Addressing fair work practices, including the real living wage, in procurement: best practice

Develop Strategy

Introduction

The decisions taken at the develop strategy stage of a procurement process are crucial in helping a public body meet its obligation to have regard the Statutory Guidance on Addressing Fair Work Practices, including the Living Wage, in Procurement.

This section of the Guidance along with the Practical Tools and Examples which are available in the Toolkit, will help a public body consider Fair Work practices when developing its commodity / service strategy.

6. Organisational Procurement Strategy And Approach

6.1. A public body’s Organisational Procurement Strategy statement on the payment of the Living Wage as required by the section 15(5)(b)(iii) of the Act establishes an agreed organisational approach to tackle Fair Work in the scope of its procurement activity. This statement can include information on the public body’s priorities and goals to address Fair Work practices and information on a targeted approach in individual commodity / service strategies, and local decision making processes and monitoring arrangements.

6.2. A public body may also establish an organisational approach to weighting criterion on Fair Work practices by commodity / service type. It is important to note that if such an approach is taken, weightings must continue to be considered on a case-by-case basis, balancing the quality and cost of the contract.

7. Supply Market Analysis / Market Sounding

7.1. Regulation 41 of the PC(S)R 2015 permits a public body, before commencing a procurement, to conduct market consultation with a view to preparing the procurement and informing the market of its procurement plans and requirements. Market sounding typically includes researching and analysing the market and engaging with suppliers and / or stakeholders to understand the opportunities and risks for sustainable outcomes before starting a procurement process.

7.2. Early engagement with the market can help a public body gather background information about the nature of Fair Work practices that are typical in the sector. This will also provide information on what opportunities there are to address Fair Work practices in a procurement process in a way that is relevant, proportionate and treats bidders equally.

7.3. It can help a public body to understand more about suppliers and their supply chains, for example, whether the contract will typically be delivered by a supply chain of sub-contractors, self-employed workers, sole traders, small, medium or micro businesses, or whether suppliers from other countries are likely to bid.

7.4. It is also an opportunity to establish whether the supply chain is susceptible to exploitative practices. For example, in construction contracts where the workforce can typically be made up of sole traders or self-employed workers, consideration should be given to whether this is appropriate or a form of bogus self-employment.

7.5. Furthermore, a public body can seek input from other areas of its own organisation, stakeholders, industry bodies or trade unions to establish which dimensions of Fair Work could be addressed in a particular commodity area and to shape commodity strategies.

8. Commodity / Service Strategy

8.1. Fair Work practices can contribute to the way any public contract is delivered, and a comprehensive approach to practices across all the dimensions of Fair Work can have an impact on how the contract is performed. When developing its commodity / service strategy, a public body will determine how relevant Fair Work practices are to the contract and identify the dimensions of Fair Work which could be targeted through the procurement process.

8.2. The decision about how relevant Fair Work practices are to the contract will be based on the nature of the contract and the impact Fair Work practices will have on the way the contract is performed.

8.3. This will also be informed by a range of factors, including: a public body’s policy on promoting the real Living Wage as set out in its Organisational Procurement Strategy; the outputs of the Sustainable Procurement Duty tools; the results of supply market analysis; or, the outcomes of a completed equality impact assessment. A public body should also consider whether any Transfer of Undertakings (Protection of Employment) Regulations 2006 obligations or any other organisational priorities, local agreements or accreditations may affect how it addresses Fair Work practices in a procurement exercise.

9. Framework Agreements

9.1. Where a framework agreement is being established, consideration must be given to how best to secure Fair Work outcomes through the subsequent call-off arrangements.

9.2. A public body should include a relevant Fair Work criterion as part of the procurement process and the subsequent contractual terms and conditions for establishing call-off contracts. This ensures that a contractor delivering a call-off contract will adopt or be required to demonstrate the Fair Work practices agreed when the framework was established.

9.3. Where Fair Work practices have not been included in the framework agreement, but are relevant to the nature of the call-off contract, a public body should consider how best to address Fair Work practices in the call-off contract in line with its policy contained in its Organisational Procurement Strategy. Mini-competitions must generally be based on the same terms as those which were applied for the award of the framework. Regulation 34(10) of the PC(S)R 2015, however, allows that, that where necessary those criteria may be more precisely formulated, or that other terms referred to in the procurement documents for the framework, may be applied where appropriate.

9.4. A public body should consider whether the terms laid down in the framework enable a Fair Work criterion to be included or refined in order to target Fair Work practices relevant to the delivery of the call-off contract. For example, if the framework agreement includes an award criterion to tackle “sustainability”, it is possible to include more precisely formulated criteria under this broader heading to address Fair Work practices.

Practical Tools and Examples on how to develop your commodity / service strategy are available in the Toolkit.