My Lords, in moving Amendment 37 I will speak also to Amendment 460 in my name, which is closely linked to it. They work to a similar effect.
The purpose of these amendments is to go back to the question of what we are trying to achieve in this Bill—what its purpose is. I think we all agree that we want honesty, transparency and value for money in public procurement, in broad terms. However, as I said at Second Reading, it seems that what we are achieving is the bureaucratisation of honesty, whereas we should be focusing on the principles. We are creating a great beneficial bonus for lawyers, as was identified by the noble Lord, Lord Fox, earlier in Committee.
The key to real-world management of procurement is flexibility: to be able to respond to circumstances as they change during a tender. The current system, as I said at Second Reading, operates by setting up some conditions at the beginning over which the contracting authority has very great control. However, the system operates with great rigidity after that, so that it is very difficult to respond to changing circumstances in the course of the tender, or to surprising tenders that might be received.
I gave some examples at Second Reading, particularly the great non-existent iconic London bus shelter. I will detain noble Lords with a couple of further examples because I have been contacted since then by a former local government officer, for whom I have great respect, with two examples from the water sector. One related to a contract in which—I cannot supply the names—the officers had set up in advance the very precise and clear criteria by which to analyse the tenders they received for a waste collection contract. When one of the tenderers said “For certain types of waste, we will pay you in order to collect it”—which can make sense for certain recyclers—the whole assessment system effectively collapsed because it had not contemplated that sort of bid. As far as I am aware, everything had to be scrapped and started again, whereas a sensible approach would have allowed it to be flexibly adapted.
The second was a case where the local authority decided to take a relaxed “Let’s see what the market comes up with” approach to the tender—which can be appropriate as well—which was also for a waste collection contract. Unfortunately for the local authority, the cheapest bidder proposed collecting waste from households only once every four weeks—which was why it was the cheapest bidder. Of course, that was neither environmentally nor politically acceptable, but what could the authority do about it at that stage? All it could do was put pressure on the second-lowest bidder, which had sensibly proposed a two-week collection cycle, to cut its price to make it competitive with the four-week people. That duly went through. The two-week collection was awarded the tender, and within a matter of months the contract had effectively collapsed because, of course, the company could not make it work at the price it had been obliged to agree.
So why is there no flexibility in the system once the initial conditions have been set up? The practical reason is that the moment you say, “This is daft. We should be able to do something about it”, the people whom I described in my Second Reading speech as the high priests of procurement will turn up and say, “Ah,
but if you do that, a disappointed bidder may sue you for failures in the process.” That is why you are tied at the outset with iron hoops to the process that you have set in motion.
What we need is a Bill that focuses on principles rather than on process. These two amendments do that by preventing disappointed bidders from suing a contracting authority for process faults; they could sue only for breach of the objectives set out in Clause 11. I remind noble Lords that those are to do with: delivering value for money; maximising public benefit; sharing information; acting with integrity and being seen to act with integrity; and equal treatment of tenderers.
It is important to explain that the approach I am proposing is not necessarily tied to Clause 11, because certain noble Lords are proposing that the Bill be augmented with a further set of principles—the amendment in the name of the noble Baroness, Lady Hayman of Ullock, adds a set of principles to the objectives in Clause 11. My amendment is perfectly compatible with her approach. If the House decides that the objectives for the Bill and the principles underlying it are not sufficiently and adequately expressed in Clause 11 and that further objectives and principles are required, on Report my amendment could be adapted to fit in with those principles. In this particular debate, I am staying neutral on the various proposals for how to develop the principles; I am totally neutral on the noble Baroness’s amendment, because mine would fit with it if that is the direction that the House and the Government wish to take. It is important to bear in mind that I am not tying this explicitly to Clause 11.
It is also important to bear in mind something else that I said. This is not a Bill for combating fraud, corruption or malfeasance in public office. All those things are criminal offences. If a contracting authority commits those offences, it will be prosecuted not under the terms of this Bill but under the relevant provisions of the criminal law—and quite properly. What this Bill does is create a huge bureaucratic minefield for contracting authorities in which disappointed tenderers can sue for some sort of compensation or damages—not that they do so very often, but it is a chilling factor when it comes to the flexibility that contracting authorities should rightly have.
Now, some people would say that this would radically alter the whole approach of the Bill. I think it is a fairly radical alteration of the Bill’s approach, but I speak with some experience when I say that it would also make it a workable Bill. I hope that my noble friend, if he or she is not immediately inclined to agree, will at least explain why this approach does not commend itself to Her Majesty’s Government.