Publication - Research publication

Analysis of the impact and value of community benefit clauses in procurement

Published: 26 Jun 2015
Part of:
Research
ISBN:
9781785444777

This research draws on data from a large scale e-survey of public organisations and in-depth analysis of 24 individual contracts.

55 page PDF

1.9 MB

55 page PDF

1.9 MB

Contents
Analysis of the impact and value of community benefit clauses in procurement
2. Use of Community Benefit Clauses

55 page PDF

1.9 MB

2. Use of Community Benefit Clauses

Key Findings

  • Since January 2009, two thirds of public sector organisations surveyed have used CB clauses in procurement. Of the 62 organisations that reported they had used CB clauses, 26% have used CB clauses routinely.
  • The main reasons given for using CB clauses were the contribution they can make towards achieving local and/or organisational outcomes (74% of organisations) and toward achieving Scottish Government National Outcomes (55% of organisations).
  • In terms of those not currently using CBs clauses, the main reasons were that CB contracts were not seen as relevant to the types of contract they let, practical concerns in terms of the management of CB clauses, having not heard of CB clauses, and not understanding the legal position on the use of CB clauses. This suggests additional support is required around raising awareness and understanding of CBs.
  • Amongst the organisations surveyed that had used CB clauses, 85% had at least one policy, process or structure in place to support the use of CB clauses. For example, 59% had a procurement officer or champion responsible for CBs.

Introduction

This chapter is based on analysis of the e-survey and provides an overview of the extent to which participating organisations have used CB clauses in procurement since 2009, the reasons behind their use (or in some cases non-use), and the processes and policies in place to support their inclusion. With 94 organisations participating in the survey, many with extensive experience of working with CBs clauses, the results provide an insight into their use across Scotland.

Use of Community Benefit Clauses in Procurement

Since January 2009, two thirds of organisations surveyed have used CB clauses in procurement. Of the 62 organisations that have used CB clauses, only 16 (26%) have used them routinely with the remaining 46 organisations (74%) using them on only some of their contracts. This suggests that even amongst organisations currently using CB clauses significant scope exists to expand their use into additional areas.

47 organisations were able to provide details about the individual contracts in which CB clauses were included. A total of 204 contracts were identified, an average of four per organisation. However there was considerable variation across organisations with:

  • 15 organisations (31%) able to identify only one contract;
  • 15 organisations (31%) able to identify two to five contracts;
  • 17 organisations (36%) able to identify six or more contracts.

In terms of CB usage across different types of organisation, and with care taken in interpreting the results as the numbers in each category are small, Figure 2.1 shows:

  • Just under half (54%) of the government agencies and bodies that completed the survey had not used CB clauses since 2009.
  • All local authorities that completed the survey had used CB clauses since 2009, although only three local authorities (17%) said they used them routinely.
  • Over two-thirds (69%) of housing associations had not used CB clauses since 2009 and it is believed that many of these housing associations will be small in size and lack the resources for using CB clauses, noting that the delivery of CB is not the core business of housing associations. Three housing associations (19%) said they used them routinely and two (13%) said they used them on some contracts.
  • The three Urban Regeneration Companies (URCs) that completed the survey had all used CB clauses - with two of them using them routinely.
  • Four universities and colleges said they had used CB clauses since 2009 - 57% of those who completed the survey from this group.

Figure 2.1: Use of CB Clauses Since January 2009 by Type of Organisation

Number of organisations

Not Used CB Clauses

CB Clauses Used

Routinely

On Some Contracts

No.

%

No.

%

No.

%

Scottish Government & govt agencies

26

14

54

2

8

10

38

Local authorities

18

0

0

3

17

15

83

Urban Regeneration Companies

3

0

0

2

67

1

33

Universities and colleges

7

3

43

0

0

4

57

Housing associations

16

11

69

3

19

2

13

Others

3

0

0

1

33

2

67

Source: TERU E-survey of Procuring Organisations
Notes: n=73

Reasons for Use and Non-Use of Community Benefit Clauses in Procurement

The main reasons identified by organisations using CB clauses were as follows.

  • 74% of organisations using CB clauses do so to help ensure procurement spend contributes to local or organisational outcomes. This would appear to tie in with the procurement duty now placed on organisations as a result of the Procurement Reform (Scotland) Act 2014, although the survey was undertaken before it received Royal Assent.
  • Contributing to Scottish Government National Outcomes was mentioned by 55% - perhaps unsurprisingly given that public agencies are asked to consider how they can contribute to these through the Outcome Agreement process.
  • Using CB clauses to encourage innovation in service delivery was identified by 40%. This is a key element of the Procurement Reform (Scotland) Act 2014, so it will be helpful to monitor how this changes over time.
  • Only a small proportion of organisations - 18% - were using CB clauses to build stronger relationships with their contractors.

In terms of the other reasons given, these were primarily in relation to supporting or building stronger links with their local community. In addition, one organisation mentioned that they were aware of the Procurement Reform (Scotland) Act 2014 and was using CB clauses to ensure they were meeting the requirements of this legislation.

Figure 2.2: Main Reason for Using CB Clauses (% of Those Using CB Clauses)

Percentage

To ensure procurement spend contributes to local / organisational outcomes

74

To ensure procurement spend contributes to Scottish Government National Outcomes

55

To encourage innovative approached to delivering services

40

To build stronger relationships with contractors

18

Other

8

Source: TERU E-survey of Procuring Organisations
Notes: n=62

Of the organisations that had not used CB clauses, the main reasons given for this were as follows.

