Legal & Policy Context
National Performance Framework
The National Performance Framework (NPF) is being reviewed and draft proposals have been developed. The current NPF, including the full list of national indicators, has been archived.
UN Sustainable Development Goals
Scotland was one of the first countries in the world to sign up to the Sustainable Development Goals which were developed by the UN to achieve a better and more sustainable future for all. Many of the Goals are relevant to employment, skills and training including:
4: Quality education
8: Decent work and economic growth
9: Industry, innovation and infrastructure
10: Reduced inequalities
Scotland’s National Strategy for Economic Transformation (NSET)
NSET outlines the actions needed to achieve the vision of a well-being economy. It acknowledges the challenges, including that currently not everyone is afforded the same opportunities. Its programmes of action include Skilled Workforce: enable people to participate and progress in the labour market, and a Fairer and More Equal Society: deliver higher rates of employment and wage growth to reduce structural poverty, particularly child poverty.
Community Wealth Building
Community Wealth Building (CWB) is an approach to economic development that seeks to transform our local and regional economic systems to enable local communities and people to own, have a greater stake in, access and benefit from the wealth our economy generates.
It acts as a framework for place-focused activity across five interlinked pillars. Fair Work First and Community Benefits in Procurement constitute two of the pillars:
- maximising economic and social benefits through procurement and commissioning,
- applying fair work practices; and
- developing good enterprises and secure supply chains.
Community Wealth Building (Scotland) Act
The Community Wealth Building (Scotland) Act 2026 creates a strategic foundation for community wealth building in Scotland.
Under the Act CWB partnerships (local authorities and relevant public bodies) will be required to prepare and publish a CWB action plan, and to implement that plan (Section 5).
A plan must set out the measures the CWB partnership is taking or intends to take to facilitate and support the generation, circulation and retention of wealth in the local economy. The measures set out may include:
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- using public procurement and commissioning to facilitate and support the generation, circulation and retention of wealth in local economy
- supporting local economic operators to access public sector contracts
- promoting employment opportunity, workforce development and equality in the workplace
A CWB action plan must also set an indicative target for the percentage of total expenditure with local economic operators through public contracts.
Specified public bodies must have due regard to CWB guidance produced by the Scottish Ministers on CWB action plans when developing their corporate plan, and delivery strategies in relation to that plan (Section 10).
See Annex B for examples of how sectors and organisations are approaching CWB.
Public procurement
Sustainable Procurement Duty
The Procurement Reform (Scotland) Act 2014 (The Act) aims to make the best use of public money, helping public bodies to achieve Scotland’s overarching purpose. The sustainable procurement duty, within the Act, “is the duty of a contracting authority—
(a)before carrying out a regulated procurement, to consider how in conducting the procurement process it can—
(i)improve the economic, social, and environmental wellbeing of the authority's area,
(ii)facilitate the involvement of small and medium enterprises, third sector bodies and supported businesses in the process, and
(iii)promote innovation, and
(b)in carrying out the procurement, to act with a view to securing such improvements identified as a result of paragraph (a)(i).”
Examples of this might include:
- availability of suitable, safe, and high quality jobs.
- looking after the needs of children and young people.
- improving physical, social and mental health. For example, by supporting people who are economically inactive/furthest from the labour market
Appropriate use of the Sustainability Test (and its associated tool: the prioritisation methodology) to identify and implement good quality employment, skills and training in relevant public contracts demonstrates compliance with several elements of the Sustainable Procurement Duty.
Contributing to the delivery of intended sustainable outcomes through procurement is important, and a public body should assess and monitor the impact made through contract and supplier management, to evidence that outcomes have been met.
Community Benefits
Community benefits in procurement are defined by The Act as a contractual requirement imposed by a contracting authority:
- relating to:
- training and recruitment, or
- the availability of sub-contracting opportunities, or
- which is otherwise intended to improve the economic, social or environmental wellbeing of the authority’s area in a way that is additional to the main purpose of the contract in which the requirement is intended.
Section 25 of the Act states that:
“…where a contracting authority proposes to carry out a regulated procurement in relation to which the estimated value of the contract is equal to or greater than £4,000,000.
(2)The contracting authority must, before carrying out the procurement, consider whether to impose community benefit requirements as part of the procurement.
(3)The contracting authority must, in the contract notice relating to the procurement, include —
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- a summary of the community benefit requirements it intends to include in the contract, or
- where it does not intend to include any such requirements, a statement of its reasons for not including any requirements.
(4)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…”
Therefore, The Act and its statutory guidance requires public bodies to consider the use of community benefit requirements for regulated procurements with an estimated value of £4 million or more. In line with Scottish Government policy, this should not preclude the use of community benefit requirements in lower value regulated procurements where it is relevant and proportionate to include them.
Community Benefits in Procurement Policy
The Act aims to achieve the maximum use of community benefit requirements in public contracts and framework agreements. For contracts at or above £4 million, public bodies must consider the use of community benefits and explain why they have not included them if they decide they are not relevant and proportionate to the contract.
Procurement policy is:
- Where there is an opportunity to provide community benefits as part of a procurement, appropriate requirements will be included in the contract.
- Contract suitability and market capacity needs to be addressed on a case-by-case basis.
- Requirements should be robust, relevant and proportionate so that they can be judged on unbiased and measurable outcomes.
- Public bodies should take care to ensure equal treatment and to avoid discrimination of economic operators in the wording of requirements.
- It is essential to monitor the outcomes of the contract to make sure the requirements of the contract are being met.
