Catering for change: buying food sustainably in the public sector

Sustainable Food and the Procurement Process

The Procurement Journey ³

Further guidance on public procurement can be found in the Procurement Journey, which is available for use by public bodies in Scotland. It should support all levels of procurement activities and help manage the expectations of stakeholders, customers and suppliers alike. It facilitates best practice and consistency across the public sector.

Planning, Specifying and Structuring the Requirement

Specifying your requirements

Procurement legislation is less concerned with what you buy than how you buy it. Public bodies are, in general, free to specify sustainable food outcomes, provided that doing so does not distort competition unreasonably, or discriminate against products and suppliers from other EU Member States or from elsewhere in the UK. It is at this stage, when requirements are being specified, that food sustainability issues can have their greatest impact. It is much easier and more cost-effective to build sustainability into the procurement process at the outset, when requirements are being drawn up, than later in the process.

Building in sustainability at the outset

As stated earlier, value for money is the optimum combination of cost, quality and sustainability. The advantage of building in sustainability at the outset is that all tenderers will have to satisfy that minimum level. That will make it easier for you to ensure that your contract delivers sustainable outcomes.

What sort of things should you think about?

In planning and specifying requirements for food and catering contracts, you should think about what type of suppliers the contract requirement is likely to attract and what you want from your contract. You can also set reasonable requirements relating to quality and service, provided they are not intended to discriminate against non-local suppliers. Your strategy might include consideration of the following, some of which are explained in more detail later in this guidance:

• specifying more fresh, seasonal produce and fewer fruit, vegetables or other produce that has to come from further afield
• specifying recognised quality standards
• placing an obligation in the contract for recording the origin of the produce being supplied and for supplying regular management information
• building into the contract regular meetings to discuss with the contractor on a voluntary basis any further progress that can be made to improve the sustainability of the contract
• the healthy characteristics of food and quality requirements
• shelf life
• specifying Protected Geographical Indication and Protected Designation of Origin standards where justified by menu requirements
• traceability and recall procedures
• organic food
• Climate Change and emissions reductions obligations
• delivery frequencies
• equal opportunity issues including medical, ethnic, cultural, religious dietary needs
• encouraging participation and competition by as wide a range of suppliers as possible, including smaller businesses
• supplier development programmes, meet the buyer events and advertising contracts widely and in good time for the seasonal production of food
• promoting the use of product and/or geographic 'lots' during the tender process, where this is consistent with value for money. Ensure care is taken with the use of lots, as procurement Regulations prohibit public bodies from splitting contracts below EU procurement thresholds for the purpose of deliberately avoiding associated Regulations
• when appropriate, advertising sub-contracting opportunities in large contracts
• any policy to support fair trade
• opportunities, including sub-contracting opportunities, for supported businesses, social enterprises and third sector organisations
• employment and training opportunities for existing and new staff

Quality Issues

The Scottish Government's Strategy "A Vision for Scottish Agriculture" ⁴ and the National Food and Drink Policy ⁵ promote food which is safe, nutritious and promotes well being of the individual and communities. For the procurement of food these policies are geared towards opportunities for sustainability, encouraging SMEs to compete for contracts and to promote animal welfare standards and accredited assurance standards. All those who are involved in the procurement process, including caterers and customers as well as buyers, should place an appropriate emphasis on quality, which is a key component of value for money. The influence of public sector bodies on caterers and producers can also help to drive up standards more generally with resulting benefits to wider society. Public bodies responsible for awarding contracts should be aware of this so that quality and the benefits of whole life cost are not ignored in favour of simply the lowest initial price.

Quality Assurance Schemes

Scottish Government policy is to encourage the adoption of assurance schemes. Through the statutory functions of Trading Standards and Environmental Health, all types of businesses in the food industry are independently audited.

Suppliers must be able to demonstrate an adequate Hazard Analysis and Critical Control Point system ( HACCP) which addresses the supply, preparation, packaging, storage and distribution of food. Contracts should also require the supplier to be accredited to an appropriate quality assurance scheme such as the Safe and Local Supplier Approval scheme ( SALSA ⁶ ), the British Retail Consortium ( BRC ⁷ ) Global Standard or Quality Meat Scotland ⁸ . Public procurement legislation, however, requires buyers to accept other means of proof and, when specifying products covered under assurance schemes, to provide suppliers with the opportunity of providing other evidence such as technical dossiers, auditors' reports and test reports. This is to ensure that the specification does not discriminate against producers who maintain equivalent standards but have chosen not to be accredited against a specified scheme.

Protected Designated Origin and Protected Geographical Indication

Protected Designated Origin ( PDO) and Protected Geographical Indication ( PGI) are specific European Union quality schemes that promote and protect the names of quality agricultural products and foodstuffs.

