Know your duty

Community challenge iStock 000005361939XSmall 146x219Contracting authorities are gearing up for implementation of the Public Services (Social Value) Act 2012. Queenie Que addresses some of the issues raised.

The Public Services (Social Value) Act 2012 received Royal Assent on 8 March 2012 and is due to be implemented in January 2013. This Act is a rare example of a piece of legislation being introduced under the private member’s bill procedure and requires public bodies in England and Wales to consider how the procurement of services may improve the economic, social and environmental well-being of the relevant area.

We asked authorities whether their tenders already incorporate questions designed to deal with this positive duty. Interestingly, the responses were almost equally divided between ‘Yes’ and ‘No’.

Who is covered
“We are not a local authority.”

In addition to local authorities, all relevant procuring entities – including arm’s length organisations and housing associations – will also need to consider the implications of the Act. This is because the Act applies to all public bodies that fall within the definition of a ‘contracting authority’ under the Public Contracts Regulations 2006, as amended.

When to consider the issue
“Our tenders do not contain this question, but these issues are taken into consideration through the preparation of the business case and development of specification.”

The Act will require public bodies to take into account economic, social and environmental well-being considerations in connection with public services contracts as part of their pre-procurement deliberations.

It is therefore appropriate for authorities to implement a procedure which actively considers the issues to be considered under the Act before a tender process is commenced. The authority can then decide on a suitable approach and consider how economic, social and environmental issues may be addressed in procurement. Authorities should keep a good record and a full audit trail demonstrating that the duties under the Act have been properly discharged.

On a case-by-case basis
“This is currently dealt with on a tender-by-tender basis depending on the nature of the contract, so [questions] are sometimes included but not at present as standard inclusions.”

We agree that it will be important to consider the application of the Act on a case-by-case basis. The Act applies when an authority proposes or makes arrangements to procure the provision of services and does not apply to procurement of works or supplies contracts where there are no services provisions involved.

The Act applies to all scales and types of procurement for services, so authorities will need to assess the extent to which it is appropriate to encourage economic, social and environmental well-being considerations. Different considerations will be appropriate for different services. Also, a suitable consideration for an internal procurement process may not be lawful for an OJEU procurement process.

The Act and EU rules
“We are currently considering how requirements such as local labour can be enforceable within the constraints of existing legislation.”

While the Act encourages economic, social and environmental well-being considerations to be taken into account, the emphasis should be that authorities may only do so within the context of existing constraints emanating from the EU rules.

The EU procurement regime already permits social issues to play a part in public procurement, but this is subject to a number of significant controls and limitations. Authorities will therefore still face the same difficulties to implement local labour clauses. The Act should not be misconstrued as permitting authorities a broad scope to include generic economic, social and environmental well-being considerations where these are not relevant to the subject matter of the contract.

Link to the subject matter
“Only where this is relevant to the subject matter of the contract.”

In order to comply with EU rules, it is a requirement that considerations may only be included if they are linked to the subject matter of the contract and that the principles of value for money and equal access for suppliers are observed. The Act should not be misinterpreted to extend the scope to set unrelated specifications or criteria in order to achieve economic, social and environmental policy outcomes.

Restrictions imposed by EU rules are to ensure all economic, social and environmental well-being considerations to be taken into account remain relevant and proportionate to the contract requirements so as not to risk distorting the outcome of the competition by any undue emphasis given to them.

The Act will require procuring entities to actively consider if there are economic, social and environmental well-being issues in connection with the procurement of public services contracts. To be ready and compliant with the Act by its full implementation date of 1 January 2013, relevant public bodies should review their internal procurement policy and adopt a compliant approach to deal with the positive duty imposed.

Queenie Que is a solicitor at Bevan Brittan.