Advertising subcontracting opportunities on the Public Contracts Scotland (PCS) website: SPPN 5/2019

Purpose
1. This note reminds public bodies that prime contractors can use the Public Contracts Scotland (PCS) website, including Quick Quote, to advertise available subcontracting opportunities that are part of a public contract. It updates SPPN 6/2014 (Delivering community benefits in public procurement).

Key points
2. The key points in this SPPN are:

• Public bodies in Scotland are already required to use PCS to advertise public sector contract opportunities of £50,000 or more for goods and services or £2 million or more for works contracts.
• This note asks public bodies to encourages the use of PCS by their prime contractors to offer more opportunities for local suppliers including SMEs, the third sector and supported businesses to win contracts down the supply chain of a public contract.
• As a matter of good practice, it is recommended that once a public contract has been awarded, the successful tenderer is encouraged to advertise its own sub‑contracts on PCS.  However, this is not intended to cut across supply chain arrangements that the prime contractor may already have in place.
• Public bodies should remind prime contractors that they can also use the Quick Quote facility on PCS for lower value sub-contract opportunities.

Background
3. Scotland’s Purpose is to ‘focus on creating a more successful country with opportunities for all of Scotland to flourish through increased wellbeing and sustainable and inclusive economic growth’. Through compliance with the Procurement Reform (Scotland) Act 2014 (the 2014 Act), including the sustainable procurement duty and community benefit requirements, public bodies in Scotland can demonstrate their contribution to the Purpose.

4. Enabling access to contract opportunities for local suppliers including SMEs, the third sector and supported businesses, is an effective way for public bodies to comply with the sustainable procurement duty and to deliver community benefit requirements.  It can also be a means of promoting equality of opportunity for disabled and disadvantaged groups.

5. Public bodies in Scotland are required to use PCS to advertise public sector contract opportunities with a value of £50,000 or more for goods and services or £2 million or more for works contracts. They are also required to facilitate the involvement of SMEs, the third sector and supported businesses and are expected to apply community benefits to contracts valued at £4 million or greater.

6. PCS is also used by some prime contractors to advertise their sub-contract opportunities or for Quick Quote opportunities. The Annual report on procurement activity in Scotland: 2019 confirms that 23% of public bodies used sub-contracting as a form of community benefit. The Government’s Economic Action Plan 2018-20 describes the aim to extend the requirement to advertise subcontracting opportunities on PCS, highlighting the importance of using public procurement to deliver sustainable and inclusive economic growth. 

7. We already have a good track record of spend with SMEs in Scotland but are keen to see local suppliers including SMEs, the third sector and supported businesses competing for and winning more public contracts, whether that be as a prime contractor or as part of the supply chain as a sub-contractor. 

8. Public bodies should remind prime contractors to promote procurement policies relating to fair work, ethics and prompt payment to ensure that the business ethics and working conditions that we expect prime contractors to meet cascade through the supply chain to sub-contractors. 

9. Guidance on the use of PCS for advertising sub-contracting opportunities or using Quick Quote can be found here.

Advertising sub-contracting opportunities and specific links with community benefits
10. The 2014 Act established a national legislative framework for sustainable public procurement that supports Scotland’s economic growth through improved procurement practice.  It requires public bodies to facilitate the involvement of SMEs, the third sector and supported businesses in all regulated procurements.  It specifically requires them to consider imposing community benefit requirements (see attached Annex for community benefit definition) in contracts valued at £4 million or greater; stating that these might relate to employment opportunities or to sub-contracting opportunities.

11. Statutory guidance is available on the Scottish Government website to help organisations to collect consistent and comparable data which tracks the impact of community benefits.

12. Further guidance on use of community benefits is available from the Sustainable procurement guides relating to employment, skills and training.  A growing range of evidence and case studies is being made available through the procurement annual reporting regime.  The Annual report on procurement activity in Scotland: 2019 includes examples of where subcontracting has been used as a community benefit.

Dissemination
13. Please bring this SPPN to the attention of all relevant staff, including those in agencies, Non-Departmental Public Bodies (NDPB) and other sponsored public bodies within your area of responsibility.

Annex
Community benefit requirements
For the purposes of this Act, a community benefit requirement is a contractual requirement imposed by a contracting authority:

1. relating to-

• training and recruitment, or
• the availability of sub-contracting opportunities, or

2. which is otherwise intended to improve the economic, social or environmental wellbeing of the authority's area in a way additional to the main purpose of the contract in which the requirement is included.

For full details of community benefits and the Procurement Reform (Scotland) Act 2014 see here.