In this blog post, Michael Bowsher Q.C. of Monckton Chambers assesses the Trade Bill currently passing through Parliament, and the goals of procurement legislation after the transition period.
The post-Brexit Trade Bill (mark 2) marches on. It deals with a number of matters that require legislation before the end of the current transition period. One of these matters concerns the creation of legislative power for the establishment of a new procurement law as would be required by the GPA and those FTAs that are “rolled over” from current EU-Third State FTAs. Various individuals submitted evidence on this, and the written evidence can be found here. I made one of those short contributions, which looked at four points:
(1) The need to establish in primary legislation the full range of goals to be achieved by procurement law to avoid (i) undue focus on trade issues and (ii) a lack of attention on core societal goals such as public sector integrity or climate change requirements.
(2) The need to consider how tenderer exclusion could be better run on a centralised basis.
(3) The definition of the extent to which outsourcing of supplies and services should be required in the UK, particularly as that is currently required on a broader basis than GPA would require.
(4) Given that it is only practical to apply a single set of procedures and principles in a particular procurement process, there is a need to consider how the procurement chapters of the GPA and multiple trade arrangements will all be taken into account in the single procurement code which will have to be applied by purchasers.
Given the constraints on the length of the evidence, I probably didn’t say enough about any of these, and I will plan to return to these topics in due course. For the purposes of this blog post I have extracted from the evidence my comments on the first of these points, which seems to me important to address first as it seems to me that the UK may be about to repeat the error it made in 1991 when first legislating for EEC procurement law. Perhaps the trade/internal market perception of procurement law is just so embedded that we cannot get out of it, but it seems to me that it distorts all the other goals that we need to balance in this area and it would be good to try and get this straight now.
Procurement law seeks to protect or promote a number of important outcomes for society. Historically it has been all too easy to dismiss the necessity for procurement law by failing to note the broad significance of these outcomes. A core concern with this Trade Bill is that by providing for procurement legislation to be implemented simply as an implementation of a trade measure without any acknowledgment of these other necessary outcomes is to diminish the prospect that procurement law will be effective in pursuing these goals. This would be to repeat the very same error that was made in 1991 when procurement law was implemented in the UK simply as an implementation of EU internal market law obligations in secondary legislation without any recognition of the wider issues. This has meant that all too often policy makers, procurement officials and the courts have focussed on internal market issues to the detriment of other core societal goals.
The current basis of procurement law is, of course, in EU law and that provides a broad basis for establishment of range of measures. Placing procurement law only within a trade-related measure may in due course raise significant practical and legal difficulties. If the past is anything to go by, it will facilitate those who seek to diminish the role of procurement law in pursuing other goals.
Procurement law is not only a trade related issue. The essential reason for having any procurement law is and has always been to ensure that expenditure of taxpayers’ money is done in a way that respects standards of integrity, good value and the like. Of course, the trade aspect of procurement law is significant, but for most citizens and taxpayers their primary concern with public procurement is that the contracts that are procured perform effectively, involve good use of tax funds and do not involve or enable abuse of power or misuse of funds.
It would be unfortunate if the scope and effect of procurement law appeared to be limited to trade issues only as it would deny United Kingdom taxpayers the sorts of legal protections over the use of their money that is now regarded as a usual protection in the modern world. Rather procurement law should focus and explicitly focus on the goals and values which it ought to be pursuing.
Value and Integrity
The terms Value and Integrity are short-hand for a range of important goals in the interests of all taxpayers and citizens. It is worth emphasising how important it is that procurement law secures these goals and it is regrettable that the key importance of these goals would not get any recognition in primary legislation if the only basis for procurement legislation were as currently expressed in this Trade Bill. This is not just a question of presentation. Procurement law inevitably has to reconcile a range principles and policies and it would be a retrograde step if the trade basis of this measure were to be taken in future to indicate a primacy of trade concerns over these core goals.
The pursuit of these goals is now a matter of great international concern. There has been a substantial body of discussion about these issues in recent months and years. To take one example, see this reference to concerns raised by the OECD about integrity in public procurement exacerbated by the Covid-19 crisis and its aftermath. See here. See also the recent report of the International Public Sector Fraud Forum here. This is also of considerable interest in recent domestic reviews. For instance, MHCLG has just published its review into risks of fraud and corruption in procurement. See here.
