Procurement Bill: Progress of the Bill

This briefing refers to the Procurement Bill before its adoption as an Act of Parliament (Procurement Act 2023) in October 2023.

The Procurement Bill 2022-23 (HL Bill 4) was first introduced in the House of Lords on 11 May 2022 and completed its Lords stages on 13 December 2022.

The Bill was presented in the House of Commons on 14 December and had its second reading on 9 January 2023. Its committee stage in the Commons took nine sittings, ending on 21 February 2023. The Commons report stage and the third reading took place on 13 June 2023, when the House of Commons passed the Bill with amendments. 

The Bill went through the “ping-pong” process between the two Houses during September and October, with the Commons and the Lords agreeing on the final version of the Bill on 25 October 2023.

The Bill received Royal Assent on 26 October 2023, becoming the Procurement Act 2023. This Act will come into force in October 2024, along with secondary legislation required to implement certain Act’s provisions.

The purpose of the Bill

Procurement rules regulate how public authorities purchase goods, services and public works, such as building schools or roads, from the private sector. About a third of public sector spending goes towards public procurement.

As the UK has left the European Union, the Government wants to reform UK procurement rules which are based on EU law. It says the reform will make procurement simpler, faster, more transparent and less bureaucratic.

The Government says this would create more opportunities for innovation and support new businesses, including small and local companies, wishing to enter the market and deliver public contracts.

Second reading

In the Commons second reading debate, Jeremy Quin, Minister for the Cabinet Office and Paymaster General, said the Bill would fundamentally improve the UK’s public procurement regime. He said it would create “a simpler, more flexible commercial system that better meets our country’s needs”. By delivering value for money, he said the Bill would require public sector contracting authorities to give greater weight to bids that support wider public benefit such as enhancing skills, innovation, and environmental protection. He said the Bill would make it easier for small and medium-sized enterprises (SMEs) to become government suppliers.

The Minister said the Bill would give contracting authorities more powers than under the EU regime, enabling them to bar companies from procurement for misconduct or illegal activities. The Bill would also introduce procedures to address conflicts of interest.

Opposition parties generally welcomed the reforms but said the Bill fell short in various aspects, such as transparency, addressing potential conflict of interest and support for SMEs.

The Labour Party said the reform was “an opportunity to make, buy and sell more in Britain”. Opposition parties said they were ready to work constructively with the Government and amend the Bill to increase its focus on social value, net zero objectives, and other areas.

MPs from across the Commons noted national security was becoming a strategic concern in procurement. There are concerns about public bodies being increasingly dependent on suppliers that are linked to hostile states, or companies linked to human rights abuses. MPs urged the Government to take a proactive role in investigating such companies and barring those who pose significant risks from taking part in procurement on security grounds. They also called for support to contracting authorities seeking to find out whether a supplier poses a security risk.

Main amendments and issues in committee

The committee stage of the Procurement Bill took place between 31 January and 21 February 2023. There were 39 votes in the committee.

The Government reversed all six amendments made to the Bill in the House of Lords. The Lords amendments would have:

• brought NHS procurement fully in scope of the Bill
• required a minister to consider certain principles before publishing a national procurement policy statement (NPPS)
• included specified strategic priorities in the NPPS
• allowed contracting authorities to exclude suppliers from contract awards for their involvement in activities linked to forced organ harvesting
• mandated that physical surveillance technology which has been delivered by suppliers involved in modern slavery, genocide or crimes against humanity be removed.

The Government argued amendments on strategic priorities would have taken away the flexibility a government needs to adjust them over time. While supporting the need to tackle the issues of human rights abuses in the supply chain, the Government argued these amendments would increase burden to contracting authorities and suppliers. It took the view that the Bill contained sufficient safeguards to address such abuses.

The Government made further amendments, many of which clarify the Bill’s provisions or are consequential to other amendments. These include:

• clarifying the process for suppliers to appeal against their exclusion from procurement (debarment)
• setting parameters around the treatment of tenders offering an abnormally low price for goods or services
• provisions regarding procurement-related international trade disputes and remedies available to suppliers from the UK and countries with which the UK has a trade agreement
• addressing concerns around cross-border procurement within the UK.

All but three government amendments passed without a vote.

Opposition MPs pressed for a vote on over 30 opposition amendments, of which none were successful.

The main themes debated in the committee included commitment to social value and net zero objectives, buying locally and supporting small businesses, national security concerns when purchasing goods or services from suppliers linked to hostile states, preventing conflicts of interest and devolution issues.

Devolution aspects

The Bill would apply to procurement by devolved authorities in Wales and Northern Ireland. Scotland, however, would maintain its own legal framework, while the Bill would provide for arrangements covering joint and cross-border procurement with Scottish contracting authorities.

The UK Government has sought legislative consent from the devolved legislatures for this Bill.

The Scottish Government did not recommend consent to this bill as introduced. The Welsh Government had indicated its consent would be conditional upon certain amendments. Following discussions with both devolved governments, the UK Government made several amendments in the Public Bill Committee, which would clarify and limit its power to make certain regulations regarding devolved procurement.

The Scottish Parliament gave its consent to the Bill on 16 March 2023 (PDF).

The Senedd agreed on 28 March to give partial consent to the Bill (PDF). It withheld consent to provisions in relation to international agreements, as far as these provisions fall within the legislative competence of the Senedd. With this, the Senedd rejected concurrent powers in the bill, so far as the UK Government ministers could exercise these powers without the consent of the Welsh ministers.

Report stage

For the Bill’s report stage on 13 June, MPs tabled 68 amendments and 17 new clauses. Of these amendments the Government tabled 39, mainly focussing on national security issues. Non-government amendments related to national security, human rights, labour rights, addressing financial and economic misconduct, evaluation of contracts and other issues.