RIA Response to the Procurement Green Paper

March 2021

PROCUREMENT GREEN PAPER RESPONSE FROM THE RAILWAY INDUSTRY ASSOCIATION (RIA)

1.

INTRODUCTION

This submission constitutes the response from the Railway Industry Association (RIA) to the Procurement Green Paper, published by the Cabinet Office.

2.

BACKGROUND TO RIA 2.1 RIA is the trade association for UK-based suppliers to the UK and world-wide railways. It has some 300 companies in membership covering all aspects of rolling stock and infrastructure supply and a diverse range of products and services. As well as most of the larger, multi-national companies, 60% of RIA's membership base is comprised of SMEs. 2.2 The Oxford Economics 2018 report shows that the UK rail sector contributes annually over £36bn Gross Value Added (GVA) to the UK economy, employs some 600,000 people and generates £11bn in tax revenues. For every £1 spent on rail, £2.20 of income is generated in the wider economy, meaning rail is not just an important sector in its own right, but it is also crucial for UK plc, its economy and connectivity.

2.3 Rail has been a growing industry with the number of rail journeys expected to double in the next 25 years, along with significant growth in rail freight traffic, regardless of shocks such as the present Coronavirus crisis. The full report Oxford Economics report can be accessed here.

2.4 The Oxford Economics report also highlights the fact that the UK rail industry is a significant exporter, selling £800 million in goods and services abroad each year, whilst the European rail trade body UNIFE’s recently-released World Rail Market Study report predicts annual rail market growth of between 1 and 2.3% until 2025, when an annual volume of approximately €240bn per annum could be expected.

2.5 RIA provides its members with extensive services, including: • Representation of the supply industry's interests to Government, Network Rail (NR), TfL, HS2, ORR and other key stakeholders; • Providing opportunities for dialogue and networking between members, including several Special and Technical Interest Groups; • Supply chain improvement initiatives; • Provision of technical, commercial and political information every week; • Export promotional activity, through briefings, rail trade missions overseas, hosting inwards visits; and • Organising UK presence at rail exhibitions overseas on Great branded UK Pavilions.

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3.

SUMMARY OF KEY PRIORITIES FOR PROCUREMENT REFORM 3.1 Overall procurement reforms: RIA welcomes these proposals, which align with the Construction Playbook, commit to publication of procurement pipelines, ‘whole life value’ and delivery model assessments (‘make or buy’). These proposals have the potential to reduce costs and increase the competitiveness, sustainability, and productivity of the supply chain. We propose an additional principle of ‘Proportionality’. We welcome the fit with WTO, zero carbon and UN Sustainability goals – but ask for reciprocity in procurement of UK content from global trade partners.

3.2 Consultation and timescales for reform: The scale of change should not be underestimated – full consultation on detailed proposals and clear, phased, realistic implementation plans are essential.

These proposals must not lead to delayed procurement and investment decisions.

3.3 Cabinet Office Unit and spending controls: A new unit has the potential to support best practice and prioritise innovation – however the remit needs to be clear, it should not duplicate other Government bodies or unnecessarily delay decision making, which delay and adds cost. We would support earned autonomy and further delegated authority for rail clients, as this would allow a Totex (Total Expenditure) approach, supporting Project SPEED aspirations to reduce the cost and time of project delivery.

3.4 Panel: Given rail spend can account for around 25% of all public infrastructure spend, any new panel should include rail supply chain representatives1.

3.5 New Procurement Act: RIA supports the simplification of the regulations. However, retention of the ability to let longer frameworks is essential for rail. Framework lengths should align with asset investment, project and programme lifecycles – longer frameworks (potentially up to 10-15 years) would also support inward investment. The current proposals would undermine the benefits of long-term supplier relationships, including innovation, productivity and private investment in assets and skills.

3.6 Frameworks: We welcome the simplification of the frameworks, and suggest the proposals go further to support the development of procurement for innovation, development of intellectual property and collaborative funding and delivery models.

3.7 Digital Procurement and Support (DPS+): RIA welcomes effective use of DPS+ and data to inform benchmarking. However, we would caution against the proposals being over ambitious and centralised. We recommend consideration of a phased approach, including options for modular rather than single IT system solutions, building on clients’ existing IT infrastructure as appropriate.

Data sharing plans will need to provide appropriate protection for commercially-sensitive data, as well as transparency on how commercial sensitivities will be addressed. Operational and cyber security needs to be taken into account.

