Community benefits in public procurement

Executive Summary

This report presents the findings of the Community Benefits in Public Procurement Pilot Programme which was intended to promote the use of Community Benefit, in particular, targeted recruitment and training ( TR&T), clauses, in public contracts. The work of the Programme stemmed from general uncertainty regarding the legality and scope for using Community Benefit clauses in public procurement projects.

It explains the legal and policy background for using these clauses, especially in the context of the Public Contracts (Scotland) Regulations 2006, the Local Government Act (Scotland) 2003 and the case law of the UK and EU courts. It illustrates, through detailed descriptions of the procurement process, how Community Benefits can be delivered within the legal procurement framework in an affordable manner. The report is accompanied by brief guidance to facilitate understanding of the sensitivities related to this subject.

Over recent years there have been developments in the interpretation of the policy and legal frameworks surrounding public procurement that have made it possible to consider incorporating Community Benefits into public contracts. Such developments include the research funded by the Joseph Rowntree Foundation (Achieving Community Benefits through Contracts by Richard Macfarlane and Mark Cook. The Policy Press. Bristol 2002) ¹ , the Interpretative communication of the EU Commission on the possibilities for integrating social considerations into public procurement (15 October 2001), and the EU's adoption of the Consolidated Directive on public procurement which has been incorporated in Scotland by the Public Procurement (Scotland) Regulations 2006.

Community Benefits are one of a range of social clauses that can be included in public contracts. In order to form part of the criteria according to which contracts are awarded, community benefit clauses must be included as a core part of the contract specification i.e. where a contract may have tradtionally been for construction, training and recruitment elements may be included as part of the specification. In these pilots the 'community benefit' that was sought by the contracting authorities was targeted recruitment and training ( TR&T).

The report draws on the experiences of five contracting authorities -

• Glasgow Housing Association, ( GHA), the largest of the pilots, is the largest UK social housing stock transfer Association with more than 80,000 housing units;
• Raploch Urban Regeneration Company (Raploch URC), one of three pathfinder urban regeneration companies in Scotland. Raploch is an area of Stirling that experiences low levels of income and qualifications and high unemployment;
• Dundee City Council which was keen to use its 'well-being' powers, as conferred by the Local Government Act (Scotland) 2003, to include Community Benefit clauses in a number of social care and construction contracts;
• Inverclyde Council, whose constituents experience high levels of deprivation, were keen to use their procurement powers to achieve regeneration objectives; and,
• Falkirk Council whose strategic objective is to mainstream the concept of achieving wider community benefits from all the Council's expenditure by embedding the idea in Council policy.

The pilot case studies are based on projects of varying scales and consider use of clauses in construction and in social care procurement. While the cases themselves do not always reflect best procurement practice, deviations from good practice have been highlighted throughout the report and they have provided the foundation for application of best practice in use of Community Benefits in procurement. Where projects have deviated from policy or recommended best practice, this is highlighted in the report through the extensive use of footnotes. In using Community Benefit clauses, authorities are expected to seek their own legal advice to ensure that their clauses comply with national and EU legal requirements.

Each pilot presented individual issues which are explained in detail in the report. These may be generally summarised as:

• The appropriateness of including community benefit clauses in procurement projects will vary from contract to contract and they are likely to be most suited to works and services contracts;
• Once a decision has been taken to use Community Benefit clauses, they should be included at all stages of the procurement process from business case to contract implementation and monitoring;
• Projects benefit from a project champion, i.e. a person or a team of persons who can take control of the Community Benefits aspect of the contract, with adequate resources and high-level backing;
• Targeted Recruitment and Training clauses require an understanding of the capacity of the contract to meet these requirements and an understanding of supply-side arrangements available to the successful bidder to ensure their delivery, including training and funding;
• Organisations must set firm and realistic expectations in terms of their requirements. These must be precise to facilitate implementation and proportionate monitoring of the clauses.

Community Benefit clauses can be legally included in public procurement projects and this report details a range of the path-finding work that has been carried out which is intended to assist other organisations that wish to explore the scope for achieving Community Benefits through procurement.

The facilitators of the Programme and authors of the report were Mark Cook of Anthony Collins Solicitors LLP and Richard Macfarlane, who were co-authors of the Joseph Rowntree Foundation ( JRF) Report.