Scottish Government progressing plans for Sustainable Procurement Bill

Scotland
After several months of informal consultation, the Scottish Government announced in March that it intends to commence a formal consultation on the Sustainable Procurement Bill in May.  The Scottish Government has announced that the Bill has five themes: transparency, compliance, social, economic and environmental benefits.  It has also set out a number of the topics it intends the Bill to cover:
Square ensuring that major public contracts deliver training and employment opportunities through the inclusion of community benefit clauses;
Square ensuring that more contract opportunities are advertised or awarded through Public Contracts Scotland (PCS) - helping Scottish businesses find and win contracts;
Square ensuring all Scottish public bodies adopt transparent, streamlined and standardised procurement processes that are friendly to Scottish businesses;
Square giving firms the right to access information about procurement decisions and to challenge them if they are unfair; and
Square building sustainability consistently into purchasing decisions.

The legal position

Legally, community benefits and sustainability clauses can be incorporated in contracts without risk of falling foul of the EU and UK public procurement rules.  The key is that they must be sufficiently 'linked to the subject matter of the contract'.  For example, requiring a contractor to use a certain number of apprentices or long-term unemployed workers on an infrastructure project being procured is unlikely to give rise to procurement law concerns whereas requiring the contractor to make wider commitments to supporting the local economy would be problematic.  Similarly, a criterion requiring a contractor to buy an amount of electricity from renewable sources which went beyond the amount needed by the authority is likely to breach the EU rules.

'Localism' is a more difficult concept to reconcile with the fundamental aim of the single European market.  The Scottish Government has clearly given careful thought to the EU public procurement rules when considering the topics that the Sustainable Procurement Bill will cover.   It has opted to ensure that authorities are taking all the measures they can to make the procurements as friendly as possible to local firms without adopting measures which could be considered to discriminate in favour of local firms.  For example, advertising contracts through PCS means local firms know where to look for opportunities, but without excluding other bidders.  Similarly, streamlining procurement processes will help minimise the burden on the smaller, local companies which do not have the resources of multi-national bodies, but not in a way that is discriminatory or otherwise risks distorting competition.  The Scottish Government has carefully avoided referring to measures that could be interpreted as actively discriminating in favour of local firms.  Any such measures are very likely to breach EU law and put authorities at risk of court proceedings or enforcement action from the European Commission.  Examples of measures that the European Commission has found breach EU law include a clause requiring bidders to source a certain percentage of their materials locally and a clause requiring use of a high percentage of national labour.

Conclusion

The next few months will be important for stakeholders looking to influence the formal consultation process and the future measures to be adopted in the Bill.  There is much that can be done within the framework of the EU procurement rules and the five themes to be promoted in the proposed in the Sustainable Procurement Bill are all themes that the European Commission and governments across all 27 Member States are all pushing hard.  That said, in difficult economic times and with elections looming authorities must be careful not to over-step the mark and promote procurement practices that either directly or indirectly discriminate in favour of local or national suppliers.  

If you would like any further information on this article please contact Victoria Moorcroft.