House to examine strengthened national security measures as Procurement Bill progresses to report stage

Transformative new rules which rip up bureaucratic EU regulations for public sector procurement will be debated in the House of Commons today.

The Procurement Bill, which begins its report stage in the House of Commons, will make it easier for small businesses to win more of the £300bn of goods and services that the government buys each year.

The reforms proposed in the Bill will help mainstream innovation and innovative practices, improve the quality and efficiency of public services, and drive growth locally and nationally.

The Bill also introduces new rules to help the government procure in emergency situations to ensure that contracting authorities can act quickly and transparently to buy vital goods.

The simpler and more flexible rules take advantage of freedoms now that Britain has left the EU, as well as strengthening the ability to exclude suppliers who may have previously underperformed on government work.

Minister for the Cabinet Office and Paymaster General Jeremy Quin said:

“Protecting the nation’s security has always been the government’s number one job.

“These new measures will protect our sensitive sectors from companies which could threaten national security and are a firm deterrence to hostile actors who wish to do Britain harm.

“This builds on the robust rules within the Procurement Bill to hold suppliers to account and ensure that the taxpayer is protected.”

The report stage comes after stepped up measures to protect national security in government contracts were announced last week.

Two new measures were tabled through amendments to the Bill:

• Establishing a National Security Unit for Procurement. The new team, based in the Cabinet Office, will investigate suppliers who may pose a risk to national security and assess whether companies should be barred from public procurements.
• New powers to ban suppliers from specific sectors where they pose a risk to national security, such as areas related to defence and national security, while allowing them to continue to win procurements in non-sensitive areas.

In addition, the Government has committed to publishing a timeline for the removal of surveillance equipment produced by companies subject to China’s National Intelligence Law from sensitive central government sites.

The Bill also confirms that value for money remains paramount during contracting, whilst also encouraging buyers to take into account other relevant wider social and environmental considerations the supplier may bring.

To further underline how the Bill will help SMEs, the Cabinet Office has published a document outlining the benefits of the changes for prospective suppliers.

The Bill’s report stage will take place today before it receives its Third Reading in the House of Lords. It is then expected to receive Royal Assent and pass into law later this year.

Notes to editors:

The main benefits of the Bill are:

· Delivering better value for money – Supported by greater transparency and a bespoke approach to procurement, the Bill will provide greater flexibility for buyers to design their procurement processes and create more opportunities to negotiate with suppliers.

· Slashing red tape and driving innovation – More than 350 complicated and bureaucratic rules govern public spending in the EU. Removing these and creating more sensible rules will not only reduce costs for businesses and the public sector, but also drive innovation by allowing buyers to tailor procurement to their exact needs, building in stages such as demonstrations and testing prototypes.

· Making it easier to do business with the public sector – The Bill will accelerate spending with small businesses. A new duty will require contracting authorities to consider SMEs and we will ensure 30 day payment terms on a broader range of contracts. The Bill will also create a single digital platform for suppliers to register their details once so that they can be used for multiple bids.

· Levelling up the UK – While value for money will remain the highest priority in procurement, the Bill will require buyers to take account of national strategic priorities such as job creation, improving supplier resilience, and driving innovation. Buyers will be able to reserve competitions for contracts below certain thresholds for suppliers located in the UK, SMEs and social enterprises.

· Taking tougher action on underperforming suppliers – The Bill will put in place a new exclusions framework that will make it easier to exclude suppliers who have underperformed on other contracts. It will also create a new ‘debarment register’, accessible to all public sector organisations, which will list suppliers who must or may be excluded from contracts.

· Creating an open and transparent system – Everyone will have access to public procurement data. Citizens will be able to scrutinise spending decisions. Suppliers will be able to identify new opportunities to bid and collaborate. Buyers will be able to analyse the market and benchmark their performance against others, for example on their spend with SMEs.

· Effective emergency procurement – The Bill will allow faster competition processes for emergency buying, reducing the reliance on direct awards while retaining (and improving) the ability to act at pace in situations similar to the COVID pandemic

· Protecting national security – The Bill includes specific rules for defence and security procurements and provides flexibility for contracts to be upgraded to refresh technology to address gaps in capability. The Bill also has provisions to enable a contracting authority to exclude suppliers from procurements if they present a threat to national security. In addition, the debarment list can identify suppliers that must be excluded from certain contracts, as well as identify suppliers that contracting authorities should consider excluding from a procurement.

· Strengthening exclusion grounds - The Bill toughens the rules to combat modern slavery by allowing suppliers to be excluded where there is evidence of modern slavery, accepting that in some jurisdictions it is unlikely that a supplier would ever face conviction.