meet the hon. Member for Battersea, who is an expert in these issues, in order to reassure her. As far as we are concerned, the Equality Act 2010 goes further than the EU procurement directives, so this amendment is not necessary.

Question put, That the amendment be made.

Amendment made: 41, in clause 56, page 39, leave out lines 9 to 12 and insert—

“(b) are primarily developed for use in the United Kingdom, or part of the United Kingdom.”—(Alex Burghart.)

This amendment would remove the definition of “standards” and clarify the definition of “United Kingdom standards”

Question proposed, That the clause, as amended, stand part of the Bill.

Clause 56 sets technical specifications that contain the required characteristics of the goods, services or works that a supplier has to provide. They are included within procurement documents to present suppliers with a full description of the contracting authority’s needs, to enable suppliers to propose a solution to meet those needs via a tender response.

In line with the broader goal of a simpler regulatory framework and increased flexibility to design efficient, commercial and market-focused competition, the Bill does not dictate how technical specifications are to be drawn up by contracting authorities, or mandate what exactly should be included.

As such, clause 56 simply requires contracting authorities to refer to performance or functional requirements over descriptive characteristics, to focus on the desired outcomes of a contract rather than being overly prescriptive on the method by which this is achieved. Clause 56 also prevents contracting authorities from referring to things like specific trademarks or producers—in essence prohibiting an arbitrary favouring of national or specific products—to avoid narrowing the competitive pool.

Contracting authorities must also use international standards where they exist, or national standards allowing for equivalents. This provision, required by the UK and other parties to the World Trade Organisation’s Government procurement agreement is helpful, as the UK advocates for high standards in the supply of goods and services and was a founding member of standards organisations, such as the International Organisation for Standardisation and the International Electrotechnical Commission.

Question put and agreed to.

Clause 56, as amended, accordingly ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned.—(Julie Marson.)

Adjourned till this day at Two o’clock.