As regards the importance of securing good value in public contracts, it is important also to note the standards of good conduct in the tendering process which it is now intended to promote through the recent update of the Outsourcing Playbook 2.0 for a professional matter. See here.
Many criticisms have been made of procurement law in the form that has been applied in the United Kingdom pursuant to EU law. Much of that criticism flows from the over-complex structure and lack of clarity in the law about what it was seeking to achieve. Procurement law has important work to do to support the state and it would be regrettable if its purpose were obscured and diminished by treating it as just another trade measure.
Many of these concerns will be enhanced as ever more is revealed about the difficulties in promoting value and integrity in those PFI contracts that have not delivered for the taxpayer. Procurement law needs to place the pursuit of these goals at the centre of its legislative aims, not just the implementation of certain trade deals.
Using Public Purchasing for Good
There is now increasing pressure on those responsible for procurement policy to use the purchasing power of the state to drive broad goals such as climate change and social goals. Some progress has been made. Perhaps the most interesting UK measure has been the Public Services (Social Value) Act 2012 which, despite its brevity, has been a catalyst for real change as it has inspired local purchasers to look to see what can be done to use the power of their purchasing. Importantly, it has done so not by mandating single goals or blunt tools. It has encouraged purchasers to look to what they can achieve. A useful summary of the position is set out in the summary of reports about application of that legislation here.
Although the relevant consultation has closed that does not yet seem to have produced an outcome.
Of course, one person’s legitimate social goal may be an inhibition on trade or a measure that damages the environment. Procurement practice is filled with examples of unintended consequences. Further, solutions that work in one place can be ineffective or positively damaging somewhere else. For that reason the Social Value Act model of empowering purchasers to implement improvements towards an overarching goal and then to look to review their effects over a multi-year period seems likely to be most effective.
A similar model might be applied to other core goals such as environmental requirements, or the abolition of model slavery. Often it is easy enough to demand that a contracting authority or contractor take steps to meet a goal or requirement but if it falls outside the ready control of the parties to the contract that can often create substantial cost for very little gain. Instead a purchasing authority should be required in each case to give some thought about what it can and should do before initiating the purchasing process.
Finally, it is remarkable in the current environment that so little has been said about the promotion of health outcomes. It is surprising that even health sector service contracts are often not clearly awarded or assessed by reference to the health outcomes they produce. There are often many complex metrics involved here but this must be an area where a public health service would be well placed to focus on whether a particular contract was meeting key health outcomes and if it were not to look to other metrics in later contracts.
Proposal
First, a good start would be to identify the core goals that procurement is to pursue and to require of all purchasers covered by the procurement regime to show that they have had regard to need to promote key goals in an effective manner. This would mean that those who had sought to contract without giving thought to these matters could be challenged and the application of irrational approaches could also be considered by those politically responsible for procurement. The legislation could then impose a requirement for a review as to what has or has not worked with a view to focussing the power of procurement after that review period.
Second, one way of achieving this might be to expand the approach in section 1(3) of the Public Services (Social Value) Act 2012 and require all authorities making purchases to show that before they initiate a purchasing process that they have considered how the contract that it is proposed to procure might secure each of the following goals:
(1) Good Value;
(2) High Standards of Integrity;
(3) Specific Environmental Goals set at Local or National Level;
(4) Specific Social Goals set at Local or National Level;
(5) Specific Health Outcomes;
(6) Elimination of Modern Slavery; and
(7) Other Goals set periodically at Local or National Level.
Third, it may be that for some repeated contracts reliance can be placed on some periodic review of these matters by the authority so that each purchase does not need to be held up. For one off or substantial purchases it would surely be desirable for specific consideration to be given to each of these matters. One would have thought that drafting could be modelled around the approach of the 2012 Act.
Fourth, each purchasing entity could then be required to review the successes or failures of its attempts to pursue and promote these goals in a periodic review which would feed into a broader national process of the type being undertaken for the 2012 Act.
An original version of this blog post was published on Michael Bowsher Q.C.’s procurement blog at: https://mostlyprocurement.typepad.com/.
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