HM Insights

A balancing Act? Greater access brings additional duties as Scottish procurement reform gets Royal Assent

The Procurement Reform (Scotland) Act 2014 (the "Act") received Royal Assent on 17 June 2014 after being introduced into the Scottish Parliament on 3 October 2013. The Act does not replace the current Public Contracts (Scotland) Regulations 2012 (the "Regulations") but will instead sit alongside the Regulations once it is enacted. Kelly Sleight from our Public Sector team gives a brief outline of the main provisions within the Act.

The Act applies to contracts which have an estimated value equal to or greater than £2 million for public works contracts and £50,000 for other public contracts. The Act aims to increase transparency around procurement procedures and the award of public contracts, and allow easier access to these contracts for SMEs. However, it is likely to impose a heaver administrative burden on contracting authorities and makes compliance with procurement rules more complicated for them.

The Act results in a number of additional duties for contracting authorities in relation to procurement exercises regulated under the Act ("regulated procurements"), most notably:

  • Compliance with the "sustainable procurement duty" established by section 9 of the Act by considering improvement of the economic, social and environmental wellbeing of its area; facilitating the involvement of SMEs, third sector bodies and supported bodies; and promoting innovation, before undertaking a regulated procurement exercise;
  • Preparation and publication of a procurement strategy for contracting authorities expected to have procurement expenditure of £5 million or more within the next financial year, which must include specific information in accordance with section 15(5) of the Act, and an annual report on its regulated procurement activities after the end of that financial year;
  • Consideration of whether to impose community benefit requirements in carrying out a regulated procurement for a contract with an estimated value of equal to or greater than £4 million;
  • Notification to unsuccessful participants before submission of tenders of the reasons why they have been excluded for regulated procurements which do not fall within the scope of the EU Directives; and
  • Retention and maintenance of a register of all the contracts the contracting authority has entered into as a result of regulated procurements.

The Act also makes provision for the Scottish Ministers to publish guidance or regulations in respect of a number of duties within the Act, for example, the procurement of contracts for health or social care services and circumstances in which a contract can be awarded without competition. The Scottish Ministers are also required to establish and maintain the Public Contracts website under the Act on which the contracting authorities must publicise any intention to seek offers and award contracts under regulated procurements.

Contracting authorities must be aware of their additional duties introduced by the Act and any associated practical implications. The Act extends the scope of contracts which will be subject to some form of legislative regulation, whether under the Act or the Regulations.

Further reform to the procurement regime is pending, courtesy of the new EU Directives which came into force on 17 April 2014 and which will need to be implemented by member states within two years of that date.

For further information and guidance on any aspect of procurement, please contact me or another member of the Public Sector team at Harper Macleod.