Sustainable Procurement and Community Benefits

Getting ready for Procurement Reform in ScotlandJennifer Marshall

What?Developments in Public Procurement Law

- New procurement regulations later this year or early next- Implement 2014 EU Procurement Directive- Implement Procurement Reform (Scotland) Act 2014

- Sustainable Procurement Duty- Community Benefit Requirements- In Scotland only new duties and rules apply to “Regulated

Procurements”- public works contracts with a value over £2m- other public contracts with a value over £50k

What? New Scottish Duties- General Duties apply to regulated procurements but not

“EU Regulated Procurements”- treat relevant economic operators equally- act in a transparent and proportionate manner

- Sustainable Procurement Duty applies to all regulated procurements

- Community Benefit Requirements apply to all “major contracts”

- EU Treaty Principles of equal treatment, non-discrimination and transparency continue to apply to contracts in which there is a “cross-border interest”

Why?Scottish Procurement Policy

Who? Contracting Authorities

- 69 named bodies, office holders and persons- Scottish Administration and Scottish Parliament- Local Government- Others (e.g. Scottish Housing Regulator, Healthcare

Improvement Scotland, Health Boards, Private rented housing panel, Scottish Enterprise, Scottish Fire and Rescue Service, Scottish Police Authority)

- Any other contracting authority whose functions are exercisable in or as regards Scotland and do not relate to reserved matters

- But not Utilities (e.g. Scottish Water, Network Rail)

How? Sustainable Procurement Duty

- “before carrying out a regulated procurement, to consider how in conducting the procurement process it can – - improve the economic, social, and environmental

wellbeing of the authority’s area- Facilitate the involvement of small and medium

enterprises, third sector bodies and supported businesses in the process, and

- promote innovation, and- in carrying out the procurement, to act with a view to

securing such improvements identified”

Sustainable Procurement Duty – FAQ

- Must consider only matters that are relevant to what is proposed to be procured and the extent that it is proportionate to take these into account

- Small and Medium Enterprises = not more than 250 employees

- Third sector bodies = non-statutory bodies that exist to provide benefits for society or the environment

- “wellbeing of the authority’s area” includes reducing inequality in the area

- Scottish Government will publish guidance

Technical Specifications

- Standards- Eco-labels- “Dutch Coffee” (Commission v Netherlands Case C-

368/10)- Fair Trade - Organic

- Scottish Government is considering whether Scottish rules on technical specifications should be the same as EU Rules

Contract Conditions

- General freedom to define subject matter of contract- But, restricted by EU law- Non Discrimination (e.g. requirement to have a pre-

existing office in a particular area)- Equal Treatment- Free movement of goods, services etc.

- Terms must be linked to the actual supply, works or services that the contracting authority wants to buy

- “Special” social or environmental conditions may be used

Exclusion and Selection - EU

- Mandatory and Discretionary grounds for rejection- May apply minimum standards of economic and financial

standing and technical and professional ability:- skills, efficiency experience and reliability- environmental management measures - must be linked to the subject matter of the contract

- Cannot exclude for inability to comply with “special conditions” which do not relate to technical ability

Exclusion and Selection – Scotland

- Likely to mirror structure of EU rules- Mandatory rejection grounds related to specified offences- Discretionary rejection grounds may differ slightly:- e.g. failure to comply with statutory duty/specified

misconduct- Provisions for minimum standards- Guidance will cover living wage and employee

representation

Award: Most Economically Advantageous Tender

- “linked to the subject matter of the contract”- Consumption effects (e.g. noise/pollution)- Production effects (renewable energy supply)- Disposal effects (waste)- Workforce matters (equality/ health protection/ social

integration/ employment)- Price or Cost? - “the best price-quality ratio, which shall be

assessed on the basis of criteria, including qualitative, environmental and/or social aspects, linked to the subject matter of the public contract in question”

What is a Community Benefit?

- “a contractual duty imposed by a contracting authority relating to –- Training and recruitment- Availability of sub-contracting opportunities or

- which is otherwise intended to improve the economic, social or environmental wellbeing of the authority’s area in a way additional to the main purpose of the contract in which the requirement is included”

Major Contracts

- Estimated value is equal to or greater than £4 million- Must consider community benefits before carrying out the

procurement- Must include in the contract notice either:- Summary of community benefit requirements, or- Statement of reasons for not including any requirements

- Contract award notice must contain a statement of the benefits which will be derived from the requirements

Contact:

Michael Dean – 0330 222 1713Email: michael.dean@mms.co.uk

Catriona Munro – 0330 222 1902Email: catriona.munro@mms.co.uk

David McGowan – 0330 222 1880Email: david.mcgowan@mms.co.uk

Jennifer Marshall – 0330 222 1860Email: jennifer.marshall@mms.co.uk