The Sustainable Procurement Duty, outlined in the Procurement Reform (Scotland) Act 2014, requires you to think about how you can improve the:
- Environmental and
- Economic wellbeing
of the area(s) in which you operate – whether that is nationally or more locally. Particular focus should be on reducing inequality.
You can create a positive environmental impact through every procurement exercise you undertake, regardless of its value or scope. This must be a key part of commodity/service profiling and strategy development rather than an optional area of interest. You must fully explore the possibilities with your User Intelligence Group and other stakeholders for your procurement.
Economic, Social and Environmental Wellbeing Examples
Each contract or Framework Agreement must include conditions relating to the performance of the contract (which are linked to the contract subject matter). These conditions must be considered reasonably necessary to ensure the supplier complies with these environmental, social and employment law obligations. These conditions of contract must be included in the procurement documents and a plan in place at this point to manage these through the life of the contract.
Statutory Guidance has been published on Sustainable Procurement Duty to help you.
Sustainable Procurement Tools
The Scottish Government has developed a number of tools to help you:
- identify and work on how to increase social, environmental and economic benefits from your contract.
- to agree your sustainable procurement priorities and policies.
You can use the following tools when developing your commodity/service strategies:
- The Prioritisation Tool: an early stage tool
- The Sustainability Test: used at category/commodity/service level to identify potential scope of benefits;
- Life Cycle Impact Mapping: assesses environmental impacts throughout the life cycle
- The Flexible Framework Assessment Tool: assess current performance and actions required
The above tools can be accessed by registering on the Sustainable Procurement Tools platform. Accompanying Sustainable Procurement Guidance can also be accessed on the Sustainable Procurement Tools and is available for both registered and unregistered users.
By assessing and scoring the socio-economic criteria on these tools you can:
- identify what risks and opportunities can be targeted for each commodity
- how to influence the management of those risks
- include recommendations in your Commodity Strategy to be addressed as part of the procurement process.
As a matter of good practice, you should have completed the Sustainable Public Procurement Prioritisation Tool (to prioritise Sustainable Procurement aims) at a category or organisation level prior to working on your commodity/service strategy. If you are unsure, please speak to your manager to ask if this has been done.
Successful Sustainable Procurement, Risks and Opportunities
Sustainable Procurement is successful where its importance is made equal to other areas of commodity/service profiling e.g. quality, technical specifications and commercial objectives.
There are always different options available to you when examining how to achieve this balance. You may wish to visit the Case Studies section of the Sustainable Procurement Tools platform to read process-focused examples of how sustainability benefits have been embedded in public procurement exercises.
While many options will be commodity/service specific, the primary considerations of the Sustainable Procurement Duty (when Profiling the Commodity/Service) are:
- Identify the opportunities to improve the economic, social and environmental wellbeing of the area(s) in which your organisation operates
- Facilitate the involvement of small and medium enterprises, third sector and supported businesses
- Promote innovation
There are a number of areas procurement can influence to improve environmental, social and/or economic factors. These are listed below and more information can be found in the Sustainable Procurement Duty Index.
Involving Supported Businesses, SMEs and Third Sector Suppliers
To meet your obligations under the Sustainable Procurement Duty you must consider how to facilitate the involvement of:
- Small and Medium Enterprises (SMEs) and
- Third Sector Bodies and
- Supported Businesses
in all procurement exercises.
To do so there are some specific actions you must take.
- Develop transparent, detailed organisation Procurement Strategies and Annual Procurement Reports. This helps prospective tenderers identify opportunities ahead of the advertisement stage and plan resources. Procurement Strategies and Annual Procurement Reports are mandatory for Organisations who expect the value of their regulated contracts in that year to be £5m or over (excluding VAT).
- Advertise regulated contracts and award notices through Public Contracts Scotland (PCS). PCS allows free and unlimited access to all potential bidders and smaller suppliers are more able to find opportunities.
- Increase the use of debriefing. This supports the development and improvement of bidders, benefiting both the bidders and the organisation for future procurement exercises.
A Supported Business is a supplier:
- whose main aim is the social and professional integration of disabled or disadvantaged persons,
- where at least 30% of their employees are disabled or disadvantaged workers.
