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The PSED and procurement

Predeterminiation iStock 000016468646Small 146x219Anja Beriro analyses the interplay between the public sector equality duty and the public procurement regime.

The public sector equality duty (PSED) under section 149 of the Equality Act 2010 (the 2010 Act) is one of a dwindling class of legislation that is effective across the whole of Great Britain. The 2010 Act replaced a number of separate pieces of legislation governing the protection of certain characteristics and prohibiting certain types of conduct.

Under the 2010 Act the following characteristics are protected:

  • age
  • disability
  • gender reassignment
  • marriage and civil partnership (this characteristic is covered only by the first limb of the duty under PSED – that is, to eliminate discrimination and other prohibited conduct)
  • pregnancy and maternity
  • race
  • religion or belief
  • sex
  • sexual orientation.

As with previous legislation, the prohibition of certain conduct affects a wide range of individuals and organisations. PSED is a new positive duty on public authorities to have due regard to the need to:

  • eliminate discrimination, harassment, victimisation and any other conduct that is prohibited by or under the 2010 Act
  • advance equality of opportunity between persons who share a relevant protected characteristic and persons who do not share it. This involves having due regard to the needs to:

- remove or minimise disadvantages suffered by persons who share a relevant protected characteristic that are connected to that characteristic;

- take steps to meet the needs of persons who share a relevant protected characteristic that are different from the needs of persons who do not share it; and

- encourage persons who share a relevant protected characteristic to participate in public life or in any other activity in which participation by such persons is disproportionately low. In meeting the needs of disabled persons that are different from the needs of persons who are not disabled steps should be taken, in particular, to take account of disabled persons’ disabilities.

  • foster good relations between persons who share a relevant protected characteristic and those who do not share it. This includes having due regard to the need to tackle prejudice and to promote understanding.

It is arguable that ‘due regard’ connotes a more specific demand than simply have general regard for something [1].

PSED applies to the majority of functions of public authorities. Public authorities are defined by a list in Schedule 19 of the 2010 Act. On some occasions the definition of public authority can include private companies undertaking work on behalf of public bodies (for example a private company running a prison) [2]. Schedule 18 of the 2010 Act includes a list of bodies that, while not public authorities, do exercise public functions, but are not subject to PSED. These include the House of Commons and GCHQ. Schedule 18 also states that functions in connection with proceedings in the House of Commons or the House of Lords are exempt from PSED.

Some functions of public authorities are exempt from PSED. These are set out in Schedule 18 of the 2010 Act. In brief, these are:

  • certain functions relating to the provision of education in schools and accommodation, benefits, facilities or services in certain residential establishments;
  • immigration functions in relation to the protected characteristics of age, race, religion or belief. Race means race relating to nationality or ethnic or national origins; and
  • judicial functions.

There is further guidance as to what constitutes a public function in case law and in non-statutory guidance published by the Equality and Human Rights Commission.

Public procurement regime

The Public Contracts Regulations 2015 (the PCR 2015) govern the procurement of goods, works and services by contracting authorities in England, Wales and Northern Ireland. What must be remembered is that the definition of public authority under the Equality Act 2010 is not the same as a contracting authority under the PCR 2015. ‘Public authority’ encompasses a wider range of bodies than ‘contracting authority’. Contracting authorities are defined in the PCR 2015 as “the State, regional or local authorities, bodies governed by public law or associations formed by one or more such authorities or one or more such bodies governed by public law, and includes central government authorities, but does not include Her Majesty in her private capacity.” There are two further definitions that assist with this:

  • ‘central government authorities’ are defined as: “the Crown and all bodies listed in Schedule 1 (whether or not they perform their functions on behalf of the Crown), but does not include Her Majesty in her private capacity”; and
  • ‘bodies governed by public law’ are defined as: “bodies that have all of the following characteristics:-

- they are established for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character;

- they have legal personality; and

- they have any of the following characteristics:

  • they are financed, for the most part, by the State, regional or local authorities or by other bodies governed by public law;
  • they are subject to management supervision by those authorities or bodies; or
  • they have an administrative, managerial or supervisory board, more than half of whose members are appointed by the State, regional or local authorities or by other bodies governed by public law.”

What these definitions do is require many bodies, such as wholly-owned local authority companies, to comply with the public procurement regime but they omit many private companies that are contracted to deliver public services. For example, the same private company running a prison that is classed as a public authority under PSED would not be a contracting authority under the PCR 2015. What this means is that although a public authority may be covered by PSED, it will not be required to award contracts in a way that complies with the public procurement regime.

The public procurement regime is an EU-based system that aims to ensure the free movement of goods and workers throughout the EU. It does this by requiring contracting authorities to follow certain processes and adhere to certain principles when procuring contracts that are over specific financial thresholds. Some of these principles are called the General Principles, from the Treaty on the Functioning of the EU. These key principles are:

  • transparency of process and award of contracts;
  • equal treatment of suppliers and bidders;
  • proportionality in the application of procedures and in decision making; and
  • mutual recognition of qualifications and standards from other EU member states where appropriate.

