Sustainable procurement duty - impact and value analysis: main report

Appendix 1: Case studies

Sustainable Procurement Case Study 1

Name of organisation

Renfrewshire Council

Value of regulated contracts (2018-19)

£135 million, of which 50% awarded to SMEs.

Approach

The council considers individual projects as part of a whole Council approach, taking account of the council’s objectives and strategic outcomes and the impacts of procurement. The procurement team sits under Policy and Commissioning under the Chief Executive’s Service which means that they have the policy lead, the Partnerships and Inequalities lead and the Economic Development lead all sitting under the same service. They come together regularly to review goals.

There has been strong leadership from two successive leaders of the council who have bought into and committed to procurement as a driver for change. Elected members also place an emphasis on social value in Renfrewshire. Renfrewshire is the tenth largest unitary authority but has the third biggest procurement team.

In Renfrewshire significant emphasis is placed on social value rather than just savings. Their aim is to find solutions that are sustainable for everyone and do not drive providers into the ground. For example, in terms of costs their care contracts are average compared with other local authorities, but they try to work with contractors to find creative solutions, e.g. doing a single run of invoices rather than one for each client. In Renfrewshire they target specific contracts where they think there can be rewards.

Fit with wider policy

Staff actively engage with community partners and partners within the Council and wider public sector to identify and explore opportunities to promote the Council’s CSR objectives.

Use of community benefit requirements

The Council actively promotes the inclusion of community benefit requirements in all regulated procurements and, where feasible and appropriate, in all other procurements.

A community benefits outcome menu has been developed and this is included in all relevant tenders, providing a transparent and fair approach to assessing the value of the community benefits offered by each bidder.

Once a contract is awarded, the Council’s Community Benefits Forum works with the Council’s procurement officers to co-ordinate and support the delivery of community benefits. This forum is a cross-service working group involving staff from different departments. A third sector partner and a representative of Developing the Young Workforce also sit on the forum. When contractors offer community benefits, these are considered by the forum and suppliers are provided with contact details for relevant members of the forum who then work with them to deliver their offer. It is an opportunity to encourage ambition and innovation in relation to community benefits. It is resource intensive for the council however this approach delivers clear benefits.

The Forum also monitors the delivery of community benefits and identifies new opportunities for the delivery of community benefits. Individual procurement officers also check on progress.

Some recent examples of community benefits offered by suppliers include:

• a fruit and vegetable contractor donated food boxes to food banks once a week
• a roads contractor offered to re-surface car parks in local schools
• a contractor that clears gutters and gullies offered to clean up the local burn which had been heavily polluted with rubbish. Local people now maintain the burn themselves
• significant community benefits realised through their City Deal
• community benefits delivered in the form of employability support through Invest in Renfrewshire
• cultural infrastructure projects which have offered a range of community benefits

Fair work and living wage

They evaluate fair working practices in accordance with legislation and work closely with suppliers and service providers to help support them to support their workforce and encourage them to ensure that all workers delivering services to the Council are paid a real living wage.

Facilitating access to SMEs, third sector bodies and supported businesses

They lead the Community Benefits Forum (a cross-local authority forum for exchanging good practice) which works closely with local and national business representatives and actively engages with the third sector and community partners, and Economic Development within the council to explore opportunities for developing and growing the role of local SMEs, third sector bodies and supported businesses in procurement. This includes small business mentoring, reserved contracts, and procurement workshops to help build knowledge and capacity.

In addition, the Council hosts SME workshops and Meet the Buyer supplier events, supports the annual B2B event hosted by Renfrewshire Chamber of Commerce.

Staff training and support

Strategic commercial category managers work with services to provide high level support, guidance and input into commissioning strategies from the earliest stage and throughout the whole commissioning cycle.

The Purchase to Pay manager in the enterprise resource planning team continues to develop new procurement process maps and policies and procedures and to support the training delivered to individual service areas.

They continue to develop the skills and capabilities of the procurement team, promoting training and development opportunities to ensure that the team maximises its commercial and strategic skills, providing strong support, guidance and leadership to their services.

Addressing innovation

The council actively explores new opportunities for innovation with suppliers, inviting their input and considering opportunities to achieve mutual goals and efficiencies for the benefit of all.