Your Organisation can “reserve” a competition so that only supported businesses can bid. In these cases, this must have been assessed as appropriate as there are specific rules around the reservation of competitions.
SPPN 4/2017 provides further information and guidance on Reserving Contracts For Supported Businesses, including:
- Determining whether an organisation meets the definition of a supported business for the purposes of public procurement legislation;
- Identifying supported businesses; and
- Monitoring and reporting.
The majority of businesses are SME’s. By doing everything you can to make it easy for SME’s to bid for your exercise then you are reaching the broader market and this will benefit your organisation as well as the broader economy.
Some things you can do to help SME’s access your process include:
- Make sure your procurement exercise is advertised properly;
- Use Lot to enable smaller companies to identify potential opportunities;
- Make sure to include SME’s in pre-tender market engagement;
- Check that your tender and any pre-qualification are proportionate and will not exclude SME’s - e.g. do you really need such high levels of insurance for this process?
- Using a Dynamic Purchasing System (DPS) can offer benefits to SME’s in that, on qualifying they can access the contract at any time through it’s life and have access to smaller competitions within larger frameworks.
There are many more things that you can do (or indeed not do) and you should take time to explore these as part of your strategy development. Speaking to colleagues, your UIG and contacting organisations such as the Federation of Small Businesses and the Supplier Development Programme can be very helpful.
The third sector, which includes charities, social enterprises and voluntary groups, delivers essential services, helps to improve people’s wellbeing and contributes to economic growth. It plays a vital role in supporting communities at a local level. The economic contribution of third sector organisations is steadily increasing and we expect this to continue in the coming years. Some things you should do to help Third Sector suppliers access your process include:
- Identify and engage with any relevant Third Sector suppliers as early as possible in the process;
- Examine the market to identify any potential “blockers” to entry – e.g. are their providers for some of the requirement but not all? Would using lots help open up the opportunities ?
Many of the actions that you can take to make sure SME’s are engaged can also support the inclusion of Third Sector organisations. Each council in Scotland has a “Third Sector Interface” (TSI) and further information can be obtained from these if you need help in identifying local Third Sector organisations.
Addressing Fair Work Practices
Fair Work practices are actions an employer adopts for the benefit of its workers. They are above the minimum legal requirements and reflect the five dimensions of the Fair Work Framework.
When developing any procurement exercise, you must do so in line with Statutory Guidance. This requires you to consider how to address Fair Work practices in all procurement exercises before you start your procurement.
To support this Best Practice Guidance and a Toolkit have been developed to offer additional guidance and practical tools for public bodies and suppliers. Guidance has been embedded throughout the Procurement Journey.
The Scottish Government believes that contractors who go beyond minimum legal requirements by adopting Fair Work practices will:
- increase innovation,
- improve workplace outcomes and business performance,
positively impact on the delivery of a public contract. The payment of the real Living Wage is considered by the Scottish Government to be a significant indicator of an employer’s commitment to Fair Work practices. The payment of the real Living Wage is one of the clearest ways an employer can demonstrate a positive approach to its workforce.
- the real Living Wage should not be confused with the National Minimum Wage (including the ‘national living wage’), which is the legal minimum wage set in law by the UK Government.
The Scottish Government expects:
- Organisations to promote Fair Work practices in all relevant procurement exercises. At the same time ensuring a balance between contract quality and cost. This will include the impact of working conditions costs, and
- Suppliers delivering public contracts to adopt and demonstrate appropriate Fair Work practices., They should ensure these are delivered for all workers engaged on public contract delivery.
In addition to the Sustainable Procurement tools, a Fair Work practices commodity/service strategy: checklist and flowchart is available to help identify how to address fair Work in relevant procurement exercises with an example - Fair Work commodity/service strategy: checklist - home support services.
The Toolkit also includes Information Sheets on:
- Frequently asked questions
- What is Fair Work?
- What is the real Living Wage?
- What are Fair Work practices?
- Useful resources
You must make sure the performance of the contract by suppliers complies with their obligations in environmental, social and labour law. It is essential that robust requirements are built into your strategy, procurement documents and contract management processes.
