7.1 Under European Public Procurement legislation, workforce matters may come into consideration at the pre-qualification and tender evaluation stages of the contractual process. Under the EU rules the criteria for short-listing candidates are restricted to technical capacity, economic and financial standing and, for service contracts, ability.
7.2 Contract award criteria can be selected on the basis of either 'most economically advantageous tender' or 'lowest price'. PPP contracts should not be awarded only on the basis of 'lowest price'. The best option will involve other factors such as whole-life cost, quality, and good employment practices related to service delivery. Contract award criteria therefore, should not simply rely on price alone, unless the authority is satisfied that the specification for the work incorporates all these matters. In practice, these conditions are unlikely to be satisfied in all but the simplest contracts. Choosing the 'most economically advantageous' tender allows contracting authorities to consider more general matters, provided that these matters relate to the performance of the contract itself and do not result in discrimination between contractors within the European Community. The general award criteria to be used must also be clearly stated.
7.3 At the pre-qualification or selection stage, only workforce matters that affect the suitability of a candidate, as determined by those criteria, can be considered. As part of the qualitative evaluation of bidders who respond to the Final Invitation to Negotiate (ITN), the PSO should evaluate the bidders' proposals in relation to:
• the arrangements for managing the application of TUPE where transfer of employees is involved
• the management arrangements for the workforce
• pay, terms and conditions of transferees and new appointees to the workforce, including pension arrangements
• workforce training and development
• the framework for, and conduct of, employee relations including their approach to trades union recognition and facilities, such as the deduction of union subscriptions at source
• Health and Safety
• equal opportunities
• the principles contained within any human resources strategy which applies to the PSO in question (eg the Human Resources Strategy for NHSScotland).
• the identification and approach to use of subcontracted labour, including being assured that there will be safeguards to prevent individuals being wrongly classified as self-employed.
7.4 This information should be supplied by bidders as part of their proposals in response to the Final ITN. These factors should be evaluated by the PSO with the intention of establishing the quality of service delivery implicit in bidders' proposals.
7.5 Trades union representatives should be invited to hold discussions, through interviews for example, with all short-listed bidders. The PSO should facilitate the discussion with the bidders and agree with the trades unions who should attend from the PSO. Minutes of any meetings/discussions should be formally agreed; In addition, trades unions should be invited to provide a report to the PSO of the outcome of the discussion. It would be reasonable for the trades union representatives to discuss with bidders the PSO output specifications, the bidders responses to the Final ITN (which will contain the bidder's proposals for the scheme in respect of the principles of human resources strategy, TUPE, staff management, pay, terms and conditions and training and employee relations) and their design proposals.
7.6 It should be made clear to employees and trades unions that they should respect bidders' requests that other than the reports to management of the PSO, their discussions remain confidential. Bidders are not expected to have discussions with trades unions representing employees who are not expected to transfer to the private sector as a result of the PPP contract.
7.7 As part of the information and reporting requirements referred to in paragraph 6.5 above, the PSO in conjunction with its legal advisers, needs to have formulated a strategy for dealing with a refusal by a bidder to participate in the process of discussions with the trades unions or to provide particular information (other than on bona fide grounds of commercial confidentiality). It would be reasonable to request the bidder to give reasons for its refusal. The PSO will then need to take legal advice on whether those reasons are legitimate in the context of the EU procurement regulations and the need for the PSO to verify the information already provided or claims made by the bidder in support of its bid.
7.8 The trades unions should be encouraged to discuss their views with the PSO and its legal advisers first before any report by the trades unions on the outcome of their discussions with the bidders is submitted. Once such a report has been received by the PSO, the relevant sections referring to a particular bidder should be passed back to that bidder for comment. The PSO must, having first obtained legal advice, inform both bidders and trades unions whether, and if so what, elements of the report will be disregarded for the purposes of the evaluation exercise. Bidders must be allowed time to respond to any specific concerns raised by the trades unions. It is not the intention that this process should have the effect of allowing bidders to revise their bids, which would be unacceptable. Its purpose is to ensure transparency and equal treatment of bidders and to enable the PSO to verify the information that it has been given before appointing the preferred bidder.
7.9 The PSO should take all the factors set out above: the information received in response to the ITN, the minutes of the discussions held with bidders, the possible report and the response from bidders into consideration in the evaluation exercise for quality and the assessment of best value for money. In so doing, the PSO must observe the criteria which it has adopted for making an award in accordance with the regulations. The PSO retains the full and final responsibility for final selection of the preferred bidder which will also need to take into account all the other evaluation criteria for assessing best overall value for money.
7.10 In order to demonstrate that the process is meaningful, the PSO must respond to the points raised in the trades unions' discussions with bidders and any subsequent report, and must be able to explain the reasons for any of its decisions which run counter to any valid concerns raised.