Random factors
Traditionally, economic and qualitative factors are foremost to be taken into account when entering into contracts but issues outside of the commercial arena are becoming increasingly important, write Caroline Finnett and Lucy Carlile
Social and environmental issues have come to the forefront of procurement agendas for a variety of economic, environmental and political reasons but their inclusion in the procurement process has been an issue many public authorities have avoided due to its chequered history in the courts and uncertain legal footing.
The legal basis for incorporating social and environmental issues into the procurement process became a little clearer with the specific mention of non-economic factors in both Directive 2004/18/EC (on the coordination of procedures for the award of public works supply contracts and service contracts) and the UK implementing legislation the Public Contract Regulations 2006.
Until these pieces of legislation came into force, local authorities tussled with their duty to promote the social, environmental and economic well-being of their area (by way of its [sustainable] community strategy and/or its use of the well-being power) against procurement legislation and the guidance on the extent to which such issues could be incorporated into the procurement process from the European court of Justice.
Now we have a firmer legal footing, if such issues are included in the procurement process in an appropriate and considered manner, they can be legally incorporated into contracts and help further an organisation's sustainable procurement policies.
Below are our top ten considerations for incorporating social and environmental considerations into the procurement process.
Top Ten Tips
1. Always ensure that any social and environmental considerations you wish to select or evaluate on in a public procurement process are linked to the subject matter of the contract. If not, such considerations will fall foul of the procurement regulations, for example, it may be appropriate to evaluate the percentage of recycled material in goods to be supplied, but not whether a supplier uses recycled paper in its offices, as this is not linked to the subject matter of the contract.
2. Expressly mention any social and environmental considerations you intend to include in the procurement in the contract notice and tender documents.
3. Think about how to include Small and Medium-sized Enterprises (SMEs) and the local supply chain. Consider specifying where contracts are particularly suitable for SMEs, and split larger contracts into lots to provide SMEs with opportunities to bid for bite-size chunks rather than a large unmanageable contract. Where splitting the contract into lots is not possible, or would prove unaffordable or cumbersome, highlight the possibility of SME bids as part of a consortia.
4. Consider local and national policies. The considerations you include in a procurement process should be relevant to your particular needs. Review strategies (for example, sustainable procurement strategy/sustainable community strategy) regularly to ensure they reflect your main priorities and amend if needed. Ensure references to your policies (and compliance with them) are included throughout the procurement process
5. Be open-minded. Do not be too prescriptive as to how the authority wants a specific outcome to be achieved. By focusing on an outcome or a desired level of functionality, public authorities can give suppliers the opportunity to be innovative and to suggest solutions with added social and environmental impact. Think about allowing variant bids and ask tenderers to think about the inclusion of social and environmental considerations in such variant bids.
6. If you need or want to specify a particular national or international quality standard (for example ISO or DIN) always use the words 'or equivalent'. This allows potential bidders, who have not attained the specified mark, to show they can meet your required standard; it also complies with the Treaty principle of non-discrimination.
7. Award criteria must not confer an unrestricted freedom of choice on the authority. Award criteria must 'restrict freedom of choice' by setting specific, product-related and measurable criteria, or, as the European Court of Justice put it, "adequately specific and objectively quantifiable" criteria.
8. Consider whether you can enter into voluntary commitments and voluntary arrangements with contractors and suppliers (both new and existing) to ensure that they understand other considerations that are important to the authority without these being expressly included in any procurement process. Although not legally binding and therefore unenforceable, contractors are unlikely to act differently once signed up as they will not want to damage their reputation. The difficulty comes when asking contractors to sign up – this cannot be a requirement on which award is based.
9. Partnership. Try to establish a working partnership relationship with the successful bidder and you are more likely to be able to ask the private sector partner to work with you in achieving your social and environmental agendas. Whilst not requirements of the contract, by working together you may be able to encourage the contractor to act in certain ways and get the results you want.
10. As with any procurement process, ensure compliance with the fundamental principles of Community law, in particular the principles of non-discrimination, transparency and proportionality. Know the Public Contracts Regulations 2006 and understand their limitations. Ensure you seek specific legal advice so as to not fall foul of the procurement rules.
Whilst the Procurement regime is often cited as a barrier to taking social and environmental issues into account when procuring, public authorities can incorporate various considerations within the procurement processes in order to ensure that the outcome is aligned with their social and environmental agendas. Although public procurement is a complex area which requires considered advice, there are permissive provisions within the EU procurement regime and other UK legislation which can be utilised to the advantage of public authorities and the public alike.
Caroline Finnett (0113 283 2500; This email address is being protected from spambots. You need JavaScript enabled to view it.) and Lucy Carlile
(0113 283 2500; This email address is being protected from spambots. You need JavaScript enabled to view it.) are solicitors in the Public Sector and Projects team at Walker Morris. They regularly contribute articles and updates to reach…®, the Walker Morris knowledge database and alerter service.