3.8 Poor performance and redress: We welcome the intention to reduce the time and cost of legal challenge and recognise the need to get the incentives right. However, any Key Performance Indicators (KPIs) used to assess poor performance need to be applied intelligently, and on the basis of transparent evidence.

3.9 RIA would welcome full consultation on detailed proposals to ensure that: i) the right balance is stuck between the supplier and client; and ii) any changes, such as the removal of debriefing letters and new mechanisms such as independent review or pre-contractual arrangements, are proportionate and practical.

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https://nic.org.uk/app/uploads/CCS001_CCS0618917350-001_NIC-NIA_Accessible-1.pdf#page=114 Note the Rail Needs Assessment proposes options for 25%/50% + increases to this funding for rail: https://nic.org.uk/studies-reports/rail-needs-assessment-for-the-midlands-and-the-north/

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4.

CONTEXT 4.1 The UK Government is consulting on major reforms to procurement legislation, merging seven sets of regulations into a new single Procurement Act. A Procurement Policy Statement is expected to be published shortly and renewed every five years or so. RIA understands that proposals include: new simplified procurement frameworks, ideas for supporting innovation, increased use of data and reforms to court system regarding challenge, and redress, to speed up decision-making and strengthen incentives for resolution.

4.2 RIA submission is as follows.

5.

NEW PRINCIPLES BASED APPROACH AND PROPOSED PROCUREMENT POLICY STATEMENT

Q1 Do you agree with the proposed legal principles of public procurement? (The public good, value for money, transparency, integrity, fair treatment of suppliers and non-discrimination.)

5.1 RIA welcomes these proposals, including the intention to simplify the legislation and processes, and improve transparency and support innovation. They have the potential to reduce bidding time and costs and to improve access to procurements, thereby supporting competition and innovation and reducing costs overall.

5.2 We understand the proposals are intended to support SMEs, innovation and effective use of data.

However, we are concerned that a one-size-fits-all approach could result in disproportionate outcomes, where contracting bodies use new flexible procedure and transparency requirements in a way which actually creates complexity and adds bureaucracy.

5.3 There is a risk that, for example, the approach clients choose to take to the open framework, data and transparency, and social value requirements, may add complexity and undermine the purpose of reforms and/or create barriers to entry for SMEs. Any new approach must be proportionate, hence we propose the addition of a further principle of ‘Proportionality’, noting the need for procedural efficiency. Post implementation review of the proposed Procurement Act should assess whether the intended cost and time savings have been delivered.

5.4 The scale of change should not be underestimated. Consultation on the detail at each stage will be necessary, with clear transition and implementation plans. For example, in the rail sector companies may need to: i) prepare for when contracts are first procured under the new rules; ii) trial on specific procurements; iii) upskill teams, in the case of value-based procurement; and iv) agree with clients consistent ways to measure value. It would also be important to ensure these changes do not lead to a delay in letting contracts, as this would lead to uncertainty in the market and add costs and risks.

5.5 RIA welcomes the alignment with the WTO General Procurement Agreement, and notes the Government’s role in procuring innovation in the UK which can unlock potential future exports.

There is an opportunity for the UK to demonstrate leadership in its approach to open competition and procurement, and some of the principles proposed here – including transparency, whole life value and visible pipelines – are the same principles we should be asking for in future trade agreements. We welcome the commitment to whole life value approaches and procurement for social value and zero carbon as this create opportunities for UK global leadership, including alignment with Government commitments to UN Sustainability Goals.

5.6 However, RIA does not agree with the statement that these proposals necessarily ”will guarantee access to £1.3 trillion in overseas public procurement markets providing major export opportunities for British businesses”. For example, RIA members cite the “Buy America” provisions of the US 3 / 12

Surface Transportation Act as effectively preventing the sale of UK manufactured goods to the US rail industry where there is any Federal funding, and argue that to deal with this situation UK Government Procurement Policy should state that: “Bids for contracts where the product is not of UK origin should be required to declare that the country of manufacture would not impose trade restrictions or tariffs if UK manufacturers wished to export such products to that country.”

5.7 We note that the proposed Procurement Policy Statement is intended to make the Government’s strategic priorities clear: • Delivering social value, including economic, social and environmental outcomes; • Commercial delivery, including publishing pipelines of future procurement; and • Commercial capability, including benchmarking performance.

