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PART 3SOCIALLY RESPONSIBLE PUBLIC PROCUREMENT

CHAPTER 1INTRODUCTION

Key concepts

21Public contracts

(1)In this Part, a “public contract” means a contract between one or more economic operators and one or more contracting authorities; and having as its object the execution of works, the supply of products or the provision of services.

(2)For the purposes of this Part, a framework agreement is treated as a public contract (and references to “public contract” are to be construed accordingly).

22Contracting authorities

(1)In this Part, a “contracting authority” means a body, office-holder or other person listed in Schedule 1.

(2)But the Welsh Ministers are not a contracting authority for the purposes of sections 29, 30, 35, 36 and 41.

(3)In this Part, a contracting authority’s area is the area by reference to which the authority primarily exercises its functions, disregarding any areas outside Wales.

(4)The Welsh Ministers may by regulations amend this section, and Schedule 1, so as to modify the meaning of a contracting authority.

23Public procurement

For the purposes of this Part, references to “public procurement” are to a contracting authority—

(a)designing and carrying out any procedure preceding the award of a public contract including, in particular, seeking bids and selecting economic operators;

(b)drafting, negotiating and awarding a public contract;

(c)managing a public contract after it has been awarded;

and references to “procurement” are to be construed accordingly.

CHAPTER 2SOCIALLY RESPONSIBLE PROCUREMENT DUTY

The socially responsible procurement duty

24Socially responsible procurement duty

(1)A contracting authority must seek to improve the economic, social, environmental and cultural well-being of its area by carrying out public procurement in a socially responsible way.

(2)A contracting authority carries out public procurement in a socially responsible way by taking action, in accordance with the sustainable development principle, aimed at contributing to the achievement of the well-being goals listed in section 4 of the WFGA 2015 (referred to for the purposes of this Part as the “well-being goals”).

(3)A contracting authority must set and publish objectives (“socially responsible procurement objectives”) designed to maximise its contribution to achieving the well-being goals.

(4)Schedule 2 makes provision about revising and reviewing socially responsible procurement objectives.

(5)In taking action aimed at contributing to the achievement of the well-being goals, a contracting authority must—

(a)take all reasonable steps to meet its socially responsible procurement objectives when it carries out public procurement in relation to any prescribed contract;

(b)take the particular actions referred to in section 25 when it carries out public procurement in relation to a major construction contract;

(c)take the particular actions referred to in section 26 when it carries out public procurement in relation to an outsourcing services contract.

(6)Despite subsection (1), a contracting authority must not include provisions in a prescribed contract that—

(a)are not proportionate (taking into account the estimated value of the contract);

(b)would conflict with any other enactment or rule of law relating to public procurement.

(7)For the purposes of subsection (2), “the sustainable development principle” has the meaning given by section 5 of the WFGA 2015.

(8)In this Part, a “prescribed contract” means—

(a)a major construction contract (see section 25),

(b)an outsourcing services contract (see section 26), and

(c)any other public contract of a description prescribed by the Welsh Ministers by regulations.

25Socially responsible procurement duty: major construction contracts

(1)The particular actions mentioned in section 24(5)(b) are—

(a)having regard to model social public works clauses published by the Welsh Ministers under section 27;

(b)in designing and carrying out procedures preceding the award of the major construction contract, considering whether the contract should include social public works clauses;

(c)in negotiating and awarding the contract, taking all reasonable steps—

(i)to include any social public works clauses it considers should be included;

(ii)to ensure that clauses included in the contract can be implemented;

(d)in managing the contract, taking all reasonable steps to ensure that any social public works clauses included in the contract are implemented;

(see sections 27 to 31 for further provision about the meaning of “social public works clauses” and their application to major construction contracts).

(2)In this Part, a “major construction contract” is a public contract with an estimated value equal to or greater than £2,000,000, which is—

(a)a public works contract,

(b)a works contract, or

(c)a works concession contract.

(3)The Welsh Ministers may by regulations amend this section to modify the meaning of a major construction contract.

