Bulletin - Charities - September 2011

welcome to our latest charities bulletin

This issue includes a guide to procurement, new rights for agency workers, news of a new consortium created by the Scottish Government, and an update on Lindsays events.

A Guide to Procurement
Are you prepared for new rights for agency workers?
Bare Necessities
Just Enterprise
SCVO Borders Roadshow
Charities Sector Events

A Guide to Procurement

Introduction

In recent years, local authorities and other public bodies have increasingly moved away from awarding grant funding for the provision of services and have instead put service contracts out to tender. This is particularly true in the context of social and care services. Consequently, charities are finding themselves being required to participate in complex and sometimes, fairly protracted, tendering procedures in order to secure funding which would have previously been made available to them via grants.

This can be extremely difficult for many charities who do not necessarily have the manpower to dedicate to lengthy tender procedures. It can also be very stressful for those charities whose existence is dependent on securing funding via service contracts.

However, like it or hate it, putting services out to tender is firmly rooted in the practice of local authorities, particularly in light of current pressures to cut ever-tightening budgets.

This article aims to clarify some uncertainties surrounding the complex legal framework relating to procurement and to provide some basic information in relation to the tender process.

Legal Basis

The impetus for moving towards a tender based approach comes from European legislation. The European Procurement Directive 2004/18/EC sets out detailed procedural rules for the purchase of goods, services and works by public bodies. Directive 2004/18/EC has been implemented into Scots law by the Public Contracts (Scotland) Regulations 2006 (SSI 2006 No 1), as amended.

The overarching aim of the legislation is to promote fair and open competition in a single European market.

Contracting Authorities

The Regulations apply to “Contracting Authorities” who include local authorities, the Scottish Government and Government departments.

Principles

Contracting Authorities are under a general obligation to observe certain principles in relation to the procurement process. The principles are embodied in both the Directive and the Regulations and are as follows:

• Consistency;
  
• Transparency;
  
• Equality of treatment;
  
• Non-discrimination; and
  
• Proportionality.

Scope of Regulations

The Regulations apply in circumstances when the following four conditions are met:

• there is a Contracting Authority;
  
• the relevant contract is a public works, services or supplies contract;
  
• the value of the contract (net of VAT) exceeds certain financial thresholds; and
  
• there are no applicable exemptions (eg employment contracts, contracts for Part B services (see below), contracts classified as secret etc.)

Financial Thresholds

The applicable financial thresholds are fixed for 2 year periods on 1 January in every even year.

The current thresholds were set on 1 January 2010 and are as follows:

• £3,927,260 for procurement of works;
  
• £101,323 for procurement of supplies and Part A services by central government; or
  
• £156,442 for procurement of supplies and Part A services by other Contracting Authorities – it is this threshold which is most relevant to the voluntary sector.

Classification

The degree to which the Regulations apply depends on the classification of the services that are subject to the contract. Contracts which are “Part A Services Contracts” (Priority Services) attract the full breadth of the Regulations, whereas only a limited number of the Regulations apply to “Part B Services Contracts” (Residual Services). Part A services include computer and related services, accountancy, architectural and consultancy services.

The detailed rules contained within the Regulations in relation to the specifics of the tender process only apply to Part A services, not Part B. However, whilst Contracting Authorities do have more freedom in terms of a Part tender process, they are nonetheless under a general obligation to act in accordance with the Principles (as set out above), regardless of the classification of services.

In practice, many local authorities do follow a formal tender process even when the services being tendered for are subject to the less stringent Part B regime or where the value of the relevant contract is below the thresholds noted above. Many local authorities set out rules relating to how tender procedures should be conducted in instances where the specific requirements of the legislation do not apply. These are generally found in Standing Orders which can often be obtained on the relevant local authority’s website.

Advertising Requirements

If the contract exceeds the relevant threshold value, the Contracting Authority may be under an obligation to publish an advert in the Official Journal of the European Union.

Even if the value of a contract is below the relevant threshold, local authorities, and other Contracting Authorities, are encouraged to make use of the Public Contracts Scotland website to advertise any contracts they are putting out to tender.

