© 2012 Morgan Cole LLPExpertise | Experience | Efficiency | Contribution 17 th July 2012 Equality, Social and Community Benefits in Procurement – how far

© 2012 Morgan Cole LLP Expertise | Experience | Efficiency | Contribution

17th July 2012

Equality, Social and Community Benefits in Procurement – how far can you go ?

Simon McCann, Partner

Expertise | Experience | Efficiency | Contribution © 2012 Morgan Cole LLP 2

Procurement context

• Procurement part of single market – delivers level playing field between EU Member states

• Based on competition• Matters to be taken into account in choosing contractor

LIMITED to: Technical/professional competence and economic financial standing

of contractor (selection); and Most economically advantageous tender (best value for money) OR

lowest price (award)

• Limited ability to use free-floating policy-based aims (if not linked to contractor/subject matter)

http://www.morgan-cole.com/index.html


Selection (PQQ) stage

• Tendency to ask lots of equality-based questions at PQQ – for some reason, is seen as best tool available

• However, PQQ is a blunt instrument – can only be used to assess contractor’s ability to undertake contract

• Selection matters strictly limited to categories listed in Regs 25 and 26 Public Contracts Regulations 2006 – e.g. experience, qualification, people, qualifications, accounts, etc

• Potential breach of the Regs to go beyond this• Is LEAST suitable place to address equality – delivers highest

risk for least benefit



OGC / Treasury view

“In an example of what not to do, a group of contracting authorities, G, has developed a common standard for equalities in public procurement, which is used to decide who to invite to tender or put on their approved lists. Firms are asked to meet various criteria including identifying and addressing imbalances in job applicants and employees according to gender, ethnicity and disability. As the criteria are unlikely to be relevant to every procurement, the standard should not be imposed in blanket fashion, which would run the risk of legal challenge.”

Social Issues in Public Procurement



Gebroeders Beentjes –v- Netherlands (1988 Case 31/87)

• Construction project – Beentjes was lowest bid, but lost• One reason – inability of B to create jobs for long-term

unemployed• “…such a consideration has no relation to the checking of

contractors’ suitability on the basis of their economic and financial standing or their technical knowledge and ability…”

• Therefore social issues are NOT to be used at PQQ stage (unless directly relevant to contractor’s ability to perform)



So where can we deal with equality requirements and community benefits ? (1)

• Pre-contract – consult with market, publish your organisation’s aims and policies – make it clear what you are trying to achieve

• Specification – don’t leave equalities/CBs until last – need to be clear on what you want and how you will deliver it. Vague woolly aspirations are doomed to fail.

• Specification should take into account accessibility criteria for people with disabilities or design for all users (Art 23(1), Directive 2004/18)

• Technical specifications shall afford equal access for tenderers (Art 23(2))




• PQQ/selection – only if: Relevant to technical ability to carry out contract – e.g. tenant

advisory services or maintenance in occupied homes – will need to demonstrate ability/training to deal with people of different abilities and backgrounds; or e.g. experience of running targeted recruitment and training programmes or other community benefits schemes where this is part of the contract requirement; OR

Has breached equalities legislation – potential ground for exclusion under Reg 23(4) of the Public Contracts Regulations 2006

• SQuID – only includes the latter question unless specific relevance to subject-matter




• Award criteria – ONLY if linked to subject matter of contract• Very vexed question – no cases directly on

equalities/community benefits • However analogous cases on inclusion of environmental

benefits show the principles



Concordia Bus Finland –v- Helsingin Kaupunki (C-513/99, 2002)

• Contract for bus services• Additional points (up to 10) available for least noise &

emissions, further points awarded for bidders’ quality and environmental programmes

• HKL (part of City of Helsinki, though financially distinct) was one of the few bidders who could offer such buses. Concordia’s was lowest bid, but beaten by HKL on the environmental criteria

• C argued environmental criteria are not permitted as award criteria



Concordia, cont.

• Court held – contracting authorities NOT precluded from using environmental factors as award criteria.

