last update March 2016
We implement reserved contracts via Scottish regulations. European Directives (ED) have set a change in scope for the award of reserved contracts that we must transpose in to Scottish Law. We recognise the uncertainty created by the change of definition from 50 per cent disabled to 30 per cent disabled or disadvantaged.
As there is no singular authoritative definition of disadvantaged we have written to the European Commission asking if it intends to issue practical guidance on this for purchasers to ensure a consistent approach across all Member States, and if so, when. In the meantime, contracting authorities and those considering the use of reserved contracts should consider what is known and published in this respect.
The definition of those businesses who can benefit from access to reserved contracts is in two parts:
Firstly, a supported business’ primary aim is the social and professional integration of disabled or disadvantaged persons. This is an entirely new condition. This may be evidenced in the Memorandum and Articles of Association, or similar documentation that underpin the formation of the business.
Secondly, at least 30 per cent of the employees of those businesses should be disabled or disadvantaged. The precise proportion of staff may fluctuate over time. However with this requirement being underpinned by the main aim of the business being the social and professional integration of disabled and disadvantaged people, then assurances should be evidenced through the HR and resourcing policies of the business.
Notwithstanding further guidance that may be issued by the European Commission, reference should be made to EU Directive 2014/24/EU, recital 36, for what may be considered as disadvantaged.
"In order to be considered for a reserved contract, businesses will need to fulfil both parts of the definition."
EU Directive 2014/24/EU regarding public procurement, recital 36 states:
"Employment and occupation contribute to integration in society and are key elements in guaranteeing equal opportunities for all. In this context, sheltered workshops can play a significant role. The same is true for other social businesses whose main aim is to support the social and professional integration or reintegration of disabled and disadvantaged persons, such as the unemployed, members of disadvantaged minorities or otherwise socially marginalised groups. However, such workshops or businesses might not be able to obtain contracts under normal conditions of competition. Consequently, it is appropriate to provide that Member States should be able to reserve the right to participate in award procedures for public contracts or for certain lots thereof to such workshops or businesses or reserve performance of contracts to the context of sheltered employment programmes."
What is a supported business?
Scotland has a well–established history of creating supported businesses – some have been in existence for over 150 years and there are currently 15 supported businesses in operation. These businesses provide sustainable employment for around 1,100 people in Scotland of whom around 65 per cent are people with disabilities. The skills and expertise of the workforce are exceptional - providing high quality, competitive goods and services.
Why are supported businesses important?
The value of on-going employment, training, social interaction and mentoring offered to people with disabilities is central in enabling them to become more independent and active in the workplace and their communities. The Scottish supported business sector has a turnover of more than £35 million each year and provides a wide range of high quality products coupled with a strong ethos of customer service to both the public and private sector.
Legislation and supported businesses
Public sector buyers have the freedom, within EU procurement Regulations, to decide to reserve contracts to supported businesses only - many do so as part of their organisation’s social and corporate social responsibility policies.
It is the Scottish Government’s policy that every public body should have at least one contract with a supported business. Individuals and organisations are strongly encouraged to investigate the breadth and quality of services and goods on offer, as this is a sector we should be proud to support.