The guidance is little more than a précis of the social and environmental aspects of European procurement rules as implemented by the Regulations (and, if you don’t want to read the guidance or the Regulations, perhaps read our earlier précis here). But it is regardless a far more enthusiastic approach to social value in procurement to come from central Government than the caution and conservatism that has historically been demonstrated.

The guidance demonstrates a recognition from Government that social and environmental considerations can be brought into the procurement process in a range of ways and at all stages of the process, including:

  • reserving contracts to businesses that employ disabled or disadvantaged workers, or to organisations with a public service mission;
  • incorporating social and environmental requirements into the specification – including appropriate use of labels;
  • the exclusion of candidates because they are not compliant with relevant environmental, social and labour laws;
  • applying contract award criteria that are relevant to the subject matter of the contract (including a specific acknowledgement that fair trade requirements may be relevant);
  • the use of life cycle costings that include environmental and social factors;
  • the rejection of an abnormally low tender if it is abnormally low because the tenderer is not compliant with relevant environmental, social and labour laws;
  • the use of social and/or environmental contract performance conditions;
  • suitable contract management arrangements to encourage (and hopefully ensure) compliance with social and environmental requirements.

There are some useful “FAQs” included in the guidance to supplement the description of relevant parts of the Regulations, covering compliance with environmental, social and labour laws, compliance with the Modern Slavery Act 2015, and a consideration of the reserved contracts rules (under which competition can be ringfenced to organisations that employ, as at least 30% of their workforce, individuals who are disabled or disadvantaged). This last confirms our preferred approach to defining what “disadvantaged” persons are (as the term is not defined in the Regulations), which is to refer this to the term as defined in State aid law, is an acceptable way to proceed. “Disadvantaged”, therefore, can relate to people in long-term unemployment, the 15-24 age bracket, the over-50s, lone carers, and even gender where there is a gender imbalance within an industry, to name but a few.

Because it is outside the scope of the Regulations, the vital pre-procurement stage is not considered, however – meaning the guidance lacks any discussion of the importance of the wider commissioning process in terms of potential pre-procurement engagement with potential contractors, users and stakeholders to shape the procurement and the subject of the contract, and application of the Public Services (Social Value) Act 2012 before the procurement has actually commenced.

This guidance is a helpful description of the opportunities that the Regulations offer to achieve better social and environmental benefit from public contracts, but it is not a practical guide. It is, though, a hopeful first step from the UK Government in its journey towards understanding the positive social and environmental benefit that public procurement could achieve. As a next step, we would welcome guidance from the CCS about integrating the Regulations into, and reconciling them with, related domestic legislation, including the Social Value Act and Part II of the Local Government Act 1988 (non-commercial considerations).

Contract management pitfalls – payment
Contract management pitfalls – payment

In the second part of our series on contract management pitfalls, we look at the risks and opportunities presented by payment mechanisms in construction contracts.