8 July 2014

Scottish Procurement Reform Act obliges public sector to consider social and environmental factors

A new Scottish Act of Parliament, which received Royal Ascent on 17 June, puts pressure on public sector organisations to include broader social and environmental considerations in procurement processes. The Procurement Reform (Scotland) Act obliges local authorities, before carrying out a procurement, to consider whether it can be used to "improve the economic, social, and environmental wellbeing of the authority’s area, facilitate the involvement of small and medium enterprises, third sector bodies and supported businesses in the process, and promote innovation".

Specifically, they are asked to consider how the procurement can be used to reduce inequality in the local area. A new 'community benefit requirement' requiring contractors to provide opportunities and training locally would also have to be considered for any procurement worth more than £4 million. If such a requirement was not included, the relevant authority would be expected to provide a justification of its reasons.

"If and when the new rules are brought into force, the Act has the potential to transform public procurement in Scotland," said procurement expert Jamie McRorie of the law firm Pinsent Masons, “Not only will contracting authorities now be obliged to consider the social impact of their purchasing requirements, the Act also introduces a new lower threshold for the effective review and challenge of procurement decisions. Scottish contracting authorities will have far less of a 'safe harbour' when conducting below threshold procurements."

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