For example, when considering how to address Fair Work practices in a procurement exercise, you must assess whether you should exclude supplier(s) if they do not meet their legal obligations as a diligent employer.
SPPN 09/2016 includes guidance and contract conditions an organisation can adapt for use in its contracts.
You must consider how you can promote innovation through your procurement exercise.
Some methods you can use to achieve this are:
- using outcome specifications,
- identifying options to innovate through the procurement process
- directly procure research and development to inform your requirements
Other Areas for Consideration
Sustainable procurement elements can also be included as part of your costing model and it’s important for you to review what models are available and assess where you think that sustainable elements can be considered.
Life Cycle Costing
You can apply life cycle costing as part of the specification and subsequent evaluation.
Life Cycle Costing may be used where additional environmental costs result from the products or services being purchased e.g. carbon emission costs from purchased machinery and the environmental disposal cost at end of life.
Life cycle costing takes into account all identifiable product or service costs i.e.:
- from its acquisition
- through use,
- maintenance and
- end of life (recycling / disposal).
These can be direct costs like scheduled maintenance and energy used through the life of a road sweeping vehicle. Also included are less apparent external environmental costs. Such as the cost of emissions of greenhouse gas based on the energy use of the road sweeper.
These costs can only be assessed when:
- They are based on objective criteria that don’t favour or disadvantage any potential bidders
- The assessment method is accessible to all interested parties
- The data required can be provided with reasonable effort from all interested parties. This includes those from other EU states and states party to international agreements by which the EU is bound e.g. the World Trade Organisation Government Procurement Agreement ( USA).
If using a life-cycle costing approach, the Procurement Documents must state:
- The data to be provided by bidders
- The method used to determine the life-cycle cost on that basis
It is important to differentiate between Whole Life Costing, Lifecycle Costing and Lifecycle Impact Mapping:
Whole Life Costing: Focuses solely on cost(£) of a product or service from cradle to grave. It takes into account:
- ownership and
- disposal costs.
It does not include any environmental or social costs.
Lifecycle Costing: Life-cycle costing covers part or all of the following costs over the life cycle of a product or service:
a) costs produced by the Organisation or other users, such as:
(i) acquisition costs;
(ii) usage costs such as energy consumption and other resources;
(iii) maintenance costs;
iv) end of life costs, such as collection and recycling costs; and
(b) external environmental costs linked to the product or service during its life cycle. These costs must be able to be determined and verified. This may include the cost of emissions of greenhouse gases, other pollutant emissions and other climate change mitigation costs.
Lifecycle Impact Mapping: Focuses on social and environmental impact rather than cost. Life cycle impacts help the user identify and assess impacts. For example, it may help to focus attention on the disposal phase before the procurement is carried out. This allows you to build end-of-life management requirements into performance clauses for successful contractors and your own internal management procedures.
Please note: Life cycle impact mapping can be used alongside life cycle costing as part of the procurement process.
The Lifecycle impact Mapping tool can be accessed by registering on the Sustainable Procurement Tools platform.
When purchasing goods or services you can specify labels as a means of proof that you meet certain requirements.
For example, does the product or service required have specific social, environmental, or other characteristics that would be verified by a label such as Fairtrade?
There is specific guidance around the use of labels within procurement.
To specify labels in your procurement exercise you need to meet the following criteria:
- The labels can only concern criteria that are linked to the subject matter of the contract
- They have to be based on objective and non-discriminatory criteria
- The label itself is established in an open and transparent procedure and accessible to all interested parties
- The label requirements are set by a third party over which no potential bidder has any decisive influence
Rather than apply a label on a broad basis, if it’s more proportionate you can detail which label requirements are to be met. This will reduce the burden on bidders and could expand the number of capable bidders for your process.
Labels must comply with the label requirements of the Public Contracts (Scotland) Regulations 2015 and equivalent labels must be accepted. Where the bidder can demonstrate it has not been possible to obtain either the label or an equivalent, through no fault of its own, you must accept other appropriate means of proof e.g. manufacturers technical dossiers.