26Socially responsible procurement duty: outsourcing services contracts

(1)The particular actions mentioned in section 24(5)(c) are—

(a)having regard to the public services outsourcing and workforce code published by the Welsh Ministers under section 32;

(b)in designing and carrying out procedures preceding the award of the outsourcing services contract, considering whether the contract should include social public workforce clauses;

(c)in negotiating and awarding the contract, taking all reasonable steps—

(i)to include any social public workforce clauses it considers should be included;

(ii)to ensure that clauses included in the contract can be implemented;

(d)in managing the contract, taking all reasonable steps to ensure that any social public workforce clauses included in the contract are implemented;

(see sections 32 to 37 for further provision about the public services outsourcing and workforce code, the meaning of “social public workforce clauses” and their application to outsourcing services contracts).

(2)In this Part, “an outsourcing services contract” means a contract under which—

(a)a requirement to provide a public service provided by, or previously provided by, a contracting authority is transferred to another person, or

(b)another person agrees to undertake any other function undertaken by, or previously undertaken by, a contracting authority;

and “outsourced” is to be construed accordingly.

Social public works clauses

27Social public works clauses in major construction contracts

(1)The Welsh Ministers must publish model clauses for major construction contracts (“social public works clauses”) designed to bring about the improvements to economic, social, environmental and cultural well-being listed under each category in the Table in subsection (2).

(2)The categories and improvements are—

TABLE 1
CategoryImprovements
PaymentsEnsuring and enforcing prompt payments.
EmploymentProviding employment opportunities to younger people, older people, the long term unemployed, people with disabilities or people who may otherwise be disadvantaged (for example because of their race, religion or belief, sex, gender identity or sexual orientation).
ComplianceEnsuring compliance with legal obligations in relation to employment rights (including the minimum and living wage), health and safety, and trade union representation.
TrainingProviding appropriate training for workers.
Sub-contractingProviding opportunities to small and medium sized enterprises and voluntary organisations to execute works, supply products or provide services.
EnvironmentRequiring sustainable management of natural resources, use of sustainable materials, resilience to the impact of climate change, reduction of greenhouse gas emissions, and enhancement of the natural environment and biodiversity.

(3)A reference in this Part to a contracting authority including social public works clauses in major construction contracts—

(a)is a reference to all of the model contract clauses published in respect of each of the improvements under the categories in subsection (2), and

(b)means incorporating clauses that have the same or substantially the same effect as the published model contract clauses.

(4)The Welsh Ministers may by regulations amend subsection (2)—

(a)to add a category, and improvements under that category, to the Table;

(b)to remove a category, and improvements under that category, from the Table;

(c)to amend a category or improvements under a category in the Table.

28Social public works clauses in subcontracts

(1)Subsection (2) applies if a contracting authority intends to include social public works clauses in a major construction contract it agrees with an economic operator (a “contractor”) (the authority having considered whether to do so in accordance with section 25(1)(b)).

(2)The authority must take all reasonable steps to ensure that the obligations in the social public works clauses are implemented where the contractor enters into a subcontract with any other economic operator (a “subcontractor”).

(3)Examples of the reasonable steps that could be taken under subsection (2) include—

(a)ensuring that social public works clauses having the same or substantially the same effect as those in the major construction contract are included in any subcontract—

(i)the contractor enters into with a subcontractor, and

(ii)the subcontractor enters into with a subsequent subcontractor (and so on);

(b)ensuring that the contracting authority can enforce the obligations in social public works clauses under the major construction contract or under a subcontract;

(c)requiring the contractor to obtain the contracting authority’s consent before entering into a subcontract, with consent being made conditional upon social public works clauses having the same or substantially the same effect as those included in the major construction contract being included in any subcontract;

(d)requiring the contractor to inform the contracting authority if it intends to enter into a subcontract which does not include social public works clauses having the same or substantially the same effect are those included in the major construction contract;

(e)requiring the contractor to monitor the extent any obligations in social public works clauses are implemented where the contractor has entered into a subcontract with any other economic operator.

