Community benefits in public procurement

2 Understanding Community Benefits

2.1 Mapping the Field

The following hierarchy may be helpful in understanding this emerging field of policy and activity:

• Targeted recruitment and training ( TR&T) is one element in a wider range of Community Benefits;
• Community Benefits is one element in a wider range of 'social issues';
• 'Social issues' are part of the still wider concern of 'sustainable procurement';
• Sustainable procurement is a way of delivering the Government's sustainable development objective.

'Sustainable procurement' has primarily been concerned with environmental issues, but there is now greater awareness of the need to extend this to social and local economy issues. The Sustainable Procurement Task Force's definition of sustainable procurement is:

"a process whereby organisations meet their needs for goods, services, works and utilities in a way that achieves value for money on a whole life basis in terms of generating benefits to society and the economy, whilst minimising damage to the environment". ⁷

'Social issues' in the context of procurement is understood to include core labour standards, ⁸ disabled access, disability, gender and race equality, employment and training issues, fair trade, and support for SMEs including social enterprises, black and ethnic minority enterprises and women and disabled-owned businesses.

'Community Benefits' include not only targeted recruitment & training, but also equal opportunities, training for the existing workforce, supply-chain initiatives, community consultation, 'considerate contractor' schemes, contributions to education, the promotion of social enterprises, and resources for community initiatives.

Targeted Recruitment & Training ( TR&T) outcomes are viewed as key community benefits with clear scope for use in public sector contracts.

2.2 Innovation

The use of Community Benefit clauses provides a method of including social and economic matters in contracts for the supply of goods, services or works that do not conventionally have these requirements as defined or measured outcomes. ⁹

Therefore, there is need for new and innovative ideas regarding the ways in which social requirements can be inserted into contract specifications while ensuring value for money in their delivery. The problems faced by public bodies in doing this can be disaggregated into:

• those related to pursuit of new contract requirements, e.g. disabled access to public buildings or new environmental standards; and/or
• those related to the context in which the social requirements are being introduced, e.g. vocational training being included in a works contract.

However, these problems do not provide a sufficient explanation for the resistance of some public bodies to successfully incorporating innovative solutions into their procurement practice. A second explanation is centre-periphery tensions, i.e. tensions operating between central and local procurement bodies, and at each level within a procurement body. They can involve:

• resistance by agency or departmental procurers to social requirements that are being promoted from the centre of the organisation;
• resistance by the centre to social requirements that procurers at the periphery want to include.

2.3 Policy Rationales

2.3.1 Sustainable development

The following are priorities for Scotland and the whole of the UK:

• Sustainable consumption and production: achieving more with less. This includes reducing the inefficient use of resources, looking at the impact of products and materials across their whole lifecycle and encouraging people to think about the social and environmental consequences of their purchasing choices.
• Climate change and energy: securing a profound change in the way we generate and use energy, and reducing greenhouse gas emissions.
• Natural resource protection and environmental enhancement: protecting our natural resources, building a better understanding of environmental limits, and improving the quality of the environment.
• Sustainable communities: creating communities that embody the principles of sustainable development locally. ¹⁰

The 'well-being powers' of local authorities ¹¹ can be seen as the cascading of sustainable development to a local level. Including social issues in procurement can be a way of achieving sustainable development objectives as described above. This will be discussed in more detail in section 3.3.

2.3.2 Sustainable Procurement Task Force

The business-led Sustainable Procurement Task Force was set up in May 2005 to bring about a step change in the way the UK buys its goods and services. The aim is for the UK to be recognised as a leader among EU Member States in the field of Sustainable Procurement by 2009. In June 2006 the Task Force published its National Plan ¹² with a challenging set of recommendations to the UK Government for action in the short, medium and long term. The UK Government issued its response in March 2007.

The Scottish Government will produce a Scottish Sustainable Procurement Action Plan later in 2008 which will have regard to the UK report, the recommendations of the Review of Public Procurement in Scotland published in March 2006 and will build on existing achievements.

The UK report covered a range of themes including leadership, professionalism and building capacity and these also feature in recommendations of the Scottish Public Procurement Review, which also recommends that the Scottish Government should prepare and issue guidance on Corporate Social Responsibility ( CSR) in procurement.

