Agenda item 4: Socially Responsible Procurement update

SPC Members are asked to:

• Review the draft Section 9.5 Guidance at Annex 1 and either agree it as drafted or suggest specific amendments.
• Note the contents of this paper and the update it provides on Part 1 sections 9 and 10 (the public procurement subgroup) and Part 3 (socially responsible procurement provisions). 

Review and agree the process for appointing members to the public procurement subgroup outlined in this paper.

1. This paper updates SPC on implementation of the remaining elements of the Social Partnership and Public Procurement (Wales) (the SPPP Act), provides the draft guidance on the composition of the procurement subgroup, and outlines the process for appointing the membership of the subgroup. 

2. The third commencement order was made on 23 March, and this provided Welsh Ministers with duties and powers to develop secondary legislation and guidance, including guidance made under section 9(5) which relates to the procurement subgroup (a draft of which is attached at Annex 1). 
    
3. In addition to the draft guidance at Annex 1, we are working on other materials. This includes drafting regulations (see section below), developing the Public Services and Workforce Code, clauses and guidance, creating construction contract clauses, and the information and data required for annual reporting. We will consult on all these matters over the summer.  In line with our commitment to social partnership we will share materials with social partners and seek their feedback. Due to the pressing timeframes and the scheduling of SPC meetings, much of this will need to be handled through correspondence rather than in SPC meetings.

4. Four regulations need to be made before Part 3 can be commenced. These are (i) changing the words “people with disabilities” to “disabled people”, (ii) defining “prescribed procurements” and (iii) “registrable contracts”, and (iv) prescribing the information that contracting authorities must include in their annual reports. 
    
5. The most contested part of the regulations is the “information” (well-being metrics) to be included in annual reports. The challenge lies in balancing the diverse views on what is appropriate, the practicalities of what can be reported, and avoiding a burdensome reporting process. However, through engagement with social partners and interested parties we have developed a viable and useful set of metrics. We are now considering options for how this information is to be recorded and reported. A formal 3-month consultation on the regulations will take place over the summer. We anticipate this will begin in late June or in July. 

6. The Act requires Welsh Ministers to publish guidance about the composition of the procurement subgroup as set out in Section 9(5). The Act also requires (within 6 months of section 9 coming into force) the SPC to take all reasonable steps to establish the procurement subgroup and Welsh Ministers must publish its procedures within the same timeframe. 
    
7. The third commencement order specified that section 9 (1) to (4) and 10 should come into force on 30 June. This means that the SPC must take all reasonable steps to establish the subgroup before the end of this year. 
    
8. A draft Welsh Ministers guidance document on the composition of the group as required under section 9(5) is included at Annex 1. This has been drafted taking account of matters raised during scrutiny on the Bill and more recent conversations with social partners. 
    
9. SPC members are asked to review the guidance and either agree it as drafted or suggest specific amendments. A final version needs to be agreed in June to ensure sufficient time for the appointment process to be completed, allowing the procurement subgroup to be established within six months of the commencing order coming into force.

The steps outlined in the table below will be taken to establish the procurement subgroup. The SPC is requested to agree to these steps. 

Before the appointment process begins, SPC members are requested to informally raise awareness within their own organisation and networks of the upcoming Expression of Interest (EoI) process.

The EoI will be developed alongside an assessment matrix. These will be used to select proposed members, ensuring an appropriate mix of relevant skills, experience and other qualities.  

• Appointment of subgroup co-Chairs. These are required to be existing SPC members and should comprise one worker representative and one employer representative. The co-chairs will be on the assessment panel which will select subgroup members. The SPC Secretariat will contact SPC members to request nominations for co-chairs. 
  Deadline: June 2025
   
• Finalise the assessment matrix, then launch and disseminate the Expression of Interest (EoI) across social partner organisations, networks, and the procurement community. 
  Deadline: July 2025
   
• Deadline for returns of Expressions of Interest (EoI). 
  Deadline: mid-September 2025
   
• Assessment panel formed comprising of the sub-group co- chairs and Welsh Government officials. 
  Deadline: late September 2025  
   
• Assessment panel to update the SPC on the outcome of the EoI exercise, including the panel’s recommendations on which candidates should be selected. 
  Deadline: October 2025
   
• The First Minister, as Chair of the SPC, will write to invite the successful candidates to be members of the procurement subgroup. 
  Deadline: November 2025
   
• Appointments confirmed, followed by a Written Ministerial Statement announcing the sub-group. 
  Deadline: December 2025 Allow 1 to 2 weeks for acceptances
   
• First meeting 
  Deadline: 1^st Quarter 2026

10. There are strict timelines for implementing the remaining elements of the Act. As outlined in this paper, from the time the relevant commencement order comes into force, we have six months from June to take all reasonable steps to establish the procurement subgroup and issue its guidance and procedures. For Part 3, we must conduct the consultations over the summer to enable us to lay the regulations in the Senedd in the autumn and have them voted on in prior to the Senedd Election in 2026.  Missing these deadlines will result in failing to implement these elements of the Act before the Senedd election. Ministers are clear that this must not happen.
     
11. Officials will be happy to arrange briefings with the SPC if that would be helpful.

1. Purpose

This document contains guidance on the composition of the public procurement subgroup of the Social Partnership Council (SPC). Welsh Ministers are required to issue this guidance under section 9(5) of the Social Partnership and Public Procurement (Wales) Act 2023 (“the Act”). Its purpose is to achieve an appropriately representative membership of the subgroup. The document also provides some background and a summary of the role of the subgroup as set out in the Act. 

