Scottish Executive Consultation on draft Scottish regulations implementing the Public Sector Procurement Directive 2004/18/EC

November 2005

Introduction

This paper constitutes UNISON Scotland's response to the Scottish Executive consultation document ‘The Draft Scottish Regulations Implementation Public Sector Procurement Directive 2004/18/EC.'

UNISON is Scotland's largest trade union representing over 150,000 members working primarily in the public sector.

UNISON Scotland welcomes the opportunity to put forward our views regarding the implementation of the Procurement Directive and this response builds on our response to the October 2004 consultation.

Response

UNISON welcomes the aim of the new European Public Sector Procurement Directive to modernise, simplify and clarify the provisions of the previous Public Procurement Directives covering works, supplies and services. UNISON is concerned that most of the suggested amendments that we recommended in the October 2004 consultation exercise on draft regulations implementing the new Public Sector Procurement Directive have not been implemented. In particular, we do not understand the failure to reflect the important changes in the new Directive that enable consideration of social and environmental criteria, including employment issues, to be taken into account in the evaluation and award of contracts.

We also note that the Executive is almost entirely following the approach set out in the equivalent English regulations promulgated by the OGC. Procurement is a devolved issue and therefore there is an opportunity to develop a distinctive Scottish approach to procurement that reflects our public sector ethos and supports the Scottish economy.

In essence we want the Scottish Executive to recognise that EU policy is not just about competition. The procurement rules are flexible and we want the Executive to use this flexibility as other governments across the European Union do. It is vital that Scottish manufacturers are operating on a level playing field and that public procurement is used to secure employment in Scotland and the rest of the UK.

1. Legal certainty on the use of social and environmental criteria

UNISON welcomes the legal certainty derived from the text of the new Directive. This makes it clear that contracting authorities are legally allowed to include social and environmental criteria in the evaluation and award of contracts as long as the criteria are linked to the subject matter of the contract as stated in Recital 1 and Article 26 of the Directive.

This removes any doubt that public authorities are able to consider employment issues, including statutory guidance and legislation on fair employment and to tackle the two-tier workforce as set out in the Scottish Protocol on PPPs, the draft s52 guidance and any other code of practice that may be agreed.

However UNISON is concerned that the draft regulations have not made explicit that the new Public Sector Procurement Directive allows contracting authorities to undertake public procurement in such a way that achieves both value for money and meets vital social, employment and environmental challenges. Furthermore we are disappointed that, in the draft regulations themselves, the fact that contracting authorities may stipulate conditions including social and environmental considerations only appears, without any further detail, under ‘miscellaneous' measures (Part 7) on page 54 of a document which, runs to 84 pages. Given the importance of these new opportunities, we would expect to see it clearly stated at the beginning of the document. The Executive should also include a clear reference to the role of contracting authorities in promoting employment sustainability.

Innovative contracting authorities are already making use of these provisions and omitting them from the regulations will inevitably lead to confusion.

UNISON also believes that in the transposition of the Public Sector Directive, the Executive is not making full use of the new opportunities provided by the Directive to promote social, employment and environmental criteria that were negotiated into the text of the new Directives following campaigns by trade unions, NGOs and equality bodies at European level.

UNISON has previously emphasised the importance of Recital 34 of the new Directive which states that "collective agreements, at both national and Community level, which are in force in the areas of employment conditions and safety at work apply during the performance of a public contract" and "If national law contains provisions to this effect, non-compliance with those obligations may be considered to be grave misconduct or an offence concerning the professional conduct of the operator concerned, liable to lead to the exclusion of that economic operator from the procedure for the award of a public contract.."

UNISON would like the Executive to elaborate the details of provisions that would be covered and to stress the importance of compliance in this area.

2. Regulation 18 implementing Article 29 - competitive dialogue

The consultation document (3.2.5 Page 9) states: "the final text for this Article was achieved after lengthy negotiation and lobbying, with the UK's aim being that the procedure should fit as much as possible with UK best practice on the award of PFI and PPP contracts".

UNISON believes that contrary to the Executive's claims, there is substantial evidence showing that PFI has not offered either value for money or, quality employment conditions and protections. UNISON is aware of many PFI schemes which do not present a ‘best practice' development in the provision of public services or in public contracting across Europe and should not be portrayed as such. In addition in Scotland we have different approaches to PPP procurement as set out in the Scottish Executive PPP Protocol. As this section of the consultation paper is a direct lift from the OGC consultation it is unclear if this is regarded as "UK best practice".

3. Regulation 45 implementing Article 25 -information on sub-contracting

UNISON is disappointed that the Executive did not take the opportunity, as we stated last year, to transpose Article 25 of the Public Sector Directive as mandatory rather than optional, i.e. that a contracting authority must ask tenderers to indicate any share of the contract s/he may intend to sub-contract to third parties. UNISON would like to see a clear obligation in Regulation 45 requiring sub-contractors to comply with the social, employment and environmental provision of the legislation and related laws, including protections under collective agreements.

It will be particularly important for the contracting authorities to have knowledge of the primary provider's plans for sub-contracting in order to comply with the PPP Protocol and draft s52 guidance. It would also support any future policies or legislation designed to tackle the two-tier workforce and promote a fair wages/fair employment agenda, which would be consistent with UK government and Scottish Executive policy. It is unclear how this alleged ‘flexibility' squares with the devolved responsibility for procurement decisions as claimed in the consultation paper (3.2.3).

