My Lords, this group of amendments builds on the good base that already exists in the Bill, and I will set out our thinking behind them.
Small businesses often find public sector procurement processes unfairly opaque. Enabling small businesses to fairly compete and win public sector contracts requires commissioning and pre-procurement planning, as well as structured market engagement. This will require new guidance and skills development at the commissioning/ procurement level within public sector organisations.
Experience—in many cases, painful experience—has shown that better commissioning, aligned to outcomes, is at the heart of driving an increase in the participation of small businesses in procurement processes. There is a strong benefit in early market engagement, asking questions of the market before procurement processes are initiated.
Small businesses need to be engaged as part of the commissioning process. Unless and until commissioners understand what localised small businesses can or cannot bring to the table, they will be selling themselves
short in terms of what their local market can deliver. This early market engagement needs to be fed into the procurement process itself—from the specification through to the rationale for the procurement route taken and all the documentation required to be completed.
Skills in commissioning and procurement need to be addressed. There is an industry in the process itself, which tends to be input driven rather than concentrating on where the value can really be derived—that is, aligning the processes to the outcomes required. Commissioners and procurement officers have little support, training and guidance that will serve to facilitate a material difference in small business uptake. Therefore, the processes will tend to be biased towards larger, established organisations.
Small businesses that have been through the process claim that it is weighted heavily in favour of larger companies, with no consideration given to the fact that smaller enterprises have fewer resources to complete lengthy tendering documents. The smaller the business, the greater the proportion of its time, resources and effort will be required to submit a competitive tender.
Therefore, our amendments seek to provide the capability to government to effectively devise procurement processes, appropriate duties and considerations, as well as measurements and reports, to ensure an increase—more than just levelling the position—in small business success in winning public contracts.
Under Amendment 35G, the Secretary of State may impose duties on contracting authorities to provide details of any costs related to participating in the procurement process, helping to illuminate and navigate a key barrier to small businesses.
Amendment 35H establishes baselines which will be critical to determining the success or otherwise of public sector bodies both in participating in procurement processes and in increasing the awarding of contracts to small businesses. It proposes tracking key performance indicators, asking contracting authorities to report on the number of small businesses participating in the procurement process, the number of contracts, the value of the contracts and the value of subcontracts awarded to small businesses.
Amendment 35J would impose a duty on contracting authorities to deliver fair and equal procurement contracting, as well as a duty to have regard to region, diversity and the value of the contract and subcontract awarded.
Amendment 35P provides that contracting authorities have a duty to publish reports about the amount and proportion of expenditure within procurement undertaken by a contracting authority in relation to small businesses and the area local to the contracting authority, as well as duties to disclose and explain any reasons why specified businesses or companies, or a specified category of business or company, may be excluded from consideration by a contracting authority.
In Amendment 35U, the mystery shopper, when conducting an investigation, must give,
“due consideration to the fair and equal delivery of a procurement contract”,
having regard to region, diversity and the value of the contract and sub-contract awarded.
In short, we are asking public sector bodies to take greater care in designing processes that do not disadvantage small businesses, and we are trying to give them the tools to measure these effectively. They need to consider what are we asking for in procurement processes—the range of checks and balances with respect to the amount of time and cost that they are expecting bidders to invest. Are the questions being asked really relevant to the contract size and type of the contract?
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All those with experience of government would agree that there is a tendency for commissioners and procurement officers to play it safe by choosing an established name and by allowing the larger companies to unfairly inform tender processes, while providing specifications and documentation to prospective customers that are then rehashed within the procurement process. Small businesses are frequently put off by the length, language and style of the tender documentation; it can and should be made more user-friendly.
Thought needs to go into the relevance of the questions being asked to the delivery of the outcomes required. If it is not relevant, why is it always included with no thought to how the market might react, the bidding costs involved and how local small businesses may well be put off from participating in the first place? But the biggest barrier by far for small businesses looking to get public sector work is the amount of bureaucracy involved. The problem is that procurement in the public sector is carried out largely on a one-size-fits all basis, and one size does not fit all.
One area where we disagree with the Government is the idea of abolishing pre-qualification questionnaires. We are not convinced that the research and consultation examined this matter with sufficient consideration. Certainly, detailed discussions that we have had with a number of small businesses have come out with a different view. Largely, we do not believe that it is an either/or argument. Forcing binary options frequently undermines the benefits that could be developed in changing the nature of this. It reminds me of how, in business, sometimes you talk to operational people, who tend to have an approach involving how to find a better way; sometimes, when you examine these matters with finance people, they take a “cut or keep” approach.
We believe that the pre-qualification questionnaire process can be substantially improved. Some 80% to 90% of it should be standard across all bodies, and certainly shorter. Fundamentally, having different PQQs, different formats, different styles of documents and different questions from organisation to organisation has the impact of putting off small businesses from applying and increasing the cost of participation, which has a disproportionate impact on small businesses, which, as the noble Lord, Lord Young, said, do not have the same size of procurement teams and staff readily available to fill in a lot of documentation.
We believe that requiring guidance will be needed on the appropriateness of qualifications and certifications to the tender process, their cost and their relation to the value and the outcome that the organisation seeks to achieve. There are issues ranging from insurance levels, requirements for bonds, health and safety, IIP
and ISO—the list goes on. That does not mean getting rid of such requirements, but it does and should mean ensuring the appropriateness of the requirement to the contract value and outcome.
I would be grateful if the Minister would do me the kindness of providing in her response any good reasons why these amendments would not be helpful. Is there any part of what I have said that the Government disagree with or would not like to be covered either by Bill, regulation, guidance or practice in future? I beg to move.