2. Legislative background

Section 1 of the Act allows the SPC to improve economic, environmental, social, and cultural well-being in Wales, by providing “information and advice to the Welsh Ministers in relation to the functions conferred on contracting authorities and the Welsh Ministers under Part 3 (socially responsible public procurement).” Part 3 of the Act covers sections 21 - 45.

Section 24 defines socially responsible procurement and places a duty on contracting authorities to improve their area’s economic, social, environmental and cultural well-being through socially responsible procurement. Contracting Authorities must take action in accordance with the sustainable development principle to achieve the well-being goals in the Wellbeing of Future Generations (Wales) Act 2015.

Section 8 of the Act allows the SPC to establish subgroups to “carry out any function delegated to it by the SPC” and to “help the SPC carry out its functions.” Any subgroups “must be chaired by a member of the SPC” and “may include other members of the SPC and other individuals.” 

Sections 9 and 10 of the Act require the SPC to establish a public procurement subgroup. This is the only subgroup mandated in the Act.

The public procurement subgroup may “provide information and advice to the SPC about the functions conferred on contracting authorities and the Welsh Ministers under Part 3 (socially responsible procurement).”  Section 10 states that if Welsh Ministers request information or advice from the SPC about socially responsible procurement, the SPC must obtain it from the procurement subgroup.

Sections 30 and 36 also reference the procurement subgroup. These sections outline the process to be followed when a contracting authority notifies Welsh Ministers that it does not intend to include social public works or workforce clauses in a relevant contract. These sections allow Welsh Ministers to consult the subgroup when deciding how to respond to the notification.

The role, expected activities of the subgroup, and the approach to membership, is covered in the sections below. The quorum for meetings and the procedures to be followed are not included in this document. These procedures will be published separately, as set out in section 9(2), within six months of section 9 coming into force. 

3. Role

The role of the procurement subgroup is limited to providing information and advice to the SPC about the socially responsible procurement duties in Part 3 of the Act (s.10(1)). In limited circumstances, i.e. where Ministers choose to consult the subgroup about a notification about the social public works or workforce clauses (sections 30 and 36) the subgroup may provide information and advice directly to Ministers (s.10(4)). The sub-group will not provide information or advice on matters outside of Part 3 of the Act.

The primary mechanism established by the Act to assess the Part 3 duties is the annual reporting process set out in Section 39 of the Act. 

Section 41 of the Act allows Welsh Ministers to conduct procurement investigations related to a specific procurement exercise or a contracting authority’s procurement activities more generally. This is described in broad terms in the Act, and similar powers are conferred on Ministers in the Procurement Act 2023.

Section 39 and section 41 contain duties for Contracting Authorities and duties and powers for the Welsh Ministers.  Neither the procurement subgroup nor the SPC is mentioned in sections 39 or 41. However, the SPC (and subgroup, indirectly) can provide information and advice relating to Welsh Ministers’ functions under those sections. 

Since annual reporting is the mechanism for overseeing compliance with Part 3 of the Act, this reporting cycle will form the basis of the subgroup’s routine work. The activities of the subgroup should include:

• A yearly review of a summary of published Annual Reports to assess strengths and weaknesses.
  • Providing advice to the SPC, on where, for example, additional support for contracting authorities may be needed to improve compliance and outcomes. The SPC can then forward this advice to Welsh Ministers under s.10(2)(a) or revise it and send it s.10(2)(b).
  • Providing advice to the SPC, should subgroup members believe that a Procurement Investigation is required s.10(1). The SPC then can forward this advice to Welsh Ministers under s.10(2)(a) or revise it and send it under s.10(2)(b).
  • Responding to any requests from the SPC for advice in relation to socially responsible procurement (section 10(3)). The SPC can then forward this advice to Welsh Ministers under s.10(2)(a) or revise it and send it under s.10(2)(b).

Since the subgroup is referred to in sections 30 and 36 of the Act. The sub-group may also:

• Participate in exception notifications when Contracting Authorities notify Welsh minsters that they do not intend to include social public works clauses in major construction or social public workforce clauses in outsourcing contracts. This involvement is not automatic but may be requested by Welsh Ministers, if for example, the issues raised are technical and require specific expertise. This involvement is likely to be at short notice, requiring a rapid response, and may therefore involve members with particular expertise. In these cases advice must be provided to Welsh ministers (section 10(4)).

4. Membership

• The subgroup must be chaired by a member of the SPC (section 8(3)). To ensure that employer and worker interests are engaged on equal terms, the SPC may nominate an employer and worker representative as co-chairs.
• The number of subgroup members should be between 8 and 12.
• The membership should include employer representatives from the public, private and third sectors, with an equal number of worker representatives. While the chair or co-chairs must be members of the SPC, the remaining employer and worker representatives are not required to be members of the SPC. However, they should have experience and/or knowledge of procurement.
• The subgroup should include additional members selected for their specific procurement and commercial expertise. These individuals should not exceed the number of employer and worker representatives.
• All members, other than the chair/co-chairs, must have an understanding and/or experience of delivering wellbeing outcomes through procurement, and a wider awareness of matters relating to economic, social, environmental and cultural well-being.
• Given the specific duties in the Act on construction supply chains, membership should include a representative or representatives with experience of construction procurement.
• The membership should, as far as possible, reflect the diversity of Wales - its people, geography, and different parts of the economy.
• Meetings will be attended and supported by Welsh Government officials; however, these officials will not be members of the subgroup.