• PDO - covers agricultural products and foodstuffs which are produced, processed and prepared in a given geographical area using recognised know-how
• PGI - covers agricultural products and foodstuffs closely linked to the geographical area. At least one of the stages of production, processing or preparation takes place in the area

It is possible to specify PDO/ PGI products when justified by menu requirements. For example, if menus or customers regularly demand Scotch Beef or Orkney Lamb, it is not necessary to specify "or equivalent". If specifying PGI or PDO because of quality requirements alone, however, it is necessary to add the words "or equivalent" and to consider products which meet equivalent quality criteria

Table of PGI and PDO designated products for Scotland at 2010. A full list is available via the footnote ⁹

Product	Status	Dossier Number
Scottish farmed salmon	PGI	UK/ PGI/0105/0141
Scotch lamb	PGI	UK/ PGI/0117/0275
Scotch beef	PGI	UK/ PGI/0117/0274
Arbroath smokies	PGI	UK/ PGI/0005/0081
Shetland lamb	PDO	UK/ PDO/0017/0272
Orkney beef	PDO	UK/ PDO/0017/0272
Orkney lamb	PDO	UK/ PDO/0017/0273

Fair Trade

Scottish Government guidance ¹⁰ recommends that public procurement should support fair trade food and drink as far as possible. It is not permissible to specify only fair trade items, but the guidance explains how you can support fair trade by other means, for example by encouraging suppliers to include fairly traded options as part of their tenders and working on a voluntary basis with suppliers once contracts have been awarded.

Climate Change

Section 44 of the Climate Change (Scotland) Act places duties on public bodies relating to climate change. The duties require that a public body must, in exercising its functions, act:

• in the way best calculated to contribute to delivery of the Act's emissions reduction targets
• in the way best calculated to deliver any statutory adaptation programme
• in a way that it considers most sustainable

The duties came into force on 1 January 2011 and apply to all public bodies, defined as a Scottish public authority. The Scottish Information Commissioner website contains information on Scottish public authorities.

The Act allows Ministers, by order, to require reports on compliance with climate change duties, and to designate one or more bodies or persons to monitor compliance and to carry out investigations. The Act specifically mentions that such reports might include an explanation of how an organisation's procurement policy and procurement activity have contributed to compliance with those duties.

Procurement legislation does not permit consideration of the distance travelled to deliver food, or the locality in which it is produced, as these are discriminatory criteria. There is, however, still scope for supporting climate change obligations through your food procurement contracts by, for example:

• setting reasonable requirements for delivery frequencies, seasonality, freshness and timescales for delivery
• reducing the frequency of individual journeys needed to make deliveries
• requiring suppliers to switch off their vehicle engines when making deliveries
• reducing or avoiding excessive packaging
• using recyclable materials in packaging

Community Benefits

Community Benefit ¹¹ Clauses can legally be included in public procurement contracts. Procurement can be used to achieve social and environmental requirements if this complies with EU procurement legislation, including a duty to specify the requirements in the contract notice published in the Official Journal of the European Union ( OJEU). The contracting authority must also have the legal powers to pursue the requirements.

In particular, the principles of equal treatment and transparency must be observed. Community benefit requirements in contracts must be objective and should not favour local suppliers or restrict employment or training to UK nationals. For example, contracting authorities must not express a preference for jobseekers from a particular locality to receive training or employment or require subcontracts to be placed with "local" SMEs. As wide a variety of suppliers as possible should be able to compete for the contract.

Advertising the Requirement

In 2008 ¹² , the public sector in Scotland spent around £130 million on food and drink. This presents a significant opportunity for suppliers, including Scottish suppliers.

You should try to ensure that contract opportunities attract as much interest as possible from a wide range of suppliers. They should be widely advertised to attract Small and Medium sized Enterprises ( SMEs), Social Enterprises, and Third Sector organisations, as well as larger suppliers such as food service companies. You may also consider advertising forthcoming tendering opportunities in advance in order that suppliers and producers can plan ahead, for instance by publishing Prior Information Notices ( PINs).

Procurement legislation does not permit preference being given to any sector of suppliers, such as local suppliers, Social Enterprises or SMEs. Supported Businesses are an exception and particular rules apply to them - see below.

You can make it easier for a wide range of suppliers to compete for public business by:

• advertising contract opportunities as widely as possible, including on the Public Contracts Scotland portal
• ensuring potential suppliers are aware of where opportunities will be advertised
• making the tender documentation and the tendering procedure as simple as possible for all suppliers
• organising/attending regular meet the buyer events. These events should not be linked to a particular tendering opportunity unless they are advertised to the same extent as the contract opportunity itself

The Scotland Food and Drink ¹³ website provides further information on the Meet the Buyer events that they run. Public bodies themselves are encouraged to initiate Meet the Buyer events.

