Transcript Cities As Responsible Purchasers in Europe: Seizing

Equality and Diversity Forum
Seminar Series
Can procurement be used to
promote equality?
Lessons from experiences at
home and abroad
Linkage


Concept of “linkage”
“Participating in the market as
purchaser, and at the same time
regulating it through the use of
purchasing power to advance equality”
Some distinctions






Can, effectively; and can, legally?
Public and private procurement
Non-discrimination and promoting
equality
Which grounds/groups?
Equality of what? Employment and
beyond
Equality, where?
How is linkage done?





Specification of what is being purchased
Specification of the processes by which the
contract must be delivered
Regulating who can tender for the contract
Attempting to influence supply chain by
including provisions on sub-contractors
Denial of ability to tender as a sanction for
breach of social law
How is linkage done?




Including social and ethical issues as
considerations to be taken into account at the
award stage
Granting price preferences to selected
tenderers
Enabling selected tenderers to match lowest
offers
Conditions regulating post-award delivery of
the contract
Method of pol icy
i mplemen tation
No Descri ption
.
#1 Product/servi
ce
specification
#2
Set -asides
#3
Qualificat ion
criteria
Remarks
Cont ract ing authorit ies can often give effect to social and
economic policies through appropriat e specificat ion of the
product or service that is to be procured, e.g. to promote
employment by specifying const ruct ion methods that involve
intensive use of labour rather than construction plants.
Cont ract ing authorit ies can at tain policy object ives by set t in g
aside a certain proport ion of their procurement requirements
and allow only defined enterprises or individuals to compete
for the work so reserved.
Cont ract ing authorit ies can at tain policy object ives by
excluding firms that cannot meet a specified requirement, or
norm relat ing to the policy object ive, from part icipation in
cont racts. Firms are typically excluded from part icipat ion
through an inability to at tain a legal requirement (e.g. not to
discriminate on the basis of gender, race or disabilit y), or to
at tain a norm enforced in the public sector (e.g. a requirement
to implement an affirmative act ion programme), or to respond
to contract ual condit ions regarding the composit ion of the
tendering entity. In some instances, firms are excluded a s a
sanct ion for their failure to comply with policy in the past or to
enjoy good standing in respect of their taxes.
#4 Preferences at
the
shortlisting
stage
A contracting authority may decide to limit the number of
qualified suppliers or service providers who may participate in
contract award procedures to reduce costs relating to
procurement and to avoid wasted expenditure by suppliers or
service providers. Criteria relating to policy objectives may be
taken into account in deciding which of the qualified suppliers
should be invited to tender.
Contracting authorities give a weighting to policy objectives
along with the usua l commercial criteria, such as price and
quality, at the award stage, i.e. a preference in the form of
tender adjudication points is provided.
#5 Award
criteria
(tender
adjudication
criteria)
#6 Offering back Contracting authorities may achieve their policy objectives by
giving targeted enterprises a second chance to make their
tenders successful, e.g. the most competitive ÒpreferredÓ
contractor can be given an opportunity to undertake part of the
contract if that contractor is prepared to match the price and
quality of the best tender received.
#7
#8
#9
Cont ractual
condit ions
Cont ract ing authorit ies may achieve their policy object ives by
making such object ives a contractual condit ion. Condit ions,
typically, may concern the subject mat ter of the cont ract, or the
way in which it is delivered, or may relate to the cont ractorÕs
business as a whole.
Design of
Cont ract ing authorit ies can design specifications and/or set
specifications, cont ract terms to facilitate participat ion by target ed groups of
cont ract
suppliers. For example, work can be packaged into a number of
condit ions
separate, small contracts rather than onelarge contract to make
and
it more likely that the work will be at t ract ive to small firms
procurement
and, possibly, less likely that it will be attractive to larger
processes for compet itors. They may also conduct the procurement process
the benefit of itself in a way that assist s part icipat ion by the targeted groups,
part icular
e.g. by simplifying procedures and set t in g longer deadlines to
suppliers
enable small firms to part icipate more easily.
General
Cont ract ing authorit ies can provide support for target ed groups
assist ance
to compete for business, wit hout giving these part ies any
favourable t reat ment in the actual procurement . This may be
done, for example, by providing these groups with informat ion
on tender opport unit ies; by act ively seeking them out t o
encourage them to register on lists from which suppliers are
chosen; or by providing training on procurement rules and
systems.
Source: SABS 0396 (draft).
Examples from abroad





Affirmative action in employment: United States:
Executive Order 11,246
Employment equity: Canadian Federal Contractors
Programme
Set-asides for minority and women-owned
businesses in the United States
Canadian Procurement Strategy for Aboriginal
Business
South African Targeted Procurement: Preferential
Procurement Policy Framework Act, 2000
Empirical assessments from
abroad

US contract compliance: Gunderson:
“affirmative action under the federal contract
compliance program appears to have improved the
labor market position of those groups to which it
is directed, with stricter enforcement enhancing
effectiveness.”

