Route 2 - Develop documents - Selection, Award and Exclusion Criteria - Exclusion Criteria

Route 2 - Develop Documents - Exclusion, Selection and Award - Exclusion Criteria

All exclusion criteria must be relevant and proportionate to the subject matter of the contract.  Procurement Officers should set out the specific requirements, the relevant exclusion grounds and the minimum standards that are relevant for the procurement exercise in the Contract Notice. 

Statutory Guidance has been published on Selection of Tenderers and Award of Contracts.

 

Exclusion Criteria

 

Some grounds for exclusion are circumstances in which a bidder must be excluded from the procurement process.  Some other grounds for exclusion are circumstances in which the organisation may determine on a case by case basis whether a bidder should be excluded.  These are referred to as mandatory and discretionary exclusion grounds respectively.

 

In all cases the bidder must be given the opportunity to provide evidence which proves that it has taken sufficient and appropriate remedial action to demonstrate that they have ‘self-cleansed’ (i.e. that the problem will not occur and that the bidder can be regarded as reliable).

 

Exclusion grounds, selection and award criteria must be clearly defined in the Contract Notice and any other relevant procurement documents, to ensure a common understanding of the requirements by all bidders, and must not be changed or waived during the procurement process.

 

The exclusion and selection questions are contained in the European Single Procurement Document (Scotland) and should be used in conjunction with the Standardised Statements for the Contract Notice. It is best practice, and will help promote consistency,  to use the ESPD (Scotland) document for all Route 2 procurements. More information on the ESPD (Scotland) and the Standardised Statements is contained in the ESPD (Scotland) station.

 

 

Exclusion Criteria Statement in the Contract Notice

In the Standardised Statement document, along with the selection statements, you can find two exclusion ground statements, one for the Contract Notice for below OJEU procurements and one for the OJEU Contract Notice. In the case of a Contract Notice for below OJEU procurement, please make sure that you copy over the statement for a sub-threshold notice to the textbox in the Contract Notice under II.2.14 Additional Information. This will make sure that you have informed the bidders that you will apply mandatory and discretionary exclusion grounds in the procurement exercise.

Mandatory Exclusion Grounds

These must be applied in all Route 2 procurement exercises.  There are circumstances where a potential supplier has been convicted by final judgement of one of the criminal offences contained in the relevant regulations, or has been found to have, or admitted to having, blacklisted.  These are set out in regulations 8 and 9(1) of the Procurement (Scotland) Regulations 2016.

 

 

[In the case of Care and Support Services the mandatory exclusion grounds (regulation 8(1) of the Procurement (Scotland) Regulations 2016) must be applied to all procurements, and you can also choose to apply the discretionary exclusion grounds.

Exlcusion statements should be put under II.2.14 Additional Information of the Social and other Specific Services Contract Notice.]

 

 

Criminal Offences

 

Where a bidder has been convicted in the last five years by final judgment of one of the criminal offences contained in the regulations the exclusion grounds must be applied. These offences relate to:

  • Participation in a criminal organisation;

  • Corruption;

  • Bribery and Fraud;

  • Terrorist offences or offences linked to terrorist activities;

  • Money laundering or terrorist financing;

  • Child labour and other forms of trafficking in human beings.

 

Blacklisting

 

The Scottish Government regards blacklisting or the compiling of a blacklist as totally unacceptable.  Blacklisting refers to the practice of systematically denying individuals employment, who would otherwise be able to be employed, on the basis of information, accurate or not, held in some type of database.

 

The Employment Relations Act 1999 (Blacklists) Regulations 2010 provide rights for individuals if blacklisting results in refusal of employment, detriment, dismissal or redundancy.   Any bidder which has been found to have breached, or which has admitted to breaching, these Regulations must be excluded from the procurement process for a period of three years, unless it can demonstrate to the satisfaction of the organisation that it has taken appropriate remedial steps.  

 

Derogation from Mandatory Exclusion Considerations

 

Where there are exceptional circumstances, organisations may, for overriding reasons relating to the public interest, disregard any of the mandatory exclusion grounds when making a decision in respect of the selection of a bidder.  This provision is known as derogation from the mandatory exclusion considerations.  This ensures that organisations are able to respond to unforeseen emergency circumstances.

 

There is no definitive list of situations in which this derogation can be used and any decision should be made on a case by case basis. Organisations should be able to demonstrate that the actual or potential harm is so great, that the public interest in using the derogation outweighs the public interest in excluding a bidder. An example may be where urgently needed vaccines or emergency equipment can only be purchased from a bidder to whom one of the mandatory exclusion grounds otherwise applies.

