Effective from 31 January 2013, the new Act places a duty on “relevant authorities”, at the pre-procurement stage, to consider how the services to be procured might improve the economic, social and environmental wellbeing of the area; and to consider whether to consult in relation to this.

So what do charities need to know about the Act and its impact?

Here are a few key facts:

  • The duties imposed by the Act will apply to any charity that is also a “contracting authority” within the meaning of the Public Procurement Regulations (Public Contracts Regulations 2006, the “Regulations”). So any charity that is required to comply with the Regulations must similarly comply with the obligations under the Act.
  • The Act only applies at the pre-procurement (ie planning stage). 
  • It applies only to services contracts that fall within the scope of the Regulations (so works or supply contracts are not caught and nor are contracts that fall below the Regulations’ financial threshold). 
  • The duty to consider relates only to matters that are relevant to the services being procured and the authority must consider whether it is proportionate to take such matters into account. 
  • The duty to consult may be of particular relevance where the contract in question involves delivery of services to the public. Charities, third or voluntary sector providers, who are already engaged in delivering the services or who are involved in working with the relevant local community, may have a key part to play when responding to such consultation. 
  • The Act does not change the obligations and requirements of EU public procurement law. In other words, it does not legitimise considerations that would not be permissible as a matter of procurement law.

Implications for charities required to comply with the Act

Charities required to comply with the Act should ensure that their procurement policies, procedures and documentation reflect its requirements, ie to consider, at the pre-procurement phase, how the services to be procured might improve the economic, social and environmental wellbeing of the area and to consult on this as appropriate. A robust audit trail should be retained to demonstrate that the necessary consideration/consultation has taken place and the outcome of this. Failure to comply with the Act could be susceptible to legal challenge in a similar way to the recent trend in challenges for failure to comply with the equality duty under the Equality Act 2010.

Implications for charities bidding for contracts subject to the Act

For charities who are not required to comply with the Act but are bidding for public contracts falling within the scope of the Act, they should consider how their approach to service delivery may improve economic, social and environmental wellbeing and gather evidence of how this has been achieved in practice. There may also be opportunities for charities to bid as partners with larger providers wishing to strengthen their tenders and the social value element of their service provision.

As procuring authorities are increasingly encouraged to undertake market engagement in advance of a procurement, charities can have an important part to play in that engagement and in identifying the social values that the procurement could achieve. In doing so, they should be well placed to respond to any subsequent tender opportunity and its social value requirements.

While achieving social values through procurement will rarely be a procuring authority’s principal concern, even as a secondary consideration the social value that a charity could bring may be the ultimate differentiating factor between a winning and second placed bid. Charities should therefore seize the opportunity the Act presents them with.