Procurement in a nutshell – social and environmental aspects

The Public Contracts Regulations 2015 (PCR 2015) gave legal footing to the inclusion of social and environmental matters within the public procurement process in the UK.

On 5 October 2016, the Crown Commercial Service (CCS) published a guidance document on the social and environmental aspects of the PCR 2015.

What’s in the guidance?

The guidance highlights key points of which contracting authorities (CAs) should be aware including:

• the flexibility available to CAs to include social, labour law and environmental criteria throughout the procurement process;
• that government policy is for CAs to ensure that suppliers comply with relevant social, environmental and labour laws in delivering public contracts; and
• the existing obligations within the regulations for CAs to ensure compliance with various international laws.

An explanation of the measures available to and the requirements incumbent on CAs throughout the different stages of the procurement process is provided. As an overview, the guidance covers:

• The early stages (including exclusion and selection)
  • Reserved contracts provision (regulation 20)
    • Allows CAs to reserve the right to participate in procurement procedures to particular bidders (such as sheltered workshops), provided that they key requirement is met.
  • Exclusions (regulation 57)
    • Oblige CAs to exclude tenderers where convicted of terrorist, child labour or human traffic-related offences or where in breach of one of the mandatory exclusion conditions.
    • Provide CAs with the discretion to exclude tenderers in violation of social, labour or environmental conventions.
• The specification
  • Labels (regulation 43)
    • CAs may ask for labels as a means of evidencing that the deliverables meet the specified environmental characteristics.
• The award stage
  • Contract award criteria (regulation 67)
    • The regulations provide principles that the criteria must adhere to, rather than an exhaustive list of criteria, including best price quality ratio and being related to the subject matter of the contract.
  • Life-cycle costing (regulation 68)
    • CAs may include environmental factors such as CO2 emissions and carbon footprint of the manufacturing stage of a product.
  • Abnormally low tenders (regulation 69)
    • An abnormally low tender must be rejected if it is such because it does not comply with international or national environmental, social or labour laws.
• Post-award
  • Conditions for performance of contracts (regulation 70)
    • Provides the option of including social, employment related and/or environmental contract performance conditions where appropriate, provided they are linked to the subject matter of the contract.

A facts and questions section provides further insight on matters of policy, definitions and interpreting the regulations and certain practical queries which CAs might have. Suggested contract clauses for social and environmental issues are provided in an appendix to the guidance.

Why is this important?

The inclusion of social and environmental aspects in procurement is part of a sustainable procurement process. Sustainable procurement plays a role in ensuring that the products and services that a CA buys have the lowest environmental and most positive social impact.

The goal is for the procurement to achieve reduction in adverse impacts upon health, social conditions and the environment. This in turn creates savings for both organisations and the wider general community. Key to the business case for CAs to procure sustainably is the potential for the more efficient use of public resources by:

• reducing costs through greater energy efficiency, reduced waste disposal and reduced risk management;
• lowering costs for some products and services; and
• increasing productivity and lessening lost time from sickness due to the improvement in the work environment.

There is clearly encouragement, at both the EU and UK level, for CAs to accommodate social and environmental aspects in procurement.

At the least, CAs should take heed of the social and environmental aspects of procurement to the extent that they must fulfil certain obligations under the PCR 2015.

Beyond this, CAs should take the time to consider the potential long term benefits which they may reap as a result of successfully implementing sustainable procurement.

The CCS guidance perhaps does not set the consideration of social and environmental aspects in the most practically-orientated context.

For example, the guidance does not cover strategic development and prioritisation of initiatives, assessing the needs of the CA and planning the procurement accordingly or the topic of translating the defined subject of the contract into detailed measurable technical specifications.

Nevertheless, the guidance is a useful starting point for CAs. Where a CA has any doubts regarding the implementation of sustainable procurement practices, seeking legal advice at the early stages will safeguard against difficulties further along the process.

How can I find out more?

If you have any queries on the issues raised or on any aspect of procurement, please contact us via our procurement hotline on 0191 204 4464.