Procedures Used to Award a Contract

If the Directive applies, then the Contracting Authority should identify the appropriate Award Procedure which should be followed, depending on the nature of the contract. There are four different procedures:

• Open Procedure;
  
• Restricted Procedure;
  
• Negotiated Procedure; and
  
• Competitive Dialogue Procedure.

Award of Contract

Contracts must be awarded on either of the following bases:

• lowest price; or
  
• most economically advantageous tender, based on an assessment of merit, technical capability and running cost etc.

Challenging a Tender Award

Unsuccessful and aggrieved tenderers have certain rights following the award of a contract and are able to challenge tender awards if they believe that they have been awarded unfairly or otherwise contrary to the principles of the Regulations.

If you have any queries in relation to this article, or in relation to procurement issues generally, please contact Alastair Keatinge for further information on 0131 656 5746.

Back to top

Are you prepared for new rights for agency workers?

Agency workers make up about 4% of the UK workforce. The Agency Workers Regulations 2010 entitle temporary agency workers to equal treatment with regard to pay and working conditions, as someone recruited to do the same job on a permanent basis directly by the employer. The Regulations, which come into effect on 1 October 2011, give some rights immediately and further rights after a qualifying period of 12 weeks. In effect, this means that agency workers on continuous assignment with an employer from 1 October 2011 will be entitled to equal treatment from Christmas Day 2011. However, the Regulations are not back dated which means that any time spent on an assignment before 1 October 2011 will not count towards the 12 week qualifying service.

Who do the Regulations affect?

All workers who are not directly engaged by an employer but are supplied by another organisation, including umbrella companies.

Who falls outside the scope of the Regulations?

Workers who are genuinely self-employed and temporary workers engaged directly by the employer.

What are qualifying agency workers entitled to?

From day 1 agency workers have the right to access communal facilities and amenities provided by the employer including canteen or similar facilities, transport services, car parking, work place crèche (but subject to same waiting list as others) and access to information on job vacancies.

After 12 weeks continuous service, agency workers have the right to equal treatment with regard to pay and conditions including basic rate of pay, overtime and shift premiums, bonuses related to the quality or quantity of work done, luncheon vouchers with monetary value, hours of work and rest breaks, and holiday entitlement (above the statutory minimum).

What is excluded from ‘pay and conditions’?

Bonuses and benefits intended to reward loyalty or long service; company share schemes; pensions; sick, maternity, paternity or adoption pay above the statutory minimum; redundancy payments and staff discounts.

Complaints about unequal treatment

After the qualifying period, an agency worker has the right to request from their agency details of how their pay and conditions have been determined. If the agency does not respond within 28 days, the worker can go to the hirer for the same information. If the worker believes they have not received their entitlement, they can make a claim through the Employment Tribunal, usually within three months of the assignment.

The Employment Tribunal will assign the liability to whoever they believe has caused the disadvantage to the worker. However, liability for failure to provide the day one entitlements lies solely with the hirer.

What are the penalties?

The immediate award will be to make up the difference in earnings with a minimum level of 2 weeks’ wages. However, failure to comply with the Agency Workers Regulations can result in penalties of up to £5,000 per incident.

Lindsays employment team offer advice on all aspects of employment law. If you would like to discuss any of the issues raised in this article, please get in touch with Frances McAulay at francesmcaulay@lindsays.co.uk or call 0131 656 5715.

Back to top

Bare Necessities

Many charities may have watched with interest the recent Cairn Energy and Greenpeace developments, following a protest which was held at Cairn’s offices in Edinburgh. For those who missed the reporting, the protest involved 50 protestors (dressed as polar bears) occupying the office. Many of the protestors were filmed inside the premises and numerous pictures were taken, which were quickly posted to social media websites, and forwarded to press agencies.

Cairn Energy obtained a court order, known in Scotland as an interdict (commonly known as an injunction in England), which prevented Greenpeace from carrying out further protests and also prevented Greenpeace from attempting to publish or disseminate any pictures or other information obtained during the occupation. This resulted in the images that had been posted by Greenpeace being removed.

