Procurement Bill, Committee Stage, 4 July 2022

• The LGA broadly welcomes the Government’s proposed reforms to public procurement including enshrining in law the objectives of public procurement.
• Following the publication of the Green Paper, Transforming Public Procurement, we have been working closely with Government to help them to understand the way that councils procure goods, works and services. This will enable the new regime to be designed in a way that is effective and reduces unnecessary costs and administrative burdens for councils.
• We are pleased that many of our concerns arising from the Green Paper have been resolved in the legislation as it was introduced in Parliament. However, a number of areas remain within the Bill which may have unintended consequences for local government and create new difficulties in meeting the procurement objectives whilst delivering high-quality public services.
• We are concerned that the wording of the Bill will require the public sector to spend time and money seeking market solutions for goods and services which can currently be delivered effectively by collaborative arrangements within the public sector. It is vital that the Bill is amended to ensure councils can continue to work with other public bodies to jointly deliver efficient public services and value for money. Government amendment 142 is helpful in this respect but a further amendment to paragraph 1 of that schedule is essential to give proper effect to the government’s intentions
• It is positive that the Bill enables Ministers to introduce regulation to allow local authorities to ring-fence lower-value public contracts to SMEs, VCSEs or suppliers within their local area through amending section 17 of the Local Government Act 1988. This is much needed and would bring local authorities into line with the rest of the public sector who can already choose to ‘buy local.’ We are therefore seeking to require the Government to amend the Local Government Act 1988 within six months of the Procurement Act passing, to help councils to support local businesses and drive inclusive local economic growth.
• Government should amend the Local Authorities (Goods and Services) Act 1970 to clarify that local authorities can now carry out procurement on behalf of any “contracting authority” as defined in the Procurement Act, not just the narrower list of “public bodies” defined in the Local Authorities (Goods and Services) Act 1970.  This will enable councils to procure on behalf of a wider range of public bodies, to buy services or supplies at scale and deliver better value for money.
• We strongly support the aims of the single digital platform to enhance transparency and simplify the public procurement system for both buyers and suppliers. However, we are concerned that a range of differing requirements in existing legislation - which specify where and how public bodies must publish procurement information - undermines the single digital platform’s objectives. We are therefore calling on Government to amend existing legislation which sets out differing requirements from those which will be required for the single digital platform. There also needs to be a requirement for any future laws requiring the publication of procurement information to use the single platform.
• We want to see Government go further to reduce red tape for both the public sector and businesses, and will continue to work with Government to ensure the reforms deliver their intended improvements to the procurement regime.

• Councils are currently able to award contracts to public bodies that they manage or enter into collaborative arrangements with other entities who can provide services on their behalf. Such cooperation and shared delivery of services enables councils and other public sector bodies to drive efficiencies through working at economies of scale, while delivery quality public services. Generally speaking, public contracts awarded by local authorities are subject to the procurement rules and contracts go through full competitive procurement processes.

• However, there are two particular exceptions to this, which are set out in Regulation 12 of the Public Contracts Regulations 2015 and Schedule 2 of the Procurement Bill.

• The first exception is when a public body makes ‘in house’ awards to entities that are for all intents and purposes another part of that contracting authority, albeit with a separate legal personality – these are sometimes known as vertical arrangements.

• The second, less-used exemption, is when a public body enters into a public-public co-operation arrangement (for example where local authorities cooperate to jointly deliver waste services) – sometimes known as horizontal arrangements. Under the current regime, such arrangements are excluded from full procurement rules on the basis that public bodies are cooperating to fulfil common objectives in the public interest.

LGA view:

• Schedule 2 of the Bill sets out the contracts that are exempt from the full public procurement rules for the purposes of the Act. Schedule 2, paragraph 1, introduces a new concept that the contract is not exempt if:
  • the goods, services or works representing the main purpose of the contract could be supplied under a separate contract, and;
  • that contract would not be a contract of a kind listed in this Schedule.

• We are concerned that the wording of this new provision will mean that if a private provider could reasonably provide the services or goods in question, the public sector will no longer be able to make use of these fundamental exemptions which save time and money and are essential to the effective delivery of public services. To redress this, schedule 2 of the Bill must be amended to clarify that both vertical and horizontal collaboration arrangements within the public sector will continue to be exempt and that the model of service delivery remains the choice of the contracting authority.

• Local authorities, or consortia, can currently procure supplies or services on behalf of other public bodies, including other local authorities. A purchasing consortium is where councils join together to procure goods or services, which they all require, at scale to secure lower costs. Purchasing in consortia also reduces the costs of running separate procurement processes, as only one contract needs to be negotiated and managed with the provider on behalf of all of those in the consortium.
• Under the current procurement regime, local authorities can procure on behalf of ‘public bodies’ as defined by section 1, subsection 4 of Local Authorities (Goods and Services) Act 1970. This defines ‘public bodies’ relatively narrowly.
• The Procurement Bill uses the broader definition of ‘contracting authority’ (Clause 1, subsection 1) which includes any authority of a public nature that is funded wholly or mainly from public funds and is subject to contracting authority oversight, and is not an excluded authority.

