Public procurement update - Reserving contracts for supported businesses: SPPN 1/2025

Purpose

This note replaces SPPN 4/2017 and provides advice on reserving contracts for supported businesses.

SPPN status

This SPPN is not to be construed as legal advice or a substitute for such advice and should not be read as such. Contracting authorities should seek their own legal advice in relation to any questions and issues they may have.

Key points

This note contains information regarding the following: 

• background and definition of a supported business
• updated Scottish Government Guidance for Public Sector Buyers for the Purchase of Goods and Services from Supported Businesses, published in April 2025

• identifying supported businesses 

• the Scottish Government’s Requirements Reserved for Supported Businesses Dynamic Purchasing System (DPS) 

• monitoring and reporting 
• action required to ensure organisations remain compliant with legislation

Background and definition of a supported business

The ability for contracting authorities to restrict participation in a tender exercise to supported businesses has been part of national procurement legislation since 2006. The provision within the legislation which makes this possible is also referred to as "Reserved Contracts". 

Regulation 21 of the Public Contracts (Scotland) Regulations 2015 states:  

 A contracting authority may -

1.  reserve the right to participate in procurement for the award of a public contract or framework agreement to a supported business; or 

2. provide for such a contract or framework agreement to be performed in the context of a supported employment programme

The Procurement Reform (Scotland) Act 2014 ("the 2014 Act") similarly includes a provision allowing contracting authorities to restrict participation in the tendering process to supported businesses only. It also places a requirement on a contracting authority to: 

• consider, before starting a procurement competition, how, by the way in which it conducts the procurement process, it might facilitate the involvement of supported businesses, and 

• (assuming the contracting authority considers it may facilitate involvement of supported businesses) then to act in a way to best bring that about

The definition of a supported business is twofold. Firstly, a bidding organisation must have the social and professional integration of disabled and disadvantaged persons as its main aim. This may be evidenced in the organisation's Articles of Association (in the case of companies) or such other constitutional documentation that governs the organisation. It is within the discretion of individual contracting authorities to determine whether a bidding organisation has demonstrated the requirement that it has, as its main aim, the social and professional integration of disabled and disadvantaged persons. 

Secondly, the definition requires that at least 30% of the employees of the organisation are disabled or disadvantaged.  Regulation 2 of the Public Contracts (Scotland) Regulations 2015 states "disabled", in relation to a person, means a disabled person within the meaning of the Equality Act 2010 and, in relation to a worker, means a disabled person who is a worker (see Section 6 of the Equality Act 2010). 

The Public Contracts (Scotland) Regulations 2015 do not define “disadvantaged workers”. Contracting authorities may look to the EU Public Procurement Directive 2014/14/EU, from which Regulation 21 derives, and in particular Recital 36 which describes a disadvantaged person as “the unemployed, members of disadvantaged minorities or otherwise socially marginalised groups”. Contracting authorities may also find it helpful to consider the definition of a “disadvantaged worker” given in the European Commission Regulation (EU) No 651/2014 of 17 June 2014.

To meet the second part of the definition, organisations are only able to count employees or workers when setting out whether they meet the 30% threshold. Volunteers and those doing unpaid work placements or internships therefore do not count towards meeting the definition of a supported business. Organisations can count staff for which part, or all, of the remuneration is funded through a third party. 

The precise proportion of employees qualifying as disabled or disadvantaged may fluctuate over time. Contracting authorities may want to satisfy themselves the organisation has HR and resourcing policies that illustrates its overall commitment to employing staff from the target group. It is important that a disproportionate burden is not placed on organisations or contracting authorities in reviewing staffing levels. 

Organisations will need to meet both parts of the definition to be considered a supported business for the purposes of procurement legislation. Buyers should conduct due diligence to determine if organisations meet the two-part definition. 

Scottish Government guidance on reserving contracts  

In April 2025, the Scottish Government published updated Guidance for Public Sector Buyers for the Purchase of Goods and Services from Supported Businesses, providing practical advice for buyers on establishing if goods and/or services being procured can be provided by supported businesses, and on restricting competition to supported businesses. The guidance includes a Ministerial foreword which strongly encourages public bodies who procure the types of goods and services supplied by supported businesses to target at least 1% of their overall procurement spend on supported businesses where they are not doing so already. Doing so will make a significant difference to the sustainability of Scotland’s supported businesses.

Identifying supported businesses 

Buyers should carry out market research as part of their sourcing strategy to proactively determine whether their particular regulated procurement exercise is suitable to be tendered under reserved contract procedures. There are a number of ways in which a buyer might go about doing so. 

For example, the advertising portal, Public Contracts Scotland (PCS), alerts buyers to the existence of supported businesses that could possibly deliver their contract. When contracting authorities enter the commodity they wish to purchase, the portal will highlight supported businesses which could potentially meet that requirement.

It is important to note that PCS relies on organisations self-declaring whether they meet the definition and therefore does not constitute evidence in its own right that a supplier is a supported business in terms of the legislation. Buyers will need to carry out their own due diligence to satisfy themselves the definition has been met. 

Requirements reserved for Supported Businesses DPS

The Scottish Government offers a Requirements Reserved for Supported Businesses DPS to underpin reserving contracts, to provide Scottish public sector and third sector bodies with a route to market for a range of goods and services provided by supported businesses.  

 The Requirements Reserved for Supported Businesses DPS webpage provides an up-to-date list of all the supported businesses on this DPS, with details of the goods and services each supported business offers to the market, along with contact details. The webpage also includes a list of supported business which are not on the DPS. 

It is important to note that the aforementioned list of supported businesses which are not on the DPS relies on organisations self-declaring whether they meet the definition and therefore does not constitute evidence in its own right that a supplier is a supported business in terms of the legislation. Buyers will need to carry out their own due diligence to satisfy themselves the definition has been met. 

Monitoring and reporting 

Under the 2014 Act, contracting authorities with an annual regulated procurement spend equal to or greater than £5 million are required to publish an annual procurement report. One of the mandatory elements to be included in the report is "a summary of any steps taken to facilitate the involvement of supported businesses in regulated procurements during the year covered by the report". Statutory guidance on procurement strategies and annual procurement reports can be accessed from the Scottish Government website. 

Contracting authorities are also expected to complete the Annual Procurement Report data template (sometimes referred to as Annex A), recording: 

• total number of all regulated contracts that were awarded to supported businesses during the reporting period (whether this was under the reserved contracts procedure or another procedure) 

• total spend with supported businesses during the reporting period through regulated contracts (including spend within the period on contracts placed before the period)

• total spend with supported businesses during the reporting period through non-regulated contracts (including spend within the period on contracts placed before the period) 

• total value of contracts subcontracted to supported businesses during the period of the report

Action required to ensure organisations remain compliant with legislation

Contracting authorities should familiarise themselves with the Guidance for Public Sector Buyers for the Purchase of Goods and Services from Supported Businesses. 

Contracting authorities should also familiarise themselves with the goods and services provided by supported businesses and proactively consider, when planning a procurement exercise, if a contract or framework agreement could or should be reserved. 

Contracting authorities should consult the Requirements Reserved for Supported Businesses DPS for information on goods and services provided by supported businesses, and to issue tender opportunities for in scope goods and services.

It is in the interest of contracting authorities to monitor how they are actively facilitating supported businesses in their procurement activities as it will help evidence their compliance with the sustainable procurement duty and annual reporting requirements set out in the 2014 Act. 

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.

Scottish Procurement Policy Note: SPPN 1/2025

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