Public procurement - human rights and grave professional misconduct: SPPN 3/2026

Purpose

This Scottish Procurement Policy Note (SPPN) provides public bodies with guidance on the options available to them for dealing with bidders which may be involved, whether directly or through their supply chains, in activities which constitute grave professional misconduct.

Grave professional misconduct can include, but is not limited to: the exploitation of assets in illegal settlements, not respecting human rights, or acting in a manner through action, inaction or through business relationships, which may have an adverse impact on, or infringement of, human rights.

Public bodies and bidders should respect the principles and requirements of relevant human rights instruments including, but not limited to: the UN Guiding Principles on Business and Human Rights (UNGPs), the International Labour Organization Core Conventions, and the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct.

This policy note supersedes advice contained in SPPN 4/2014 – Public procurement and illegal settlements, which was published on 22 August 2014, and has now been withdrawn.

Key points

We expect companies that are awarded public contracts to: maintain high standards of business and professional conduct, respect human rights, adopt clear corporate policies on human rights appropriate to their business and the public contract, and take action which prevents, mitigates and, where appropriate, remediates actual or potential human rights abuses.

Public bodies have a legal obligation to exclude companies from a public procurement exercise which have been convicted of any offence under part 1 of the Human Trafficking and Exploitation (Scotland) Act 2015 or under any provision referred to in the Schedule to that Act. Public bodies may also exclude a company which has breached any obligations in the fields of environmental, social or labour law.

We strongly discourage trade and investment from illegal settlements. A company’s involvement in the exploitation of assets in illegal settlements (irrespective of where that company is registered) would likely be regarded as constituting “grave professional misconduct” for the purposes of procurement law. Where evidence of this exists, public bodies may decide to exclude a company from a public procurement exercise.

Individual public bodies are responsible for their own procurement decisions. This SPPN is not legal advice and should not be construed as such. As with all commercial and procurement matters, decisions must be taken on a case-by-case basis, with appropriate legal advice being sought.

Background

We are committed to the UN Guiding principles on Business and Human Rights (UNGPs) which make it clear that businesses have a responsibility to respect human rights and ensure their activities do not have adverse impacts on human rights. The responsibility to respect human rights applies to all businesses regardless of their size, sector, operational context, ownership and structure. However, the scale and complexity of the means through which a business can meet that responsibility may vary according to these factors. Addressing adverse human rights impacts requires taking adequate measures for their prevention, mitigation and, where appropriate, remediation. The responsibility of businesses to respect human rights refers to internationally recognised human rights.

The UNGPs are clear on the expected actions of States. These actions include, but are not limited to: having adequate oversight of the businesses they contract with, the promotion of respect for human rights by businesses, and helping to ensure that businesses operating in conflict-affected areas are not involved in human rights abuses.

SPPN 3/2020: Reducing the risk of human trafficking and exploitation in the performance of public contracts, describes the measures available to public bodies through public procurement legislation aimed at ensuring contractors’ compliance with environmental, social, and labour laws when performing public contracts, and advocates an approach to human rights that considers actions on a case-by-case basis.

Public bodies should consider whether a bidder’s conduct amounts to grave professional misconduct for the purposes of procurement law. It is the longstanding view of the Scottish Government that the exploitation of assets in illegally-occupied territories is likely to constitute grave professional misconduct, and could therefore give rise to a ground for exclusion.

Bidders from countries which are signatories to the World Trade Organization’s Government Procurement Agreement, or which have other relevant agreements with the UK, must be treated the same as bidders from the UK. Such bidders also have equivalent rights of redress to the courts in the event of discriminatory treatment or another breach of these rights. This means that discrimination against bidders from one of these countries is not permitted.

There are no relevant international agreements with either Russia or Belarus. SPPN 1/2022 sets out considerations specific to bidders from those countries.

Public procurement legislation – grounds for exclusion

Public procurement legislation sets out the grounds on which bidders may, or must, be excluded from procurement procedures. These are set out in:

• Regulation 58 of the Public Contracts (Scotland) Regulations 2015
• Regulation 78 of the Utilities Contracts (Scotland) Regulations 2016
• Regulation 40 of the Concession Contracts (Scotland) Regulation 2016
• Regulation 8 and regulation 9 of the Procurement (Scotland) Regulations 2016

Which legal regime applies to any given contract is dependent on the nature of that contract. However, the grounds for exclusion are for the most part the same across each regime. The remainder of this note refers only to the Public Contracts (Scotland) Regulations 2015, as it is the principal procurement regime.