M. Gunderson, Male-Female Wage Differentials
and Policy Responses, XXVII Journal of Economic
Literature (1989), p. 46 at 53.
Empirical assessments from
abroad

US contract compliance: Donohue and Heckman
find “a positive correlation between black
employment growth and contractor status. [T]he
presence of a governmental effect has been
confirmed, although its precise nature is still
uncertain.”

J.J. Donohue III and J. Heckman, Continuous
versus Episodic Change: The Impact of Civil
Rights Policy on the Economic Status of Blacks,
XXIX Journal of Economic Literature (1991), 1603
at 1635.
Empirical assessments from
abroad

Canadian Procurement Strategy for Aboriginal
Business: Department of Indian and Northern
Affairs’ Audit and Evaluation Branch reported that
“overall, the PSAB has been successful in meeting
its stated objectives, and that a sound rationale for
the strategy continues to exist.”

Department of Indian Affairs and Northern
Development Corporate Services, Departmental
Audit and Evaluation branch, Evaluation of the
Procurement Strategy for Aboriginal Business,
August 2002
Empirical assessments from
abroad

South African Targeted Procurement:ILOsponsored study of the operation of the
programme concluded: “On balance, targeted
procurement has been effective in attaining the
goals set out in the Reconstruction and
Development Programme ….”

Targeted Procurement in the Republic of South
Africa: An Independent Assessment (ILO)
Unintended consequences?



Protectionism: does linkage increase the
opportunity for, or have the effect of,
excluding competitors?
Competition between social policies: does
linkage make it more difficult for SMEs to
tender successfully?
Linkages as a method of promoting “bad”
social or ethical policies: is linkage a twoedged sword?
Unintended consequences?




Cost concerns in context of tighter budgets:
does linkage increase costs?
Transparency issues: does linkage lead to a
reduction in transparency of the procurement
process?
Good governance issues: Does linkage lead
to greater bureaucratization of procurement
process?
Corruption: does linkage increase the
opportunities for corruption?
Other questions




Why use procurement, rather than other
policy instruments?
Partial coverage, only relating to those
companies in government procurement
market?
Evasion of democratic and constitutional
controls?
Are policies on linkage serious or mere
window-dressing?
Developments in UK
Government Policy






In Race Relations White Paper 1975, but dropped
Conservative governments and Local Government
Act 1988
Contracting-out and CCT
After election of Labour: more neutral approach,
and (partial) relaxation of the restrictions on local
government and CCT
Rise of “sustainable procurement”
Office of Government Commerce report,
published this month
Other recent GB policy drivers








Cook and Macfarlane, Achieving Community Benefits Through
Contracts (Rowntree, 2002)
Strategy Unit, Ethnic Minorities in the Labour Market (March,
2003)
CRE Guidance on equality and procurement (July 2003)
National Procurement Strategy for local government (October
2003)
Office of Government Commerce (OGC)/DEFRA, Joint Note On
Environmental Issues (October, 2003)
National Employment Panel Report to Chancellor (March 2005)
Office of Deputy Prime Minister, Code of Practice on Workforce
Matters (September 2005)
Women and Work Commission, Shaping a Fairer Future
(February 2006)
Recent initiatives



West Midlands Forum initiative
Haringey SME Procurement Pilot,
Community Benefit Clauses
Greater London Authority initiatives
What next?



Government reaction to Women and Work
Commission Report
NEP’s Minority Ethnic Group work with
JobCentre Plus and Department of Work and
Pensions on race equality and procurement
New Disability and Gender equality duties
come into effect
Why does linkage occur?



Economic weight brought to bear on
problems where other regulatory
techniques may be ineffective
Demonstrated success of some
linkages in the past
Good ideas travel: growth in
transnational discussions about
social/ethical procurement
Why does linkage occur?


Growth of concept of “sustainable
development”: growth of “green”
purchasing stimulates interest in social
and ethical procurement
Development of “corporate social
responsibility” stimulates interest in
procurement linkages, e.g. by utilities
Why does linkage occur?


