On 9 January, the second reading of the Procurement Bill in the House of Commons took place.
The Bill, which is set to come into force in Spring this year, is intended to simplify the UK’s public procurement regime with a focus on value for money, transparency, and creating greater opportunities for SMEs to contract with the government.
We have summarised some of the key themes of the House of Commons debate here, which elucidated the government’s main priorities and exposed some potential pitfalls or weaknesses of the new Bill. The key point of contention remains: does the Bill go far enough in transforming the public procurement regime?
Key principles and objectives
Opening the debate, the government repeated the themes from earlier readings; emphasising the centrality of value for money, transparency, flexibility, and simplicity. Questions from the Opposition centred around the recent allegations of “cronyism” during the COVID-19 pandemic, in respect of current procurement legislation.
The government reiterated that integrity lies at the heart of the new Bill, and that this will be achieved by:
- the consolidation of all procurement regulations (which are currently spread over four different regimes) into “one rulebook that everyone can understand and use”; and
- regulations dealing with declarations of conflicts of interest and proper procedures to address them, ensuring that integrity and transparency will be even more entrenched in the new regime.
Of course, the robustness of such regulations will ultimately lie in their detail and the effectiveness of their application in practice. In particular, it is unclear how the “proper procedures” to address conflicts of interest will actually be undertaken and how and whether they will be enforced stringently enough.
It was also noted that the new Bill will contain measures to prevent suppliers from countries found guilty of genocide, slavery, or other human rights abuses from entering the UK’s production chain. For example, companies will be debarred for misconduct or illegality.
SMEs
Under the current regulations, SMEs are faced with a disproportionately complex – and therefore expensive – process to even participate in a procurement competition. This has been a key priority in the planned improvement of the public procurement regime.
A number of measures in the new Bill were highlighted as being designed to make access for SMEs easier and more efficient, including:
- a duty on procurers to make sure that they are considering the specific needs of SMEs during the procurement process;
- a 30-day payment period implied into public contracts (if not expressly written into them);
- ensuring that contract pipelines and prospective contracts are published well in advance;
- an ability to compete for and win a contract without a need to be insured to actually perform it;
- a single entry point which allows companies to set out in one place what they are as an SME before they have even considered the tender they are applying for; and
- more flexible frameworks, including a new “open framework”, which will prevent small businesses being ‘shut out’ for long periods.
The intention is that the changes in the Bill will accelerate spending with small businesses and will put an onus on contracting authorities to have regard to SME participation. There will also be certain provisions enabling contracting authorities to design procurement processes with fewer barriers for SMEs.
While this seems promising for SMEs, there remains some question around how much benefit they will be able to derive from these types of provisions in practice. For example, the 30-day payment period will ultimately only be a contractual right and, as such, it could still be costly for SMEs to bring a claim against a large contracting authority for a failure to pay within that prescribed timeframe (where that contracting authority has the benefit of much greater bargaining power).
Missed opportunities?
There were several matters raised during the debate which, it is alleged, have not been suitably addressed by the new Bill. Some of these centred on environment, social and governance responsibilities, which have become (and are set to continue) a fundamental consideration for all contracting parties.
In particular, it was noted that there is no obligation or duty on parties to ensure compliance with the Climate Change Act 2008 and the Environment Acts with suggestions that compliance with these laws should not be optional. The government responded by highlighting the laborious process this would burden SMEs and procurers (such as contracting authorities) with.
Other queries included whether there should be an amendment that would give priority when awarding government contract to companies that pay their staff the real living wage. The government response was to query if this was a reach too far for legislation.
There was also criticism that the Bill was a missed opportunity to create regulations which would promote genuine growth and support for British industry, and that nothing in the new Bill prevents historical mistakes and wasted public spending from continuing into the post-Brexit public procurement regime (for example, the use of urgency as a justification for granting direct awards).
Next steps
The Bill is now at the ‘Committee stage’ in the House of Commons, which will be followed by the ‘Report stage’, and then a third reading. Any amendments will then be considered before the Bill is sent for Royal Assent.
With public scrutiny of government contracts intensifying - fuelled by media reports of errors, waste and potential “cronyism” during the COVID-19 pandemic – the government may be under increased pressure to further amend the Bill to ensure it delivers a genuinely resilient and transparent regime grounded in integrity. This, however, remains to be seen until the Bill is finalised.
