Scotland's journey of achieving sustainable procurement outcomes 2002-2022: independent review

Chapter 3: Benchmarking Practice Across the UK

Respondents in the qualitative research were asked for their impressions of sustainable procurement across the UK, with this chapter outlining the key themes raised. There was clear consensus among respondents, including those from outwith Scotland, that Scotland is, and has long been, a leader in driving improvement and outcomes in sustainable procurement.

"We should be confident in our ability in Scotland. We're small, but…we really do punch above our weight." (Government)

The position of Scotland as a leader in sustainable procurement was said to be due to a number of reasons which are outlined below.

Length of journey

Almost all respondents were of the opinion that the public sector in Scotland was further on in their journey of achieving sustainable procurement outcomes, having "moved first", and given their sustained activity, investment and progress in this area for the past twenty years. Consequently, a few respondents commented that Scotland implemented an outcomes rather than process-based approach which was said to "mark them differently", whereas the UK were more recently in a position to focus on the tracking of outcomes following their updated policy on social value.

Some respondents mentioned the "golden thread" throughout procurement in Scotland.

"What Scottish Government…has been trying to do for a number of years…McClelland identified procurement's role…using the public sector spend…latching on to that the lever of public procurement as a way of delivering strategic objectives…And I think Scotland probably spotted that potential earlier than a lot of other places." (Wider stakeholder)

Supporting policy and legislation

The Procurement Reform (Scotland) Act 2014 was viewed as a key driver by many respondents, due to the requirements on public bodies including the production of annual reports. These allow public bodies to share progress and outcomes and therefore increase transparency. It was suggested by some to have greater strength than the Public Services (Social Value) Act 2012 in England due to these requirements that led to behaviour change.

"The Procurement Reform (Scotland) Act is broader than the public services Social Value Act, but…it also has some very useful tools…If you're not going to incorporate community benefits into procurement, you have to say why in the contract notice. So, as opposed to the English legislation, which is sort of a duty to consider, it's actually got some things where you have to almost by exception, explain why you're not doing things. It's got some things which influence behaviours." (Wider stakeholder)

Amongst those respondents aware of the detail within the Welsh legislation, The Welsh Procurement Policy Statement was considered valuable in terms of increasing focus on community benefits. The Well-being of Future Generations (Wales) Act was said by some respondents to have significant potential benefit; in particular the "critical friend" role of the Future Generations Commissioner.

The Commissioner's Office fulfils its duty to advocate for the well-being of future generations by promoting awareness of sustainable development principles, assisting public bodies in the development of local well-being plans, connecting public bodies where there are opportunities for collaboration, and carrying out reviews of practice to provide support or challenge^[118].

It was suggested by a few respondents that the other nations should examine and consider this approach. Northern Ireland has traditionally focused on policy rather than legislation, with a respondent indicating that it was seen to afford more flexibility, with a principle of securing best value for money and defined as a combination of quality, price and sustainability to suit the department's needs.

A key turning point for the UK approach was perceived by a few respondents to be Carillion (a British multinational construction and facilities management services company) going into compulsory liquidation in 2018. This led to the development of a post-Carillion recovery plan which included reform of the Social Value Act. The plan focused on supplier diversity, smaller supply chains and ensuring community benefits. Essentially, the language changed from government departments having to 'consider' social impact to ensuring it was explicitly evaluated. The UK leaving the EU was described by a respondent as a further "black swan" event impacting on the development of sustainable procurement within the UK.

Many respondents considered there to be a lack of a systematic and sustained approach to developing sustainable procurement within UK legislation and how this was implemented. This included a lack of systems and tools required to ensure a consistent approach, and a lack of specific requirements in the tender documents, despite the Social Value Act being described as an "anchor point".

"What we had was an Act saying for social kind of benefits or procurement, here's some guidance or things you can follow. But everyone's busy, constrained and trying to…thread it through…Sustainable procurement has always suffered from that to an extent… as soon as it's siloed, or it's nice to have, or there's no kind of governance accountability around it, that's where it gets difficult, even though the aims and the focus may be there." (Government)

Those who were aware of the detail within The UK Green Paper – Transforming Public Procurement – generally thought it had a role in addressing some of the gaps in UK procurement legislation. However, these individuals did not consider the paper to be transformative for Scotland in that much of the suggested practice was already inherent in Scotland's procurement processes (as outlined in Chapter 2). Despite this, a few respondents highlighted the importance of continuing to track the progress and implementation of the paper to continue to examine transferable practice or learning.

Top-down commitment

The public sector in England was suggested by some respondents to have had more of a 'bottom-up' approach, with public bodies and suppliers driving improvement and finding solutions and effective approaches in a more localised context. In contrast, there was a general consensus that Scotland have applied a more "top-down" approach spearheaded by the Scottish Government's policies and practices. Some tier one suppliers were said to be driving improvement in the public sector in England, echoing more of an individualised rather than systematic approach.