Public Contracts Scotland

The Public Contracts Scotland on-line portal ( www.publiccontractsscotland.gov.uk) provides a single facility for suppliers and purchasers alike, where Scottish public sector requirements can be advertised. The portal supports publishing contract advertisements in the OJEU (where above EU threshold requirements must still be advertised) but can also be used for below threshold requirements. Facilities are free to suppliers. Additionally it supports individual organisations' micro-sites - called "buyer profiles" - enabling organisations to provide a local interface to Public Contracts Scotland from their own website, while providing a consistent approach. All public bodies should adopt the portal and make sure it is widely used throughout the organisation.

A further facility available through Public Contracts Scotland is 'Quick Quote'. This is an online request for quotation facility and can be used to obtain competitive quotes for low value/low risk procurement exercises.

Bringing in more suppliers will often bring greater competition to the market place, offering greater value for money to purchasers and potentially reducing the costs of procurement. Social enterprises, micro enterprises and SMEs are key to developing greater competition and a greater choice in the food that can be offered through menus.

Supported Businesses

Article 19 of the European Union Procurement Directive 2004/18/ EC (Regulation 7 of The Public Contracts (Scotland) Regulations 2006) makes it possible for public bodies to reserve the right to participate in a particular competition to supported businesses, a supported employment programme or supported factories. Where a public body wishes to reserve the right to tender for a requirement in this way its decision to do so must be specified when advertising the requirement, including when advertising in the Official Journal of the European Union ( OJEU).

In Regulation 7, a supported business, supported employment programme, or supported factory means a service, scheme or establishment where more than 50% of the workers are disabled persons who by reason of the nature or severity of their disability are unable to take up work in the open labour market.

Information on supported factories and businesses is provided at:

http://www.scotland.gov.uk/Resource/Doc/116601/0105625.pdf

http://www.ogc.gov.uk/documents/Supported_Factories__Businesses.pdf

Selection of Tenderers

Selection criteria must focus on potential suppliers' economic and financial standing, technical capacity and experience. At this stage in the procurement process you cannot ask questions about potential suppliers' general policies on sustainability issues unless they relate directly to the subject matter of your contract and then only as part of the assessment of whether potential suppliers have relevant and appropriate experience that would make them a suitable candidate to be invited to tender. At this stage you are not allowed to consider how their policies might influence their performance of the contract.

Tender Evaluation and Contract Award

Only two options are available - (1) Lowest Price and (2) Most Economically Advantageous Tender ( MEAT). The Scottish Procurement Policy Handbook specifies that in determining the criteria for the award of contracts, buyers should rarely rely on price alone. This is because awarding contracts on the basis of the most economically advantageous tender allows buyers to strike an appropriate balance between quality and price when arriving at a value for money judgement.

The emphasis on whole life cost encourages the consideration of sustainability issues. Criteria for determining the most economically advantageous tender must be relevant to the subject matter of the contract and appropriately weighted, according to their relative importance to the performance of the contract. The criteria must be notified to tenderers in advance, for example, in the Contract Notice and other advertisements, so that tenderers are able to consider them when preparing their submissions.

Tenderers may at this stage refer to various policies they have in relation to sustainability. Many of these schemes are general high level statements or refer to achievement of voluntary standards or membership of voluntary schemes. You should not score these policies or voluntary standards or schemes. Other tenderers may have equal or better standards but choose not to join a particular scheme.

The important thing is to ask tenderers to say exactly what part those policies would play and how they would influence the day to day operation of your contract and then score them according to how relevant they are to the performance of that particular contract.

Contract Management

The contract management responsibilities of named individuals must be clearly defined and understood, preferably through a documented scheme of delegation. Tender documents should explain the expectations and policies of the organisation, and all requirements for performance and management information through the life of the contract.

As with any procurement, after a food contract has been awarded, you are free to work co-operatively with suppliers to voluntarily improve the sustainability of the contract including reducing their environmental impact, and that of their supply chain, by for example, reducing packaging, making use of recycled packaging and looking at delivery frequency and scheduling.

Some caution must be exercised to ensure that any such voluntary improvements do not amount to a material or significant change to the contract, as this might lead to unsuccessful tenderers complaining that their tenders would have been different, had they known what the revised requirement was going to be. Material or significant changes to contracts might mean that the contract has to be re-tendered.

Food Safety and Contract Management

The Pennington Report ¹⁴ on the Outbreak of E.coli in South Wales was published in March 2009, and has significant implications that will require all public sector organisations, food producers and suppliers to review and improve where necessary their processes and compliance mechanisms. The following recommendations quoted directly from the Pennington Report are pertinent particularly when considering contracting for food supplies with SMEs that do not have the resources of large producers and foodservice distributors. The importance of this cannot be overstated.

Recommendation 16; Businesses contracting for the supply of high-risk foods, such as raw and cooked meats, to public sector organisations must be subject to independent food hygiene audits.

Recommendation 22; Good practice advice and guidance issued by public bodies should be subject to follow-up and/or more detailed evaluation.