Community benefits in public procurement

This report presents the findings of a pilot programme which was intended to promote the use of 'community benefit'.


1 Achieving Community Benefits Through Contracts: law, policy and practice by Richard Macfarlane and Mark Cook. ( ISBN 1 86134 424 4). The Policy Press. Available from Marston Book Services, PO Box 269, Abingdon, Oxon OX14 4YN Tel 01235 465500. Fax 01235 465556. E-maildirect.orders Price £13.95 + £2.75 p&p.

2 The Raploch URC pilot sought wider Community Benefits but these are not covered by the case study included here.

3 Social Issues in Purchasing, the Office of Government Commerce, February 2006.


5 For this report 'value for money' has been interpreted in terms of cost, affordability and the benefit to the client.

6 ACS & Richard Macfarlane were not involved in developing the CBIP contract requirements and procurement procedures in Dundee or Falkirk.

7 Procuring the Future - Sustainable Procurement National Action Plan: Recommendations from the Sustainable Procurement Task Force (June 2006), page 10.

8 as established by the International Labour Organisation ( ILO).

9 Anthony Collins Solicitors The scope for using social clauses in UK public procurement to benefit the UK manufacturing sector. Report for the Manufacturing Forum ( DTI) July 2006.

10 Choosing Our Future: Scotland's Sustainable Development Strategy (

11 Part 3 of the Local Government in Scotland Act 2003.

12 Procuring the Future - Sustainable Procurement National Action Plan: Recommendations from the Sustainable Procurement Task Force (June 2006).

13 Scottish Government. People and Place Regeneration Policy Statement. Edinburgh. February 2006 pp 9/10.

14 GHA. Neighbourhood Renewal Strategy 2004-07.

15 Anthony Collins Solicitors. The Scope for using Social Clauses in UK Public Procurement to Benefit the UK Manufacturing Sector. Report for the Manufacturing Forum ( DTI), July 2006.

16 Social Issues in Purchasing, Office of Government Commerce, February 2006, page 15 and page 31.

17 Directive 2004/18/ EC of the European Parliament and of the Council of 31st March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts.

18 The Wednesbury principle, which dates from 1948, states that public bodies are required to be reasonable in the decisions that they make.

19 Appendix 6 C 448/01 - (1) EVNAG (2) Wienstrom GMBH v Republic of Austria (2003).

20 The major problem is likely to be the lack of robust comparable data from sites that don't have the provision of labour-force monitoring information as a contract condition.

21 This target can include new entrant trainees (E above) that are recruited from the target agencies.


23 Scottish Enterprise Glasgow.

24 Social and environmental considerations must be linked to the subject matter of the contract, cannot be a blanket requirement.

25 In order to observe the EC Treaty Principle of Proportionality, questions in the PQQ must be set with reference to the needs of the contract in question.

26 As the contract will include a social clause as part of the core requirement, the Authority must ensure that there is adequate budget to finance this part of the requirement. Experience to date suggests that funding has been available externally for training, but some resources are need for the procurement process, implementation and monitoring of clauses.

27 The degree of monitoring must take into account Data Protection legislation and proportionality.

28 The individual needs to give consent to their employer to share personal information with the contracting authority.

29 SEG and its partners in Construction Glasgow decided that the project should close in March 2006, two months after delivery of the first GHA ' CBIP contracts' started.

30 Waltham Forest Housing Action Trust in London (in the early 1990's) could provide a comparable scale of project, but comparable tendering information is not available.

31 GHA website. May 2004.

32 It is intended that within the first few years much of the stock and management functions will be transferred from GHA to 60+ neighbourhood-based Associations.

33 GHA 30-Year Business Plan. March 2004. Page 5.

34 The investment programme is complex because of the range of works to be undertaken, the numbers of occupied dwellings to be improved, the geographical spread and the numbers of contractors required.

35 This provision was inserted into the Housing (Scotland) Act 2001 by the Housing (Scotland) Act 2006.


37 this is critical to GHA since 90% of its tenants live in the 15% most deprived areas of Scotland.