5.8 RIA welcomes the alignment between the new Treasury Green Book requirements, the Construction Playbook and these procurement proposals. We have consistently urged Government to consider ‘whole life value’, and promoted the significance of visibility of pipelines, in order to ensure a sustainable, productive and cost-effective railway industry. Furthermore, we fully support the Construction Playbook, including the use of ‘should cost’ models, early contractor engagement and Delivery Model Assessments (‘make or buy’).

5.9 With regard to the five-yearly Policy Procurement Statements, RIA welcomes clarification of the Government strategic objectives. However, it will be important for these reforms to be supported widely politically – effective procurement requires certainty and consistency over long timescales, and so these reforms need to attract cross party support at all levels. It is not clear what these reforms might mean in the devolved nations – in order to deliver the proposed efficiencies in full it is to be hoped that national and devolved policies will be aligned as far as possible.

5.10 Assuming the proposals achieve their goals as intended they should unlock the full social value of rail investments including what RIA calls the ‘3 Gs’: • Growth: Rail projects generate significant investment – for every £1 spent on the rail network, £2.20 is generated in the wider economy; • Geography: Rail projects support investment in all regions and nations of the UK, including areas of social deprivation where investment and regeneration is urgently needed – supporting local jobs, productivity and the Government’s ‘levelling up’ agenda; and • Green: Rail is a green mode of transport and investing in rail will ensure the economic recovery is also an environmentally beneficial one. Rail is the only mode with a ready solution to zero carbon long distance heavy freight and has a major role to play in modal shift.

Supporting local jobs and companies 5.11 We note the new flexibilities to procure for local content and local jobs, and recognise the intention to support the Government’s ‘levelling up’ agenda. However, it is important that such requirements do not unintentionally inhibit company growth and opportunities. For example, an SME based in the North may supply specialist goods or services nationally and bring welcome expertise and innovation to a new location.

6.

NEW UNIT TO HOLD CONTRACTING AUTHORITIES TO ACCOUNT

Q2 Do you agree that there should be a new unit to oversee public procurement with new powers to review and, if necessary, intervene to improve the commercial capability of contracting authorities?

Q4 Where should the members of the proposed panel be drawn from and what sanctions should they have access to in order to ensure the panel is effective?

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6.1 RIA suggests that proposals for a new unit be more fully defined, to ensure they do not result in added bureaucracy and delay to procurements. It is not clear what the purpose of a new unit would be, and how it would fit with existing bodies involved in public procurement – for example, HM Treasury (HMT), the Department for Transport (DfT) and the Infrastructure Projects Authority, which all have existing roles on funding, project and procurement decision making.

6.2 If developed in the appropriate way, a new unit could build on the current Crown Commercial Service role leading on procurement best practice and policy in discussion with departments, client bodies and suppliers. Clients and departments could be encouraged and supported in their own commercial capability training and development programmes. Further, the unit could inform strategic choices, taking a view across client bodies in order to help reduce duplication and set direction, for example on innovation funding.

6.3 There is a concern, however, at the suggestion that the new unit’s powers could include spending controls. It is not clear what this means in practice, as procurements are already subject to Cabinet Office spending controls2. Such controls can create the potential for delay, micromanagement, and unnecessary bureaucracy, when arguably clear guidance and delegated authority would be more flexible and cost effective.

6.4 Some RIA members express support for spending controls and agree that the unit should have the power to issue improvement notices. These notices would include recommendations to drive up standards in individual contracting authorities and, where recommendations were not adopted, the unit could have recourse to further action such as spending controls or the unit’s involvement in sanctioning individual procurement activities. However, such powers need to be targeted and proportionate and balanced by earned autonomy for effective contracting authorities. They need to avoid adding cost and creating delay in decision making.

6.5 Any new unit could potentially duplicate existing HMT and DfT functions, with rail funding decisions subject to significant layers of governance, ‘Operations, Maintenance & Renewals’ (OMR) funding for Network Rail (NR) agreed in five-year Control Periods, and enhancement funding subject to the Rail National Enhancement Pipeline (RNEP) process. The role of the unit would need to complement DfT oversight of transport client bodies and any Williams Rail Review new rail body role – roles and responsibilities would need to be clearly defined.

6.6 At the beginning of the current Control Period NR was allocated over £10.4bn for enhancement funding, yet neither NR nor the DfT have full delegated authority for this funding – HMT has already retained £1bn of underspend in the past two years. Whilst some of this may reflect NR readiness for investment, the delay in decision-making has made it more difficult for it and the supply chain to deliver as efficiently as they could, causing delays in delivery and leading to unnecessary costs.

