The Public Services (Social Value) Act 2012 – Social Value and Equalities in Procurement

1. The Public Services (Social Value) Act 2012 – Social Value and Equalities in Procurement Equalities and Human Rights Commission Gayle Monk 7th March 2013

2. What will we cover? The core legislation on social value in procurement What does the Social Value Act say? The Equality Act 2010 and the public sector equality duty The interface between social value and equalities Some practical considerations

3. Core Legislation Procurement Consolidated Directive (2004) UK implementing Public Contracts Regulations 2006 Social Value Public Services (Social Value) Act 2012 Updated Directive (2013) Equality Act 2010 Local government legislation Best Value statutory guidance – September 2011 for councils in England

4. Public Services (Social Value) Act 2012 The Act: covers public service contracts (including service contracts with a works or goods element) and frameworks for such contracts applies itself to the pre-procurement stage of the commissioning process requires that contracting authorities should consider how to improve the economic, social and environmental well-being of the area served by them through procurement and how to undertake the process of procurement with a view to securing that improvement consider whether to undertake any consultation as to these matters provides that genuinely urgent situations do not require this exercise Section 1 - Contracts of relevant authorities

5. Public Services (Social Value) Act Inserts a new section 17(11) into the Local Government Act 1988 (exclusion of non-commercial considerations in the case of local and other public authority contracts): Section 2 – Local Authority contracts “(11) This section does not prevent a public authority to which it applies from exercising any function regulated by this section with reference to a non-commercial matter to the extent that the authority considers it necessary or expedient to do so to enable or facilitate compliance with duty imposed on it by section 1 of the Public Services (Social Value) Act 2011.”

6. Non-commercial considerations employment terms and conditions, training and opportunities for workforces whether sub-contractor terms are for self-employed persons only involvement in industrial disputes country of origin of supplies/location of business political, industrial or sectarian affiliations financial support for an organisation the authority withholds support from Building Regulations approvals Local authorities are not usually permitted to take non-commercial considerations into account in their contracts, but can do so if needed to comply with the Social Value duty

7. In force… Now! 31st January 2013 It’s time to start planning: updates to policies any new policies needed this year’s procurement exercises: what’s on the cards?

8. Guidance Cabinet Office Procurement Policy Note: “When considering how a procurement process might improve the social, economic or environmental well being of a relevant area the authority must only consider matters which are relevant to what is proposed to be procured. The authority must also only consider those matters to the extent to which it is proportionate, in all the circumstances, to take those matters into account” The Public Services (Social Value) Act 2012 – advice for commissioners and procurers: Information Note 10/12 20th December 2012 https://update.cabinetoffice.gov.uk/resource-library/public-procurement-note-public-services-social-value-act-2012

9. Key points on social value Policy is critical to social value being embedded in procurement Early scoping so the subject matter of the contract is clear greatly reduces bases for challenge The use of sustainability criteria that go beyond quality accreditation must be explained in the tender documentation Provided that all evaluation criteria are properly disclosed to bidders, the use of economic, social and environmental requirements is entirely acceptable Don’t use specified labels - technical specifications used should instead describe the underlying requirements Therefore contract conditions and award criteria are best way forwards for social requirements Social requirements in contract specifications must be verifiable and tangible and clearly within the within the scope of what is being paid for. Including social and economic requirements in procurement is nothing new, but had a renaissance at the beginning of the century when new clarity developed around the ambit of the EU procurement rules, and the relaxation of local government rules on non-commercial considerations.

10. Equality Act 2010 Key provisions: Section 1- Socio-economic duty (not in force) Section 149 - Public sector equality duty

11. The Public Sector Equality Duty A public body must, in the exercise of its functions, have due regard to need to: eliminate discrimination advance equality of opportunity foster good relationships Applies to age, disability, gender reassignment, pregnancy and maternity, race, religion or belief, sex and sexual orientation. Procurement and commissioning are ways in which the public body exercises its functions

12. Some interfaces between Social Value and Equalities Procurement can recognise and respond to the diverse needs of communities Allows contracting authorities promote quality of treatment Socio-economic factors can make contracts more accessible Open up opportunities to BMEs / SMEs, social enterprises and social firms (sheltered workshops) Also encourage supply chain partners to advance equality and diversity

13. Social Value and Equalities in Context Strong drive for increased efficiency and real savings more shared services – makes sense but may lead to more standardised services taking equalities into account is part of understanding the public body’s communities and/or service users, and focusing resources where they are most needed – but often seen as marginal rather than VFM need to assess potential differential impact of initiatives More procurement likely? could ensure equalities implications and objectives taken into account but only if good understanding of ‘relevance’ and positive leadership from key stakeholders

14. Social Value and Equalities in Practice Need corporate approach and strategy which spells out how procurement will be used to drive delivery of equalities objectives but crucially how addressing equalities can contribute to your wider objectives – and help deliver community/social/economic benefits and which sets framework for supplier diversity policy then build equality considerations into each stage of process

15. Social Value and Equalities in Practice Show you take equalities seriously by: what you say (contract documents) how you do it (contract size, etc) what you do (award criteria, contract monitoring & management etc) put the organisation’s commitment to equalities at the start, quoting overall strategy and objectives, and your equalities objectives use prequalification to establish suppliers’ compliance, but take their size into account and offer/signpost to support monitor, but more importantly, work with providers to improve equalities performance during life of contract

16. How to build equalities into procurement – 6 key points Supplier engagement and community testing– what is achievable / realistic / affordable? Scoping project and drafting specificationstoidentify relevant and appropriate equality and other non-commercial considerations. Contract terms: capture key issues in the contract terms and conditions. There will be a cost attached – is it affordable?

17. How to build equalities into procurement – 6 key points 4/5.Do we have the right to reject applicants at selection stage? At tender stage, can we include socio-economic issues in assessment of most economically advantageous tender? Yes – But selection and evaluation (award) criteria must be: in accordance with the Regulations non-discriminatory proportionate and linked to subject matter of the contract 6. Living the contract - what obligations?

18. What can we do to comply? Develop a sustainable commissioning strategy – reflect priorities, local needs and the need to comply with the Public Sector Equality Duty Soft market testing and community consultation Supply chain mapping Develop policy for social value commissioning in procurement

19. If you have any queries or comments in social value or equalities in procurement please contact Gayle Monk of Anthony Collins Solicitors LLP on 0121 212 7472 or gayle.monk@anthonycollins.com