29Social public works clauses: notifying the Welsh Ministers

(1)A contracting authority must notify the Welsh Ministers if, in relation to a major construction contract—

(a)the authority does not intend to include social public works clauses in the contract (despite having considered whether to do so in accordance with section 25(1)(b));

(b)social public works clauses are not included in the contract (despite the authority having taken all reasonable steps in accordance with section 25(1)(c)(i));

(c)there is no process in place for ensuring that obligations in social public works clauses are implemented (despite the authority having taken all reasonable steps in accordance with section 25(1)(c)(ii));

(d)there is no process in place for ensuring that obligations in social public works clauses are implemented where the contract is subcontracted (despite the authority having taken all reasonable steps in accordance with section 28(2)).

(2)A notification under subsection (1) must be made as soon as reasonably practicable and give the authority’s reasons.

30Social public works clauses: Welsh Ministers’ response

(1)Where the Welsh Ministers receive a notification from a contracting authority under section 29(1), they must—

(a)publish a summary of the notification, and

(b)consider whether they are satisfied with the reasons given in it.

(2)In considering whether they are satisfied with the reasons, the Welsh Ministers may—

(a)consult the authority;

(b)by notice require the authority to provide any documents or other information as the Welsh Ministers may require for the purposes of subsection (1) in such form or manner as may be specified in the notice;

(c)provide the SPC public procurement subgroup (see section 9) with a copy of the notification under section 29(1) and any documents or other information received under paragraph (b);

(d)consult the SPC public procurement subgroup.

(3)If, following consideration under subsection (1), the Welsh Ministers are satisfied, they must publish a summary of their reasons for being satisfied.

(4)If, following consideration under subsection (1), the Welsh Ministers are not satisfied, they may direct the contracting authority to take all reasonable steps to—

(a)include social public works clauses in the major construction contract,

(b)put processes in place for ensuring that obligations in social public works clauses are implemented, or

(c)put processes in place for ensuring that obligations in social public works clauses are implemented where the contract is subcontracted.

(5)Where the Welsh Ministers give a direction under subsection (4), they must—

(a)inform the SPC public procurement subgroup that they have given the direction, and

(b)publish the direction.

(6)Where the Welsh Ministers do not give a direction under subsection (4) despite not being satisfied, they must—

(a)inform the SPC public procurement subgroup that they have not given a direction, and

(b)publish a summary of—

(i)their reasons for not being satisfied, and

(ii)their reasons for not giving a direction despite not being satisfied.

(7)The Welsh Ministers must take any action taken under subsections (2)(a) or (b) as soon as reasonably practicable.

(8)A contracting authority must provide any documents or other information it is required to provide under subsection (2)(b) as soon as reasonably practicable.

(9)Nothing in this section requires the Welsh Ministers to publish information which, following consultation with the appropriate contracting authority, the Welsh Ministers consider would be exempt from disclosure were it to be subject to a request for information under the Freedom of Information Act 2000 (c. 36).

31Social public works clauses: Welsh Ministers’ contracts

(1)The Welsh Ministers must publish a statement if, in relation to a major construction contract—

(a)they do not intend to include social public works clauses in the contract (despite having considered whether to do so in accordance with section 25(1)(b));

(b)social public works clauses are not included in the contract (despite having taken all reasonable steps in accordance with section 25(1)(c)(i));

(c)there is no process in place for ensuring that obligations in social public works clauses are implemented (despite having taken all reasonable steps in accordance with section 25(1)(c)(ii));

(d)there is no process in place for ensuring that obligations in social public works clauses are implemented where the contract is subcontracted (despite having taken all reasonable steps in accordance with section 28(2)).

(2)A statement made under subsection (1) must be made as soon as reasonably practicable and give the Welsh Ministers’ reasons.

Social public workforce clauses and code of practice on outsourcing public services

32Public services outsourcing and workforce code

(1)For the purposes of maintaining or improving the quality of public services or other functions outsourced by contracting authorities, the Welsh Ministers must prepare and publish a code of practice (the “public services outsourcing and workforce code”) about employment and pensions matters related to outsourcing services contracts.

(2)The Welsh Ministers may revise the code and must publish the revised code.

(3)In preparing the code or any revision the Welsh Ministers must consult such other persons as they consider appropriate.

(4)The Welsh Ministers must lay a copy of the code and any revision before the Senedd.