"In England…the number of major contractors who've got designated people who take it seriously and have transformed the way that organisations approach procurement…that's been the biggest transformation or reflection in England…where they've got dedicated officers driving sustainability and driving social value…because…they got the signal, this is how you're going to win contracts…Fundamentally, [in Scotland] you've got a government which is pushing it firmly and keeps making sure it happens." (Wider stakeholder)

"The construction industry was way ahead of any of the local authorities [in England], because they saw this coming." (Wider stakeholder)

The accessibility and close working relationships between ministers, Scottish Government teams, and local government were considered by some respondents to be significant facilitators. A few respondents said that the size of the country enabled this accessibility and the delivery of integrated benefits, due to having fewer local authorities.

"If you want to talk to the local authorities in Scotland, you can get 32 people in a room…it's more like 500 in England so you're never going to get that interaction…it's far more coordinated in Scotland with everybody working together." (Government)

A common opinion among respondents was that there is evidence of a commitment to engagement and continuous improvement across the whole of the UK. For example, Wales are committed to ensuring the successful implementation of the Wellbeing of Future Generations (Wales) Act and were said to have invested in staff to engage with public bodies to support the implementation of the Act, identifying examples of good practice, and providing support where there are missed opportunities. Wales are also undertaking a Section 20 review which examines how public bodies are considering procurement in their wellbeing objectives.

Integrated approach

Some respondents perceive the integrated approach across Scotland as being enabled by high-level transparency and commitment to a continuous improvement process and facilitated by a range of tools, support and training that drive consistency. Sustainable procurement being embedded in the early stages of a contract in Scotland was viewed as best practice by almost all respondents. In contrast, some described the approach in England as more fractured, with the success of sustainable procurement being more dependent on the effort and progress of particular local authorities rather than a committed, transparent, central UK government approach.

"There is a difference in perception of the role of procurement – in Scotland, procurement is engaged in the planning stage, not the buying stage." (Government)

"In England, it's been devolved organisations like the local authorities which have adopted it and created their own ways of doing it and toolkits…But there's been no central government backing it apart from the fact that they are now waking up to it…so it will be reflected in public procurement and the Green Book, but nobody is really owning it in the way in which the Scottish Government own it and keep trying to bang the drum…Fundamentally in England, it depends upon local organisations owning it and making it work and choosing to do so. Which is why you get a very fractured position." (Wider stakeholder)

That being said, a respondent perceived a key enabler in the UK Government to be the introduction of Commercial Officers within public bodies, who embedded procurement early in the journey:

"In UK Government…they've done a great job in making sure that every department has a Commercial Officer, those officers sit on all their committees….I think in Scotland, most public bodies probably don't have very many Commercial Officers that sit on the more senior committees and have that degree of influence….If you've got a Commercial Officer there in the early thinking stages…it's another way that you can get in early on the left-hand side of the timeline and start to influence things properly." (Government)

In common with the NPF in Scotland to which local priorities are aligned, Wales have seven national wellbeing goals that contribute to the setting of wellbeing objectives within public bodies alongside tailoring such objectives to local priorities. These are: a prosperous Wales, a resilient Wales, a healthier Wales, a more equal Wales, a Wales of more cohesive communities, a Wales of vibrant culture and thriving Welsh language, and a globally responsible Wales.

Supplier development and supporting tools

Activity undertaken across the UK to develop the supply chain was considered as best practice. Many respondents spoke in particular about the supplier engagement programmes (including the supply chain engagement programme and associated frameworks established as part of YORhub approximately ten years ago) and the introduction of Sell2Wales and Public Contracts Scotland. In addition, the UK government departments have introduced an SME Champion and a Social Value Champion to enable and support local businesses to maximise procurement opportunities.

That being said, the tools, support and training provided by the Scottish Government to aid the journey of achieving sustainable procurement outcomes were praised by many with one respondent describing these as setting Scotland apart. This includes the Sustainable Procurement Tools platform and the Procurement Journey website.

"The…supplier reach the Scottish Government has…I think that's outstanding and an exemplar of best practice…If I go on the Scottish Government website…I can see across…the different areas what's happening, what events there are, and if I was a supplier, that would be a fantastic resource. And that's something…Scotland's way ahead of…that kind of reach into suppliers. So that's a huge benefit… I think the Scottish Government's done a lot of fantastic work in that area." (Government)

Demonstrating outcomes

The other UK nations appear to have faced similar challenges to Scotland in monitoring and measuring impact, having also not arrived at a unified approach. In Wales, respondents spoke of there being a hybrid approach using various toolkits and measures, with research currently being commissioned to evaluate the most effective measurement tools. The UK approach, at a government department level, was said by a few respondents to reflect the Scottish model of prioritising social impact rather than monetary benefit, specifically to enable diversity in the supply chain (although this approach is not necessarily applied by local authorities).

"It's all about a level playing field…we [UK] deliberately adopted a qualitative approach to allow…SMEs an opportunity so it didn't become a numbers game…We wanted it to be the quality of social value and how it makes an impact in local environments…When we took our measurement system forward, we were incredibly keen that we didn't have financial proxies…If we had a race of quantity, then we would have…created a barrier to SMEs participating in government contracts…For us, it's all around trying to grow diversity of supply chains." (Government)

A respondent described Northern Ireland as currently developing more of a quantitative solution and metric for measuring social impact. Within the tender process, a specified cost of the social impact is required, so they can recoup that cost if the benefit is not delivered. Alongside this, a respondent indicated that they issue "yellow and red cards" which dictate whether the supplier can bid for a government contract in the future.

