The Scottish Government has issued the first of its statutory guidance under the Procurement Reform (Scotland) Act 2014 (the Act), which addresses fair work practices in procurement. The guidance applies to all regulated procurements which commence on or after 1 November this year. A few provisions of the Act which are relevant to the guidance came into force on 28 September, including Section 2 which defines a 'regulated procurement' as any procedure carried out by a public body in relation to the award of a regulated contract. A 'regulated contract' is a public contract for works with a value of £2m or more, or for goods and services with a value of £50,000 or more.
Section 29 of the Act is also now in force, which allows the Scottish Government to publish guidance on the selection of tenderers including matters such as their terms and conditions of employment, in particular payment of a living wage. Public bodies must have regard to the guidance when undertaking regulated procurements.
In issuing the guidance, the Scottish Government is attempting to encourage payment of the living wage by tenderers. However, it is clear that they have struggled somewhat in drafting this element of the guidance, as the European Commission has confirmed that public bodies are unable to make payment of the living wage a mandatory requirement in a procurement process, and no element of the overall tender score can be reserved specifically to payment of a living wage. Therefore the guidance provides that public bodies can take account of a contractor's 'approach to fair work practices' including fair and equal pay as part of a package to be delivered during the contract's duration.
The guidance provides that a public body must consider whether it is relevant and proportionate (to the contract being procured) to include a question on fair work practices, which would be evaluated along with other relevant criteria. This should be in accordance with the public body's procurement strategy and must be transparent and non-discriminatory. The question should ask bidders to describe the package of measures which demonstrate their positive approach to fair work practices. The guidance states that payment of a living wage is one of the clearest ways in which a bidder can demonstrate this but it is not the only indicator, and failure to pay a living wage would not mean an automatic failure to meet fair work standards.
We will be publishing updates on further guidance issued under the Act, so watch this space. If you have a question on living wage and procurement, please contact our team.