33Social public workforce clauses in outsourcing services contracts

The public services outsourcing and workforce code must include model contract clauses (“social public workforce clauses”), which in particular—

(a)are designed to ensure that members of staff employed by contracting authorities in providing services, or undertaking functions, to be outsourced will, if they wish, become employed by the person providing those services, or undertaking those functions, when they are outsourced (“transferring staff”);

(b)are designed to protect the terms and conditions and pensions arrangements of transferring staff;

(c)are designed to ensure that the terms and conditions of other members of staff employed by the person providing the services, or undertaking the functions, who are involved in providing those services, or undertaking those functions, are no less favourable overall than those of transferring staff, and that the pensions arrangements of those other members of staff are reasonable;

(d)make provision supplementary to the matters referred to in paragraphs (a) to (c).

34Social public workforce clauses in subcontracts

(1)Subsection (2) applies if a contracting authority intends to include social public workforce clauses in an outsourcing services contract it agrees with an economic operator (a “contractor”) (the authority having considered whether to do so in accordance with section 26(1)(b)).

(2)The authority must take all reasonable steps to ensure that the obligations in the social public workforce clauses are implemented where the contractor enters into a subcontract with any other economic operator (a “subcontractor”).

(3)Examples of the reasonable steps that could be taken under subsection (2) include—

(a)ensuring that social public workforce clauses having the same or substantially the same effect as those in the outsourcing services contract are included in any subcontract—

(i)the contractor enters into with a subcontractor, and

(ii)the subcontractor enters into with a subsequent contractor (and so on);

(b)ensuring that the contracting authority may enforce the obligations in social public workforce clauses under the outsourcing services contract or under a subcontract;

(c)requiring the contractor to obtain the contracting authority’s consent before entering into a subcontract, with consent being made conditional upon social public workforce clauses having the same or substantially the same effect as those included in the outsourcing services contract being included in any subcontract;

(d)requiring the contractor to inform the contracting authority if it intends to enter into a subcontract which does not include social public workforce clauses having the same or substantially the same effect as those included in the outsourcing services contract;

(e)requiring the contractor to monitor the extent any obligations in social public workforce clauses are implemented where the contractor has entered into a subcontract with any other economic operator.

35Social public workforce clauses: notifying the Welsh Ministers

(1)A contracting authority must notify the Welsh Ministers if, in relation to an outsourcing services contract—

(a)the authority does not intend to include social public workforce clauses in the contract (despite having considered whether to do so in accordance with section 26(1)(b));

(b)social public workforce clauses are not included in the contract (despite the authority having taken all reasonable steps in accordance with section 26(1)(c)(i));

(c)there is no process in place for ensuring that obligations in social public workforce clauses are implemented (despite the authority having taken all reasonable steps in accordance with section 26(1)(c)(ii));

(d)there is no process in place for ensuring that obligations in social public workforce clauses are implemented where the contract is subcontracted (despite the authority having taken all reasonable steps in accordance with section 34(2)).

(2)A notification under subsection (1) must be made as soon as reasonably practicable and must give the authority’s reasons.

36Social public workforce clauses: Welsh Ministers’ response

(1)Where the Welsh Ministers receive a notification under section 35(1), they must—

(a)publish a summary of the notification, and

(b)consider whether they are satisfied with the reasons given in the notification.

(2)In considering whether they are satisfied with the reasons, the Welsh Ministers may—

(a)consult the contracting authority;

(b)by notice require the authority to provide any documents or other information as the Welsh Ministers may require for the purposes of subsection (1) in such form or manner as may be specified in the notice;

(c)provide the SPC procurement subgroup with a copy of the notification under section 35(1) and any documents or other information received under paragraph (b);

(d)consult the SPC procurement subgroup.

(3)If, following consideration under subsection (1), the Welsh Ministers are satisfied, they must publish a summary of their reasons for being satisfied.

(4)If, following consideration under subsection (1), the Welsh Ministers are not satisfied, they may direct the contracting authority to take all reasonable steps to—

(a)include social public workforce clauses in the outsourcing services contract,

(b)put processes in place for ensuring that obligations in social public workforce clauses are implemented, or

(c)put processes in place for ensuring that obligations in social public workforce clauses are implemented where the contract is subcontracted.

