My Lords, as the noble Lord, Lord Mendelsohn, said, there is a good deal of common ground here, although we believe that we have most of the powers that we need, either in this Bill or in separate, regulation-making powers. I thank my noble friend Lord Young of Graffham for explaining the mystery shopper so clearly, and how PQQs have changed. I will come on to Contracts Finder in a minute.
On Amendment 35G, we consider that requiring a small business to pay a fee to access a public contract opportunity is a significant barrier to entry and should be stopped. That is why the Government’s intention in the draft Public Contracts Regulations 2015, which I have mentioned several times, is to help ensure that small businesses have free access to contract opportunities in one place. Moreover, the power in Clause 38 can already be used to make regulations to ensure that documents, information and any process involved in bidding for a contract are made available free of charge. The Cabinet Office will assess the impact of the reforms to be introduced through the draft Public Contracts Regulations before deciding whether to use Clause 38 to make regulations about providing free access.
The noble Lord, Lord Mendelsohn, asked how we will ensure that there is early engagement with suppliers and that small businesses are included. This is a very good question. Noble Lords will recall that our draft illustrative regulations demonstrate how the power
could be used to require authorities to carry out pre-procurement engagement in a way that increases interest in bidding for procurement for SMEs. This could also help to bring in new SMEs and deal with the reputational issues, which was the issue behind my noble friend Lord Deben’s helpful intervention. I recall that, when I was in business, we had a similar wish to encourage new small and local suppliers. We held pre-engagement road shows to talk to the suppliers. Bringing in suppliers that we had not had anything to do with before led to new contracts being let to smaller suppliers outside the mainstream. That is not public sector experience, but it gives me confidence that we should be able to use this pre-engagement process to improve things.
We support the spirit of Amendment 35H and we are already doing more to promote transparency in public procurement. The procurement directive, which was intended to be transposed earlier this year, will require contracting authorities to disclose the number of above EU threshold contracts awarded to small and medium-sized enterprises, based on the EU definition. Contracting authorities will also be required to provide information on the number of bidders for a procurement, as well as reporting on the value of any contracts awarded.
The noble Lord, Lord Mendelsohn, said that too many prime contracts go to large suppliers. I cannot help but agree with that. The new Public Contracts Regulations will require contracting authorities to explain why they have not broken down large requirements into smaller lots. As my noble friend Lord Young, said, there will be a new Contracts Finder website, which will advertise all central government contracts over £10,000 and local government contracts over £25,000 free of charge. As has been said, the site is already attracting international interest and comment. The regulations will also place an obligation on a contracting authority to report, for contracts of £10,000 and above for central government and £25,000 and above for other authorities, on whether the successful bidder is a small or medium-sized enterprise or a member of a voluntary community social enterprise organisation, and on the value of the contract awarded. I think that that is important. Contracting authorities will be required to publish this information on Contracts Finder.
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Amendment 35J would place additional duties on contracting authorities to give due consideration in delivering fair and equal procurement. This consideration would have regard to factors such as diversity of the contract awarded and the region in which it takes place. Contracting authorities, including local authorities, already take steps to promote legitimate policy of this kind through procurement. When the policy in question is clearly relevant to the subject of the contract, the contracting authority can use a procurement opportunity to deliver it.
The Public Contracts Regulations apply to contracts awarded on EU principles and those principles of transparency, proportionality and equal treatment, of course, have to be observed. Indeed, the regulations will set out expressly to contracting authorities that
they must treat economic operators equally and without discrimination. The noble Lord’s amendment creates problems because it goes beyond the principle of equal treatment which limits the extent to which local discrimination is permitted under EU law.
Turning to Amendment 35P, the 2014 directive will require, for contracts covered by the directive, contracting authorities to disclose the number of contracts awarded to small and medium-sized enterprises, as I have already said. The Government’s intention is that contracting authorities will also be required to report by publishing information on Contracts Finder. I have already explained what we have planned. On the issue of exclusions, contracting authorities can already exclude suppliers on grounds of certain past behaviour, for example, criminal convictions, including conspiracy, bribery, money laundering or grave professional misconduct. The directive also sets out clear grounds on which a contracting authority must, or might treat a bidder as ineligible. These again include specific criminal convictions as well as exclusions for matters such as grave professional misconduct, bankruptcy or insolvency. Details of these grounds are set out in the supplementary information.
Turning to Clause 39 and Amendment 35U and the mystery shopper, as we have heard, this investigates whether practices are poor or problematic. It is not designed to deliver particular policies for procurement. As I have said, contracting authorities are already able to pursue legitimate policies through procurements when they want to do so and when the policy is relevant to the subject matter of the contract. We keep coming back to these same points, many of them reflected in EU law. We believe that this amendment would require the mystery shopper to divert its focus leading to more complexity, and it would introduce a different purpose when its purpose is to look at whether a contracting policy authority has engaged in poor procurement practice and to take steps to put that right.
I have gone through each of the amendments in turn and I apologise for the length of my reply, but I hope that that has helped the noble Lord to understand why I would like him to withdraw the amendment.