Legislation Overview

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The Public Services (Social Value) Act 2012

The Public Services (Social Value) Act 2012 places a responsibility on relevant public sector organisations to consider social value in service contracts, or where there is a service element in goods or works contracts. In theory it only applies to contracts beyond a certain minimum value and for services only, but it is increasingly being used to catapult a broader agenda. Implementation date was 31st January 2013 and as a result of The Act the focus within business processes, bids and tendering activity will no longer be solely upon financial metrics and measurements, but increasingly will also mean that procurement teams will need to consider the wider social impact that has been traditionally discharged through Corporate Social Responsibility or related activity that business may be doing.

“The Public Services (Social Value) Act has the potential to transform both public and private sector procurement by putting social value at the centre of the commissioning process’’ – Hazel Blears MP

“The Act to requires public authorities to have increasing regard to economic, social and environmental well-being in connection with public services contracts; and for connected purposes”

The Localism Act 2011

The Localism Act 2011 (c. 20) is an Act of Parliament that changes the powers of local government in England. The measures affected by the Act include more powers for local communities, elected mayors, referendums and the “Local authority’s general power of competence” which means that “A local authority has power to do anything that individuals generally may do”.

Specifically for communities the Localism Act gives community groups, parish councils and local authority employees the right to express an interest in taking over the running of a local authority service. The local authority must consider and respond to this challenge; and where it accepts it, run a procurement exercise for the service in which the challenging organisation can bid. This makes it easier for local groups with good ideas to put them forward and drive improvement in local services.

“To make provision about the functions and procedures of local and certain other authorities; to make provision about the functions of the Local Commission for Administration in England; to enable the recovery of financial sanctions imposed by the Court of Justice of the European Union on the United Kingdom from local and public authorities; to make provision about local government finance; to make provision about town and country planning, the Community Infrastructure Levy and the authorisation of nationally significant infrastructure projects; to make provision about social and other housing; to make provision about regeneration in London; and for connected purposes”

EU Directive 92/50/EEC (Horizontal Policies for Procurement)

The creation of a common market for public-sector procurement and construction contracts was unlikely to come about entirely as a result of the obligations Member States had undertaken in the Treaties to remove restrictions on foreign goods, services and businesses. It was still likely to be frustrated by differences in national regulations.

Community legislation was necessary to make sure that government contracts were open to all nationalities on equal terms and to make tendering procedures more transparent so that compliance with the principles laid down in the Treaties could be monitored and enforced.

Therefore, to back up the prohibition of import restrictions resulting from discriminatory public purchasing and to make it easier for resident and non-resident foreign firms to compete for public-sector contracts, the Council issued directives to coordinate procurement procedures in all public-sector procurement subject to the Treaties.

The public procurement directives are based on three main principles:

Community-wide advertising of contracts so that firms in all Member States have an opportunity of bidding for them.

The banning of technical specifications liable to discriminate against potential foreign bidders.

Application of objective criteria in tendering and award procedures.

The latter principle is ensured by the following requirements:

Contracts are to be put out to open tender (open to all interested parties) or restricted tender (open only to selected candidates), at the choice of the authority placing the contract. Authorities may have recourse to negotiated tendering only in specified exceptional circumstances.

Interested parties may only be excluded from participating (in restricted or negotiated tenders) or from final selection (in open, restricted or negotiated tenders) on certain specified qualitative criteria.

Contracts may be awarded only on economic or technical criteria, namely either the lowest price or the economically most advantageous tender overall.