38 This must be done while achieving value for money for the authority.

39 Report on the Procurement Strategy to GHA Operations Sub-committee. January 2004.

40 Raploch URC Business Plan. December 2004. page 8.

41 Business Plan 2004 pages 24-25.

42 The partnership body that operated before the Raploch URC obtained separate legal status in 2006.

43 The actual contracts for the Development Partner will be between the successful bidder and Raploch URC Ltd.

44 Inverclyde Alliance Regeneration Outcome Agreement 2005-08 page 10.

45 Hedra Consultancy Ltd.

46 Use of postcodes depends on a number of assumptions, may not be valid measure reinvestment in the local economy.

47 This approach, if used in a procurement context, runs counter to the EU Treaty principle of equal treatment.

48 To achieve its strategic objectives, the Council needs to look at ways of opening-up the supply chain to all SMEs, and by default, a significant amount will be local. This should not be interpreted as a "well-being" power.

49 For the benefit of doubt it is appropriate for the Council to seek to maximise 'local employment' through its policies and programmes. It is acceptable to use procurement to facilitate training of local residents, but is not appropriate to use it to facilitate local labour recruitment.

50 The problem was exacerbated by the training provider not having enough lead-time to recruit for the opportunities.

51 Construction Employment Integrator, National Employment Panel.

52 Experience is taken into account at the pre-qualification stage of the procurement process, not during award of tenders within the framework, making it inappropriate to use KPIs as the basis for award of further work within the framework.

53 Scottish Enterprise Glasgow that manages a Construction Skills Action Plan for the city.

54 This % is varied with the type of work. Most contracts have included a 10% requirement, but this was reduced to 5% for demolition and may rise to 15% of new build housing contracts.

55 Depending on the range of quality matters that applied to the type of work to be delivered.

56 The Pre-qualification questionnaire ( PQQ).

57 It would be more appropriate to ask for "Experience of Targeted Recruitment and Training Initiatives" to avoid inferring "local preference" which would run counter to the EC Treaty principle of Equal Treatment.

58 Quality of response will obviously influence the score given.

59 Where there were less than 20 submissions the top and bottom 10 were still used (so some scores were counted in both top and bottom), except in the case of Works 11 where the top and bottom 3 were used.

60 The Framework has not been included here because it will be used in the evaluation of forthcoming tenders and has not been made available to bidders. However, the form of the document was also used by Raploch URC and is included in that case study.

61 For which detailed information was easily available.

62 Typically 21 criteria, but in the case of environmental improvements only 12 criteria.

63 Some of the English Housing Action Trusts used a contractual approach in the early 1990s but there are no known records of the process.

64 Equivalent to a person working for five days.

65 E.g. Works Type 1 Roofing & External Wall Cladding.

66 See 7 below.

67 Local Development Companies, ( LDCs - 8 across Glasgow but restructuring to 5 in 2007-08), and not-for-profit organisations that undertake neighbourhood-based economic development.

68 The commission was awarded to Professor Alan McGregor from the Training and Employment Research Unit ( TERU), Glasgow University.

69 GHA Works Type 1 Contract, Volume 2.

70 SEG, Jobcentre Plus, Careers Scotland, GHA and the 8 Local Economic Development Companies.

71 Castlemilk Economic Development Agency who provide four mentors for the trainees who can help to resolve problems with their training or employment, or with personal issues that are affecting their work.

72 initially the IT specialist under a Scottish Enterprise programme.

73 because the value of the contract was below the threshold value of £3.8m it was deemed unnecessary to advertise the contract in the OJEU. This situation has changed and contracting authorities and utilities which are public undertakings, ("contracting bodies"), are bound to comply with the rules and principles of the EC Treaty when awarding contracts. Even where the contract is exempt from the detailed rules of the Directives on public procurement ( e.g. because the contract is below threshold value, is for a Part B service or is otherwise exempt) EC principles apply.

74 This action is not allowed in terms of EU rules therefore emphasising the importance of considering the scope/suitability of including Community Benefit and other social clauses at the outset of the procurement.

75 ITT clause 81.2.

76 Tenders can be awarded on the basis of lowest price or most economically advantageous tender ( MEAT). It is Scottish Government policy to apply MEAT. Itwould be more consistent to give this criteria as MEAT.