The Scottish Government is committed to embracing social, economic and environmental issues in its own procurement activity and in that of the wider public sector in Scotland. As part of its CSR guidelines the Government intends to support and promote the roll-out of the flexible framework produced by the UK Sustainable Procurement Task Force for benchmarking progress made by contracting authorities in embedding sustainability into procurement practice and organisational culture.

2.3.3 Regeneration and Social Inclusion

At a national level the importance of linking regeneration spend to opportunities for disadvantaged communities is clearly stated in the Scottish Government's Regeneration Policy Statement:

"……regeneration is about achieving outcomes for business, people and communities. It is about taking an approach which ensures these outcomes work together and reinforce each other to generate economic growth and an improved quality of life for people and communities."

"…… regeneration can … generate economic opportunities and connect disadvantaged communities to these opportunities … … and through this canmake the difference in tackling concentrations of poverty and disadvantage." ¹³

At a local level many Community Planning Partnerships will have adopted policies to help address social exclusion, as will other public bodies. For example the Neighbourhood Renewal strategy of Glasgow Housing Association ( GHA) lists amongst its aims:

"Jobs and Training. To maximise sustainable jobs and training gains for Glasgow residents arising from GHA investment activity." ¹⁴

This is a legitimate policy goal for GHA. It reflects commitments made during the tenants' ballot on the transfer of the City Council's housing stock to GHA.

2.4 A Flexible Approach

The inclusion of social requirements in public procurement contracts can be achieved in accordance with UK and EU procurement laws, policy and good practice provided appropriate drafting and procurement processes are used.

Recent work for the DTI Manufacturing Forum ¹⁵ identified the following benefits of 'social clauses' relative to other means of achieving social policy goals:

• they are available to a wide range of public bodies as a means of assisting in the delivery of their social, economic and environmental duties and priorities;
• they are flexible: they can be designed for specific contracts in specific contexts;
• they are more capable of being enforced than other means that are available to many public sector purchasers;
• they can provide durability in a context where public sector contracts may last for many years ( e.g. PFI and facilities management) but organisations, personnel, and tax and grant regimes change regularly;
• they can be used in tandem with other approaches, e.g.:
  • to include measurable requirements in a specific contract as a means of implementing legislation or Government guidance;
  • to include requirements for outcomes that could largely be paid for by the contractor obtaining grants from other bodies;
• appropriate use of social clauses fits well with good procurement practice offering:
  • consistency and transparency: the opportunity for the purchaser to identify need and convert this into a specification that each bidder has to deliver;
  • the opportunity to focus on measurable outputs rather than the delivery process;
  • an approach that can be the subject of comparative evaluation which will help secure value for money;
  • the opportunity to include monitoring information as a part of the specification, which will enable the Authority to ensure that they receive the service they pay for.

2.5 Scottish and UK Guidance Notes on Social Issues in Public Sector Procurement

In February 2006 the Office for Government Commerce issued its guidance note on Social Issues in Purchasing (the Social Note), designed to further understanding of how such issues can be legitimately incorporated into the purchasing cycle. It reinforces good practice in procurement emphasising that:

• social issues must be relevant to the subject matter of the contract;
• actions must be consistent with government procurement policy based on value for money;
• sustainable procurement must be approached from a whole life cost perspective.

The Social Note covers a wide range of social issues, including: Community Benefits; core labour standards; disability and equality issues; employment and training issues; fair trade; gender equality; race equality; SMEs; workforce skills (including adult basic skills). In Scotland the OGC note has been superseded by the Scottish Procurement Directorate's note "Social Issues in Public Procurement".

Both sets of Guidance set out actions for incorporating social issues into procurements at the different stages of a purchasing process, covering: strategic context, business case development, specification. selections, tender evaluation and contract management. The Scottish Guidance provides an overview of how and when social issues may be taken into account. Neither guide precludes the need to take legal advice in any case where there is doubt as to whether it is possible to take social issues into account.

Noteworthy is the acceptance that "a core requirement can be defined as an essential part of the contract, and this should be reflected both in the specifications and the conditions of the contract … In this context it is possible for a social issue to be a core requirement provided it is central to the subject of a procurement and consistent with the rules...". ¹⁶ Attempts to include secondary or additional requirements that are not related to the subject of the contract can add costs and increase the risk of legal challenge. It is for the authority to decide, on the basis of their powers and policies, what Community Benefits are a core requirement.