• Didn’t matter that only City’s own producer could meet requirements

• Key requirements for criteria: Must be linked to the subject matter Must not allow unrestricted freedom of choice Must be expressly stated in the tender documents Must comply with fundamentals of EU law (in particular non-

discrimination)



EVN & Wienstrom –v- Austria (2003, C-448/01)

• Electricity tender. 45% weighting on amount of energy produced from renewable sources – was potentially determinative in its own right

• Court – Austria NOT precluded from doing this. Perfectly fine as an award criterion

• BUT – tender process did not allow for verification. Criteria do not need to be quantifiable in money terms, but they do have to be measurable

• AND – only required bidders to say how much renewable energy they generated for a non-defined group of consumers - was not connected to subject matter and discriminated against smaller producers



Criteria held to be discriminatory

• Storebaelt (C-243/89) – the requirement that the successful contractor be “obliged to use to the greatest possible extent Danish materials, consumer goods, labour and equipment.”

• Italian legislation in the Unita Sanitaria Locale (C-21/88) cases which required public bodies to obtain 30% of their supplies from undertakings established in the region.

• Ruffert –v- Land Niedersachsen (C-346/06) – minimum pay scales agreed by collective bargaining could not be imposed on bidders from other EU states who were not bound by the agreement




• Contract conditions – probably best place to address equalities

• Must not be discriminatory – so all bidders should be equally capable of complying (including those from other EU states)

• Should be referred to in the contract notice and set out in detail in the contract docs

• Not relatively marked (like criteria) but compliance required – so can be a pass/fail if bidder does/does not accept

• Can be an immediate “threshold” requirement or longer term realisation via KPIs

• Monitoring and incentivisation must be realistic and effective



Summary of legal position (1)

• PQQ – Only OK if connected to ability to perform the subject matter. Generally not appropriate for PQQ stage (OGC, Beentjes) – other than compliance with legal requirements (e.g. equalities law)

• Specification – must take into account accessibility for both users and tenderers. Social factors not to be included (unless “core”)

• Contract conditions – Directive and case-law clear that both environmental and social factors can be used here (so long as non-discriminatory). This is most widely used area – e.g. unemployed utilisation plans on a “non-core” basis



Summary of legal position (2)

• Award criteria – must: Be linked to the subject matter Not allow unrestricted freedom of choice Be expressly stated in the tender documents Comply with fundamentals of EU law (in particular non-discrimination) Be capable of objective measurement (EVN)



Core or non-core ? (1)

• 2 possible approaches• Core – part of the subject-matter of the contract and included

in the award criteria. • Requirements must be included in the OJEU notice, detailed

by the authority & will be assessed.• E.g. – major housing project advertised as a contract for

works AND recruitment/training• Vires – need to check organisation’s constitution / charitable

objects to make sure has the power to contract for the community/social element OR it benefits the organisation’s performance of its objects



Core or non-core ? (2)

• Non-Core - included as contract conditions but will not be assessed at selection or award stage

• Contract conditions do not need to be linked to the subject-matter – but must be non-discriminatory and proportionate

• Requirements must be referred to in OJEU notice and set out as contract conditions. But not assessed at either selection or award stage (although acceptance of the contract conditions may be a “pass/fail”, or threshold requirement)

• Requirement of vires probably less stringent – but still need to show that it benefits CA’s aims/policies in some way



Delivering equality aims

• Combination of pre-tender briefing and contract conditions probably safest and most effective

• State in advance policies you would like to achieve• Make sure they are non-discriminatory and that bidders from

any EU country would be able to comply equally• Refer to in OJEU notice/Memo of Information and insert link.

State that at tender stage, bidders will be required to comply• At tender stage, state as contract term that bidders must

comply with policies X&Y or carry out the required equality measures. Bidders who refuse to accept could be disqualified



Post tender

• Monitoring and reporting key if we are to move beyond lip service/tokenism

• Use a few focused, realistic, easily measurable KPIs• Contract meetings to discuss failures – escalate if necessary

to management• Possible financial penalties or even termination for

repeated/serious breaches• Tools available - Value Wales Sustainable Risk Assessment

Tool, Community Benefits Measurement Tool



Welsh guidance

• “Community Benefits – Delivering Maximum Value for the Welsh Pound” – very useful, practical guide. Examples of OJEU, ITT and contract wording

• “Can Do” toolkit, Sept 2008. For housing sector, but much useful info and materials, including model material that can be used from business case right through a procurement

• Sustainable Risk Assessment tool• “Opening Doors” – Charter for SME engagement• “Contracting with Supported Factories and Businesses” -

FAQs


Documents

© 2012 Morgan Cole LLPExpertise | Experience | Efficiency | Contribution 17 th July 2012 Equality, Social and Community Benefits in Procurement – how far