8 An Introduction to the Case Studies
The following five contracting authorities participated in the Community Benefits in Procurement Programme by putting pilot contracts out to tender:
- Glasgow Housing Association ( GHA);
- Raploch Urban Regeneration Company;
- Inverclyde Council;
- Dundee City Council; and
- Falkirk Council.
In addition to the targeted recruitment and training requirement ( TR&T) the case studies involved procurement of a variety of services on varying scales.
The focus of the case studies is the suitability of using Community Benefit clauses in procurement projects and the effectiveness of the procurement process in obtaining a contractor that is committed to delivering the required Community Benefits and any 'supply-chain' initiatives ( e.g. training and recruitment services) that were put in place to help the contractors to deliver their obligations. The clauses used were developed from a range of model clauses.
While working in accordance with EC Treaty principles and Scottish procurement legislation, each of the authorities provided specific justifications for their use of Community Benefits clauses. A short introduction to each pilot participant and their justification is detailed below:
8.1 Glasgow Housing Association ( GHA)
Glasgow Housing Association ( GHA) is the UK's largest social housing stock-transfer Association, receiving 80559 housing units from Glasgow City Council in March 2003, after a tenants ballot in 2002. The key objectives of the transfer were to secure investment for stock modernisation, promote community empowerment and ownership, provide more effective housing management, provide increased opportunity of home ownership and contribute to area and community regeneration and social inclusion. 31 It is anticipated that over a 30-year period GHA and its successor bodies 32 will invest £2.9 billion in the housing stock, 33 but this review covers the arrangements for an initial investment of £750 million over the five years commencing in 2005-06. 34
GHA is also Scotland's largest Registered Social Landlord ( RSL) and, as such, it is governed by the terms of the Housing (Scotland) Act 2001. Section 58 of the Act sets out the objectives and purposes which RSLs are permitted to pursue in carrying out their principal function of providing and maintaining affordable housing. In particular, section 58(g) states that RSLs may pursue the objective of:
"promoting or improving the economic, social or environmental well-being of -
(i) it's residents (or its residents and other persons together), or
(ii) the area in which the houses or hostels it provides are situated." 35
This gives GHA a power of well-being similar to that bestowed on Local Authorities which can justify the incorporation of targeted recruitment and training ( TR&T) clauses when contracting with the private sector. Of course, such clauses must comply with the EU procurement rules and Public Contract (Scotland) Regulations 2006.
The policy basis for regeneration activity relies on policy documents. From its very inception GHA's Statement of Intent for 2003 and 2004 stated that it would endeavour to use its procurement strategy to maximise employment and training gains for GHA neighbourhoods. 36 The detail of this intention has been developed in GHA's Procurement Strategy and its Neighbourhood Renewal Strategy.
- each bidding supplier or contractor should make proposals for their commitment to employment and a'partnership training initiative';
- GHA's Neighbourhood Renewal Team would advise and support the procurement process to ensure that this maximises social and economic benefits;
- GHA would not be the main funder of social and economic initiatives but would act as enabler and facilitator. 39
The first bullet point establishes the intention to use the procurement process to obtain contractors' commitments to targeted recruitment and training.
The Neighbourhood Renewal Strategy includes the following aim:
"To maximise sustainable jobs and training gains for Glasgow residents arising from GHA investment activity."
The Strategy identifies the role of the Neighbourhood Renewal Team in facilitating the delivery of targeted recruitment and training by working with the GHA Procurement Team, contractors, economic development agencies and training providers. It provides more detail on how the second and third of the above bullet points would be delivered by GHA.
More recently, GHA's "Sustainability Strategy", November 2006 states:
"We ensure that our policies and actions are underpinned by our commitment to sustainability. We consider the impact we can have in improving the economic, social and environmental circumstances of the wider community."
Even GHA's Business Plan for 2007/2008 takes these commitments into account, pledging that " GHA will continue to support wider city-wide action on issues such as…access to jobs and training with GHA contractors and partners".
The above legal and policy framework has been considered sufficient to justify the inclusion of targeted recruitment and training ( TR&T) requirements as a core element of the contract requirements.
