Welsh Procurement Policy Note (WPPN) 009: Reserving contracts to certain suppliers

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• A prosperous Wales
• A resilient Wales
• A healthier Wales
• A more equal Wales
• A Wales of cohesive communities
• A globally responsible Wales

• This Welsh Procurement Policy Note (WPPN) is effective from the date of commencement of the Procurement Act 2023 and the Procurement (Wales) Regulations 2024. For procurements started prior to this date (24 February 2025), please refer to WPPN 02/2021.
• It has been updated to reflect changes introduced by the Procurement Act 2023 and the Procurement Regulations 2024, such as new terminology. It does not constitute a change in policy.
• Any policy should be read in conjunction with the Wales Procurement Policy Statement, the Procurement Act 2023, the Procurement (Wales) Regulations 2024 and the Social Partnership & Public Procurement (Wales) Act 2023.
• It should not be treated as legal advice and is not intended to be exhaustive – contracting parties should seek their own independent advice as appropriate. Please also note that the law is subject to constant change and advice should be sought in individual cases.
• The note assumes a certain level of knowledge of public procurement. It is available via the Welsh Government website GOV.WALES and any queries should be directed to CommercialPolicy@gov.wales or via the Welsh Governments’ customer services.
• References to the ‘Procurement Act 2023 and the Procurement (Wales) Regulations 2024’ will be expressed herein as “the Procurement Regime”.

The Procurement Act 2023 (the Act) includes 2 reserved contracting provisions: Sections 32 and 33 designed to help devolved Welsh authorities (DWAs) address social inclusion goals.

This WPPN is intended to promote the opportunities to use the 2 reserved contracting provisions in the Procurement Act 2023 and to provide guidance for DWAs to consider when using these provisions.

The Welsh Government recognises that public procurement can drive economic, social and environmental benefits and support jobs and growth by providing mechanisms that allow suppliers of all sizes to flourish, promote Wales as a good place to do business and to find opportunities for all that make Wales a good place to live. This means that as well as taking into account the direct costs of contracts, consideration should also be given to the wider social value/community benefits public bodies may be able to achieve through the influence of their expenditure.

Reserving a contract under either Section 32 or Section 33 allows DWAs to reserve contracts for businesses with a social purpose. Only those businesses that meet the relevant criteria may tender. This guarantees contracts that will deliver social value along with value for money goods or services.

2.1 Section 32: Reserving contracts to supported employment providers

Section 32 enables DWAs to support employment and training opportunities for disabled or disadvantaged people:

• By enabling a competitive flexible procedure to exclude suppliers that are not supported employment providers from participating in, or progressing as part of, the procedure. When assessing tenders under section 19 of the Act (‘Award of public contracts following a competitive tendering procedure’) for the award of a competitive flexible procedure that allowed for these provisions, a DWA must disregard any tender from a supplier that is not a supported employment provider;
   
• There are no restrictions on the type of contract DWAs can reserve, but the viability of a restricted competition should be considered. Market research and knowledge should be used by DWAs to evaluate whether there would be sufficient interest from supported employment providers to commence a reserved procurement, and whether it would deliver value for money;
   

• A supported employment provider is an organisation that operates wholly or partly for the purpose of providing employment, or employment-related support, to disabled or disadvantaged people where at least 30% of the employees of the organisation are disabled or disadvantaged. Where a particular part of the organisation is to perform the contract then disabled or disadvantaged individuals represent at least 30 per cent of the workforce of that part of the organisation. Similarly, if more than one organisation is to perform the contract, then disabled or disadvantaged individuals represent at least 30% of the combined workforce of:

  1. those organisations
  2. where parts of each organisation are to perform the contract, those parts, or
  3. where a combination of organisations and parts will perform the contract, those organisations and parts.
      

  Please see section 32(4) of the Act.

2.2 Section 33: Reserving contracts to public service mutuals

Section 33 allows the award of a competitive flexible procedure (under section 19 of the Act) to exclude suppliers that are not qualifying public service mutuals from participating in, or progressing as part of, the procedure. When assessing tenders under section 19 for the award of a competitive flexible procedure that allowed for these provisions, a DWA must disregard any tender from a supplier that is not a qualifying public service mutual but only if the competitive flexible procedure they have published provides for this.

Under section 33 of the Act, DWAs are able to reserve certain types of light touch contracts for public sector mutuals. These light touch contracts must be (a) for reservable light touch services and (b) last a maximum term of five years or less. Light touch contracts are contracts for certain social, health, education and other public services. Reservable light touch contracts are identified by an “R” next to the description of the light touch service in Schedule 1 of the Procurement (Wales) Regulations 2024 (Schedule 1).

A “qualifying public service mutual” refers to a public service mutual that has not entered into a reserved contract for the same kind of light touch services, with the same DWA, in the preceding 3 years.