LGA view:

• Government should amend the Local Authorities (Goods and Services) Act 1970 to update the legislation and clarify that local authorities can procure on behalf of any “contracting authority” as defined in the Procurement Act. This will ensure beyond doubt that councils will be able to procure on behalf of the full range of other public bodies, for example health partners. This clarification is essential to ensure the public sector local authorities can purchase goods and services at scale which result in cost savings for a wide range of partners.

• In December 2020,  a policy Note (PPN ), issued by the Cabinet Office gave all public sector bodies, aside from local authorities, the right to reserve below-threshold contracts for suppliers that are SMEs or in the VCSE sector, or to ring-fence contracts to suppliers in the local area. It also allowed public bodies to limit competitions for contracts to suppliers which are in the UK.

• ‘Below-threshold’ procurement relates to contracts with a lower value than the thresholds set out in the Public Contracts Regulations 2015 - these are currently contracts below £189,330 (for goods and services) and below £4,733,252 (for works), as awarded by sub-central bodies.

LGA view:

• Section 17 of the Local Government Act 1988 currently prohibits councils from ring-fencing contracts of any value to local suppliers. Therefore, councils will still be unable to reserve contracts for local suppliers and SMEs unless Section 17 of the Local Government Act is amended. The Government have committed to addressing this issue at a later stage, but it is only optional, not mandatory, for ministers to do so within the Bill.

• To enable councils to ‘buy local’ and better support their local economies, it is vital that this issue is addressed as soon as possible. We are therefore seeking to ensure that there is a requirement in the Bill for the Government to lay regulations within six months of the Act passing, which make provision to disapply the duty under section 17(1) of the Local Government Act 1988 in relation to below-threshold contracts.

• This Government amendment would ensure ‘below- threshold procurement’ is exempt from the Bill’s requirement in Clause 82 (1) for contracting authorities not to discriminate against a ‘treaty state supplier’. A treaty state supplier is a supplier from a country with which the UK has a free trade agreement.

LGA view:

• We support Lord True’s amendment, as it would enable public bodies to strategically procure goods and services from local suppliers, UK suppliers, SMEs and VCSE’s for below-threshold contracts, without fear of contravening the UK’s international commitments.

• The current procurement regime utilises a range of platforms, including Find a Tender Service, Contracts Finder, the Supplier Registration Service, the Digital Marketplace and the Contract and Spend Insight Engine (CaSIE). The systems do not interoperate and there is limited ability to share data, for example between councils and health partners.  

• To simplify the procurement system, improve data sharing and transparency, the Government set out their intention in the Transforming Public Procurement Green Paper and more recently in their ‘transparency ambition statement’ to create a single digital platform for public procurement, where all opportunities can be published and viewed in one place.

• For local authorities and the wider public sector, the single digital platform offers the opportunity to streamline the various requirements for publishing different types of procurement information in different ways and in different places. This would reduce bureaucracy and costs, and improve data quality.

LGA view:

• We support the intention of the single digital platform and the intention to consolidate the information publication requirements related to public procurement for both buyers and suppliers, that are currently laid out in various pieces of legislation and guidance.

• However, we are concerned that long-standing requirements in existing legislation and statutory guidance - which specify where and how public bodies must publish procurement information - will undermine the single digital platform’s objectives.

• To bring existing legislation in line with the Procurement Bill, we are therefore seeking to oblige Government to amend the following legislation within Bill:

• Transport Act 1985: In section 89, subsection (4)(b) and subsection (5) should be disapplied. These sections require local authorities to individually issue notices of tender to all suppliers who have given written notice that they wish to be notified.
• Service Subsidy Agreements (Tendering) (England) Regulations 2002: Regulations 4 and 5 should be disapplied. These regulations require local authorities to publish tender information relating to transport service subsidies to the general public ‘at times and in places which are convenient to the public’ and publish notices of tender in local newspapers.

• For the same reasons, Clause 86 of the Bill should also be amended. This clause sets out that ‘appropriate authorities’ may by regulations make provision about the form and content of notices, documents or other information that must be published or provided under this Act; and how such notices or documents must be published, provided or revised. It is important that there is a new requirement in the Bill to ensure that any future regulations do not undermine the purpose of the single digital platform by requiring procurement information to be published elsewhere.

• The Government must also revise statutory guidance such as the Local Government Transparency Code, especially Part 2.1, to ensure that local government will only have to publish procurement spending information in one way and in one place: to the new single digital platform. We seek a ministerial assurance in the House that Part 2.1 of the Code will be revised so that, from the date that the regulations under the Procurement Act relating to the single platform come into force, local authorities will only have to publish procurement information to the new single digital platform, in a common standard and a single format.

Megan Edwards, Public Affairs and Campaigns Adviser

[email protected]