Procurement Bill strengthened to protect national security

• New amendments tabled to the Procurement Bill to strengthen national security.
• Specialist unit to be established to investigate suppliers who may pose risk to national security.
• Amendment to allow bidders to be banned from sensitive sectors, while able to win contracts in non-sensitive areas.
• Procurement Bill, which will rip up red-tape and help small businesses, to have its Report Stage next week.

Stepped up measures to protect national security in government contracts are to be brought forward, the government has announced.

Yesterday the government tabled amendments to the Procurement Bill, ahead of its Report Stage in Parliament next week to include two new measures:

• Establishing a National Security Unit for Procurement. The new team, which will be 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, 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 is committing to publish a timeline for the removal of surveillance equipment produced by companies subject to China’s National Intelligence Law from sensitive central government sites.

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 new National Security Unit for Procurement will  draw on a full range of expertise within government and  respond swiftly to emerging threats, such as companies looking to win public contracts in order to gain access to sensitive information or sites which could be used to compromise government and society. The specialist team will work across government, including liaising closely with our intelligence agencies.

To further strengthen the national security measures, the government is introducing new, context-specific mandatory debarments on national security grounds. This will mean that the government will be able to ban suppliers which pose a risk to national security from specific types of contracts.

The commitment to publish a timeline for the removal of relevant surveillance equipment from sensitive sites builds on action taken last year to halt the installation of new equipment on the government estate. It will provide the necessary reassurance that departments are removing surveillance equipment from sensitive sites.

Cabinet Office Minister Alex Burghart said:

The Procurement Bill puts the government in a stronger position to get the best deal for taxpayers, while prioritising growth by cutting red tape and removing barriers for small businesses.

It’s absolutely right we continue to look at ways to strengthen central government rules when it comes to national security and I have no doubt these additional measures will ensure the Bill delivers on its objective to have a robust, modern procurement process which delivers for the British people.

The Bill, which will have its Report Stage in the House of Commons next week, will make it easier for small businesses (SMEs) to win more of the £300billion of goods, services and works that the government buys each year.

The Bill introduces new rules to help the government procure in emergency situations, such as during health pandemics, ensuring that contracting authorities can act quickly and transparently to buy vital goods.

These simpler rules take advantage of freedoms now that Britain has left the EU, as well as strengthening the government’s ability to exclude suppliers who may have previously underperformed on government work. The rules will help exclude suppliers, both in the UK and overseas who are involved in modern slavery - further clamping down on this abhorrent practice.

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.

Notes to editors:

• The new provisions will allow Ministers to consider the risk profile of a particular supplier, supported by the new National Security Unit for Procurement, and act accordingly. Certain types of contracts can be identified on the debarment list that the supplier must not be allowed to bid for. This can be identified by the type of goods, services or works or by reference to certain contracting authorities or locations.
• The new unit will be proactively monitoring the supplier landscape and will  recommend to Ministers which suppliers should be investigated for debarment; the outcome of that investigation may lead to an entry on the debarment list. The proactive approach will be highly advantageous in minimising the risk posed by some suppliers and will make it easier for contracting authorities to implement national security exclusions.
• We will also commit to publish a timeline for the removal of surveillance equipment produced by companies subject to China’s National Intelligence Law from sensitive central government sites. By committing to this timeline, we are providing reassurance and urgency around the removal plans.

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.