“Public service mutuals” are organisation that:

1. operate for the purpose of delivering public services and mainly for the purpose of delivering one or more reservable light touch services,
2. are not for profit, or provide for the distribution of profits only to members, and
3. are under the management and control of their employees.

2.3 The benefits of reserving contracts

2.3.1 Ensuring value for money

DWAs should remember that supported employment providers and public service mutuals eligible to bid under sections 32 and 33 of the Act respectively, like any other business, function in competitive markets, selling their goods and services to consumers, the public sector and to other businesses. It should not be assumed that they will be uncompetitive or unable to meet quality or service delivery requirements. Consequently, when ‘reserving’ a public contract under either section 32 or 33, DWAs must comply with the requirements of the Act, such as assessing tenders in line with section 19, to ensure a transparent and fair competition. Section 3 of the Act defines a ‘public contract’.

Section 16 (‘Preliminary market engagement’) of the Act permits the use of preliminary market engagement to help inform a contracting authority’s approach to a procurement. DWAs can undertake preliminary market engagement to help develop their requirements, or to design their procedure, conditions of participation or award criteria, and potentially assist in identifying likely contractual terms. There is also the opportunity of such engagement aiding the DWA in identifying suppliers who would be able to bid for a reserved contract, and if the market is small using preliminary market engagement to build capacity by notifying the market of a potential reserved procurement opportunity.

However, when undertaking preliminary market engagement, DWAs must ensure (by taking the necessary steps) that by doing so, the supported employment providers or public service mutuals participating in it, are not put at an unfair advantage, and that the competition in relation to the award of the public contract is not otherwise distorted.

DWAs should refer to section 16 of the Act for further information, as well as published guidance on preliminary market engagement for further information on what they are able to do.

Key performance indicators can be set to help DWAs assess the performance of the ‘reserved’ contract. DWAs can use key performance indicators to examine the actual outcomes, the delivery of the procurement against what was expected and extent to which value for money is achieved.

Where reserved contracts have been used and have delivered value for money, these positive experiences and benefits should be used to promote the use of sections 32 or 33.

2.3.2 Additional benefits of reserving contracts

Contribute to your own organisation’s objectives to deliver against the requirements of the Well-being of Future Generations (Wales) Act 2015 (“WFG Act”). Reserving contracts may be used to address the Well-being Goals of supporting a more prosperous, more equal, healthier and resilient Wales with more cohesive communities.

• Enable greater access to employment opportunities for disabled or disadvantaged people
   
• Increase the diversity of the public sector supplier base to help deliver better public goods and services that meet the needs of those who use them by drawing from the wider pool of talent and skills available in the workforce that are currently underutilised i.e. ‘disadvantaged’ workers who face barriers to entering the labour market, and
   
• Contribute to increased social inclusion and interaction of disabled people in the labour market and their communities.

• Guidance on Section 32: Reserving contracts to supported employment providers
• Guidance on Section 33: Reserving contracts to public service mutuals (guidance on reserving contracts to public service mutuals is within the guidance on “light touch contracts” – please read this guidance for a full overview of how to utilise the light touch contract procurement process)
• Guidance on Preliminary market engagement
• Guidance on Competitive tendering procedures and tender notices

The Procurement (Wales) Regulations 2024, Schedule 1 – Light touch services CPV Codes (Schedule 1 of ‘The Procurement (Wales) Regulations 2024’ provides a list of CPV codes, where the types of light touch contracts that can be reserved under section 33 are those for the supply of ‘reservable light touch services’, which are identified by an “R” next to the description of the service in Schedule 1 to the Wales Regulations).

This WPPN applies to procurements commenced under the Procurement Regime and is therefore effective from the commencement of the Procurement Act 2023 and the Procurement (Wales) Regulations 2024 until it is superseded or cancelled.

This WPPN is directly applicable to all DWAs and should be circulated (for information) within your organisation, particularly drawing it to the attention of those with a commissioning, procurement planning or contract management role.

All DWAs should consider the potential benefits of reserving contracts under sections 32 or 33.

Use of Sections 32 and 33 aligns with the WPPS Principle of “We will promote value-based procurement which delivers optimum long-term outcomes for Wales” (Principle 10, WPPS 2021), by promoting commercial activities that encourage DWAs to consider the whole life-cycle of a contract, promoting value throughout the supply chain and focusing on aligning supplier’s resources, products and services to outcomes-based goals.

Including but not limited to:

• The Procurement Act 2023
• The Procurement (Wales) Regulations 2024
• The Well-being of Future Generations (Wales) Act 2015

Commercial Policy: CommercialPolicy@gov.wales

Polisi Masnachol: PolisiMasnachol@llyw.cymru