(5)Where the Welsh Ministers give a direction under subsection (4), they must—

(a)inform the SPC procurement subgroup that they have given the direction, and

(b)publish the direction.

(6)Where the Welsh Ministers do not give a direction under subsection (4) despite not being satisfied, they must—

(a)inform the SPC public procurement subgroup that they have not given a direction, and

(b)publish a summary of—

(i)their reasons for not being satisfied, and

(ii)their reasons for not giving a direction despite not being satisfied.

(7)The Welsh Ministers must take any action taken under subsections (2)(a) or (b) as soon as reasonably practicable.

(8)A contracting authority must provide any documents or other information it is required to provide under subsection (2)(b) as soon as reasonably practicable.

(9)Nothing in this section requires the Welsh Ministers to publish information which, following consultation with the appropriate contracting authority, the Welsh Ministers consider would be exempt from disclosure were it to be subject to a request for information under the Freedom of Information Act 2000 (c. 36).

37Social public workforce clauses: Welsh Ministers’ contracts

(1)The Welsh Ministers must publish a statement if, in relation to an outsourcing services contract—

(a)they do not intend to include social public workforce clauses in the contract (despite having considered whether to do so in accordance with section 26(1)(b));

(b)social public workforce clauses are not included in the contract (despite having taken all reasonable steps in accordance with section 26(1)(c)(i));

(c)there is no process in place for ensuring that obligations in social public workforce clauses are implemented (despite having taken all reasonable steps in accordance with section 26(1)(c)(ii));

(d)there is no process in place for ensuring that obligations in social public workforce clauses are implemented where the contract is subcontracted (despite having taken all reasonable steps in accordance with section 34(2)).

(2)A statement under subsection (1) must be made as soon as reasonably practicable and give the Welsh Ministers’ reasons.

Procurement strategies

38Procurement strategy

(1)A contracting authority must prepare a strategy (a “procurement strategy”) setting out how the authority intends to carry out public procurement.

(2)A procurement strategy must, in particular—

(a)state how the authority intends to ensure that it will carry out public procurement in a socially responsible way in accordance with section 24(1);

(b)state how the authority intends to take all reasonable steps to meet its socially responsible procurement objectives when it carries out public procurement in relation to any prescribed contract;

(c)state how the authority intends to make payments due under a contract promptly and, unless this is not reasonably practicable, no later than 30 days after an invoice (or similar claim) is submitted.

(3)The Welsh Ministers may by regulations amend subsection (2)—

(a)to specify other matters which procurement strategies must address;

(b)to reduce the number of days mentioned in subsection (2)(c).

(4)A contracting authority must—

(a)review its procurement strategy each financial year,

(b)make any revisions that the authority considers appropriate from time to time, and

(c)publish the strategy, and any revision, as soon as reasonably practicable after it has been prepared or revised.

(5)Two or more contracting authorities may fulfil their obligations under this section by preparing a joint procurement strategy.

CHAPTER 3REPORTING AND ACCOUNTABILITY

39Annual socially responsible procurement reports

(1)A contracting authority that has awarded any prescribed contracts during a financial year must prepare and publish an annual report on its public procurement as soon as reasonably practicable after the end of that year.

(2)The report must include—

(a)a summary of the public procurement exercises during the year that led to the award of a prescribed contract or were intended to lead to the award of such a contract;

(b)a review of the extent to which all reasonable steps were taken in those public procurement exercises to meet the authority’s socially responsible procurement objectives;

(c)in so far as the authority considers that further steps could reasonably be taken in future public procurement exercises to meet its socially responsible procurement objectives, a statement of how it intends to take those steps;

(d)a summary of the public procurement the authority expects to carry out in the next two financial years;

(e)information of the kind mentioned in subsection (3) that must be specified by regulations made by the Welsh Ministers;

(f)other information as may be specified by regulations made by the Welsh Ministers.

(3)The information referred to in subsection (2)(e) is information that the Welsh Ministers consider they require in order to assess the extent to which—

(a)a contracting authority meeting its socially responsible procurement objectives contributes to the achievement of the well-being goals;

(b)a contracting authority’s public procurement, generally, contributes to the achievement of the well-being goals, for example by—

(i)benefitting the economy of its area, including through the award of contracts to small and medium sized enterprises;

(ii)taking environmental considerations into account;

(iii)taking (other) social considerations into account;

(iv)promoting and facilitating use of the Welsh language.