There was however wide coverage in legal circles and in quality newspapers at the time, which perhaps gave misleading advice. The reports seemed to suggest that others who had posted the images would somehow be in breach of the Court order. This obviously highlights the importance of taking advice in such situations before publishing such material but also shows how you should not always believe the legal commentary you read in the press! Much of the commentary was in general terms and also may be, for example, from English commentators speaking from an English law perspective. In Scotland an interim interdict, such as the one obtained by Cairn Energy, is only enforceable against those who are called as respondents, in this case Greenpeace (and some associated bodies) and those who occupied Cairn’s premises. Therefore, other bodies who published or now publish photographs etc. would not be breaching the order.

If you have any queries in relation to this article, or relating to interdicts generally, please contact Paul Harper in our Dispute Resolution department on 0131 656 5639.

Back to top

Just Enterprise

As part of a £7 million investment by the Scottish Government, Cabinet Secretary John Swinney has launched a package of support for growth and development of the third sector and social enterprises in Scotland. A new consortium – “Just Enterprise” - has been launched to deliver the Scottish Government’s contract for business support to the enterprising third sector. Just Enterprise will have responsibility for bringing together Scotland's key social enterprise support agencies and for providing business support and development services to enterprising third sector organisations across Scotland. Just Enterprise will promote enterprise and growth in the third sector during these challenging economic times by providing business support, start-up services, development workshops, leadership/educational programs and tender guidance.

Additionally the Scottish Government has set up an Enterprise Growth Fund which will work together with Just Enterprise by providing grant assistance of £25,000 - £200,000 to support growth and sustainability in enterprising third sector organisations across Scotland. Further information on Just Enterprise and the Enterprise Growth Fund is available at: www.justenterprise.org .

Back to top

SCVO Borders Roadshow

Lindsays is one of three firms who provide pro bono legal work to qualifying members of the Scottish Council for Voluntary Organisations (SCVO). We having been do so for more than four years and it continues to provide us with interesting and challenging queries.

We also contribute to seminars arranged by SCVO which to date have generally been in Edinburgh and Glasgow. SCVO recently organised roadshows for SCVO members in the Highlands and the Borders. Through Lindsays office in Jedburgh we have strong connections with a number of Borders charities, and on this basis Alastair Keatinge was invited to be a participant in the Borders Roadshow which took place on 5th September at Tweed Horizons, Newton St Boswells. There was a good mix of charities in attendance with a lively discussion on governance issues. Alastair’s topic was how to improve governance by undertaking governance reviews and modernising constitutions It is hoped that a follow up event in the Borders will be arranged jointly between Lindsays and SCVO and we will provide details as soon as available.

We can also provide training on duties of trustees and governance issue to groups of local charities or individual charities.

Back to top

Charities Sector Events

Our Charities Group is involved in the following events over the coming months.

Governance Magazine – Chairs & CEOs Conference

This event will be led by Dorothy Dalton, Editor of Governance Magazine and will take place in Lindsays Edinburgh office on Thursday 3rd November. This course will explore the roles and expectations of chairs and trustees, and will discuss how to ensure that trustees fulfill their governance role. For further information go to tinyurl.com/chairsandceos .

Governance Magazine - Trustee Training Course

This training course will also be led by Dorothy Dalton, and will take place in Lindsays Edinburgh office on Monday 7th November. This course is an excellent way of becoming an outstanding trustee sooner rather than later. With lots of illustrated examples, covering topics from roles, collective authority and the three strands of governance, your relationship with the chair of trustees and the chief executive to understanding charity finance and governing without managing, this course helps you meet the requirements for trustee induction. It also acts as a powerful refresher course for existing trustees who need to keep abreast of changes in legislation and evolving case law. For further information go to tinyurl.com/trusteetraining2 .

We hope you found this Bulletin informative. If there are any topics that you wish covered in our future Bulletins please contact Alastair Keatinge - alastairkeatinge@lindsays.co.uk .

Lindsays has wide experience in acting for clients in the charity and not for profit sector. If you would like to discuss any issues with our team, please get in touch.

This newsletter has been issued by Lindsays on the basis of publicly available information, internally developed data and other sources. Whilst all reasonable care has been taken to ensure the facts stated and the opinions given are correct, Lindsays does not accept any responsibility for its content and advise that specific advice should be sought regarding the topics covered.
© Lindsays 2012