The document summarizes the Procurement Reform (Scotland) Act and its implications. Key points include: - The Act introduces community benefits clauses for public contracts over £4 million that can provide social, economic and environmental benefits. - The full impact of new EU procurement directives will not be known until they are transposed into Scottish law by the end of 2015. - A living wage cannot be included in the community benefits clauses as it would violate EU law. - The Act offers opportunities for organizations like Cyrenians to develop consultancy services around the community benefits clauses and procurement reform. However, organizations will need to closely monitor developments and comply with complex procurement rules.

1. Policy Briefing
The Procurement Reform (Scotland) Act and Community Benefits Clauses
15 January 2015
Policy Conclusions/Implications
 The Procurement Reform (Scotland) Act and accompanying clauses offer the
Cyrenians opportunity to develop a unique consultancy service to corporates
 The full impact of EU Directives on the Act will not come into effect until the end of
2015
 Hopes of including a ‘living wage’ in the Act have been thwarted when the
Government ruled this would breach EU Law.
 The Act is the largest shake-up of procurement reform since 1971
 The inclusion of community benefits clauses is public sector contracts will need
considered carefully together with the strategy and not be open-ended.
 The Act should offer increased public sector Value for Money as well as benefits for
communities effected by public sector contracts.
Introduction
The Procurement Reform (Scotland) Bill
was introduced in the Parliament on 3rd
October 2013 and came into law in 2014.
Public procurement in Scotland is
governed by a detailed and complex
framework of European law and the Bill is
necessarily framed within this existing EU
legislation.
It is important to note that the Bill does
not transpose the Directives. The
Directives will be transposed into Scots
law via new Regulations, within two years
of final agreement.
This briefing seeks to provide the context
for the Procurement Reform (Scotland)
Act and an overview of the main
1
http://www.scotland.gov.uk/Topics/Government/
implications of the ‘community benefits’
clauses for tendering organisations and
suppliers. Issues including the impact of
the EU Directives on public procurement
and the ‘living wage’ are also discussed in
this briefing.
Why is the Act important?
The Procurement Reform (Scotland) Act
2014 is centred on the Scottish Model of
Procurement and seeks to put
‘procurement at the heart of Scotland’s
economic recovery’1. The aim is to focus
on outcomes rather than outputs and in
doing so maximise the value of public
spend for the taxpayer. The reforms are
part of the wider public sector
Procurement/policy/ProcurementReform/ProcRef
ormAct

2. procurement reform to effect efficiency
and sustainability building on the
recommendations as published in the
2006 McClelland Report.
It is also important to note that the
introduction of the most sweeping
changes to public procurement since 1971
have been enacted by the European
Union Commission (EUC) on 15 January
2014. These three EU Directives on public
procurement are part of the Europe 2020
strategy for mart, sustainable and
inclusive growth.
Although the Procurement Reform
(Scotland) Act has received Royal Assent,
the Act will not come into force until the
Scottish Government has fully considered
how to enact the three new EU Directives
on public procurement. The Scottish
Government has 24 months (until April
2016) to “transpose” these Directives into
Scots Law.
ACHIEVING COMMUNITY BENEFITS
When drafting Community Benefit Requirements, the following factors should be taken into
account:
EU Directives on Public Procurement in Scotland
What are the three new EU Directives?
 EU Procurement Directive 2014/24/EU – on public contracts
 EU Procurement Directive 2014/23/EU - on the award of concession contracts
 EU Procurement Directive 2014/25/EU - on procurement by entities operating in the
water, energy, transport and postal services sectors (predominantly utilities)
The new Regulations are expected to be in place towards the end of 2015.
the objectives of Community Benefit clauses, i.e. the needs of the
beneficiaries compared with the capacity of the contract to accommodate
these needs and still deliver other priorities like quality, timetable, cost;
Design the requirements to fit with supply-side funding and services, while
taking into account the durability of the latter in relation to the timeframe
for contract delivery
the monitoring and reporting requirements in relation to the contracting
authority’s capacity to use this information effectively