Sustainable Procurement Case Study 2

Name of organisation

Scottish Prison Service (SPS)

Number and value of regulated contracts (2018-19)

In the reporting year, SPS awarded 33 regulated contracts – with an estimated value of £35.38 million.

Approach

SPS has a well-established procurement team of approximately 18 people. They have mature policies and practices that have existed for many years meaning that the organisation was well-placed when the Duty came into force. There is close liaison between the Procurement team, Operations Directorate and other internal stakeholders with engagement happening from a pre-procurement planning stage, through the tender process and for the duration of live contracts.

Where there is no SPS-wide ’national contract’ or collaborative contract, SPS provides devolved procurement authority to undertake transactional procurement at a local level up to the value of £20k. This ensures alignment between SPS taking strategic procurement decisions including around the SPD with providing an appropriate level of local operational flexibility within set policy parameters.

A small team undertakes contract management activity across some 270 live contracts. This includes scheduled meetings with suppliers to monitor and ensure that contracts are delivered as intended including ‘soft’ outcomes related to the SPD and community benefits.

SPS invests time in ensuring procurement staff have the relevant skills and experience necessary through training and mentoring in the role to confidently take forward activity around the Duty.

Use of community benefit requirements

SPS has a long history of working with suppliers to encourage community benefits to be delivered – and started doing so over a decade ago on a voluntary basis prior to the Duty coming into force. SPS now routinely considers and reflects the inclusion of community benefits for regulated procurement where the value of the contract is greater than £4m. They are also considered for relevant non-regulated contracts where appropriate and practicable.

SPS has progressively updated its approach to community benefits over the years.  As Scotland’s prison service they have increasingly sought to focus attention towards activities which provide opportunities for to engage with the SPS’s ‘priority’ group; people in or leaving custody. There is a synergy between the corporate aspirations of the SPS Employment Strategy and what the procurement activity seeks to achieve here through community benefits.

SPS tends to work in conjunction with suppliers during the pre-tender, tender and contract phase to encourage them to go beyond the traditional narrative, be more creative and work with others to deliver benefits relevant to the priority group, or which support wider socio-economic or environmental outcomes.  SPS also actively seeks to engage early with partners who can support or facilitate activity for contractors e.g. the local authority’s economic development team.

SPS has experienced challenges in bidder’s responses referring to generic  outcomes which are not related to the contract in question, or indicating future aspirations rather than clear deliverables. There are however a number of suppliers who see the opportunity to engage with the SPS in terms of developing and shaping a suitably targeted community benefit offer.

SPS keeps records of all contracts that have community benefit outcomes and require suppliers to submit mid and end-year progress reports.  This latter part is key to outcomes being fulfilled and being reported in their Annual Procurement Report.

In the reporting year, SPS awarded three new regulated procurement contracts with community benefits and outcomes related to the Duty along with some existing contracts which continue to report outcomes.   The suppliers have delivered a large number of community benefits including community initiatives, scholarships, and charity work. SPS activity to encourage main contractors to purchase from supported businesses and social enterprises as part of their supply chain has generated significant value for these sectors.

Fair work and living wage

SPS has been an Accredited Living Wage employer since August 2016. SPS and its suppliers ensure compliance with ‘Workforce Matters’ commitments including fair work.  SPS also periodically takes steps to confirm that relevant contracted suppliers have met their legal obligation to produce and publish a Modern Slavery & Human Trafficking Statement.

Facilitating involvement of SMEs, third sector bodies and supported businesses

SPS regularly contracts with suppliers that are SMEs - approximately 50-60% of the 1,200-1,350 supplier used annually are SMEs.

SPS engages regularly with the British Association for Supported Employment (BASE).  This includes direct purchases by the SPS, seeking to get supported businesses linked into main contractor supply-chains, and in respect of work placements or employment opportunities for individuals in custody who happen to be disabled or disadvantaged.

SPS also undertakes significant work with the third sector through a number of contracts and other types of partnering engagement which supports persons in or leaving custody.

