Publication - Advice and guidance

Ensuring compliance with environmental, social and labour laws: SPPN 09/2016

Published: 31 May 2018
This note promotes measures in the Public Contracts (Scotland) Regulations 2015 ensuring compliance with environmental, social and labour laws.
Published:
31 May 2018
Ensuring compliance with environmental, social and labour laws: SPPN 09/2016

Purpose

1. This note is to promote measures in the Public Contracts (Scotland) Regulations 2015 (PC(S)R 2015) and the Procurement (Scotland) Regulations 2016 (P(S)R 2016) aimed at ensuring contractors compliance with environmental, social, and labour laws when performing public contracts and provide contract conditions that contracting authorities may wish to adapt for their own use.

Key points

  • by applying exclusion grounds and relevant and proportionate selection criteria in the procurement process, a contracting authority is better placed to ensure that contractors who deliver public contracts do so in compliance with social, environmental and labour law
  • contracts must not be awarded to a contractor where its tender price is abnormally low due to breaches of social, environmental or labour law
  • contracts should include relevant clauses to allow for termination in the case of breaches of social, environmental or labour law

Background

2. Regulation 19(4) of PC(S)R 2015 places a legal obligation on contracting authorities to include in each public contract or framework agreement such conditions relating to the performance of the contract or framework as reasonably necessary to ensure that the contractor complies with environmental, social and employment law.

Exclusion

3. Under regulation 58(8)(a) of PC(S)R 2015 and regulation 9(5)(a) of P(S)R 2016, a contractor may be excluded from a procurement process where a contracting authority can demonstrate that the contractor has breached any obligations in the fields of environmental, social or labour law. Relevant questions have been included in section 3D of the European Single Procurement Document: https://www.procurementjourney.scot/node/134/

Abnormally low tenders

4. Under regulation 69 of PC(S)R 2015 a contracting authority must require a contractor to explain any tender which, in its view, could be regarded as abnormally low. In all instances any abnormally low bid must be rejected where it has been established that the tender is abnormally low because it does not comply with environmental, social or labour law. While this is not a requirement for procurements below the EU contract threshold values, this approach is considered best practice for those contracts within scope of the Procurement Reform (Scotland) Act 2014 i.e. contracts for goods and services with a value in excess of £50,000 and construction contracts with a value in excess of £2m.

Contract clauses

5. Under regulation 73 of PC(S) 2015 a contracting authority can terminate a contract in the event of failure by the contractor to comply with its legal obligations in the fields of environmental, social or employment law, or if any of the termination events of substantial modification of the contract, contract award despite the existence of exclusion grounds or a serious infringement of EU legal obligations occur.

6. The Scottish Government's standard terms and conditions have been updated to provide for termination under these circumstances. The new contract clauses are included in Annex A, and the standard terms and conditions have been updated on the Scottish Government web pages to include the new clauses.

Action required

7. Contracting authorities are asked note the measures relating to social, environmental and labour law as described in this policy note and to consider adopting equivalent provisions in relevant contracts to those provided in Annex A.

Dissemination

8. Please bring this SPPN to the attention of all relevant staff within your field of responsibility to whom it may be of interest.

Enquiries

9. Any enquiries in relation to this guidance should be addressed to Scottish Procurement: Scottishprocurement@gov.scot

Contact

Any enquiries relating to this SPPN should be addressed to Scottish Procurement:

Scottishprocurement@gov.scot

Scottish Procurement
The Scottish Government
5 Atlantic Quay
150 Broomielaw
Glasgow
G2 8LU