Sustainable Procurement and Community Benefits Getting ready for Procurement Reform in Scotland Jennifer 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 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 – Catriona Munro – David McGowan – Jennifer Marshall –