Implementation review of transitional employment services 2017

6. Procurement

Overview

6.1 WFS was procured by SG through a non-competitive action with existing Work Choice providers. The process involved inviting providers to submit an 'Invitation to Negotiate'. They then entered into detailed discussions and negotiations with each provider before the contracting stage.

6.2 SDS were responsible for the competitive procurement process for WAS, the approach to which was based on that used for other employability programmes (including the Employability Fund).

What worked well?

Both programmes were contracted in advance of their launch date.

6.3 The procurement processes for both programmes were completed well ahead of time - providers were appointed and contracts in place within a relatively short timescale. Indeed, it was commented that contracts were agreed earlier than usual for programmes of this type. This is very positive.

6.4 The Scottish Government sought and benefited from legal advice at each stage to ensure they were keeping within the Public Sector Procurement rules – wanting a rigorous and thorough process. A key challenge they faced was in sourcing people with experience of procuring employability programmes. SG embedded in house SG procurement expertise in the programme team, seconded in people from DWP who had relevant experience and also sought advice from procurement colleagues within SDS. Moreover, the Scottish Government Director of Procurement sat on the Programme Board to aid with the resolution of any issues. This drawing in of wider experience was helpful and has enabled any issues to be resolved quickly and efficiently.

6.5 The Scottish Government Procurement Directorate wanted the ability to extend provider contracts into 2018 in case of any delays with the mobilisation of Fair Start Scotland. This recommendation was based on previous experience of other procurement. Although the Fair Work Directorate was initially resistant to this, they did agree and the option for extension was incorporated. However, this agreement took time and was only possible because they were using an invitation to negotiate as opposed to a competitive tender process. It perhaps highlights the need to agree such issues at as early a stage as possible.

6.6 Also, and building on the point made previously about the levels of engagement between the Government and providers, they were able to enter into negotiations with providers in advance of contracting. This was reported to have saved money as the Scottish Government could negotiate for the removal of "unnecessary costs", for example some relating to the mobilisation phase.

6.7 The procurement process for WAS involved navigating EU procurement policy alongside domestic procurement policy . There was a reported tension between the two with EU policy placing emphasis on avoiding or managing poor performing providers, whilst Scottish Government policy was focussed on socio-economic factors. Navigating the two was reported be challenging. However, this was achieved and they managed to procure provision in the limited time available whilst 'avoiding a legal challenge' (despite a threat).

6.8 One provider noted that the procurement process was carried out via Public Contracts Scotland ( PCS) – a familiar system which aided the process for them.

What worked less well? What are the challenges?

The single tender process brought restrictions.

6.9 A few consultees were of the view that, although having a non-competitive action for WFS was the pragmatic choice given the time constraints on the programme, it would have been better if the contract could have been tendered competitively. This would have enabled the programme to be changed to a greater extent and it would have made it easier to performance-manage.

The SDS process was perceived as onerous.

6.10 There was some concern on the part of the Scottish Government and providers that SDS's procurement process was too onerous for the size of programme, and that tender documents submitted were disproportionate to the value of the contracts. It was suggested by two providers that the Scottish Government's ambition to encourage small, local specialist suppliers to participate in the procurement processes may be at odds with how the process worked in practice. It was said that there are not many local organisations who would have had access to the resources required to participate in the procurement process.

6.11 From SDS's point of view this reflected:

• The need to meet EU procurement rules .
• A lack of clarity about the detailed client groups that would be served.

6.12 There was also concern that SDS was too focused on the skills element of the programme at the expense of considering other barriers to employment faced by participants – particularly in relation to health issues. It was felt that, although SDS's approach may work well for the Employability Fund, it may be less suited to a programme on the scale of WAS, and for the client group the programme was targeting.

6.13 There was concern that the intended client group for WAS had not been well-defined for tenderers. One consultee felt that there had been little clarification as to the nature of the barriers to work that participants might be facing. Providers felt they had to respond to a very open invitation about the nature of different issues in the overall client group. They had to cover all bases and state what they would do for each client group. This made the process much more onerous than it should have been. This is turn led to some very long bids that were also a frustration to those having to review and score them. It was suggested that a word limit would have been appropriate.

6.14 There was also a concern that the timescale to respond to the Invitation to Tender was too short. Again, this could have influenced who was able to bid. The challenge was seen to be particularly high on this occasion as providers had to bid for something that they had not delivered before.

6.15 There was also a concern that the bidding requirements were too inflexible. Providers saw this as reducing their ability to draw on their experience to best meet the needs of the client group (as described in Chapter Four). Similarly, one provider was also frustrated by SDS's requirement for them to provide the names and addresses of employers, which they felt was inappropriate. This gave the impression that SDS thought that providers did not know what they were doing. Conversely, it could simply be seen as testing applicants' track records and networks.

6.16 A further frustration with the tendering process was the definition of package areas. These were, we understand, based on previous DWP arrangements. However, it was commented that they did not correspond to coherent labour markets or make supply chain management arrangements easy.

Communications were an issue throughout the tendering processes.

6.17 In contrast to the Scottish Government, who engaged WFS providers in advance of procurement, SDS did not engage with providers in advance of the procurement exercise for WAS. For providers involved in both programmes, this difference was very noticeable, and from their point of view to the detriment of WAS . That said, it was acknowledged that it may be easier to have dialogue during a single (non-competitive) tender process.

6.18 SDS highlighted a concern over the transparency of the tendering process, where providers bid for work and write in sub-contractors who 'may' assist with delivery. There was concern that some smaller providers might not actually get used as, whilst they were named in the bids, they were not guaranteed any actual business. This was reported to have been an issue with the Work Programme and at odds with the perceived desire to involve smaller, local and specialist providers.