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Lothian and Borders Police are working with both authorities to share vital information relating to businesses that could be influenced by serious organised crime groups.
Believed to be the first of its kind in Scotland, the new protocol represents a fundamental step forward in the fight against organised crime.
Senior council and health officials will now be able to apply to the police for certain information relating to individuals linked to the company bidding to supply services.
They will then be able to use this information to determine whether companies should be awarded the contracts.
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The move is designed to ensure that organised criminals do not get a foothold and undermine legitimate businesses operating in the Force area.
Strict processes have been put in place to ensure the protection and security of all of the shared information, and the process will operate under the strict guidelines of the Data Protection Act 1998.
The scheme has already received a high level of support from other local authorities, and it is hoped that it can be rolled out in similar forms across other areas of the Force.
Councillor Phil Wheeler, Finance Leader for the City of Edinburgh Council, said: "The Council is pleased to be working in partnership with Lothian and Borders Police in the fight against organised crime.
"This protocol will protect the tax payer and the Council by ensuring contracts are not awarded to businesses linked to crime groups."
Detective Chief Superintendent Malcolm Graham said: "Lothian and Borders Police, along with our partners, is committed to restricting and removing opportunities for criminal financial gain.
"We want to ensure that public money does not line the pockets of organised criminals, and we will do everything in our power to enforce this.
"This new protocol will allow us to keep services in the Lothian and Borders area of a high standard, and continue our fight against serious and organised crime."
(GK/KMcA)