 

Each situation must be judged on its merits, but the following situations are, on their own, unlikely to meet this test:

  • when a bidder which should be excluded is offering a substantially better quality / more economical product or service;

  • when there would otherwise be a lack of competition. 

 

Discretionary Exclusion Grounds

 

These may be applied to Route 2 procurement exercises.  These are circumstances in which a bidder is in one of the situations listed in regulations 9(2) and 9(5) of the Procurement (Scotland) Regulations 2016.

 

Tax and Social Security Obligations

 

The Scottish Government treats tax and social security obligations seriously.

 

Organisations can exclude a bidder where they establish by any appropriate means that the bidder has breached its tax or social security obligations.  Organisations must determine on an individual basis whether a particular piece of evidence which falls short of a judicial or administrative decision is sufficient to demonstrate “appropriate means”.

 

Examples of evidence which may demonstrate breaches in tax or social security obligations, on which organisations can seek clarification from bidders, could include:

  • credit references, i.e. details of any outstanding tax debt;

  • company accounts, depending on the size of the tax debt the bidder may be obliged to include this in their accounts;

  • an admission by a bidder to an Occasion of Non-Compliance (OONC); or,

  • an admission by a bidder of the failure of an avoidance scheme which they were involved in and was, or should have been, notified under Disclosure of Tax Avoidance Scheme (DOTAS).

Where a bidder admits to a breach of its tax or social security obligations, which did not involve a judicial or administrative decision, in order to determine the nature of the breach, the organisation can request further details and any mitigating factors, from the bidder. This could include:

  • a brief description of the OONC and which tax it applied to;

  • where the OONC relates to a DOTAS, the number of the relevant scheme;

  • the date of the original breach;

  • corrective action taken by the bidder to date;

  • planned corrective action to be taken;

  • changes in personnel or ownership since OONC; and,

  • changes in financial, accounting, audit or management procedures since the OONC.

Self-Cleansing – Tax and Social Security Contributions

 

Where the bidder can provide evidence that it has fulfilled its obligations by paying the amount due, it must not be excluded from the procurement exercise on this basis alone.  This also applies where it has entered into a binding agreement with a view to paying the taxes or social security contributions, including any interest due. Evidence of this could include a receipt or confirmation of payment requested from the relevant tax authority or a written copy of the agreement to pay obligations.

 

Additionally, where the exclusion of a bidder would be clearly disproportionate, either because a minor amount of tax or social security contributions are owed or a bidder has not had sufficient time to pay the amount owed, an organisation may decide not to exclude the bidder. An organisation must take a balanced view when deciding not to exclude on this basis.  This could include consideration of the bidder’s overall tax and social security obligations and the overall risk to the effective delivery of the contract.  For example there may be instances where an apparent “minor amount” may significantly affect the liquidity of a bidder and its ability to perform the contract, or where sufficient time did exist for the outstanding amounts to be paid.

 

Social, Environmental and Labour Laws or Obligations

 

One of the several discretionary grounds for exclusion relates to social, environmental and labour law obligations.  These obligations include any relevant national and European law, as well as relevant collective agreements and specific international agreements.

 

Bidders may be excluded where the organisation can demonstrate that the bidder has breached any of these obligations. This exclusion ground is discretionary and, it is therefore, for the organisation to decide if exclusion is appropriate.

 

When determining whether to exclude a bidder on this basis, organisations should be proportionate in their decision, taking into account the size of the contracts, the relevance of the breach, and its impact on the operational and reputational risk to the delivery of the contract.

 

Bankrupt or Insolvent Businesses

 

Where a bidder is bankrupt or is the subject of insolvency proceedings the organisation can choose whether to exclude it from the procurement exercise.  Potential evidence to assist in making this decision could include: copies of accounts verifying they have sufficient liquidity to perform contract; its business plan outlining steps the potential supplier will take to address concerns, or references from other recent customers.

 

When considering whether to exclude a bidder who has become bankrupt or the subject of insolvency or winding up proceedings, organisations should consider the potential risks associated with the delivery of the contract.  This includes the impact this may have on the sub-contracting supply chain.  This can also include the scale of the contract and any potential consequences of the contract failing.  Additionally, organisations should take into account the potential benefits of awarding a contract to such a bidder. These can include providing opportunities to contribute to: increased employment opportunities in communities; the wellbeing of local and regional communities or helping unlock the innovation or economic potential with local businesses.

 

Self-Cleansing

 

Specific guidance on how bidders can take self-cleansing action in respect of tax and social security obligations is detailed earlier in this station.  If a bidder is in a situation which might result in its exclusion, other than for reasons of tax or social security obligations, it may provide evidence to show that it has taken remedial action to demonstrate its reliability.  If the organisation is satisfied that the evidence provided is sufficient to demonstrate its reliability despite the existence of a relevant ground of exclusion, the organisation must not exclude the bidder from the procurement procedure on those grounds (although the bidder may, by application of the contract-specific selection criteria, subsequently not be selected to submit a bid). This is known as self-cleansing. 