  • The main reason - mentioned by 53% of organisations - was that they did not think CB clauses were appropriate for the type of contracts they let. Whilst e-survey participants were not asked why they felt they were inappropriate, based on the literature on this topic[8], it is fair to assume that this reflects perceptions that CB clauses apply only to construction projects.
  • A quarter (25%) were concerned about the resources required to manage and monitor CB clauses, suggesting that some organisations perceive the inclusion of CB clauses as a potentially labour and/or resource intensive activity.
  • Just under a fifth (19%) raised concerns about the legality of CB clauses, while a similar proportion said they had not heard of CB clauses. Combined, these suggest that there is still work to be done in terms of increasing understanding and raising awareness of when and how to use CB clauses.
  • Some organisations were concerned about the implications CB clauses had for the cost of the contracts (19%) or the quality of contractors coming forward (16%).

In relation to the 'other' reasons given, these included:

  • Limited procurement being undertaken and contracts that are being procured being low value, limiting the capacity to use CB clauses.
  • Contracts being of a highly specialised nature (e.g. scientific research), which makes CB clauses more difficult to use.
  • A commitment having been made at an organisational level to use CB clauses but where:
    • No contracts have been let since approach agreed.
    • None of the contracts let have met the criteria agreed (e.g. all contracts let have been below the minimum contract value for CB clauses).
  • Difficulties in securing buy-in to CB clauses from internal stakeholders.
  • A lack of capacity within the organisation to enable it to use CB clauses (for example, no dedicated procurement officer).

No organisation cited a previous bad experience for not using CB clauses.

Figure 2.3: Main Reason for Not Using CB Clauses (% of Those Not Using CB Clauses)

Percentage

Do not think CB clauses appropriate for type of contracts let

53

Concerned CB clauses would require greater internal resources to manage / monitor

25

Concerned using CB clauses would result in higher contract costs

19

Not clear about legal position on use of CB clauses

19

Have not heard of CB clauses

19

Concerned good quality contractors would be put off from tendering by CB clauses

16

Concerned using CB clauses would result in contracting process taking longer

9

Previous bad experience of using CB clauses

0

Other

22

Source: TERU E-survey of Procuring Organisations
Notes: n=32

Processes and Policies to Support Use of CB Clauses

Focusing only on those organisations that had used CB clauses, Figure 2.4 shows the proportion of organisations with a range of policies, processes and systems in place to support the effective use of CB clauses.

  • Overall, 46 of the 54 organisations (85%) that used CB clauses and answered this question had at least one policy, process or structure in place.
  • 67% of organisations said that they had a policy or agreed policy in place for using community benefits.
  • 59% had a procurement officer or champion responsible for community benefits.
  • 57% had systems to monitor progress against CB targets, which suggests that 43% of organisations have CB targets but do not monitor them.
  • Other processes, policies and systems were much less common.
    • 37% reported services in place to support the contractor to meet CB clauses.
    • 33% had a working group in place to embed community benefits.
    • 33% had others structures or processes in place.

Five organisations (9%) had all six types of policy and process in place and a further 20 (37%) had four or five policies in place - suggesting that a substantial number of organisations have put serious efforts into embedding the use of CB clauses.

Figure 2.4: Processes and Policies in Place to Support Use of CB Clauses (% of Those Using CB Clauses)

Percentage

Policy or agreed process for using CB clauses

67

Procurement officer / champion responsible for CB

59

Systems in place to monitor progress against CB targets set

57

Services in place to help contractors meet CB clauses

37

Working group to embed CB within own organisation

33

Any other structure or process that supports use of CB clauses

33

Source: TERU E-survey of Procuring Organisations
Notes: n=54

Figure 2.5 compares the use of processes and policies to support the use of CB clauses amongst those organisations that use CB clauses routinely and those that use them on some contracts only. Whilst care must be taken given the small number of cases (only 14 in relation to those using CB clauses routinely), it is noticeable that those organisations that use CB clauses routinely appear to be much more likely to have processes and policies in place to support their use. However, what the survey cannot tell us is whether having processes and policies in place is leading to more routine use of CB clauses - or if having decided to use CB clauses routinely leads organisations to put processes and policies in place to manage this commitment.

Figure 2.5: Processes and Policies in Place to Support Use of CB Clauses by Frequency of Use of CB Clauses (% of Those Using CB Clauses)

CB Clauses Used Routinely

CB Clauses Used on Some Contracts

All using CB Clauses

No.

%

No.

%

No.

%

Policy or agreed process for using CB clauses

11

79

25

63

36

67

Procurement officer/champion responsible for CB

11

79

21

53

32

59

Systems in place to monitor progress against CB targets

13

93

18

45

31

57

Services in place to help contractors meet CB clauses

10

71

10

25

20

37

Working group to embed CB within your organisation

7

50

11

28

18

33

Other structure or process to support use of CB clauses

6

43

12

30

18

33

Source: TERU E-survey of Procuring Organisations
Notes: n=54 (14 using CB clauses routinely; 40 using CB clauses on some contracts)

Next Chapter

Having considered the usage of CB clauses in Scotland, Chapter 3 proceeds with an in-depth analysis of the outcomes and impacts achieved from 24 contracts of varying scale and type that were identified from the survey responses.


Contact

Email: Joanne Farrow