8.2 Raploch Urban Regeneration Company
Raploch is an area of Stirling that experiences low levels ofqualifications, low average incomes and high unemployment, both in absolute terms and in relation to the increasingly affluent Forth Valley area. The area has also suffered through the poor quality of the public sector buildings and environment including housing and health, and from its position on the City's roads network that cuts the community in two. To address these issues Raploch Urban Regeneration Company has been created. It is one of six Urban Regeneration Companies ( URCs) which have been incorporated in Scotland to coordinate the physical and economic regeneration of specific areas. Raploch URC will lead the investment in roads, housing and the environment, while complementary investments will be made in the schools (by Stirling Council), a new health campus (by NHS Forth Valley) and business premises (through Scottish Enterprise Forth Valley).
Its Business Plan of December 2004 states that the vision of the Raploch URC is to "build a community where people choose to live, work and visit …… within an economically sustainable environment". This vision is "underpinned by one core principle: community benefit is at the heart of everything we do". 40
The vision is to be delivered through five sets of outcomes relating to property, place, partnership, prospects and people. The 'prospects' theme refers to "improved prospects and opportunities for the Raploch" and includes the following targets for 2004-12:
- People of working age with qualifications beyond standard grade: rise from 22% to 80%;
- Percentage of school leavers entering further or higher educations: rise from 4% to 40%;
- Unemployment benefit claimants: fall from 6% to 2.4%;
- Average incomes: rise from £6,240 to £29,170. 41
This vision has resulted in the Raploch URC including targeted recruitment and training requirements in their procurement processes and documentation.
The incorporation of the Raploch URC as a limited liability company in 2005 formalised the pre-existing partnership between key private and public sector bodies, including Stirling Council, which operated as a Shadow URC. Before its incorporation it did not have a separate legal personality from its founding partners and thus could not enter into contracts on its own behalf. This is why this case study relates to two contracts that were procured on behalf of the Shadow URC 42 by Stirling Council. The first was a £1.3 million roads construction contract and the second was for a development partner that will lead the investment into new homes and the environment.
For the first contract and for the procurement process for the second contract, 43 the local authority undertook the procurement on behalf of the Shadow URC. This required Stirling Council, as opposed to the Raploch URC, to have a legal and policy basis for incorporating the CBIP requirements in the procurement process. The broad legal powers are provided by the Local Government in Scotland Act 2003 which includes a power to promote or improve the well-being of its area and persons within the area. The policy basis for action was the Raploch URC Business Plan referred to above (to which Stirling Council was a party), the Council's Social Inclusion Policy and the Stirling Community Plan.
8.3 Inverclyde Council
On the basis of the Scottish Index of Multiple Deprivation (2004) Inverclyde has the second highest concentration of deprivation amongst Local Authorities in Scotland (after Glasgow), with 33% of its population living in the worst 15% of datazones for deprivation. The key contributing elements to this deprivation are health, unemployment, education and income.
In recognition of the employment issues in Inverclyde the area has been selected as one of the Scottish Executive's six 'Closing the Opportunity Gap' areas. This initiative aims to reduce the current 12,100 people on DWP benefits by 3,000 between 2004 and 2010.
These statistics form the basis upon which the Inverclyde Alliance (the Community Planning Partnership) has prepared its Regeneration Outcome Agreement (its Community Plan) 2005-2008. This provides the strategic and operational framework for the community planning partners to deliver the 'closing the opportunity gap' objective:
"Regenerating the most disadvantaged neighbourhoods so that
people living there can take advantage of job opportunities and
improve their quality of life."
(Regeneration Outcome Agreement 2005-08 Page 2). 44
The above commitment is reflected in the Council's Economic Development Strategy which is based on sustainable development. The Strategy aims to secure improvements in the economy in a way that:
"… tackles social and economic exclusion,…
(and)… minimises any adverse impact on the environment,
whilst providing meaningful and additional employment
In relation to 'inclusion' the Strategy states:
"For Inverclyde to achieve sustainable economic progress, it
is vital that residents and communities are connected to economic
opportunities and feel able to contribute to and benefit from
The latter is a very clear statement of the Council's commitment to targeting the recruitment and training opportunities that arise from its development and investment activities. However, prior to the CBIP pilots it had not sought to use its contracts to achieve this.