 

The bidder must prove that it has:

  • paid or undertaken to pay compensation in respect of any damage caused by the criminal offence or misconduct;

  • clarified the facts and circumstances in a comprehensive manner by actively collaborating with the investigating authorities; and

  • taken concrete technical, organisational and personnel measures that are appropriate to prevent further criminal offences or misconduct.

When considering any self-cleansing measures, organisations must consider all relevant factors, including the gravity and particular circumstances of the criminal offence or misconduct. 

 

Where an organisation is of the view that the remedial action taken is not sufficient to demonstrate the potential bidder’s reliability, they must provide the bidder with a statement outlining the reasons for the decision.  The statement of reasons must be provided as soon as is reasonably practicable.  It should be in writing and allow the bidder to understand why the self-cleansing measures taken are insufficient and the basis of the decision.

 

Applying Exclusion Grounds to Sub-Contractors

 

An organisation must consider how, in conducting the procurement, it can facilitiate the involvement of small and medium enterprises, third sector bodies and supported businesses in a procurement process.  This can include the use of sub-contractors to support the delivery of the contract.

 

The Procurement (Scotland) Regulations 2016 do not extend to the application of mandatory and discretionary exclusion grounds to sub-contractors for contracts below the EU threshold contract value.  An organisation should however consider the circumstances where this approach needs to be applied in order to safeguard the effective delivery of the contract.

Timescales for Exclusion

Bidders must not be excluded indefinitely from participating in procurement activity.  A bidder must only be excluded:

  • for a maximum of 5 years from the date of conviction by final judgment for one of the criminal offences listed in regulation 58(1) of the Public Contracts (Scotland) Regulations 2015;

  • until it has paid its outstanding tax or social security obligations, including any applicable interest or fines, has entered into a binding agreement to do so or the obligation to make repayment ceases; or

  • for a maximum of 3 years from the date of the relevant event for all other grounds for exclusion.

Mandatory and Discretionary Exclusion Grounds Split

 

The following table provides a summary of the breakdown of the different types of exclusion grounds, stating whether they are mandatory or discretionary.

 

Please refer to 58 of the Public Contracts (Scotland) Regulations 2015 for the full list of mandatory and discretionary exclusion grounds.

 

Self-cleansing - In all cases a bidder is able to provide evidence that they have taken remedial action to demonstrate their reliability.

 

Exclusion Grounds

Mandatory Exclusion Grounds

Discretionary Exclusion Grounds

Conviction by final judgement of any of the following criminal offences:

  • Participation in a criminal organisation or serious organised crime,

  • Bribery or Corruption,

  • Fraud,

  • Terrorism offences or offences linked to terrorist activities,

  • Money laundering,

  • Slavery, compulsory labour (including in respect of children) or human trafficking, or

  • Offences in connection with the proceeds of drug trafficking

 

x

 

Breach of the Employment Relations Act 1999 (Blacklists) Regulations 2010 

x

 

Breach of tax and social security obligations

  • established by judicial or administrative decision having final and binding effect

 

 

 

x

Breach of tax and social security obligations

  • established by any appropriate means

 

X

Breach of environmental, social and labour laws

 

x

Bidder:

  • Subject to bankruptcy or insolvency or winding up proceedings,

  • Has its assets been administered by a liquidator or court,

  • Is in an arrangement with creditors,

  • Has suspended its business activities, or

  • Is in any analogous situation.

 

x

Grave professional misconduct, which renders the bidder’s integrity questionable

 

x

Where the organisation has sufficiently plausible indications that the bidder has entered into agreements with other bidders to distort competition

 

x

Conflict of interest which cannot be effectively remedied by other less intrusive measures

 

x

Distortion of competition from the prior involvement of the bidder in the preparation of the procurement exercise, that can’t be remedied by other less intrusive measures

 

x

Bidder has shown significant or persistent deficiencies in the performance of a substantive requirement under a previous public contract, which led to early termination of that contract, damages or other comparable sanctions

 

x

Bidder is guilty of serious misrepresentation in supplying the information required for the verification of absence of grounds for exclusion or fulfilment of the selection criteria or has withheld this information or is not able to submit the ESPD supporting documents

 

x

Bidder has or has undertaken to unduly influence the decision making process of the organisation, to obtain confidential information that may confer undue advantages or to negligently provide misleading information that may have a material influence on decision concerning exclusion, selection and award

 

x

 

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