77 Care needs to be taken when including SME requirements in social clauses in order to avoid local bias. All EU member states are viewed as a single market and there should be no discrimination on the basis of location.

78 These are two employment projects operated by Stirling Council.

79 To comply with the Data Protection Act.

80 The Employer in this context is the client for the works e.g. Stirling Council.

81 The comments from SCRM are taken from a case study prepared by Anthony Collins Solicitors for a DTI's manufacturing Forum study of social issues in procurement.

82 That had not at this stage been shared with other Panel members.

83 Tenders cannot be evaluated on the basis of predicted economic benefit.

84 That was based on 70% quality and 30% cost.

85 ibid 2 above.

86 ibid.

87 Care must be taken with clauses like this to ensure they do not discriminate against businesses with ongoing equivalent activities. They should reflect potential in the market.

88 The Scottish Government would not advocate exclusive use of named agencies to select subcontractors.

89 As per our earlier footnote, it is not appropriate to limit opportunities to named agencies.

90 Of the Invitation to Tender.

91 This was accepted in this instance for the pilot. Care needs to be taken when limiting sources of recruits. It is appropriate to suggest sources, but not to limit the contractor to named sources. This comment applies to the whole of Appendix 2.

92 While suggestions may be made as to possible sources of subcontractor, these sources should not be limited; to name sources would be discriminatory to other small businesses not registered with the named agency. This note applies to all instances in Appendix 2 where an agency has been named.

93 "Additional SB" means a firm that employs or otherwise engages less than 50 people and that has no previous experience of contracting or sub-contracting with the contractor/consortium.

94 They had not demonstrated any awareness or commitment to the requirements up to that point.

95 Based on a contract officer's estimate of the total time used on the contracts and the numbers of weeks of work experience provided.

96 Funding for the recruitment of a construction intermediary has now been approved by the Council.

97 In this case the term 'Employer' refers to the contracting authority.

98 A pro-forma was provided, based on the Method Statement used by Glasgow Housing Association.

99 There was a high rate of drop-out - five of the nine people referred left the programme before completion.

100 Dundee City Council Social Work Department.

101 The CBIP consultant was originally asked to draft requirements that would be suitable for contractors managing care homes.

102 Procurement can influence sources of trainees, but not of recruits in terms of local labour.

103 Voluntary agreements bring their own difficulties - there is no entitlement to enforce these and construction bodies have stated a preference for Community Benefit clauses to be included at the outset in procurements to facilitate a level playing field for bidders.

104 Agreed by the Scottish Government.

105 Anthony Collins Solicitors and Richard Macfarlane. New Approaches to Public Procurement ( NAPP) Toolkit May 2005. Appendix 4 Model Clauses for a PFI or PPP Contract.

106 As stated in Appendix 2, it is not appropriate to limit sources of recruits to named agencies.

107 Local preference breaches procurement legislation, this note applies to the whole of this section (A5.5) It is also worth noting that this type of commitment would be difficult to adhere to in any case in terms of capturing the whole market of available businesses.

108 The Falkirk pilot is the only contract to make use of limited liability clauses. It is important when applying such clauses that they are proportionate and do not constitute penalties as the courts would be unlikely to enforce penalties.

109 It is not appropriate to specify the source of recruits as this would be construed as local preference. In addition, care should be taken in defining beneficiaries to ensure compliance with procurement and equality obligations.

110 This requirement may be difficult to enforce as the risk for the recruiting lies with the contractor, and they are likely to set recruitment criteria.

111 See footnote 108 above.

112 See footnote 109 above.

113 Gebroeders Beentjes BV v The State (Netherlands) C 31/87.

114 C513/99 - Concordia Bus Finland Oy Ab (formerly Stagecoach Finland Oy Ab) v (1) Helsingin Kaupunki (2) HKL Bussiliikenne (2002), para 55.

115 ibid., para 57.

116 ibid., para 62.

117 ibid., para 64.

118 C 448/01 - (1) EVNAG (2) Wienstrom GMBH v Republic of Austria (2003), para 68.

119 C 234/03 - Contse SA v Insalud (Now Ingesa) (2005), para 70.



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