Procurement Bill, Remaining Stages, House of Commons 13 June 2023

• The LGA 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 engaging with Government to help them to understand the way that councils procure goods, works and services, to help design the new regime in a way that is effective and reduces unnecessary costs and administrative burdens for local government. 
• We are pleased that many of our initial concerns with the legislation have been resolved and we are grateful for Cabinet Office officials’ ongoing engagement to improve the Bill. In particular we welcome the Government’s amendments at Report Stage, which clarify that contracting authorities can continue to use the vertical and horizontal procurement exemptions. These exemptions enable councils and public sector bodies to enter into collaborative arrangements to run efficient public services.
• We strongly support the aims of the single digital platform to simplify the public procurement system for both buyers and suppliers and enhance transparency. The Government plans to launch a two-stage public consultation on the secondary legislation that will sit below the Bill, with the second stage covering issues relating to the single digital platform and the wider legislation that needs to be amended for the Act to take effect. As we have previously noted, the Government must bring procurement requirements in existing legislation (the Transport Act 1988 and Service Subsidy Agreements (Tendering) (England) Regulations 2002) into line with the single digital platform to avoid duplication and inefficiency. 
• Government should provide contracting authorities, including councils, with clear guidance on the procurement of goods and services from suppliers where there are national security concerns. We would like clarification as to whether Government amendments 57 and 27 could result in contracting authorities having to exit existing contracts with suppliers that are added to the proposed debarment list. If this is the case, there could be significant financial implications for councils. It will therefore be vital for Government to provide affected contracting authorities with adequate new burdens funding to effectively remove debarred suppliers from the supply chain and prevent the burden of implementing national security measures falling on already over-stretched council budgets.
• Councils are currently prohibited from reserving below-threshold contracts for local suppliers, SMEs or voluntary and community organisations. It is welcome that Government has committed to rectifying this issue in secondary legislation, which will allow councils to further support their local economies and businesses by ‘buying local’, as well achieving other important objectives such as increasing supply chain resilience and reducing carbon emissions. It will be important that councils are able to reserve contracts on a range of scales, not simply a county or London borough – for example to align with Integrated Care System boundaries.  We look forward to continuing to work with Government on this issue and welcome early engagement on the secondary legislation. 
• The Government has indicated that the new procurement regime will go live in October 2024. We look forward to working with Government to shape the secondary legislation that will sit under the Procurement Act and will be responding to the upcoming public consultations. 

• Government amendment 57, tabled by Jeremy Quin MP, introduces a mandatory exclusion ground, which would allow a Minister to exclude suppliers that are determined to pose a threat to the security of the United Kingdom, if satisfied that the supplier would pose a threat in relation to certain contracts. Excluded suppliers will be placed on a debarment list. 
• Government amendment 28 will enable excluded suppliers (that are determined to be a threat to national security) to only be banned from bidding for particular contracts (for example, in sensitive sectors). 

LGA View

• Government should provide contracting authorities, including councils, with clear guidance on the procurement of goods and services from suppliers where there are national security concerns, for example, security and surveillance systems.
• We would like clarification as to whether these amendments could result in contracting authorities having to exit existing contracts with suppliers that are added to the debarment list. There could be significant costs to councils were they to be advised or required not to use suppliers that many have already procured from, or are in the process of procuring from. We note in many cases that such contracts are outsourced and that the provider, rather than the council, will be making the decision on which systems fulfil the requirement. 
• If councils are required to remove and replace equipment – for example surveillance equipment/CCTV cameras – that is produced by suppliers on the debarment list, then this would have significant financial implications for councils, both in terms of covering potential contractual costs associated with terminating contracts and the costs of having to let new contracts.
• If this is the case, Government must provide affected contracting authorities with adequate new burdens funding to effectively remove debarred suppliers from the supply chain and prevent the financial burden of implementing national security measures falling on already over-stretched council budgets.

• In December 2020, Procurement Policy Note 11/20 gave public sector bodies the right to reserve below-threshold contracts for local suppliers (for example, county level), SMEs or Voluntary, Community, and Social Enterprises (VCSEs). The option to strategically reserve below-threshold contracts in this way enables public sector bodies to further support their local economies and businesses by ‘buying local’, as well achieving other important objectives such as increasing supply chain resilience, reducing carbon emissions in supply chains and attracting new entrants to public procurement markets. 
• But Section 17(1) of the Local Government Act 1988 currently prohibits local authorities (together with a few other named public authorities) from using this power and reserving contracts in this way, whatever their value. In the public sector this restriction affects local government in the main, creating an uneven playing field, and hampering the ability to promote local growth.
• It is welcome therefore that Government have committed to addressing this issue in secondary legislation (soon to be consulted upon) which will disapply or reword the relevant parts of section 17 of the Local Government Act 1988 under certain conditions. It will be important that councils are able to reserve local contracts on a range of geographical scales, not simply limited to suppliers within a county or London borough – for example to align with Integrated Care System boundaries. We look forward to continuing to work with Government on this issue and welcome early engagement on the secondary legislation.