Of the four principles, the two that are most important when looking at the relationship between public procurement and PSED are transparency and equal treatment, although proportionality will also come into play. Equal treatment of bidders is in relation to how bidders are treated in comparison to each other rather than in relation to protected characteristics. There are three ways in which PSED may be relevant to a public procurement procedure:

  • in the scenario where bidders are individuals with protected characteristics and due regard must be given to the situations to which PSED applies (this is unlikely to occur on a regular basis);
  • in the questions that are asked by the contracting authority at both selection and award stages;
  • in the manner in which a contract is performed by the successful bidder.

If there was a scenario where bidders needed to be treated in a particular manner because of a protected characteristic, that would be governed by PSED. The General Principle of equal treatment would come into play to ensure that any positive treatment of a bidder due to a protected characteristic was reasonable and was undertaken in a way that was transparent so that other bidders were able to understand why the treatment was being given. 

Selection criteria

Selection criteria are those criteria against which bidders are evaluated at what is known as the pre-qualification (the PQQ) stage of a procurement process. In England and Wales selection criteria are covered by regulations 57 and 58 of the PCR 2015. The legislation sets out certain grounds on which bidders either must or may be excluded from taking part in the procurement exercise. They go on to describe what may be included as selection criteria:

  • suitability to pursue a professional activity;
  • economic and financial standing;
  • technical and professional ability.

Under regulation 107 of the PCR 2015 contracting authorities in England, Wales (to the extent that a contracting authority in Wales is not acting under devolved powers [3]) and Northern Ireland (see footnote 3 as well) are required to use the Cabinet Office standard pre-qualification questionnaire (PQQ) [4]. This should be used for all above threshold procurements and may be used for light touch regime procurements valued at above the normal threshold for services but below the light touch threshold.

One of the questions in the standard PQQ relates to equality. This question requires bidders to state whether there have been any findings of unlawful discrimination by an employment tribunal or any complaints upheld by the Equality and Human Rights Commission. If bidders answer yes to either of these then they are asked to give a summary of the investigation and the outcome and any remedial steps taken. Bidders may be excluded if they do not satisfy the contracting authority that the same issue will not arise again.

The equality question is optional and should only be used when appropriate. Contracting authorities need to consider whether the subject matter of the contract requires equality legislation compliance to be taken into account. For example, a contract for the supply of stationary probably does not warrant the ability to exclude bidders on the ground that they have been found in breach of equality legislation. Although, some contracting authorities would argue that they require all of their suppliers to be fully compliant with their legislative duties and that they are meeting PSED by asking these questions to encourage improvements.

Award criteria

Once the selection, or PQQ, stage is completed, the following stage (or stages) of a procurement process require contracting authorities to assess bidders against criteria that will allow the contracting authority to award the contract to the bidder that scores most highly against those criteria (including price). Unlike the selection criteria used at the PQQ stage, the award criteria will be specific to the contract that is to be awarded.

Contract terms

It is now a requirement of a public procurement exercise that all documents are produced, at least in draft form, when a contract notice is sent to OJEU [5]. This includes the draft contract. Contract terms are a good way to ensure that certain obligations remain with a supplier during the term of the delivery of the works, goods or services. Regulation 70 of the PCR 2015 states that contracting authorities can include special conditions relating to the performance of a contract, provided that they are:

  • linked to the contract subject matter
  • indicated in the call for competition or the procurement documents.

Conditions may include “economic, innovation-related, environmental, social or employment-related consideration.” Clearly it could be argued that conditions relating to equal opportunities, where appropriate, would fall within these headings. For example, having terms requiring compliance with legislative provisions or reporting structures that included information about equal opportunities could be included.

Equality considerations: before commencing procurement (i.e. strategy), at each stage of the procurement process (e.g. planning, requirements, specification, selection, award) and throughout the contract lifecycle

While there is no longer a duty to undertake an equality impact assessment in England (Wales still does have this requirement) it is arguable that the requirement to have ‘due regard’ to the general duty might include when formulating procurement strategy and business cases for services.

Anja Beriro is an Associate at Browne Jacobson. She can be contacted on 0115 976 6589 or This email address is being protected from spambots. You need JavaScript enabled to view it..

[1] Section 149(3) of the 2010 Act
[2] Section 149(2) of the 2010 Act
[3] Regulation 1(8) of the PCR 2015 states that Part 4 of the PCR 2015 (which includes regulation 107) does not apply to a contracting authority if its functions are wholly or mainly either Welsh or Northern Ireland devolved functions
[4] See here for more details. 
[5] Regulation 53 of the PCR 2015