New public sector procurement rules come into force

New regulations that came into force this week that transform public sector procurement in Scotland mean that public sector contracts can no longer be awarded solely on the basis of price or cost.

From this week public bodies must consider the wider benefits to the local area when awarding procurement contracts.

The Procurement Reform (Scotland) Act 2014, Procurement (Scotland) Regulations 2016, Public Contracts (Scotland) Regulations 2015, Utilities Contacts (Scotland) Regulations 2016 and Concessions Contracts (Scotland) Regulations 2016 are based on EU procurement directives transposed for a Scottish context.

They aim to harness the approximately £10bn of annual public sector spend to promote sustainable growth and community wellbeing.

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Companies and suppliers bidding for public sector work will now be required to demonstrate how their bids offer wider economic, social or environmental benefits for local communities and promote innovation when tendering for contracts.

The new regulations also promote fair work practices by prohibiting the awarding of public sector contracts to organisations that engage in blacklisting or who fail to meet their tax and social security obligations and allowing public bodies to taking account of whether a company pays the living wage or uses inappropriate zero-hours contracts.

Small and medium-sized enterprises (SMEs), the third sector and supported businesses will also be encouraged to bid for public sector work, with public bodies now required to break down large contracts into smaller parts and support SMEs as they bid for work.

According to Julie Welsh, director of Scotland Excel, the local authority-funded procurement organisation for local government in Scotland, the new procurement rules will transform public sector procurement and become an agent for social and economic change.

Scotland Excel has incorporated community benefits into all its contracts since January 2013.

“Procurement is now so much more than just the buying of goods and services,” said Welsh. 

“It goes far beyond that, realising added value for our communities in the form of opportunities for local business supporting the creation of jobs and apprenticeships and helping make Scotland a fairer, greener place.”