3. Why have new EU Directives on
public procurement been
introduced?
Economic, social and political
developments and current budgetary
constraints have made it necessary to
reform the rules, firstly to make them
simpler and more efficient for public
purchasers. Secondly, to provide the best
value for money for public purchases,
while respecting the principles of
transparency and competition.
EU Directives and Community Benefits clauses?
The new Procurement
Reform (Scotland) Act
includes a section of
regulations on ‘community
benefits’ as part of the
wider procurement reforms
for public sector contracts.
The community benefits
clauses are intended to
provide a range of
contractual social,
environmental and
economic benefits in the
delivery of public sector
contracts.
Source: Ready for Business
Employment and
training opportunities
for the long term
unemployed
Creating opportunities
for enterprising thirds
sector organisations to
deliver public services
Contributions to
achievement of
education and training
targets
Creating opportunities
for SMEs to deliver
public services

4. The community benefits causes is an important clause in the new Act and designed to add
further transparency to public procurement. Some of the benefits of CBC can include
training and employment opportunities, sub-contracting opportunities and other social and
economic benefits.
When do the community benefit clauses
(CBC) apply?
It should be noted that the CBC only apply
to public sector contracts for services,
works or concessions above £4 million.
Where the EU procurement rules apply,
the benefits to communities should be
achieved through ‘social considerations’
and CBCs.
It is legal to include social considerations
into CBC in procurements covered by EU
rules so long the following broad
principles are met: transparency, non-
discrimination, compliance and
proportionality.
What do the EU Directives say about the
inclusion of a ‘living wage’ in CBC?
The inclusion of a living wage cannot be
included as part of the community
benefits clauses. The Government ruled
that it would breach European law to
include a living wage in the Procurement
Reform bill and was defeated in the
Scottish parliament last year before Royal
Assent.
What must a contracting public body consider when deciding to include community
benefits clauses as part of a public tender?
The organisation must consider2:
1. What community benefits requirements it intends to incorporate.
2. Where it does not intend to include any such requirements, a statement of its
reasons for not including any requirements.
3. Where community benefit requirements are included in a contract, the contracting
authority must include in the award notice a statement of the benefits it considers
will be derived from those requirements.
4. the information that should be contained in a contract notice and award notice in
relation to community benefit requirements,
5. Circumstances in which inclusion of community benefit requirements would or
would not be appropriate.
6. Contracting authorities must have regard to any guidance published under this
section.
2
Scottish Procurement Scottish Procurement Policy Note SPPN 6/2014 Date 20 November 2014 ‘Delivering
community benefits in public procurement’.

5. Procurement Strategy and Action Plan
We have produced the action plan to assist the public sector to build sustainable
procurement into their corporate culture, take proper account of sustainability in
procurement activity and to be able to demonstrate how this is being achieved.
As part of the new Procurement Reform (Scotland) Act, public sector organisations will be
required to include in tendering opportunities the requisite to produce a Procurement
Strategy and Action Plan laying out how sustainable procurement will be achieved, take
proper account of sustainability in procurement activity and to be able to demonstrate how
this is being achieved.
It will also be mandatory for bidders to measure and draft and annual Procurement Report
on whether the benefits of a contract have been realised including any CBC (see appendix
for Procurement Strategy example).
Case Study:3
The New South Glasgow Hospitals
NHS Greater Glasgow and Clyde (NHSGGC) have used Community Benefit Clauses (CBCs) in
procuring the new South Glasgow Hospitals (nSGH). This resulted in Project OsKar, a subsidiary
company of Kibble which is a well-established social enterprise, winning the contract to provide
industrial painting services for the fencing around the building site. This was the first time NHSGGC
used CBCs in procurement and provided a high profile example of the use of social clauses to deliver
supply chain benefits to the social enterprise sector.
3
http://www.Readyforbusiness.org/case-studies

