The Scottish Government treats tax and social security obligations seriously.
Organisations can exclude a bidder where they have established that the bidder has breached its tax or social security obligations. Organisations must determine on a case-by-case basis whether a particular piece of evidence (which falls short of a judicial or administrative decision) is sufficient to demonstrate “appropriate means”.
Examples of evidence which may demonstrate breaches in tax or social security obligations, on which organisations can seek clarification from bidders, could include:
|
Credit references |
i.e. details of any outstanding tax debt |
|
Company accounts |
depending on the size of the tax debt the bidder may be obliged to include this in their accounts |
|
OONC |
an admission by a bidder to an Occasion of Non-Compliance (OONC) or |
|
Avoidance scheme failure |
an admission by a bidder of the failure of an avoidance scheme which they were involved in and was, or should have been, notified under Disclosure of Tax Avoidance Scheme (DOTAS) |
Where a bidder admits to a breach of its tax or social security obligations, which did not involve a judicial or administrative decision, the organisation can request further details and any mitigating factors, from the bidder. This is to further understand the nature of the breach.
.This could include:
Self-Cleansing – Tax and Social Security Contributions
Where the bidder can provide evidence that it has fulfilled its obligations by paying the amount due, it must not be excluded from the procurement exercise on this basis alone. This also applies where it has entered into a binding agreement with the intention of paying taxes or social security contributions, including any interest due. Evidence of this could include:
Additionally, where excluding a bidder would be disproportionate, you may decide not to exclude them.
For example this could be because a minor amount of tax or social security contributions are owed, or a bidder has not had a sufficient time to pay the amount owed.
You must take a balanced view when deciding not to exclude on this basis. This could include considering the bidder’s overall tax and social security obligations and the overall risk to contract delivery.
For example there may be instances where an apparent "minor amount" may significantly affect the liquidity of the bidder and its ability to perform the contract, or where sufficient time did exist for the outstanding amounts to be paid.
The Scottish Government regards blacklisting or the compiling of a blacklist as totally unacceptable.
Blacklisting refers to the practice of systematically denying individuals employment, who would otherwise be able to be employed. Blacklisting is done on the basis of information, accurate or not, held in some type of database.
The Employment Relations Act 1999 (Blacklists) Regulations 2010 [6] provide rights for individuals if blacklisting results in refusal of employment, detriment, dismissal or redundancy.
Any bidder which has been found to have breached, or who have admitted to breaching, these Regulations must be excluded from the procurement process for a period of three years. This is unless the bidder can demonstrate that it has taken appropriate remedial steps to your satisfaction.
Exclusion grounds must be applied where a bidder has been convicted in the last five years by final judgment of one of the criminal offences contained in the regulations. These offences are:
Lifecycle Impact Mapping focuses on social and environmental impact rather than cost. It helps the user identify and assess impacts.
Please note: Life cycle impact mapping can be used alongside life cycle costing as part of the procurement process.
Lifecycle costing covers part or all of the following product or service costs::
a) costs produced by the Organisation or other users, such as:
(b) product or service life cycle environmental costs To include such values you must be able to calculated and confirm them. This may include the cost of greenhouse gas emissions, other pollutant emissions, other climate change aviodance costs.
In very exceptional circumstances a "design" specification may be unavoidable for a product or service. In such cases the type of requirement makes it essential to narrow the options by writing a detailed full design specification including exact details.
The specification should be written in "performance" terms which focus on the product, function or service output required.
It builds the specification around a description of what is to be achieved rather than a fixed description of exactly how it should be done. This encourages marketplace innovation, allowing and encouraging suppliers to propose modern (including environmentally preferable) solutions.
Within a technical specification you should avoid references which may unduly favour or eliminate suppliers e.g. by asking for a specific material or goods.
You should not reference a specific make or source or to a particular process, trademark, patent, type, origin or means of production.
Do not specify "Hoover" when you mean a vacuum cleaner or "Intel" when you mean a central processing unit of a personal computer.
In exceptional circumstances such mention may be justified if:
In either of the above circumstances such mentions should be accompanied by the words "or equivalent".
Where the goods or services are intended to be used by people, the technical specifications must, except in duly justified cases, take into account accessibility criteria e.g. people with disabilities.
Technical specifications must afford equal access to bidders and must not create obstacles to competition. For more information, reference 11 (7) (8) (9) PSR2016.
An exit strategy is necessary to:
It should be a ‘front end’ activity created before the contract is signed. This may appear counterintuitive. However without a well thought out strategy (which is consistent with your overall sourcing strategy) your Organisation risks:
Having an exit strategy in place at the start of a supplier relationship means not only that your Organisation’s needs will be included into the contract, but that the supplier will have a clear road map through to contract close (this is particularly supportive for smaller business who may rely heavily on public sector contracts). The exit strategy should also include what would happen in the case of early termination and so help to ensure there will be minimum business and customer disruption if the relationship were terminated.
Please note: you cannot terminate a contract with the aim of avoiding procurement rule obligations.
Exit strategies should be reviewed annually, or when significant change occurs
There are several considerations to be made when developing an exit strategy, including:
Below suggests some factors for consideration. This is not an exhaustive list. Each contract / supplier relationship should be considered on its own merits.
An exit strategy should set forth your organisation’s service requirements when the parties are transitioning out of the relationship. These requirements may include:
The provision of parallel services for a certain period. This can be necessary for continuity of supply and helps to resolve issues before the final change over;
An obligation by the supplier to keep the same supplier team performing services during the transition period;
Confidentiality on any communications regarding the termination of the relationship.
Data privacy and security are critical. The Exit Strategy should consider provision for:
The transfer of all data belonging to your organisation, including any customer information;
An acceptable method for the supplier to destroy and remove your organisation’s proprietary information;
The supplier destroying and removing sensitive information from all media. The supplier must ensure no information is disclosed to other individuals or organisations;
The return or transfer of each party’s assets.
Strict documentation and knowledge transfer contract requirements will be advantageous. Be sure to:
Clearly state responsibilities i.e. which party owns the work performed by the supplier and which party is responsible for the transfer of ownership;
Fully document the service description for any transition period additional services. These are services required from the supplier (e.g. employee training, training new supplier personnel);
Require the supplier to provide your Organisation with copies of data, procedures, access logs, error logs, documentation and other information generated as part of providing the contract services. The supplier should also grant your organisation the right to provide this information to potential successor suppliers.
Transition, termination and timing are a key part of the financial aspects of an exit strategy. Be sure the contract:
Specifies when compensation should be paid and how much. This includes compensation for any continuing base services and transition activities;
Specifies the return of any pre-paid fees for services which have not been rendered.
An exit strategy should cover personnel issues, such as:
Ensuring supplier personnel and key resources remain on the project and committed during the transition. This ensures relevant knowledge and expertise is retained during transition;
Defining the exit-strategy team and its roles;
The treatment of employees and any obligations to inform or consult under TUPE.