6.7 Other regulated sectors such as water and energy have moved from separate Opex (Operational Expenditure) and Capex (Capital Expenditure) accounts to a Totex (Total Expenditure) approach, and this has supported better portfolio management and efficient spend. For rail, however, Capital budgets have been separated into OMR spend, where NR has delegated authority overseen by the Office of Rail Regulation, and enhancement funding decisions overseen by DfT and HMT. This has also reduced the opportunity for suppliers to bring outcome based private financing to the industry. Whilst RIA recognises the need for rail projects to be delivered efficiently there is a concern that centralisation of decision-making can go too far.

6.8 The wish to focus on ‘whole life cost’ is welcomed. In other sectors there has been a move towards Totex, which can now be better supported by NR as they are structured on a regional basis allowing them to better understand the mix of capital cost and operational costs.

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https://www.gov.uk/government/publications/cabinet-office-controls-version-5/cabinet-office-controls-policy-version-5

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6.9 For the supply chain to best support this approach, the Contracting Authorities need to be encouraged towards transparency of their operational costs, and particularly the repairs and maintenance costs, so that the supply chain can better understand where innovation may be most welcome in driving lower whole life costs. To help facilitate this a common coding structure would be welcomed across Capex and Opex, so that Totex is tracked by component / system or similar.

6.10 In the context of NR’s CP6 performance, which is seemingly on track to deliver significant efficiency targets, and working in collaboration with the rail supply chain on Project SPEED and PACE (agile project management) reforms, it would be timely to consider how the lack of delegated authority and subsequent delay in publishing the RNEP has impacted on supply chain confidence, and investment in assets and skills, undermining efficient project delivery.

6.11 We welcome the fact that Government policies, including this Green Paper and the Construction Playbook, are designed to support a sustainable supply chain. RIA believes that there are areas where Government could go further. Putting an end to stop-start investment, so-called ‘boom and bust’ with low profit margins, would improve resilience, efficiency and investment in future capability. Reforms, including visible pipelines, prompt payment and whole life value, will help too – the Government could go further by supporting longer frameworks, and delegated funding authority, including recognition of longer baseline funding assumptions which go beyond five-year Control Period limits.

6.12 Longer investment cycles would be similar to EU investment plans, where long-term rolling investment programmes, for example on digital and electrification investment, have led to higher productivity, lower costs and faster delivery3. Digital and electrified railways are more efficient to run and so also deliver a greener lower cost railway. A 30-year rail assets plan – which RIA has previously called for – also reflects the opportunity to deliver zero carbon and productivity, and support the Government’s levelling up agenda. It would also ensure that UK suppliers remain competitive in the global market.

6.13 If a new unit is eventually established, it will be important to ensure the panel members include supplier representatives with experience of procurement in the rail sector.

7.

SIMPLIFICATION OF THE REGULATIONS

Q3 Do you agree with consolidating the current regulations into a single uniform framework?

Q5 Are there any sector specific features of the UCR, CCR or DSPCR that you believe should be retained?

7.1 RIA supports a single framework. However the UCR regulations sometimes offer greater flexibility than Government PCR regulations; for example, with regard to pre-qualification and longer frameworks which are valuable in the rail context. Further consultation on the detailed proposals will be required, and it will be important not to simply rachet up or down but to ensure proportionate and flexible legislation which reflects the needs of rail and infrastructure sectors, including highly complex mega projects where long-term investment and relationships are essential.

7.2 Some rail projects are a complex mix of traditional product supply and civils works, coupled with development of software and related systems in a safety critical environment. As technology continues to advance, the number of technical interfaces on projects will continue to increase.

Rigid contracting models can hinder the dialogue necessary for truly innovative and cost cutting proposals and increase delivery and cost risk. It is important that contracting authorities have the flexibility for dialogue with suppliers to develop innovative and high value solutions.

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For example 38% of the UK network is electrified – whereas EU networks are typically over 60% electric.

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8.

PROCUREMENT PROCEDURES

Q6 Do you agree with the proposed changes to the procurement procedures? (competitive flexible/ open/limited – crisis procedures) Q7 Do you agree with the proposal to include crisis as a new ground on which limited tendering can be used?

Q8 Are there areas where our proposed reforms could go further to foster more effective innovation in procurement?