Approaches to addressing environmental wellbeing

SPS employs a Sustainability Manager who oversees progress and champions climate change / carbon management activity.  SPS has actively made changes within the organisation and premises to increase sustainability, including switching to LED lighting, installing photovoltaic solar panels and using energy efficient laundry equipment, installing electric vehicle chargers and greening part of the SPS vehicle fleet, etc.

• Waste recycling, circular economy and smarter working are three key examples of how SPS is using procurement and contracts to contribute to their climate change activity:
• waste Recycling – 79% of the prison waste streams are processed and recycled with only 21% going to landfill.  In-prison activity contributes to this figure by sorting and bulk-baling recyclable materials for uplift by the appointed waste contractor
• circular economy - SPS operates a number of work-based activities around recycling and reuse with third sector partners as part of addressing climate change and supporting the circular economy
• the new vending service contract reflects use of Fair Trade products for all hot beverages
• smarter working – the pilot project encouraged procurement staff to work from other SPS locations and utilise flexible working to reduce travel to work. The emergence of Covid-19 accelerated SPS moving HQ and other staff into home working using lessons learned and the technology from the pilot

Collaboration

SPS actively supports sectoral and national collaborative procurement activities through use of relevant collaborative contracts and frameworks.  This enables SPS to benefit from obigations in these contract which relate to the Duty.

SPS has representation on the Procurement Collaboration Group (PCG); the Central Government (CG) Cluster Group; and participates in the national Scottish Government “Procurement Policy” and Construction forums.

SPS engages with others in the Central Government Sector and the wider public sector in Scotland on topics such as Social Value and supported lessons learned on key procurement exercises.

Sustainable Procurement Case Study 3

Name of organisation

Transport Scotland

Number and value of regulated contracts (2018-19)

In the reporting year, Transport Scotland awarded 24 regulated procurement contracts with an estimated value of £117 million.

Overview of procurement strategy

Procurement underpins the delivery of Transport Scotland’s priorities. It is integrated into the project management process and not undertaken by a centralised procurement function. Instead, this function is delegated to members of staff who are given Delegated Purchasing Authority (DPA) and who have the relevant expertise and training. Transport Scotland’s Procurement Team provides a central role in the agency’s procurement activity through the support and advice they offer to members of project teams undertaking procurement activity. They ensure that procurements are undertaken in a consistent and accurate manner.

Transport Scotland’s 2017-2020 Procurement Strategy plays a key role in supporting the Scottish Government’s overall procurement aims to deliver value for money, quality, and sustainability. Their priority is to adopt best practice across the wide range of procurement activity that Scottish Ministers have charged Transport Scotland to deliver. Transport Scotland established four key procurement commitments:

• undertake Transport Scotland procurements in a sustainable manner
• ensure Transport Scotland procurements comply with relevant EU and national legislation and internal policy and governance procedures
• add value through Transport Scotland procurements and promote collaborative procurement opportunities where appropriate to ensure Transport Scotland contracts represent value for money
• maintain a high standard of procurement capability across Transport Scotland through the implementation of best practice and continuous improvement

To successfully deliver on the procurement strategy, Transport Scotland sub-divided these commitments into 30 delivery sub-actions. They measure their procurement progress annually against each sub-action.

Use of community benefit requirements

Transport Scotland is at the forefront of implementing community benefits into their contracts and improving the accessibility of their procurements to SMEs and supported businesses. The delivery of community benefits are considered for all regulated procurements and are a scored part of the assessment process when appropriate.

Community benefit requirements have a crucial role to play in maximising employment, investing in skills and supporting young people, adults and businesses in Scotland and Transport Scotland is committed to using them to deliver apprenticeship opportunities and support employers in developing the standards for workplace training.

In the 2018-19 reporting period, Transport Scotland had five regulated procurements above the £4 million threshold that contained community benefits. The community benefits achieved include:

• 739 positions for new entrants
• 312 apprenticeships
• 219 graduate positions
• 142 work placements

In order to promote the use of community benefit requirements within their organisation, Transport Scotland has developed a toolkit to assist project managers when assessing the potential to include community benefit requirements in their procurements. The toolkit provides draft text for inclusion in procurement documents where appropriate, regardless of value. Transport Scotland also provides bi-annual feedback to their suppliers on all aspects of the contract delivery, including community benefits when appropriate, which they say is positively received by suppliers.