Regulation 58(1)(i) of the Public Contracts (Scotland) Regulations 2015 sets out that public bodies must exclude a bidder from a procurement procedure where that bidder has been convicted of any offence under part 1 of the Human Trafficking and Exploitation (Scotland) Act 2015 or under any provision referred to in the Schedule to that Act. This also applies when a person who is a member of the administrative, management or supervisory body of a bidder, or who has powers of representation, decision or control in relation to it, has been convicted of such an offence.

Regulation 58(11) provides that the period in which a bidder must be excluded from procurement procedures is five years from the date of conviction.

Regulation 58(8)(a) sets out that public bodies may exclude a bidder from a procurement procedure, where the body can demonstrate by any appropriate means that the bidder has breached any obligations in the fields of environmental, social or labour law. These obligations include any relevant national law, as well as relevant collective agreements and specific international agreements, and for example would include obligations under the Human Trafficking and Exploitation (Scotland) Act 2015, the Modern Slavery Act 2015, and the Equality Act 2010.

Regulation 58(8)(c) provides that public bodies may also exclude a bidder from a procurement procedure where the public body can demonstrate by any appropriate means that the bidder is guilty of grave professional misconduct which renders its integrity questionable. The exploitation of assets in illegal settlements by a company (irrespective of where that company is registered) is likely to be regarded as constituting “grave professional misconduct” for the purposes of procurement law.

Regulation 58(12) provides that the period in which a bidder may be excluded from procurement procedures on these grounds is three years from the date of the relevant event.

Regulation 71 allows public bodies to verify whether there are grounds for exclusion of subcontractors. Where that verification has shown that there are compulsory grounds for exclusion, the public body must require the subcontractor to be replaced. Where the verification has shown that there are discretionary grounds for exclusion, the public body may require the subcontractor to be replaced.

Public bodies considering excluding a bidder should satisfy themselves that the decision is proportionate in relation to the nature and scale of the offence or conduct. This means that decisions need to be taken by the public body on a case-by-case basis, and where doubt exists, legal advice should be sought.

Regulation 58(13) provides that bidders must also be given the opportunity to provide evidence which proves that they have taken sufficient and appropriate remedial action to demonstrate that they have ‘self-cleansed’ and can be regarded as reliable.

For such a purpose, a bidder must prove that it has:

• paid, or undertaken to pay, compensation in respect of any damage caused by the criminal offence or misconduct
• clarified the facts and circumstances in a comprehensive manner by actively collaborating with investigating authorities, and
• taken concrete technical, organisational and personnel measures that are appropriate to prevent further criminal offences or misconduct

Public bodies must evaluate the measures taken by a bidder, taking into account the gravity and particular circumstances of the criminal offence or misconduct. Where a public body considers that the evidence provided proves that the measures taken are sufficient to demonstrate the reliability of the bidder then the public body must not exclude that bidder from the procurement process.

If the public body is of the view that the remedial action taken is not sufficient to demonstrate the potential bidder’s reliability, it must provide the bidder with a statement outlining the reasons for the decision. The statement of reasons must be provided as soon as is reasonably practicable. It should be in writing and allow the bidder to understand why its self-cleansing measures are insufficient and the basis of the decision. For more information on self-cleansing please see the Procurement Journey and the statutory guidance.

Conducting due diligence in public procurement

Guidance on due diligence and human rights sets out recommendations on how the Scottish Government and its public bodies should undertake appropriate due diligence on companies, including their human rights record, before entering into an investment relationship with them. This should include an assessment of whether an individual or company, including any parent or subsidiary, has been associated with human rights abuses anywhere in the world.

The Minister for Business wrote to public bodies in October 2024 to draw their attention to the updated UN Database of companies active in listed activity of the Occupied Palestinian Territory, and advised that public bodies should consider the UN Database as part of their human rights due diligence processes. This database was published by the Office of the United Nations High Commissioner for Human Rights (OHCHR) and sets out the companies which it says it has reasonable grounds to believe are active in listed activity in the Occupied Palestinian Territory.

The presence of a company on this database on its own is not likely to be sufficient grounds to exclude that company from a procurement procedure. Public bodies should also consider other sources of evidence when conducting due diligence.

Public bodies may wish to seek assurances that goods or produce have not been produced in illegal settlements. In the absence of such assurances, and where a public body has a well-founded concern that the goods or produce it is procuring have been produced in illegal settlements, legal advice should be sought to determine whether grounds exist which would warrant exclusion of that bidder from a competition. 

Action required

Public bodies are asked to note the guidance provided in this SPPN.

Dissemination

Please bring this SPPN to the attention of all relevant staff, including those in agencies, non-departmental public bodies and other sponsored public bodies within your area of responsibility.