15 March 2013 #Public Sector
The remaining sections (sections 1 and 2) of the Public Services (Social Value) Act 2012 (“the Act”) came into force on 31st January 2013. Sections 3 and 4 came into force on 8th March 2012, when the Act received Royal Assent.
The Act will affect all organisations subject to the Public Contracts Regulations 2006 (as amended) (“the Regulations”). However, the Act will not apply to Welsh Ministers, the First Minister for Wales, the Counsel General to the Welsh Assembly Government, the National Assembly for Wales and those organisations whose functions are wholly or mainly Welsh devolved functions (i.e. functions that are within the legislative competence of the National Assembly for Wales or are imposed or conferred on an authority by the Welsh Ministers).
The Act will only apply to procurements for service contracts (Part A and Part B services) and framework agreements for service contracts (“the Relevant Contracts”) to which the Regulations apply. The Act does not apply to procurement processes for goods, supplies and works. The Act will apply to mixed contracts where:
Section 1 of the Act requires the procuring authority to consider the following before the procurement process commences:
The “relevant area” is defined in the Act as “...the area consisting of the area or areas of the one or more relevant authorities on whose behalf the public services contract is, or contracts based on a framework agreement are, intended to be made”.
Guidance issued by the Cabinet Office (Procurement Policy Note – Information Note 10/12) (“the Guidance”) provides clarification as to what extent the relevant area should be taken into account when considering social values, which is relevant when procuring authorities collaborate. The Guidance states as follows:
“...a local authority thinking of letting a contract for its own use would have to make considerations for its own geographical areas, even if the contract is only directly relevant to part of the local authority’s area. A local authority procuring a framework agreement for use by itself and neighbouring authorities would have to consider that wider area, even if the framework agreement is only likely to be directly relevant to part of that wider area. Authorities whose functions extend throughout the UK would have to consider the area of the UK, even if the contract or framework agreement is only directly relevant to a part of the UK”. The Act does not apply to areas outside of the UK.
The Guidance also provides that any consultation should be ‘digital by default’ and carried out on line as far as possible but the procuring authority should always consider how appropriate this is in terms of the consultees.
The procuring authority will not be required to comply with the requirements of the Act where there is an urgent need to arrange the procurement and it would be impractical to do so because. However, this exemption will not apply if the urgency has arisen as a result of the procuring authority’s actions causing undue delay.
As stated above, these considerations need to be taken into account at the pre-procurement stage. Considering the requirements at this stage will shape the procurement process, and enable the procuring authority to draft the procurement documents and outcomes in the technical specification with the Act in mind. The Act defines the procurement process as commencing when one of the following occurs:
The Act does not contain any reporting requirements, but the Guidance states that as a matter of good practice the procuring authority should do the following:
Although the Act applies specifically to the pre-procurement stage, the Act is bound to impact on subsequent stages of the procurement process - the requirements will also be considered in the assessment of economic operators at selection stage and their bids. The procuring authority may wish to take into account an organisation`s experience at delivering or improving those factors set out in point 1 above, and this will feed into the selection criteria. How these economic, social and environmental issues will be delivered when performing the contract may be reflected in the evaluation criteria. The Guidance states that "...procurers should be taking a value for money approach - not lowest cost - to assessing contracts...". Provisions within the awarded contract will also reflect the procuring authority`s requirements as specified by the Act.
In order to assist procuring authorities in complying with the Act, we have set out below the following practical points
Notwithstanding the above, it should be noted that a failure to comply with the requirements of the Act will not result in a procuring authority being in breach of the Regulations. However, there may be scope for legal challenge – any organisation or individual that is concerned that a procuring authority has acted in breach of the Act should obtain legal advice without delay.
Please contact us if you wish to discuss the requirements of the Act further. For previous commentary on the Act, please note our earlier article entitled Public Services (Social Value) Act 2012.