 

4. Regulation 38 implementing Article 27 - obligations relating to taxes, environmental protection, employment protection provisions and working conditions

UNISON remains of the view that Regulation 38 should transpose Article 27 of the new Directive in full as mandatory rather than at contracting authorities' discretion. If contracting authorities were required to state in contract documents where tenderers can get information on these obligations, they would have to ask tenderers to show that they have taken them into account during the contract award procedure. Such a requirement would strengthen legislation and statutory and policy guidance already in place such as the PPP Protocol and any other such Codes of Practice that may be agreed. It would also support any future policies or legislation designed to tackle the two-tier workforce and promote a fair wages/fair employment agenda which would be consistent with UK government and Scottish Executive policy.

5. Regulation 19 implementing Article 32- framework agreements

As stated in our previous response, UNISON is concerned about the potential lack of transparency of framework agreements which allows contracting authorities to call-off contracts without the need to go out to tender for each contract and advertise in the Official Journal of the European Union. Currently, when such framework agreements are made, employees are left in an uncertain position, not knowing if or when their service will be contracted out and their employment transferred to a service provider. It also raises difficulties regarding compliance with TUPE legislation and the PPP Protocol.

UNISON notes that the OGC intends to update their existing guidance on framework agreements and considers that such guidance should require contracting authorities to ensure that trade unions and staff are consulted and involved in good time before each call-off contract is entered into under framework agreements.

6. Regulation 21 implementing Article 54 - electronic auctions

UNISON recognises the efficiency and effectiveness of the use of electronic auctions (e-auctions) for purchasing supplies and goods. However UNISON wishes to see the Executive make it clear to contracting authorities, in the regulations and accompanying guidance, that the use of e-auctions is inappropriate and should not be used for contracts involving the transfer of staff. The use of electronic auctions in such circumstances could result in pushing down wage rates and other terms and conditions of employment. It is also likely that it would contravene the Acquired Rights Directive 2001 and the Transfer of Undertakings and Protection of Employment Regulations. UNISON notes that the UK e-Procurement Project has included labour-intensive services as well as the purchase of supply and goods in a list of viable categories for e-auction. This list includes cleaning services, grounds maintenance and staffing/temporary recruitment. UNISON believes that e- auctions should also not be used for purchasing services which are labour-intensive for the same reason that it should not be used for services involving the transfer of staff i.e. that there is a risk of pushing down wage rates and other terms and conditions of employment for those staff in services which are procured using e-auctions. The Executive should therefore also state in the regulation and accompanying guidance that e-auctions should not be used for the procurement of labour-intensive services.

7. Regulation 30 implementing Article 53 -contract award criteria

UNISON is aware that the Executive has pointed out in the consultation document (3.3.8) that under Regulation 30 the Government has "copied out the part of Article 53 that states that the most economically advantageous tender should be ‘from the point of view of the contracting authority'". UNISON welcomes this acknowledgement that the award criteria do offer scope to include social and employment considerations as long as they are deemed most economically advantageous ‘from the point of view of the contracting authority'. However UNISON believes that Regulation 30 should be amended to make it clear that social factors can be permissible award criteria. The Executive should also include in Regulation 30, supporting reference to Recital 1 and 46 of the Public Sector Procurement Directive. Regulation 30 (2) should simply be amended by inserting "social and" in the third line. This would read as follows:

"A contracting authority shall use criteria linked to the subject matter of the contract to determine that an offer is the most economically advantageous including quality, price, technical merit, aesthetic and functional characteristics, social and environmental characteristics, running costs, cost effectiveness, after sales service, technical assistance, delivery date and delivery period and period of completion".

Furthermore the Regulations and the accompanying guidance to the Regulations should advise that the list on possible considerations in Regulation 30 includes social criteria and is not exhaustive.

8. Regulation 30(6) Implementing Article 55-Abnormally Low Tenders

UNISON believes that Regulation 30(6) on Abnormally Low Tenders does not reflect the prominence given to this in the Directive where it is covered as a separate Article (55) in its own right. This is a significant change from the EU Directive text. UNISON believes that Article 55 should be transposed in full as a separate Regulation point. The Regulation should provide for a clear focus and importance to be given to compliance with employment protection and working conditions, as is the case in the EU Directive. The social issues guidance accompanying the Regulations should also include full details of the significance of this point.

9. Regulation 39 Implementing Article 26- Conditions of performance of contracts

The proposed transposition of Article 26 of the Directive does not take account of the clarification provided for by Recitals 1 and 33 of the Directive. Therefore Regulation 39 should be amended in line with the wording in Recitals 1 and 33 of the Directive to make it clear that the social and environmental considerations that may be included as conditions of contract include provisions on:

• on-site vocational training
• the employment of people experiencing particular difficulty in achieving integration
• the fight against unemployment, or
• the protection of the environment
• a requirement to recruit long-term job-seekers, to implement training measures for the unemployed or young persons and to recruit more disabled persons than are required under national legislation.

9. International Labour Organisation (ILO) Conventions

Recital 33 specifically mentions compliance with "the provisions of the International Labour Organisation (ILO) Conventions, assuming that such provisions have not been implemented in national law". UNISON would like to see this implemented as an obligation rather than a choice. Again, this would support Executive policy on the two-tier workforce.

Conclusion

In conclusion we believe that the consultation paper and draft regulations are drafted in a narrow and negative way and fail to take full advantage of positive EU procurement developments such as Recital 33 and decisions of the European Court. In view of recent Scottish experience (Ferguson's etc.) there is no merit or requirement for Scotland to slavishly follow the OGC's approach. This is an opportunity for the Scottish Executive to send a positive message about their commitment to using public procurement to secure Scottish employment.

For Further Information Please Contact:

Matt Smith, Scottish Secretary
UNISONScotland
UNISON House
14, West Campbell Street,
Glasgow G2 6RX

Tel 0845 355 0845 Fax 0141 342 2835

e-mail matt.smith@unison.co.uk