Controversy over the use of procurement in
contracting-out focuses attention on social
issues in procurement (esp. PPPs/PFIs)
Development of concept of “mainstreaming”
in gender equality, and more broadly
Different roles law plays





Law explicitly limits certain uses of procurement
Legislation explicitly permits public bodies to advance
certain equality policies, e.g preferences for sheltered
employment
Legislation directly requires public bodies not to give
contracts under certain circumstances, e,g. Fair
empoyment legislation in Northern Ireland
Legislation requires public bodies to consider use of
procurement for equality purposes, under new
equality duties
Concentrate on first and fourth
Legal limits





Legal issues: does linkage run the risk
of exposure to
domestic?
EU?
international (WTO) litigation?
issue is whether these developments
restrict linkage at the national level
European Union
developments






Crucial role played by the European Court of Justice
in set of crucial cases
Beentjes (1987), Nord-Pas-de-Calais, Concordia Bus
(2002), EVN (2003)
Communication by the European Commission
(October 2001)
Recent package of legislative reform measures
Heavily negotiated on the social issues by Council,
Commission, Parliament
Role of recitals
EU approach






Equal treatment requirements
Detailed regulation only above thresholds
Transparency requirements
Qualification criteria permitted, within limits
Contractual conditions permitted, within limits
Award stage possibilities (tie-break)
EU approach




NB: Relationship between social/ethical
issues and the purpose of the contract
Linkages progressively given greater
regulatory space preferably as a method of
enforcement of EU social policy
Issues over “state aids” and disabled
workshops preference
Issues over competition requirements
General UK legal and policy
issues




Procurement regulations
Competition requirements
Data protection and freedom of
information
Other government policies: meaning of
value for money
Legal issues specific to local
authorities



Local Government Act 1999: best value
Local Government Act 2000: powers to
improve social, economic and
environmental conditions
Exclusion Order 2001: non-commercial
considerations amended
Procurement and the equality
duties




Relevance and role of “equality mainstreaming”
requirements: race, disability, and gender
Devolved Government initiatives: Wales and
Scotland
CRE Guidance on equality and procurement (July
2003)
Problem is how to operationalise the equality duty
in the procurement context
Northern Ireland
developments





Section 75, Northern Ireland Act 1998
(mainstreaming)
Review of Public Procurement
Establishment of Procurement Board, and
publication of Guidance
Incorporation of equality conditions in
contracts
Initiation of unemployment pilot
Worked example: Northern
Ireland Unemployment Pilot



Contractors wishing to be considered for a
contract within the Pilot Study required to clearly
demonstrate their commitment to the scheme
Tender documentation requires contractors to
provide an Unemployed Utilization Plan (UUP)
that sets out the firm's Social Policy and details
specific proposals offered for the contract
Contractors also required to provide details of
their experience, and their capacity to implement
their proposals
Worked example: Northern
Ireland Unemployment Pilot






EU Tendering Procedures applied to all contracts
Prior Indicative Notices (PIN) and the Procedural Notices
placed in the EU Official Journal incorporate the
following provisions:
All tenders to include a project specific UUP
Specific contract provisions will require the
implementation of the UUP
The UUP to be considered during the award of contract,
where two (or more) tenders are considered equally
economically most advantageous
Contracting Authority welcomes the opportunity to view
the Firm's Social Policy Statement
Worked example: Northern
Ireland Unemployment Pilot
 Tender documentation includes the following:
 Contractors required to set out their company's strategy
and procedures in relation to this objective in an
Unemployment Utilization Plan
 Successful contractor required to satisfy the Contracting
Authority that any persons employed under the scheme
comply with the qualification requirements
 Successful contractor to use best endeavours to ensure that
any persons employed under the scheme remain employed
for the duration of the contract
Worked example: Northern
Ireland Unemployment Pilot
Contracting authorities required to monitor the
implementation of the Unemployed Utilization
Plan
Any failure to fully implement the Unemployed
Utilization Plan reflected in the contractor's
performance evaluation at the end of the contract
Evaluation will be taken into account in
assessment for future tender lists (where
employment of the unemployed is a criterion)
Assessing the effect of the
pilot






Empirical research findings for the procurement
Board by University of Ulster
No significant extra costs incurred
No significant opposition by those who were
contracting with government
No legal challenges
Few administrative problems; problems mostly
arose from civil service unease
Increase in employment of unemployed on pilot
schemes
What next in Northern
Ireland?



Report of Northern Ireland Working
Group on social issues in PPP/PFI
Equality Commission Guidance on
equality considerations in public
procurement
Single Equality Bill?
Implications for future
government policy?




Leadership by the Chancellor of the
Exchequer
Treasury Green Book should be
amended
PPP/PFI contracts should be addressed
Treasury should take a lead in
establishing a mechanism of oversight
and monitoring
Implications for equalities
legislation?


Set out the circumstances where failure to
comply with the legislation should lead to
future disbarment from public contracts?
Primary legislation to authorise secondary
legislation setting out what public bodies need
to do regarding procurement to fulfil their
obligations under positive equalities duties?