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

Open And Evaluate Tender

Introduction

Evaluators must take care to consider each bidder’s proposed package of Fair Work practices by considering its impact on the delivery of the contract.

This section of the Guidance along with the Practical Tools and Examples which are available in the Toolkit, will help a public body to evaluate tenders.

15. Evaluating Tender Responses

15.1. Evaluation must always ensure equal treatment and be undertaken by more than one person in a proportionate, objective, transparent and non-discriminatory manner. It is important that evaluators are familiar with the public body’s priorities and goals to address Fair Work practices as set out in its Organisational Procurement Strategy. Evaluators must also be familiar with the obligations in the Statutory Guidance and of how the five dimensions of the Fair Work Framework can impact on the quality of the goods, services or works to be performed.

15.2. Prior to the receipt of tenders, it is important to ensure that the evaluation panel agree the approach to scoring responses and of how to handle responses from different sizes or types of bidders to ensure a consistent, non-discriminatory approach is taken, in line with the fundamental principles of the TFEU.

15.3. A public body may also consider including a panel member with relevant knowledge or experience to help evaluate bidders’ responses to a Fair Work practices criterion, for example, this could include a human resources or trade union representative.

15.4. Evaluators must take into account the complete package of Fair Work practices a bidder offers and the impact those practices can have on the way the contract is performed. Individual elements of a package of Fair Work practices must not be evaluated separately. This includes considering how a bidder has put in place policies, which effectively implement its legal obligations, the practices which demonstrate it invests in and values its workforce and any new Fair Work practices it proposes to adopt on the delivery of the contract.

The real Living Wage

15.5. A bidder’s package of Fair Work practices would normally be expected to include fair pay and equal pay, including the real Living Wage. The Scottish Government considers the payment of the real Living Wage to be a significant indicator of an employer’s commitment to Fair Work practices. Payment of the real Living Wage is not the only indicator however, and whilst failure to pay the real Living Wage would be a strong negative indicator it does not mean that the employer’s approach automatically scores poorly against a Fair Work criterion.

15.6. The Scottish Government has obtained clarification from the European Commission, which confirms that a public body is unable to make payment of the real Living Wage a mandatory requirement as part of a competitive procurement process where the real Living Wage is greater than any minimum wage set by or in accordance with law. It is, therefore, not possible to reserve any element of the overall tender score specifically to the payment of the real Living Wage.

Compliance with relevant laws

15.7. It is expected that bidders will comply with all relevant legal obligations, including workplace standards and labour laws.

15.8. This extends to the nature of the bid and evaluators must consider whether there is a risk that the nature of the bid could result in non-compliance.There are two circumstances provided for in the Procurement Regulations to enable a public body to mitigate this risk.

Where it has established that the tender itself would not comply with relevant environmental, social and employment law, for example, equality or health and safety legislation, a public body can decide not to award a contract to that bidder ( regulation 57(2) of the PC(S)R 2015).

Where a bid appears to be abnormally low, a public body must require the bidder to explain its pricing. This can include an explanation of how the bid will maintain compliance with relevant environmental, social and employment laws. The bid may be rejected if the explanation given does not satisfactorily account for the low bid ( regulation 69(4) of the PC(S)R 2015). The bid must be rejected if it is established that the bid is low because the bid does not comply with relevant environmental, social and employment law ( regulation 69(5) of the PC(S)R 2015).

15.9. When reviewing a bid for compliance with relevant laws (see above), it is important to recognise that the legal requirements applicable to bidders from other countries will depend on where the contract is performed. For example, if a supplier from another country is providing workers to perform a service contract in Scotland, UK legislation in respect of workers’ rights will apply to those workers. If workers providing supplies in a goods contract will be located in another country, the legal requirements of that country will apply to the workers, for example, UK minimum wage rates will not apply. In the latter circumstances, the bidder should be capable of, evidencing an approach to Fair Work practices, for example, in respect of fair pay and equal pay, by referring to standards of living and average or minimum wages to offer a reasonable standard of living for workers delivering the contract in line with the five dimensions of the Fair Work Framework.

Subcontractors

15.10. Where a bidder proposes to use subcontractors as part of contract delivery, particularly where subcontractors are likely to deliver a significant portion of the contract, the Fair Work practices of those subcontractors should be considered as part of the evaluation. Consideration should also be given to any measures a bidder will take to ensure any subcontractors, which are not yet known to it, will adopt appropriate Fair Work practices when they engage on contract delivery.

Size and status of bidders

15.11. It is important to treat all bids equally and not to discriminate based on a bidder’s size or status. This includes taking into account the relative differences in a bidder’s approach when evaluating responses.

15.12. It may not be proportionate for small (<50 employees) and micro businesses (<10 employees), or small third sector or voluntary organisations to have teams of staff in place who are responsible for processes, procedures and controls to enforce their stated policies on promoting Fair Work practices. Such organisations may, however, be able to offer different approaches to give staff an effective voice given the nature of relationships that will exist due to their size.

15.13. Third sector or voluntary organisations may take a different approach to the Fair Work practices they offer taking account of the resource constraints under which they operate and may not be able to commit resources to longer term investments in workforce practices.

Bidders from other countries

15.14. It is important to consider whether a supplier’s location could impact on its approach to Fair Work practices. Suppliers from different countries will operate within different legal frameworks and cultures which could impact on their approach to employment and workers’ conditions.