Scottish procurement policy handbook

1. Introduction, applicability and legal framework

This Handbook provides guidance on the rules and policies that apply to the procurement activities of public bodies in Scotland. It also highlights some key legal obligations.

The Handbook does not replace a public body’s own procurement policy manual or sector-specific policy guidance. It is not legal advice and should not be read as such. Public bodies should seek their own legal advice in relation to any questions and issues they may have. Public bodies should also review, and amend where appropriate, their own policies and procedures so that they are consistent with this Handbook’s principles.

The guidance set out in this Handbook is designed to ensure that procurement activity is:

• focused on the delivery of Value for Money (VfM) for public funds
• conducted to high professional standards and to the relevant legal requirements
• conducted by appropriately trained and authorised staff to minimise the risk of legal challenge to public bodies
• accountable, with strong governance practices in place
• open and transparent.

In addition, to help us achieve the aims and priorities of the National Performance Framework, we are expected to conduct our procurement activities in a way which is:

• good for businesses and their employees
• good for society
• good for places and communities
• open and connected.

These outcomes underpin our Public Procurement Strategy for Scotland (PPSS).

Please note that failure to comply with the legislation and policies as set out in this Handbook may result in formal challenges and complaints being brought against the public body alleging a breach of these rules. The consequences of a successful challenge may, depending on the nature of the breach, result in the public body being fined, the duration of a contract being shortened, award of damages against the public body, and/or reputational damage to the public body.

Applicability

The Handbook applies to all devolved Scottish contracting authorities (bodies governed by public law, also referred to as public bodies). Compliance with the requirements of the Handbook is expected to feature prominently in internal and external audit scrutiny.

Any public body which fails to comply with the principles and requirements of this Handbook and to apply good practice procurement processes and procedures is unlikely to be able to demonstrate VfM, or be able to demonstrate adequate governance and accountability for the appropriate management of expenditure.

Legal framework

Public sector procurement in Scotland takes place within a framework of rules and this Handbook should be read in conjunction with these rules, which include the following:

• Procurement Reform (Scotland) Act 2014 (the 2014 Act)
• the Public Contracts (Scotland) Regulations 2015 (the 2015 Regulations)
• the Procurement (Scotland) Regulations 2016 (the 2016 Regulations)

And if conducting Concessions or Utilities procurements, then the following:

• the Concession Contracts (Scotland) Regulations 2016
• the Utilities Contracts (Scotland) Regulations 2016

The Handbook should also be read in conjunction with the internal governance of the relevant public body. Scottish public bodies are also bound by obligations from the World Trade Organization Government Procurement Agreement (GPA) and international trade agreements which are included in regulations covering higher value procurements. By following the legal framework referenced above, public bodies will ensure compliance with these agreements. In relation to procurements covered by these agreements, public bodies in Scotland must give no less favourable treatment to suppliers from signatories of these agreements than those from the UK. GPA signatories and relevant international trade agreements are listed in the appropriate schedules of the applicable regulations.

The Handbook should be read in conjunction with the above legislation and:

• the Procurement Reform (Scotland) Act 2014: statutory guidance (“the statutory guidance”)
• the Scottish Government Public sector procurement webpages
• the Procurement Journey – which provides guidance, best practice and templates for public bodies on the procurement of goods, services and care and support services
• the Client Guide to Construction Projects - which provides specific policy and guidance for public bodies on the procurement of construction related contracts
• the Sustainable Procurement Tools – which are designed to help public bodies identify and address how they can optimise the economic, social and environmental outcomes of their procurement activity
• other guidance or updates issued by Scottish Procurement and Property Directorate, including Scottish Procurement Policy Notes (SPPNs) and Construction Policy Notes (CPNs) - which provide updates on procurement policy and legal developments
• Procurement of care and support services: best practice guidance when conducting procurement for care and support services.

Scope of public procurement

Public procurement is the process where public bodies buy goods, services and works from third parties. Public bodies should take care to ensure all their contractual agreements are written and formalised.

References to procurement in this Handbook do not cover other funding agreements, for example grant funding, or non-contractual cooperation between public bodies. Please refer to your public body’s rules and governance procedures for these types of agreements.

Public bodies can employ agents to buy on their behalf. This should be done through a public contract where the agent: is required to follow the relevant public procurement rules; has a clear role and responsibilities; and provides indemnity against any costs which may result from a compliance failure. Public bodies should refer to their own internal policies and procedures when employing others to buy on their behalf and must also take responsibility for ensuring any such procurement is conducted lawfully.

Procurement thresholds

The estimated value of a contract determines which procurement regime applies. The 2014 Act applies to public contracts with an estimated value of £50,000 (excluding VAT) or above for goods and services contracts, and £2,000,000 (excluding VAT) or above for works contracts.

The 2015 Regulations apply to the procurement of contracts equal to or above the GPA financial thresholds. The value of these thresholds in sterling is revised every two years. Wherever VAT may be payable under these contracts, an allowance for VAT must be included in the calculation of the estimated value of the contract for the purposes of determining whether the contract equals or exceeds the threshold values, which are available here: Procurement threshold values.

Principles of procurement

Public procurement in Scotland must respect the following principles of procurement written into procurement legislation:

• equal treatment
• non-discrimination
• proportionality
• transparency.

Regulated Procurements must be conducted according to the principles of procurement, and as a matter of best practice, all other procurements undertaken in the Scottish public sector, regardless of value, should also follow these principles.