6. Source: http://www.scottish.parliament.uk
What will the impact of the
‘community benefits’ and
Procurement Reform (Scotland) Act
be for Cyrenians more generally?
As part of the Cyrenians Corporate Plan
and Strategy for development, the
Cyrenians intend to start-up a new social
enterprise in the guise of a consultancy
for corporate bodies. This new
consultancy will have the benefits for
corporate of offering a unique insight and
guidance on the CBC in particular and in
how the new Procurement Reform Act
and EU Directives impact on tendering
opportunities and as a supplier to public
sector organisations of services and/or
works.
The Act offers the Cyrenians opportunities
in the form of business development but
also challenges in the form of keeping
abreast of new policy developments
relating to public procurement and the
impact that the EU Directives will have on
the Act when implemented towards the
end of 2015.
More broadly, the charity will need to be
cautious of the complex and numerous
rules surrounding the CBC if, when
bidding for public sector contracts.
David Fulton

7. APPENDIX
 Procurement Strategy and Action Plans example(s)
PROCUREMENT STRATEGY
Summary of Requirement
This should summarise the nature of the procurement.
Background including future developments
What is being purchased - scope of work, related work that is not included, optional work that
could be beneficially provided by the supplier.
Objectives of the procurement.
The business case (see the section on Business Cases, SPD Toolkit) can be incorporated or
attached as an annex.
Customer/Contract Manager
This is the customer who has generated the requisition. The intended contract manager should
also be identified and this may be the ‘customer’ or someone else in the same division.
Estimated contract value/available budget
This should show the estimate of the contract value over the whole life of the contract and the
budget available to cover the goods/works or in a service contract the contract duration.
Duration of contract
The contract period, e.g. for a cleaning contract it may be 2 years or for a consultancy the
duration would be the period from contract commencement to the delivery of the final output
etc include any options to extend the contract beyond the core period.
Market capability
This should include an evaluation of the competitive environment including suppliers.
Capability and capacity to meet your requirements and those of the rest of the public sector.
Sustainable Development
This should include consideration of sustainable development issues pertinent to the
procurement, and an assessment of the extent to which goods and services can be manufactured
used and disposed of in ways which reduce resource use, energy use, travel and pollution.
Where there may be significant Sustainable Development issues associated with the

8. procurement, relevant stakeholders (e.g. Accommodation - Environmental Management,
Environment Group and Sustainable Development) should be consulted at the earliest
opportunity
Risks
This should identify the relevant risks involved. Possible risks include -
Business Risk e.g. supplier’s failure to deliver may have a significant affect on government
policy.
Service/Operational Risk should be managed by party best placed to do so e.g. design, build,
finance, operate.
External Risk e.g. Legislation (does the Transfer of undertakings (Protection of Employment)
apply); innovative product; limited number of providers.
Implications of FOI
Procurement Process
How the procurement process is conducted in terms of
 Project Team - representation from key stakeholders
 Procurement Options - Relate to procurement priorities; capability and capacity of
suppliers; single supplier vs. multiple suppliers option.
 Procurement Route - How EU rules apply; collaborative opportunities including OGC
contracts; Open, Restricted, Negotiated procedures; Strategic partnering arrangements;
non-Competitive Action
 Advertising - SE internet, OJEU, GO, press, trade journals, Potential Suppliers Database
(link) etc.
 Structuring of the Invitation to Tender document - What documents will comprise the
tender (for SPD staff - UCMS format). Expected distribution. ETS
 Criteria for tender evaluation - most economically advantageous tender/ lowest price.
Subject to complexity of project, it may be desirable to expand on specific criteria at this
stage.
 Contract management arrangements - Contract Type, Form of Contract (recompetition),
Review periods, Payment Mechanisms (EASEbuy as applicable for SE contracts),
Incentives and Rewards.
N.B. If Non-Competitive Action (NCA) is being proposed, supporting evidence is required.
Pricing strategy
The pricing arrangement should be set out, e.g. fixed price, daily rate, target pricing, schedule
of rates, arrangements for optional costs, payment stages, effect of e-procurement/e-trading
etc. Pricing strategy should aim to incorporate all foreseeable costs.
Tender Evaluation Team
This sets out who is in the project team, what their roles and responsibilities are including any
particular strengths and weaknesses.

9. Timetable
This should show all the main tasks and milestone dates for the completion of such tasks.