The existing public procurement regime is under reform. The reforms proposed in the Procurement Bill aim to, amongst other things, help mainstream innovation, improve the quality and efficiency of public services, and increase the number of small businesses (SMEs) as suppliers to government. The Procurement Bill is currently progressing through Parliament[1].

Before it was submitted for Report Stage in the House of Commons, the Government made several amendments to the Procurement Bill aimed at strengthening national security to the proposed Bill.

So how does the Government propose to strengthen national security?

By:

  1. Establishing a new National Security Unit for Procurement: this new unit will be based in the Cabinet Office and will, in close liaison with intelligence agencies, be responsible for monitoring the supplier landscape and investigating those who may pose a risk to national security. This includes companies that may try to win a public contract to gain access to sensitive information or sites with the aim of compromising government and society.
  2. Giving ministers new powers to ban suppliers from specific sectors: these powers can be used to ban a supplier from participating in public procurements in sensitive sectors such as defence, whilst still allowing that supplier to win procurements in other non-sensitive sectors.

In addition to these two new measures in the Procurement Bill, the Government has also committed to publishing a timeline for the removal of relevant surveillance equipment produced by companies subject to China's National Intelligence Law from sensitive central government sites. This builds on action taken last year to halt the installation of new equipment on the Government estate, and will provide the necessary reassurance that departments are removing surveillance equipment from sensitive sites.

What do these new measures mean for suppliers to government and contracting authorities?

If you are a supplier to government, the introduction of the new context-specific mandatory debarments on the grounds of national security may have significant implications for your organisation. It could not only impact your organisation's ability to win new work, but it could also affect your existing contracts. Consider:

  • What does "poses a threat to the national security of the United Kingdom" and "would pose such a threat in relation to public contracts"[2] really mean?
  • How objective and transparent will the criteria for debarment be?
  • Will there be an appeals process before the National Security Unit recommends a minister put your organisation on the debarment list?
  • If a minister does decide to put your organisation on the debarment list, is the right to apply to court for a suspension of that decision genuinely practical and/or useful?
  • If a court does set aside a minister's decision, do the proposed remedies go far enough?

For contracting authorities, consider:

  • what are the practicalities and legal implications of terminating existing contracts with suppliers that are put on the debarment list?
  • what are the practical implications for your procurement if a participating supplier is put on the debarment list part way through, or the outcome of its appeal to being put on the debarment list is pending?

The detail of how this will play out is not yet known, and more questions will undoubtedly arise once that clarity transpires and these measures are put into practice.

If you would like to discuss any of the points raised in this article, or the Procurement Bill in more detail, contact our public procurement team.

For more insight you can also sign up to essential updates from our Public Sector team, and read all of our latest public procurement updates.

Footnote

[1] View the latest timetable and updates
[2] Commons Amendment 100, Regulation 34A(1) (National Security), Schedule 6