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Social and environmental factors in the new regulations – How will they impact buyers?

Posted by Cindy Cheng on April 13, 2015

The recent changes in the public procurement regulations have resulted in greater clarity concerning the rules on social and environmental aspects.

Social aspects can now also be taken into account in certain circumstances (in addition to environmental aspects which have previously been allowed)

In practice this could mean including specifications for design work to contain accessibility for people with disabilities, compliance with applicable social legislation such as current employment law and adherence to labour law obligations. (Regulation 42).

Environmental aspects are already considered in the majority of tenders and usually focus on expected environmental performance levels, sustainability issues and any applicable environmental legislation

Buyers will now be able to reserve procurement procedures to encourage social inclusion

Social inclusion is positive action to change the circumstances that led to certain groups in society being excluded or disadvantaged. An example of how this is used currently is requiring that the successful service provider shows a commitment to address youth unemployment in their bid.

The new regulations now go a stage further and reserve procedures for certain social services only and for a limited period of 3 years. They have limited it to 3 years so that it is not out of open competition for too long. The regulations list the relevant CPV codes where this type of procedure is allowed such as supply services of domestic help personnel and services provided by youth associations. (Regulation 77).

Buyers can require certification/labels or other equivalent evidence of social/environmental characteristics, further facilitating procurement of contracts with social/environmental objectives

They can refer to a specific label or eco-label when putting together technical specifications where the requirement must cover certain environmental and social characteristics. For example, depending on the type of procedure they may require fair trade labels or the EU energy label.

Suppliers can use equivalent labels but only if they are unable to obtain the label requested on time for reasons that are out with their control. To ensure fairness the label must be reasonably achievable so that all suppliers have an equal chance of being able to apply for the opportunity. (Regulation 43).

Factors directly linked to the production process and full life cycle costing can now be considered by Buyers

All aspects of the production process can be considered even when they don’t form part of the material substance of the product. (Regulation 42)  Buyers can also consider a full life cycle costing approach when evaluating bids and require suppliers to provide information about the set up, maintenance and disposal costs alongside the actual cost of the goods.

 

How would this affect buyers?

From the buyers’ perspective, the slight change in social and environmental regulations should highlight the importance of good procurement practice. It can be easy for buyers to lose focus on social and environmental aspects in purchasing when pricing and other factors within the purchasing process can take priority. Looking at the social and environmental factors in more detail holds many benefits for the buyer such as:

• Enabling them to meet their own corporate social responsibility objectives through the supply chain.
• Conducting efficient environmental risk management through the process of identifying, evaluating, selecting and implementing actions to reduce risk to human health and to the ecosystems.
• Ensuring ‘real’ projections on spend using the life cycle costing method.
• Co-ordinating wider community benefits in their areas of operation.
Although the changes hold many advantages, buyers should also consider the possible disadvantages that may arise from   them.

For example, the new simplified process of assessing bidders’ credentials where only the winning bidder have to submit proof to confirm its competent status could mean that the suppliers could potentially claim to meet certain requirements or labels even though that this may not be the case. If this does happen, buyers could consequently face the problem of spending more time on evaluating other potential suppliers which will result in a delay in the purchasing, negotiating and awarding process. Buyers should also ensure that the right balance of attention is paid towards each step of the purchasing process in order to minimise risks and to avoid the failure to comply with the new public procurement regulations as this would risk reputational, financial and operational damage.

Even though there are potential downfalls due to the fact that these changes are potentially open to abuse through the reduced burden of proof, they still provide a welcome addition to the way in which contracts are let in the UK.

Effectively, these changes will further encourage buyers to address existing environmental and social compliance concerns whilst stimulating suppliers’ performance and enhancing the development process of innovative products and services in the market.

 

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