Transport Scotland is working towards community benefits being embedded into contract management in a systematic and consistent way in future. In addition, they are working to improve the ways in which community benefits are monitored and their impact is measured. They have created a standard spreadsheet with metrics which is issued to suppliers periodically for completion and they are working with suppliers to encourage them to see the benefit of showcasing what they deliver in relation to community benefits and the competitive advantage that it can give them. They describe industry as having become “mature quickly on this”.

Fair work and living wage

Transport Scotland ensures that they and their suppliers adhere to all relevant legal obligations regarding fair work practices. For selected procurements, questions related to fair work are included in tender documents.

Facilitating access to SMEs and third sector bodies

To encourage access to contracts for SMEs and third sector bodies, Transport Scotland ensures that tender documents for regulated procurements contain sub-contract clauses that specify the use of Public Contracts Scotland (PCS) to advertise sub-contract opportunities.

In addition, the organisation has participated in events such as Meet the Buyer, Procurex, and Roads Expo to engage and highlight opportunities for SMEs and third sector bodies.

Facilitating access to supported businesses

Transport Scotland ensures that supported businesses are considered when a new procurement strategy is developed. The organisation spent almost £5,500 with supported businesses during the reporting period for the following activities:

• supply of personal protective equipment
• printing of the Road Safety bi-annual magazine

To encourage their suppliers to collaborate with supported businesses, Transport Scotland regularly promotes and discusses opportunities at supplier meetings. In the reporting year, their suppliers have placed a number of sub-contracts with supported businesses and social enterprises, with a value of over £350,000.

Sustainable Procurement Case Study 4

Name of organisations

Aberdeen City Council/Aberdeenshire Council/The Highland Council

Number value of regulated contracts (2018-19)

In the reporting year, Aberdeen City Council awarded 17 regulated procurements with an estimated value of £21,173,927.

In the reporting year, Aberdeenshire Council awarded 40 regulated procurements with an estimated value of £157,725,818.

In the reporting year, Highland Council awarded 20 regulated procurements with an estimated value of £35,235,338.70.

Procurement strategy

Commercial & Procurement Shared Services (C&PSS) is the joint procurement service for Aberdeen City Council, Aberdeenshire Council, and The Highland Council. The three local authorities procure goods, works and services annually amounting to in excess of £1 billion - by procuring separately, collaboratively, or with other public sector bodies/local authorities. Depending on the strategic importance of the tender it will either be undertaken by the Service, or by the C&PSS.

Their procurement strategy focuses on key themes of Efficiency, Governance, and Improvement and these continue to underpin all procurement activity:

• support the delivery of financial savings and non-financial efficiencies through leverage of a combined contract portfolio
• deliver value and innovation by effective use of category and commercial management techniques and utilisation of spend analytic tools to enable smarter decision-making; identify collaborative opportunities and provide sector-specific market intelligence to inform decision making
• support the local economy by representing the North and East region as a single voice at national framework user intelligence groups to ensure the needs of the communities are considered; maximise opportunities for the local supply chain, SMEs and third sector organisations
• increased collaboration and standardisation without compromising governance/legislative compliance, the approach allows increased focus on:
• savings capture;
• market management;
• effective negotiation;
• exploration of new business models/opportunities, and
• social impact.

Use of community benefit requirements

The three local authorities applied a themed approach to ensure sustainable procurement/community benefits aligned with local and national priorities consistent with the Scottish Model of Procurement. The themes intended to provide procurers and suppliers with a clear, compliant, ideas-driven framework to work consistently within. A few examples of the themes include health, education, community engagement and resource efficiency.

In addition, a diverse range of specific community benefit requirements has been developed for use in regulated procurement contracts. Below is the list of community benefit requirements:

1. Fair work Practices/Real Living Wage

2. Equalities

3. Third sector support

4. Environmental measures

5. Innovation/Case studies

6. Apprenticeships

7. Placements

8. Qualifying the workforce

9. School visits

10. Curriculum support

11. Employability Engagement Activities

12. Supplier development/subcontracting opportunities

13. Prompt payment throughout the supply chain

14. Local economic development measures.

15. Promotion of adoption and fostering

Within the reporting year, each local authority awarded a number of regulated procurements that contained community benefit requirements. Collectively, some of the community benefits delivered included apprenticeships, placements/work experience opportunities, fair work practices and training workshops.