40Contracts register

(1)A contracting authority must create, maintain and publish a contracts register.

(2)A contracts register is a register of public contracts entered into by the contracting authority that are of a description prescribed by the Welsh Ministers by regulations (“registrable contracts”).

(3)In relation to each registrable contract, a contracts register must contain—

(a)the date of award of the contract;

(b)the name of the contractor;

(c)the address of the contractor’s principal place of business;

(d)the subject matter;

(e)the estimated value;

(f)the start date;

(g)the end date provided for in the contract (disregarding any option to extend the contract) or, where there is no date specified, a description of the circumstances in which the contract will end;

(h)the duration of any period for which the contract can be extended;

(i)such other information as prescribed by the Welsh Ministers by regulations.

(4)But an authority may withhold from publication an entry, or part of an entry, in the register if it considers that publishing it would—

(a)impede enforcement of the law or otherwise be contrary to the public interest,

(b)prejudice the commercial interests of any person,

(c)prejudice fair competition between economic operators, or

(d)disclose a residential address (in the case of information referred to in subsection (3)(c)).

(5)An authority may delete an entry in its contracts register only after the contract to which it relates has expired or been terminated.

41Procurement investigations

(1)The Welsh Ministers may investigate how a contracting authority carries out public procurement.

(2)An investigation may relate to a specific public procurement exercise carried out by a contracting authority or to its public procurement activities more generally.

(3)The Welsh Ministers may, by notice, require a contracting authority to provide such documents or other information as the Welsh Ministers may require for the purposes of an investigation under this section, in such form or manner as may be specified in the notice.

(4)A contracting authority must—

(a)provide reasonable assistance to the Welsh Ministers in relation to an investigation;

(b)comply with a notice under subsection (3) as soon as reasonably practicable.

(5)After completing the investigation, the Welsh Ministers may—

(a)make recommendations to the contracting authority;

(b)publish a report of the results of the investigation;

(c)lay a copy of any report published before the Senedd.

42Welsh Ministers’ annual report on public procurement

(1)As soon as reasonably practicable after the end of a financial year, the Welsh Ministers must prepare a report on public procurement in Wales that year.

(2)The report must, in particular, include information about—

(a)the annual procurement reports published under section 39;

(b)the results of any investigations under section 41.

(3)The Welsh Ministers must publish the report and lay a copy of it before the Senedd.

CHAPTER 4GENERAL

43Guidance

(1)The Welsh Ministers may issue guidance about the operation of this Part.

(2)Guidance may, in particular, make provision about—

(a)meeting the requirement in section 24(1) to carry out public procurement in a socially responsible way;

(b)setting socially responsible procurement objectives;

(c)taking all reasonable steps to meet socially responsible procurement objectives;

(d)social public works clauses;

(e)the public services outsourcing and workforce code;

(f)social public workforce clauses;

(g)consultation during the preparation of a procurement strategy;

(h)the form and content of procurement strategies and annual procurement reports;

(i)the process by which a contracting authority approves its procurement strategy;

(j)joint procurement strategies.

(3)A contracting authority must have regard to relevant guidance published by the Welsh Ministers.

(4)Before issuing guidance under this Part, the Welsh Ministers must consult—

(a)the SPC;

(b)such other persons as they consider appropriate.

44Regulations

(1)A power to make regulations under this Part—

(a)is exercisable by statutory instrument;

(b)includes the power to make different provision for different purposes;

(c)includes the power to make incidental, supplementary, consequential, transitional, transitory or saving provision.

(2)A statutory instrument containing regulations made under section 22(4), 24(8)(c), 25(3) or 27(4) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, the Senedd.

(3)Any other statutory instrument containing regulations made under this Part is subject to annulment in pursuance of a resolution of the Senedd.

45Interpretation of Part 3

(1)In this Part—

(2)For the purposes of this Part, the estimated value of a contract is to be determined in accordance with regulation 6(1) of the Public Contracts Regulations.