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

Develop Documents

Introduction

The approach a public body takes when developing documents is essential to achieve the outcomes sought in the commodity / service strategy for the procurement process.

This section of the Guidance along with the Practical Tools and Examples which are available in the Toolkit, will help a public body to target Fair Work practices on a case-by-case basis in its procurement documents.

10. Pre-Contract Notification

10.1. It is helpful for a public body to highlight to the market at an early stage any contract requirements, including its approach to addressing Fair Work practices in the procurement process. This should be included in the procurement documents, which invite suppliers to participate in the procurement process.

Examples of statements for procurement documents are available in the Toolkit.

11. Exclusion And Selection Of Tenderers

11.1. Fair Work practices are actions an employer adopts for the benefit of its workers that are above and beyond the minimum requirements set out in law and reflect the five dimension of the Fair Work Framework. In addition to considering how Fair Work practices can be addressed in a procurement process, it is important to also consider whether there are grounds for the exclusion of suppliers in respect of their legal obligations as a diligent employer.

11.2. Procurement legislation requires a public body, in all regulated and EU-regulated procurements, to establish whether exclusion grounds apply to suppliers, including sub-contractors. Regulation 58 of the PC(S)R 2015 and regulations 8 and 9 of The Procurement (Scotland) Regulations 2016 (P(S)R 2016) set out the exclusion grounds, which are tested in Part 3 of the European Single Procurement Document. This includes consideration of exclusion grounds which cover a range of employment matters established in national, European and international law, including the International Labour Organisation’s Conventions. This includes, for example, breaches of the Employment Relations Act 1999 (Blacklists) Regulations 2010, tax and social security obligations, relevant health and safety, social, employment and equalities law.

11.3. Breaches of environmental, social and employment law are discretionary exclusion grounds, except blacklisting which is a mandatory exclusion ground. These legal breaches are wide ranging and a public body can focus on a specific area of law that suppliers must take into account when making their self-declaration in respect of exclusion grounds, for example, breaches of health and safety legislation.

11.4. Where exclusion grounds apply, a public body must consider the evidence provided by the supplier of self-cleansing measures taken to demonstrate its reliability. A public body must take into account the circumstances of the breach and consider whether this affects the reliability of the supplier to deliver the contract.

11.5. Selection criteria can be used to set requirements to determine whether suppliers have existing capability and capacity to perform the contract. Selection criteria must be relevant and proportionate to the nature of the contract and must not have the effect of discriminating against any particular supplier or group of suppliers.

11.6. Careful consideration must be given to whether it is relevant and proportionate to address Fair Work practices as selection criteria. Any requirements of tendering must be relevant and proportionate to the contract and a public body must carefully consider the market and sectoral norms to minimise the unintentional deselection of capable suppliers. It may be more appropriate to include Fair Work practices in award criteria, which encourage bidders to explain how any existing and any new Fair Work practices they propose to adopt will positively impact on the way the contract is performed.

11.7. When calling off from a framework agreement, is important to note that there is no scope to apply selection criteria. Selection criteria will have been applied when establishing the framework agreement and must not be repeated at the call-off stage.

Examples of statements for procurement documents are available in the Toolkit.

12. Specification And Award Criteria

12.1. Award criteria are used to determine which bidder is best placed to deliver the contract. Award criteria must be proportionate and linked to the subject matter of the contract, and will form the basis for contract delivery.

12.2. The Statutory Guidance provides a sample invitation to tender Fair Work award criterion question, which should be adapted on a case-by-case basis to be relevant to and reflect the nature of the contract.

12.3. A Fair Work award criterion question will invite suppliers to describe the Fair Work practices, including the real Living Wage, they propose to adopt to engage their workers in order to have a positive impact on the quality of the service delivery, works performed or goods supplied. A question on Fair Work should clearly describe how a public body expects that a comprehensive approach to Fair Work practices, which takes account of all five dimensions of the Fair Work Framework will impact on the way a contract is performed.

12.4. It is important not to be prescriptive by providing a list or checklist of Fair Work practices required of bidders when responding. To do so would not be consistent with the fundamental principles of the TFEU and, for example, would suggest that the real Living Wage is a requirement of bidding. It is also important not to limit responses from bidders, which will vary dependant on different Fair Work practices they adopt and because of the size or status of bidders.

Practical Tools and Examples on how to develop a Fair Work criterion are available in the Toolkit.

13. Weighting Criteria

13.1. Fair Work practices can have a positive impact on the way the contract is performed and the weighting given to a Fair Work criterion will affect a supplier’s overall bid. The weighting and score given to a Fair Work practices criterion must be considered on a case-by-case basis taking into account the other relevant criteria and the relative impact Fair Work practices can have on the quality of the service delivery, works performed or goods supplied. Weighting must ensure the appropriate balance between the quality and cost / price of the contract and be proportionate to the contract, taking care not to negatively affect the quality of the contract to be performed.

13.2. The weighting may be higher in a contract where the way workers are engaged will have a direct impact on how the contract is performed or where there is a strong service or works element to the contract. Higher weightings may also be relevant, for example: where low pay and poor conditions of employment exist or can have an impact on the quality of the contract, such as the use of umbrella companies to exploit workers’ security of employment; where the availability or continuity of staff will impact on a services; where there is limited, or no access to trade unions; or, where a limited employee voice is having an impact on how health and safety matters are handled or how working time regulations are applied.

13.3. The weighting of a Fair Work criterion in a goods contract is likely to be lower, as the quality of the goods is more likely to be affected by a range of factors other than how the workforce are engaged. This is not to say that a Fair Work criterion is never relevant in a goods contract. It will be relevant where the goods to be supplied are created by manual labour or where an element of the workforce delivers the goods and / or ancillary services, such as customer service or installation / delivery services.

14. Scoring Methodology

14.1. When evaluating a bidder’s response against a Fair Work criterion, it is best practice to use a scoring methodology rather than a pass / fail approach. A pass / fail approach would not be consistent with the fundamental principles of the TFEU which require a public body to objectively evaluate different bidder responses proportionately and without discrimination. It is also important to note that it is not possible to require the payment of the real Living Wage as part of a tender process by scoring this element separately, including the use of a pass / fail approach.

14.2. The methodology must be relevant, proportionate and suit the requirements of the contract and the criterion. The methodology should allow a public body to take a balanced approach to scoring varying responses by taking into account the whole package of Fair Work practices proposed and not requiring any individual Fair Work practice or by scoring individual elements separately.

14.3. The technical scoring criteria used by a public body can be general or amended to be specific to certain criteria. Whichever approach is adopted, the scoring methodology must have been communicated in the procurement documents as part of the tender process and should enable the evaluation panel, following individual bid evaluation, to score responses based on the relative advantages and disadvantages of the package of Fair Work practices proposed.

Examples of scoring methodologies are available on the Procurement Journey and the Toolkit.