It is against this backdrop that the Council agreed to participate in the CBIP Pilot Programme. This decision wasapproved by the Council as a pilot initiative.
8.4 Dundee City Council
Dundee City Council is entitled to use Community Benefits on the basis of well-being powers conferred on Local Authorities by the Local Government in Scotland Act 2003.
To implement its CBIP pilots Dundee City Council established a 'Community Benefits in Procurement Group' chaired by the Head of Leisure and Communities. This had participation from Community Services, Economic Development, Social Work, Housing, Architectural Services and the Solicitors within the Council, plus a range of external partner organisations including Communities Scotland, Job Centre Plus, NHS Tayside, Scottish Enterprise Tayside, Dundee Anti-Poverty Forum and Hillcrest Housing Association.
At an early meeting of the Procurement Group it was agreed that the Council would run pilots in the construction and social care sectors.
8.5 Falkirk Council
Falkirk Council's strategic objective is to mainstream the concept of achieving wider community benefits from all theCouncil's expenditure by embedding the idea in Councilpolicy.
To support their participation in the Pilot Programme the Council's Policy and Resources Committee agreed, in September 2004, to the appointment of consultants 45 to undertake a programme of work to enable the Council torealise the full potential of implementing community benefits within Council contracts. This work was jointly funded by Scottish Enterprise Forth Valley and the Council.
The first part of the work was to analyse the Council's procurement expenditure of £108 million per year. This identified the main categories of expenditure as property and infrastructure (48%), care services (24%), and transportation (10%). The review also identified that:
- 80% of the Council's expenditure was with only 5% of their suppliers (ca. 300 suppliers). There is therefore scope for rationalising the supply-base (ca. 6,000 other suppliers);
- 41% of the expenditure, equating to £44 million, is with suppliers with a local ( FK) postcode; 46
- in relation to construction and property maintenance, 22% of suppliers had a local post-code, indicating scope to increase local company sourcing for these areas. 47
The second stage of the work was to consult Council officers and those in partner agencies ( e.g. the Community Planning Partnership) on the idea of using their procurement to achieve additional Community Benefits. This process helped to promote the concept, identified widespread support (with employment, additional apprenticeships and the development of civic pride seen asadvantages), and enabled links to be identified to other initiatives being delivered by the Council.
Thirdly, the consultants undertook research with suppliers. The majority of these were supportive of the proposed approach and a number gave examples of their existing initiatives to employ people from socially excluded groups. Other suppliers expressed concerns about potentially being relegated to sub-contractors (if supply-lists were rationalised) and they perceived there would be potential risks and costs associated with incorporating 'social clauses'.
The consultation resulted in a set of Organisational Strategic Objectives for the Council in relation to expanding 'Community Benefits':
- to increase the level of spend with local suppliers across all areas of procurement; 48
- to increase the percentage of local labour used in Council contracts; 49
- to assist in achieving an increase in youth attainment;
- to assist in decreasing the level of long-term unemployment;
- to increase the number of training opportunities within the local area;
- to assist in increasing the level of inward investment;
- to embed the community benefit requirements in the procurement process in order that they are not seen as part of a separate initiative.
These objectives are aligned to, and support, the aims of Falkirk's Strategic Community Plan. In addition, the consultant's report recommends that the Council should aim to embed the community benefit requirements in to the procurement process so that they become a Falkirk Council "Business As Usual" approach.
These objectives are legitimate as Council policy but in relation to Council procurement care must be taken to ensure that they are pursued in a way that does not conflict with EU and Scottish procurement frameworks. This can beachieved by following the approach set out in this document and in the Scottish Procurement Directorate's guidance on Social Issues in Procurement.
Annexes 1-5 are Case Studies of the five programme participants and include a variety of Community Benefit Clauses and Method Statements as used by authorities in the pilot projects. It is essential to recognise that these are used to test the approach and, authorities are expected to tailor clauses to their individual requirements. Footnotes clearly identify cases where the case studies may illustrate drift from the recommended approach in terms of legal and vfm considerations.