Q9 Are there specific issues you have faced when interacting with contracting authorities that have not been raised here and which inhibit the potential for innovative solutions or ideas?

Q10 How can government more effectively utilise and share data (where appropriate) to foster more effective innovation in procurement?

Q11 What further measures relating to pre-procurement processes should Government consider to enable public procurement to be used as a tool to drive innovation in the UK? Q12 In light of the new competitive flexible procedure, do you agree that the Light touch regime for social, health, education and other services should be removed? (N/A to rail) 8.1 RIA supports the three proposed procedures, of competitive flexible/open/limited (crisis) procedures in principle, subject to further consultation on the details. As above, it will be important that any new competitive procedure is used in a proportionate and transparent way to ensure it does not undermine the Green Paper’s objectives of simplification and cost reduction.

8.2 RIA urges the Government to retain flexibility for longer frameworks regulations, as this supports supplier investment in innovation and skills. We recommend framework lengths are considered in line with transparent client category management and delivery model (‘make or buy’) assessments which have been informed by collaboration with suppliers.

8.3 Framework lengths should align with asset investment, project and programme lifecycles – longer frameworks (potentially up to 10-15 years) which are more common in private sector utilities such as water and internationally, would also support inward investment. The current proposals could undermine the benefits of long-term supplier relationships, including innovation, productivity and investment in assets and skills.

8.4 Time periods for submission of tenders should reflect the complexity and value of the procurement. Clear investment pipelines including visibility of forward plans for procurement are essential to ensure companies can prioritise bidding resources. This is particularly significant in order to support innovation including attracting high quality SME bids.

8.5 We also support the retention of utility regulation prequalification by clients - removing this would be costly and unnecessarily undermine established relationships. Such pre-qualification (including any new DPS+ opportunity) needs to be transparent and proportionate.

8.6 We understand the rationale for the new crisis requirements. However, clear definition and controls will be needed to ensure that such powers cannot be abused, that urgency does not undermine other important considerations such as safety, and that procurement remains fair and transparent.

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Procuring for Innovation 8.7 We welcome the ambition to support better procurement for innovation. The new Procurement Act should seek to create flexibility to future proof the regulations and anticipate potential future innovations, including effective use of data and digital technologies as far as possible. Outcome based procurements and procurement for open data have the potential to accelerate UK strengths in the development of synthetic environments, data analysis, and project modelling and cyber security.

8.8 The Government should use its regulatory and contractual powers to remove barriers and unlock open data across the rail sector. In order to drive innovation and creativity, Government should also introduce interoperability standards for data sharing, ticketing, and fares. These standards should be aligned across transport modes.

8.9 Currently, too often Government and clients offer grants for the development of initial ideas with no route to market, and existing procurement for difference rules has not been used as intended.

RIA would welcome powers which enable clients to procure innovations which have been successful in pilot stages. Procurement should weight tender scoring in favour of innovative ideas provided by the tenderer.

8.10 We recommend that Government also considers options for supporting the development of supplier intellectual property (IP) – for example, IP could be licensed by Government, or where Government owns the IP suppliers could be licensed to deliver. The Government should also review State Aid rules relating to innovation funding (as highly successful US high tech companies have demonstrated, sometimes innovations take years of R&D before becoming profitable).

8.11 RIA welcomes the commitment to project outcome based evaluation, which is essential to support innovation. As technology advances at an increased rate, over specification of requirements and standards constrain innovation and reduces the incentive for suppliers to invest in UK based products and systems.

8.12 We strongly recommend that the Innovation Partnership Procedure (IPP) from the Public Contract Regulations 2015 is retained. Although this procedure has not been widely used in the UK, it is intended for situations where the required product does not yet exist and so the procurement is about choosing the right partners to work with to develop the new product. In RIA’s view the IPP is an ideal vehicle to help the UK develop and retain the Intellectual Property of the next generation of technology across key sectors. Whilst the proposed measures to support innovation are welcome, they do not support the most difficult high-risk challenges to the same degree as the IPP. The potential in the rail industry is illustrated by the fact that SNCF (French Railways) are using the procedure to develop the next generations of French high-speed trains and signalling, and thus supporting the retention of a national capability in these high value areas. In a more modest way NR are increasingly using the IPP as part of their innovation programme.

