Out-Law News 2 min. read
06 Mar 2012, 2:16 pm
The Public Services (Social Value) Bill, a Private Members' Bill proposed by Conservative MP Chris White, was returned to the House of Commons by the House of Lords without amendments last week. It is likely to be approved today and will become law later this year, according to press reports.
The new law requires public bodies, at local and Government level, to give greater consideration to the economic, social and environmental wellbeing of their area before beginning the formal procurement process. It will also apply to other public bodies including NHS Trusts and housing associations.
It will cover contracts for "the provision of services", or contracts granted under framework agreements where service contracts are likely to constitute the majority of contracts granted under that agreement.
Although bodies will not necessarily have to award contracts to organisations which provide these benefits, the Bill will allow them to take into account factors other than price when choosing which company to award a contract to.
The Bill will likely benefit so-called 'third sector' organisations including charities, not-for-profit organisations and businesses with a "social element" in their commercial activities such as providing employment and training opportunities in the local area, according to a House of Commons briefing paper.
Peter Holbrook of Social Enterprise UK, which represents the third sector, said that having more public sector contracts being delivered by social enterprises would be "good news for society and good news for the taxpayer".
"As a result of this law, public bodies will be the first to showcase what responsible capitalism really looks like. They will have the freedom and authority to commission based on what else a provider can offer society, as well as competing on price and quality," he said.
He added that Private Members' Bills, which are proposals for new laws introduced by MPs and Lords who are not ministers, "rarely get this far".
The Bill will also require the Secretary of State to publish a 'national social enterprise strategy' to encourage engagement in social enterprise, and will require local authorities to include proposals for promoting such engagement in their area as part of their sustainable community strategies (SCSs). An SCS is a local authority's long-term vision for the area, usually over a period of ten years.
"It will be interesting to see how the new requirements become embedded into pre-procurement practice," said infrastructure law specialist Barry Francis of Pinsent Masons, the law firm behind Out-Law.com. "Although the new legislation will enable consideration of non commercial issues in some cases, there is no logical reason why the new factors should be at odds with value for money rather than complement value."
Proposed changes to public procurement laws at EU level, which the European Commission hopes to adopt by the end of 2012, will ensure public bodies have to take greater consideration of social and environmental criteria such as life-cycle costs and the integration of vulnerable and disadvantaged persons into projects. However, it has said that lowest price should remain the deciding factor in the case of highly standardised goods or services.
In its recently issued tender documents for the £1 billion Crossrail London train project, the Department for Transport included a "responsible procurement" element which asks bidders to set out what opportunities they will provide for training, apprenticeships and local businesses as part of the work. Transport Secretary Justine Greening said that any information provided would not contribute to the decision-making process.
Industry body the British Services Association (BSA), which represents service providers, welcomed the proposals. "Economic, social and environmental well-being is part of the value which our members provide. They will continue to contribute to jobs, growth, the delivery of public services and to the wider community," a spokesman for the BSA said.