Facilitating access to SMEs, third sector bodies and supported businesses

The local authorities ensure that bidders have maximum creative freedom and flexibility when presenting evidence of how they deliver community benefits. This process helps to ensure the participation of SMEs and the third sector (based locally or elsewhere) without compromising the scale and range of community benefit outcomes secured and delivered in their contracts.

The local authorities also use the supplier development programme to raise awareness of tender opportunities. The C&PSS held 10 supplier events during the reporting year, including supplier 1-2-1 surgeries and What Does a Good Tender look like? events. They also attended the annual Supplier Development Programme (SDP) and Meet the Buyer North event. The C&PSS also made use of framework agreements and dynamic purchasing systems.

In addition, C&PSS have developed a partnership with local third sector interface (TSI), Senscot/P4P, local social enterprises and built capacity amongst organisations to respond to procurement opportunities.

Approaches to addressing environmental wellbeing

The three local authorities have policies in place to guide sustainable procurement activity at a strategic and operation level, contributing directly to Council commitments under the Scottish Climate Change Declaration. The policy assists procurers within the authorities to address the three key aspects of the duties: mitigation (ensuring reduction in greenhouse gases/enhancing carbon storage), adaptation (e.g. flood prevention) and maximising added social, economic and environmental value in their procurements. Examples of how the local authorities are using procurement and contracts to contribute to their climate change activity are below:

• managed Print Contract (Aberdeen City/Aberdeenshire) – the contract eliminated the use of inefficient desktop prints and replaced 3994 printers with power saving energy models. Print polices were put in place to reduce volumes, eliminate waste, reduce resources and energy consumed and promote scanning, duplex and reduce archiving. Since the contract has been implemented, the Sustainability Calculator reports a 30% reduction in energy, greenhouse gas emissions, and solid waste. In terms of user behaviour, evidence supports reduced print volumes of nearly 10% year on year.  The contract also embraces hybrid mail (less road miles for deliveries/less paper) and ensures used print cartridges are responsibly recycled
• fuel cell/hydrogen/electric vehicles – the councils have purchased 21 hydrogen (H2) cars and vans. The vehicles were distributed to Community Planning partners, “Co Wheels” Car Club and Aberdeenshire Council. In addition, three electric vans were purchased and six electric Env 200 vans were leased. The electric vehicle charge-point network was expanded (by six charging points – four of which are rapid recharging) to encourage the communities to purchases more electric vehicles. The authorities are also in the process of purchasing two dual fuel hydrogen/diesel refuse collection vehicles, one large sweeper and fuel cell H2 RCVs
• Aberdeen hydrogen bus project – in the upcoming year (2019/20), to reduce carbon emissions, 15 new hydrogen double decker buses (replacing diesel) will be purchased, which will emit water vapour
• energy from waste – a new zero waste project that will be awarded in the next annual reporting year. The project provides a long-term solution for non-recyclable waste produced in the NE of Scotland. Facility will provide a viable solution for residual waste that will generate significant, wider benefits for example, electricity generation and heat for local residents as a sustainable means of reducing fuel poverty. The forecasts indicate that the plant will process circa 150,000 tonnes of non-recyclable waste per annum. The plant will use high temperature combustion to provide electricity and heat through the production of steam – forecasts show that around 10MW of electricity, and/or 20MW of heat as steam or hot water will be produced. The project has the potential to heat 10,000 homes which would otherwise be reliant on fossil fuels

Collaboration

C&PSS enables a greater level of collaboration and standardisation across the three partner local authorities in the following areas:

• identifying collaborative procurement opportunities to generate best value
• identifying the spend opportunities that can be consolidated and aggregated to generate best value
• identifying product rationalisation and alternatives to generate best value
• sharing of best practice and processes to identify standardisation, consistency, efficiency and effectiveness
• identifying commercial opportunities (including income generation) for the future
• identifying new service delivery models
• maximising the benefits of digital technology, e.g. purchase to pay processes, electronic tendering, e-auctions and dynamic purchasing systems

The three partners take advantage of the above opportunities as appropriate.