Innovative funding models 8.13 Reforms have the potential to unlock both greater competition and collaboration. Procurement frameworks should allow for Project 13 co-clienting and enterprise delivery models (Project 13 is an industry-led initiative to improve the way high-performing infrastructure is delivered and managed – see here). Planning should also consider opportunities for alternative funding models, noting that the Channel Tunnel was built on a Build Own Operate Transfer Model with a 65-year operating concession.

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RIA members have global experience of project design, funding and financing, and would welcome the opportunity to share expertise and work with the Government on plans for the new Infrastructure Bank co-funding, co-delivery, concession and joint venture models.

8.14 RIA recommends the development of a Government innovation strategy, including rail and construction to support the new Government Growth Plan; and we note that innovations developed and procured in the UK, by UK public bodies can support global exports.

9.

EVALUATION AND AWARD

Q13 Do you agree that the award of a contract should be based on the “most advantageous tender” rather than the “most economically advantageous tender”?

Q14 Do you agree with retaining the basic requirement that award criteria must be linked to subject matter of the contract but amending it to allow specific exceptions set by Government? (eg strategic priorities such as prompt payment or environmental targets).

Q15 Do you agree with the proposal for removing the requirement for evaluation to be made solely from the point of view of the contracting authority, but only with a clear framework? (eg impacts on other contracting authorities or wider society).

Q16 Do you agree that, subject to self-cleaning fraud against the UK financial interests and nondisclosure of beneficial ownership should fall within mandatory exclusion grounds?

Q17 Are there any other behaviours that should be added as exclusion grounds, for example tax evasion as discretionary exclusion?

Q18 Do you agree that suppliers should be excluded when the person/entity convicted is a beneficial owner, by amending regulation 57(2)?

Q19 Do you agree that non payment of taxes in regulation 57(3) should be combined into the mandatory exclusions at regulation 57 (1) and the discretionary exclusions at 57(8)?

Q20 Do you agree that further consideration should be given to DPAs as a ground for discretionary exclusion?

Q21 Do you agree with the proposal for a centrally managed debarment list?

Q22 Do you agree with the proposal to make past performance easier to consider?

Q23 Do you agree with the proposal to carry out a simplified selection stage through the supplier registration system?

Q24 Do you agree with the limits on information that can be requested to verify supplier selfassessments in regulation 60 should be removed?

9.1 RIA welcomed the move to Most Advantageous Tender, as this supports the move to outcomefocussed, whole life cost, procurement which recognises the full social, economic and environmental potential of rail investment. This aligns with Treasury Green Book changes and should ensure that value, rather than pure cost, driven approaches are adopted by rail contracting authorities.

9.2 Overall, these proposals look rational in principle – but consultation on the details including the proposed Government procurement guidance will be necessary. With regard to additional criteria, these must be proportionate to the contract.

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9.3 Any KPIs used to assess poor performance need to be transparent and applied fairly and intelligently. For example, prompt payment may not be appropriate where a sub-contractor has failed to deliver the quality required. Smooth payment and quality assurance should be aligned.

10.

COMMERCIAL TOOLS TRANSPARENCY AND DATA

Q25 Do you agree with the proposed new DPS+?

Q26 Do you agree with the proposals for Open and Closed frameworks?

Q27 Do you agree that transparency should be embedded throughout the commercial lifecycle from planning through procurement, contract award, performance and completion?

Q28 Do you agree that contracting authorities should be required to implement the Open Contracting Data Standard?

Q29 Do you agree that a central digital platform should be established for commercial data including supplier registration information?

10.1 RIA welcomes the move towards digital procurement, benchmarking and the use of the open contracting data standard, subject to GDPR and commercial sensitivity. However, data transparency requirements look ambitious and highly centralised with the risk that it may be over complex, disproportionate and hard to deliver; and they may not represent value for money if they require replacement of existing client systems.

10.2 We recommend consideration of a phased approach, including options for modular rather than single IT system solutions. Data-sharing plans will need to provide appropriate protection for commercially sensitive data – and transparency on how commercial sensitivities will be addressed. Infrastructure security and cyber security risks associated with data sharing also need to be taken into account.

10.3 Any benchmarking KPIs need to be clear and consistent, and then applied intelligently – for example, track laying on a quiet rural line is very different from a heavily used commuter line – and so cross sectoral standards and environments are different. If done well, with appropriate governance and supplier involvement, this approach may present opportunities to compare and simplify cross sectoral standards and policies such as project management, not least as many supplier companies work cross sector.

