Agenda item

With reference to article 20 of the minute of the meeting of the Housing and Environment Committee of 16 February 2010, the Committee had before it a report by the Director of Corporate Governance which provided a general background and explored options available to the Council in relation to the procurement of goods and services from Social Enterprises and also looked at the securing of community benefits via the procurement process.  

Firstly, the report provided an overview of the legal and other issues which directly affected the Council’s procurement procedures.   It was advised that the Council’s procurement procedures were governed by the Standing Orders relating to contracts and procurement, the financial regulations, and the Corporate Procurement Policy.   However, it was highlighted that none of these documents precluded the procurement from Social Enterprises however, the law relating to procurement did not provide the Council with an unfettered discretion in terms of its procurement activity.  

The key internal document governing procurement was the Council’s Standing Orders (approved by Council in November, 2009 and came into force on 1 April 2010). These were up-to-date, complied with all relevant legislation, took account of the Council’s internal structures and policies, and were fit for purpose and easy to follow.   Most importantly, they complied with the regulations.   In addition the Standing Orders provided real flexibility where a contract was under the European threshold and did not prescribe how Services must procure, so long as that process was fair and transparent.    

In terms of regulations which governed regulated procurement in Scotland, it was advised that they set out the financial thresholds, procedures and timescales which must be adhered to by public bodies when tendering.  They aimed to ensure that public bodies entered into contracts in a transparent and fair manner, that all potential tenderers were treated fairly and consistently and that one organisation was not favoured over any other.  The transferring or purchasing of services by the Council must be done in compliance with both the regulations and with the Council’s Standing Orders.  

In particular, the report highlighted Regulation 7 of the regulations which covered procurements involving “supported businesses”, “supported employment programmes” and “supported factories”.   A definition of each of these was provided within the report.   Regulation 7 permitted the Council to restrict participation in the specific procurement which was covered by the main provisions of the regulations (in terms of the nature of what was being procured and the values) to supported businesses, supported employment programmes and supported factories.  Only organisations of that type would be entitled to bid for that particular contract.  It did not allow the Council to directly award a contract to a specific organisation.  Instead, the procurement must follow the requirements of the regulation in terms of advertising and timescales, etc.   Therefore, contracts could not be reserved for a specific organisation and all bids from supported businesses, supported employment programmes and supported factories submitted under the reserved contacts arrangements must be assessed in accordance with the regulations.   In terms of the regulation, a contracting authority should award a public contract on the basis of the offer that either (a) was the most economically advantageous tender from the point of view of the contracting authority, or (b) offered the lowest price.

In deciding whether to reserve a contract, the Council must balance the obvious social benefits of doing so against the statutory obligation to achieve best value.   The Council must have regard to the nature of its procurement need and the available market, in order to establish whether supported businesses etc. would be able to meet the Council's requirement, and at the same time deliver best value.   All of these factors must be assessed prior to commencing the procurement process.  

Turning to the power to advance wellbeing, the report advised that Part 3 of the Local Government in Scotland Act 2003 gave the Council a discretionary power to do anything it considered was likely to promote or improve the wellbeing of its area and/or persons in it. However, it was highlighted that this power was not without restriction. Details of the restrictions were provided.

Finally, the report highlighted the possibility of using community benefit clauses to achieve wider benefits from its procurements. Community Benefits in this context are contractual requirements which delivered a wider social benefit in addition to the core purpose of a contract.  In particular, they might focus on requirements in relation to targeted training and employment outcomes.  They could be secured either through the procurement itself or through contractual conditions flowing from the procurement.  Further details regarding the development of community benefit clauses and the regulatory requirements were outlined.

The Committee resolved:-

(i)         to note the legal and Standing Orders position regarding the procurement of goods, works and services from social enterprises;

(ii)        to note the legal and policy issues surrounding the implementation of community benefit clauses within the Council’s procurements; and

(iii)       to instruct officers within Corporate Governance to continue to work on the development of a robust corporate policy on the use of community benefit clauses within the Council’s procurements, and that the policy be submitted to a future meeting of the Committee for approval.