Any community benefits required by a contracting authority should be linked to the subject matter of the contract. They cannot be a dissociated requirement no matter how important that may be considered in a wider context.
This policy approach allows individual public bodies, who are responsible for their procurement decisions, to use their judgement to identify and apply relevant community benefits to contracts in a proportionate manner. The requirement for robust, relevant and proportionate requirements also manages the risk of unnecessary burden on suppliers.
At the time of writing, this has resulted in wide use of social clauses in public procurement in Scotland, it has also encouraged public bodies to include socio-economic requirements via other routes including making social requirements a core part of the specification, breaking contracts into lots to make them more accessible to SMEs and the third sector and reserving contracts for supported businesses.
Community benefits can be considered for procurements of any value where relevant and proportionate. Relevance and proportionality should be determined on a case-by-case basis. It is unlikely they would be proportionate in most lower value, unregulated contracts.
Buyers should consider, where appropriate, breaking requirements into lots, structuring contracts to enable sub-contracting, or reserving contracts for supported businesses. These approaches can improve accessibility for small, local businesses and third sector organisations, and contribute directly to compliance with the sustainable procurement duty.
The Transport (Scotland) Act 2019 (duties on Health boards)
The Transport (Scotland) Act 2019 places a duty on Health boards to ‘have regard to community benefits in non-emergency patient transport contracts’ (Section 120). It also requires Health boards to ‘work with community transport bodies’ (Section 121), and as soon as reasonably practicable after the end of each financial year, publish a report setting out –
(a) the steps it has taken to comply with the duty,
(b) its position on the extent to which non-emergency patient transport services in its area have been (i)effective, and (ii)cost effective,
(c)any further action it proposes to take to comply with the duty in subsection (1).
The Scottish Government has provided guidance for the development of Annual Delivery Plans for health boards in Scotland.
Small and Medium Enterprises (SMEs), third sector and supported businesses
Use of community benefits in procurement is intended to be complementary to the requirement to facilitate access to procurement for SMEs, third sector organisations and supported businesses, such as signposting suppliers to the Supplier Journey website and Guidance on Public Procurement for SMEs and Third Sector Suppliers, the use of sub-contractors to support the delivery of the contract or reserved contracts for supported businesses.
For major procurements with an estimated value of £4,000,000 or more, public bodies may encourage their prime contractors to use Public Contracts Scotland to widen/increase opportunities for local suppliers including SMEs, third sector organisations and supported businesses to win contracts down the supply chain of a public contract. Once a public contract has been awarded, the successful tenderer is encouraged to advertise its own sub‑contracts on PCS.
Public bodies should remind prime contractors that they can also use the Quick Quote facility on PCS for lower value sub-contract opportunities.
For lower value contracts, the increased accessibility for a diverse range of bidders (small, local businesses, third sector organisations etc) may, in themselves, confer social impact.
In order to manage any possible burden on suppliers, and to avoid deterring SMEs, third sector organisations and supported businesses’ participation in procurement, it is important to make sure that the inclusion of community benefits is relevant and proportionate to the contract and determined on a contract-by-contract basis. Procurement documentation must avoid potentially shaping supplier behaviour in a way that narrows competition or discourages SME participation.
Consideration should include value and duration of the contract, along with market analysis informing the approach.
Fair Work First
Fair Work First is the Scottish Government’s policy for driving high quality fair work, and workforce diversity across the labour market in Scotland. It focuses on the positive working practices that can be delivered through contracts and can be used as a vehicle to provide meaningful social impact beyond the workplace, in communities and the wider economy.
The following Fair Work First criteria are particularly relevant to employment, skills and training:
- payment of at least the real Living Wage
- investment in workforce development
- address workplace inequalities, including pay and employment gaps for disabled people, racialised minorities, women and workers aged over 50
- offer flexible and family friendly working practices for all workers from day one of employment
It is important to promote and ensure compliance with Fair Work First in its entirety. For all 7 Fair Work First criteria see the Fair Work in Procurement guidance.
Suppliers can support Scotland’s Fair Work efforts and in turn contribute toward social impact by adopting the Fair Work First criteria, paying at least the real Living Wage, and actively promoting good practice across their subcontractors and supply chain.
Reporting and Monitoring
The Act requires obligated organisations to develop a procurement strategy and report against its delivery at the end of each year. This must set out how it intends to comply with the sustainable procurement duty, its policy on the use of community benefit requirements, consulting and engaging with those affected by its procurements, and payment of the real Living Wage.
A contracting authority which is required to prepare or revise a procurement strategy in relation to a financial year must prepare an annual procurement report. Annual procurement reports include a summary of any community benefit requirements imposed as part of a regulated procurement that were fulfilled in the year covered by the report, and a summary of any steps taken to facilitate the involvement of supported businesses in regulated procurements during the year covered by the report. This further emphasises the importance of monitoring and reporting delivery of intended sustainable outcomes, such as employment, skills and training.
Use of sub-contracting through PCS in major procurements is another form of community benefit. Sub-contracting is generally not suitable for contracts below the community benefits threshold and consequently reporting on this is not expected. The Annual procurement report template reflects this.
The Public Procurement Strategy for Scotland
The Public Procurement Strategy for Scotland established a high-level vision and roadmap for the whole Scottish public procurement community. It supports the First Minister’s four priorities: eradicating child poverty, growing the economy, tackling the climate emergency and improving public services.
Knowledge Checklist
- Awareness of policy drivers behind employment, skills and training
- Consider how the procurement can contribute to employability, skills and tackling inequalities outcomes
- Understand procurement regulations on community benefit requirements