10.4 With regard to rail procurement, open frameworks need the flexibility to procure for longer time periods in order to: reflect procurement category strategies and asset life cycles; avoid boom and bust; and support innovation, productivity and investment in skills. Alternative strategies should be deployed in parallel to maintain a competitive market – for example, reserving a share of the market for new entrants or SMEs.

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11.

CHALLENGES REMEDIES AND REDRESS

Q30 Do you believe that the proposed Court reforms will deliver the required objective of a faster, cheaper and therefore more accessible review system? If you can identify any further changes to court rules/processes which you believe would have a positive impact in this area, please set them out here.

Q31 Do you believe that a process of independent contracting authority review would be a useful addition to the system?

Q32 Do you believe that we should investigate the possibility of using an existing tribunal to deal with low value claims and issues relating to ongoing competitions?

Q33 Do you agree with the proposal that pre-contractual remedies should have stated primacy over post contractual damages?

Q34 Do you agree that the test to list automatic suspensions should be reviewed? Please provide further views on how this could be amended to achieve the desired objectives.

Q35 Do you agree with the proposal to cap the level of damages (to 1.5 bid costs) available to aggrieved bidders?

Q36 How should bid costs be fairly assessed for the purposes of calculating damages?

Q37 Do you agree that removal of automatic suspension is appropriate in crisis and extremely urgent circumstances to encourage the use of informal competition?

Q38 Do you agree that debrief letters need no longer be mandated in the context of the proposed transparency requirements in the new regime?

11.1 Legal challenges lead to inefficiency cost and delay for all parties, so mechanisms to ensure fair, transparent and effective procurement – including review and pre-contractual arrangements – have the potential to deliver positive change. Proposals to speed up and reduce the cost of redress, including options for a tribunal, are welcome – and should be more proportionate for SMEs. They may lead to higher claims, hence need to be balanced against appropriate incentives.

Bid costs should be transparent and capable of being independently audited.

11.2 Care also needs to be given to ensure that a more expedited process, or reduced compensation, does not have the unintended consequence of further delaying projects, if as a result courts become less willing to lift the automatic suspension on contract award. Currently, if a bidder issues legal proceedings against the award of a contract to a competitor, an automatic statutory suspension comes into effect preventing the contracting authority from awarding the contract. During the period of suspension both the contracting authority and the successful bidder are held in limbo and unable to act. For major projects this often means being unable to efficiently deploy critical resource, manufacturing capacity and limited R&D resource elsewhere, for fear of the project losing that resource and capacity. Within the rail sector project commissioning and track access dates also come under immediate risk. The supply chain could similarly be held in limbo, with cost escalation and resource impact across their project portfolios becoming difficult to forecast.

11.3 We note the proposal to remove mandatory debrief letters – it is not clear what this means for standstill periods or how this fits with ensuring that published data does not infringe commercial sensitivities. RIA would welcome full consultation on detailed proposals to ensure that the right balance is stuck between the supplier and client, and that any new mechanisms – such as independent review or pre-contractual arrangements – are proportionate and practical.

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12.

CONTRACT MANAGEMENT

Q39 Do you agree that: • Businesses in the public sector supply chain should have direct access to contracting authorities to escalate payment delays?

• There should be specific right for bodies to look at payment performance of any supplier in a public contract supply chain?

• Private and public payment reporting requirements should be aligned and published in one place?

Q40 Do you agree with the proposed changes to amending contracts?

Q41 Do you agree that contract amendment notices (other than certain exemptions) must be published?

Q42 Do you agree that contract extensions which are entered into because of incumbent supplier has challenged a new contract award, should be subject to a cap on profits?

12.1 RIA welcomes transparency and incentives for prompt payment, and can see the rationale for limiting profits. However, it should be noted that profit margins on publicly-procured rail and construction projects are already low and this has led to underinvestment, a lack of innovation and in the worst cases market failure. Hence profit decisions need to be made on a case by case basis.

12.2 As projects become increasingly complex we would be concerned that an increased requirement to publish contract changes could constrain timely decisions by public authorities. In practice, internal governance by contracting authorities prior to publication of notices will significantly delay publication and therefore decision making on live projects. We recommend consideration of a materiality test on scope change – for example, where the modification does not alter the overall nature of the contract. This is particularly relevant to the rail sector, where decisions concerning rail access and avoidance of disruption often have a significant impact on the contracting authority.

If you would like further information, please contact Policy Director Kate Jennings at kate.jennings@riagb.org.uk and 07771 944135.

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