Responsible Procurement & UK Legislation 10 April 2014 Jennifer Robinson

Agenda What does Responsible Procurement mean in the UK? What are the key pieces of UK Legislation? How compatible is UK Legislation with the New Procurement Directives? Questions?

What does Responsible Procurement mean in the UK? Sustainable Procurement is as “a process whereby organisations meet their needs for goods, services, works and utilities in a way that achieves value for money on a whole life basis in terms of generating benefits not only to the organisation, but also to society and the economy, whilst minimising damage to the environment”. – Sustainable Procurement Task Force “Responsible Procurement means pioneering socially, environmentally and economically responsible procurement to deliver improved quality of life and better value for taxpayers, our people, our businesses and our City.” – Greater London Authority

What does Responsible Procurement mean in the UK? “Responsible procurement” = obtaining “social value” I.e. seeking, through procurement, to bring about improvements in the economic, social and environmental well- being of the relevant area

Legislation: An Overview European Community Law Public Services (Social Value) Act 2012 Procurement Reform (Scotland) Bill Other complimenting Acts, e.g. Equality Act 2010, Local Government Act 1999

Public Services (Social Enterprise and Social Value) Bill 2010 This was a private members’ bill introduced by Chris White MP. After various changes the Bill eventually became the Public Services (Social Value) Act Key provisions of the Bill included: –Development of a national social enterprise strategy and local level strategies –Obligation to consider “social value” pre- procurement and then to follow through

Public Services (Social Value) Act 2012: Background Parliament made wide ranging changes to the Bill prior to it receiving Royal Assent: –Removal of social enterprise provisions –Requirement to consider “social value” only applies to public contracts for services now

Public Services (Social Value) Act 2012: Services Contracts & Duties on Authorities Scope: –Public services contracts only –Any works or goods elements may only be incidental –Only applies where those contracts would be subject to the UK Regulations implementing Directive 2004/18/EC –Applies to framework agreements but not contracts awarded under them

Public Services (Social Value) Act 2012: Services Contracts & Duties on Authorities Before starting a procurement process, an authority must consider - –how what is proposed to be procured might improve the economic, social and environmental well-being of the relevant area, –how, in conducting the process of procurement, it might act with a view to securing that improvement, and –whether to conduct a consultation to define these matters

Public Services (Social Value) Act 2012: Services Contracts & Duties on Authorities Duty is subject to the requirement that the authority must: –consider only matters that are relevant to what is to be procured; and –in so doing, consider the extent to which it is proportionate in all the circumstances to take those matters into account.

Public Services (Social Value) Act 2012: Guidance The Cabinet Office has published guidance offering advice to commissioners and procurers on how to comply with the Act. The guidance underlines the Act’s pre-procurement focus and that the Act does not apply to any formal stages of the procurement process.

Public Services (Social Value) Act 2012: Limitations The Act has neither sanctions nor a specialist enforcement mechanism No measures on what is social value Can be disregarded if the contract must be awarded urgently Does not apply in Scotland or to certain authorities in Wales

Case Study: Norfolk County Council Contract title – Library Management System and Public Computer Replacement and Management Service for the Norfolk Library Service Extract from the Additional Information section of the Contract Notice - the Authority has considered (pursuant to the Public Services (Social Value) Act 2012) whether to explicitly seek social value through this procurement, and has decided that the Act does apply to this service.

Case Study: Royal Borough of Richmond upon Thames Contract title - The Provision and Operation of a Materials Recovery Facility Extract from the Quality and Scope section of the Contract Notice - the Provider will be required to demonstrate the added social value that their tender proposal brings to the local community, and will be expected to demonstrate co-production with local residents in all aspects of service provision. As confirmed in VI.3) social value will be evaluated as part of the tender.

Case Study: The Borough Council of Gateshead Contract title - The Provision and Operation of a Materials Recovery Facility Extract from the Award Criteria section of the Contract Notice - the most economically advantageous tender in terms of: –Value for money. Weighting 60 –Service delivery plan. Weighting 30 –Health and safety. Weighting 7 –Sustainability and social value. Weighting 3

Procurement Reform (Scotland) Bill: Objective Seeks to “establish a national legislative framework for sustainable public procurement that supports Scotland’s economic growth by delivering economic, social and environmental benefits, supporting innovation and promoting processes and systems that are transparent, streamlined, standardised, proportionate, fair and business- friendly”.

Procurement Reform (Scotland) Bill: Overview Unlike the Public Services (Social Value Act) 2012, this Bill started off as a Government Bill It is also wider ranging in that it seeks to tackle “sustainable procurement” from a number of angles It is also much broader in scope; applies to public contracts above £50,000 (goods/services) and £2million (works)

Procurement Reform (Scotland) Bill: Key Elements Introduces a “sustainable procurement duty” on contracting authorities –Wider than “social value” considerations under the 2012 Act –Extends to: Considering SME, third sector bodies and supported businesses participation in the process Promoting innovation –But still subject to relevance and proportionality tests

Procurement Reform (Scotland) Bill: Key Elements Obligation to publish an annual procurement strategy setting out matters including: –How its procurements will contribute to achieving its sustainable procurement duty –Its policy on the procurement of fairly and ethically traded goods and services –How it will ensure prompt payment of contractors

Procurement Reform (Scotland) Bill: Key Elements Consider whether to impose community benefit requirements as part of the procurement The community benefit requirement is a contractual requirement imposed by the Authority: –relating to: training and recruitment; or the availability of sub-contracting opportunities; or –which is otherwise intended to improve “economic, social or environmental wellbeing” of the Authority’s area in an additional way to the main purpose of the contract

Procurement Reform (Scotland) Bill: Additional Points Specific regime for health or social care services Promotion of central website for publishing contract notices/contract award notices Introduces various powers for production of future guidance and regulations Obligation to provide reasons Specific enforcement regime

How compatible is UK Legislation with the New Directives? Very! UK Legislation has evolved and is evolving conscious of developments at an EU level Wording reflects recognition that the EU Procurement Directives take precedence Scottish Bill highly reflective of patchwork of “sustainable” actions introduced in the New EU Directives

References Equality Act Public Services (Social Value Act) Procurement Reform (Scotland) Bill United Nations Environment Programme, What is Sustainable Public Procurement? - The National Audit Office, Sustainable Procurement in Government (2013) - content/uploads/2013/03/EAC_briefing_sustainable_procurement_gover nment.pdfhttp:// content/uploads/2013/03/EAC_briefing_sustainable_procurement_gover nment.pdf

References DEFRA, Procuring the Future, Sustainable procurement national action plan: recommendations from the Sustainable Procurement Task Force (2006) - ta/file/69417/pb11710-procuring-the-future pdf ta/file/69417/pb11710-procuring-the-future pdf Cabinet Office, Procurement Policy Note – The Public Services Social Value) Act 2012 – advice for commissioners and procurers (2012) - ta/file/79273/Public_Services_Social_Value_Act_2012_PPN.pdf ta/file/79273/Public_Services_Social_Value_Act_2012_PPN.pdf

Questions?

Contact Details Jennifer Robinson Senior Associate – Pinsent Masons LLP – Telephone – +44 (0)

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