"It's complicated, but I think you need to quantify it in some way and we [Northern Ireland] will be doing our best to do that…If you don't quantify it…how are you going to build it into your business case?" (Government)

Community Wealth Building

When examining sustainable procurement outcomes and processes across the UK, the concept of 'Community Wealth Building' is a common theme. Respondents spoke of the 'Preston model' and its ethos and priorities. Fundamentally, Community Wealth Building was viewed as a valuable concept, which enabled sustainable procurement outcomes in a community. There were two key reflections from respondents.

1) This was not a new concept, but instead encompassed a range of valuable approaches which facilitated community benefits that had long existed in Scotland and had been reconceptualised in the new term of Community Wealth Building. To illustrate, community benefit clauses were included in Commonwealth Games contracts approximately ten years ago in Scotland.

"Community Wealth Building…which is sort of being…rebranded, has pretty much been…how we've done our business for…years…They just came up with a badge." (Other public body)

2) The approach in Scotland of sustainable procurement enabling economic, social and environmental outcomes is more holistic and integrated than the original Community Wealth Building model/Preston model that centred on the local economy.

"If you want to look at it through the lens of Community Wealth Building, which is just the latest buzzword…you have to have social, economic, and environmental benefits…So whether we call it community benefits in procurement, whether we call it community wealth building…I don't think it matters. As long as you're…opening up every opportunity for inclusive economic growth." (Government)

Preston Model

The Preston Model has gained much publicity and traction in the realm of Community Wealth Building. The model was borne from a desire to evaluate local spend in Preston, reflecting a similar approach applied in Manchester, with the aim of strengthening the local economy. The timing of this coincided with the Social Value Act in 2012. Spend analysis indicated that Preston had low local spend activity (5% in Preston and 39% in Lancashire^[119]) which initiated target setting for local spend in both Preston and the wider Lancashire area (a more recent iteration of the model has introduced a possible Northwest region analysis).

In fact, a spend analysis approach was initiated by the Scottish Government in 2006/2007. The Scottish Procurement Information Hub was developed in response to recommendations contained in the Public Procurement in Scotland Report (2006). The third-party tool allows over 100 Scottish Public Sector bodies the means to examine spend by analysing accounts payable data and is used to identify collaborative procurement opportunities. The service is fully funded by the Scottish Government. The data enables the Scottish Government and other contributing Scottish public sector bodies to report on public sector procurement spend including providing answers to official requests for information such as Parliamentary Questions, Freedom of Information enquiries and annual reporting required for legislative purposes.

A respondent involved in the Preston model indicated that a key aspect of the model was the benefit of collaborative working. This included the on boarding of the six anchor institutions, a significant enabler, as were various networking and supplier development opportunities (including simplifying paperwork to aid engagement). The model was said by the respondent to highlight the effectiveness of spend analysis as an approach, of increasing place consciousness, and the value of supporting the local economy including training provision and engagement events.

The respondent indicated that a further learning was that traditional procurement being focused on the 'middle third' (i.e., contracts) misses the impact to be gained from the pre-tender, early engagement phase and the contract management stage (issues raised through the current research). Although publicised as a model, the approach was not said to be 'lift and shift' (i.e., moving the model from one environment/location to anotherwithout stopping to redesign or modify to meet local need) but instead was described as an individual, ad hoc solution to rebuilding the local economy in Preston.

"We recognised that there was a massive value in the encouragement and on boarding of…an initiative or a project involving the six major institutions based in or heavily impacting on the economy of Preston…Trying to send that message of what is social value out to the smaller SMEs, and I think Preston did achieve…that change of mindset, the change of place consciousness among buyers and suppliers…and recognising the value of spend analysis…We recognise that procurement, it's concentrated on the middle third…what our project tried to relay is the outer thirds are arguably the most important. Pre-procurement…skipping through the competition to the contract management…is equally important." (Other public body)

Enabling the local economy

The research indicates that activity to develop the supply chain and local economy is undertaken in all nations to varying degrees. Within Scotland, there were said to be varied approaches and activity that enable local spend including collaborative working with economic development teams to support and develop local supply chains and make the most of the Quick Quote process.

Robust supplier engagement, considered by respondents to be embedded as best practice across Scotland, is characteristic of Community Wealth Building and the delivery of sustainable community benefits. An example is the Dundee First approach applied by Social Security Scotland which, for unregulated spend, looks to attract Dundee suppliers and make use of the Supported Business Framework.

"We're very, very focused on contract and supplier management and supplier development, which is good for Scotland…good for all our citizens." (Wider stakeholder)

The Community Wealth Building approach taken by North Ayrshire Council to encourage local spend includes increasing the threshold for works contracts procured through Quick Quote to the value of £2 million (with senior management support).

A few respondents perceived facilitators to local spend to include the Supplier Development Programme and the Scottish Government-funded Grow Local tool, an additional optional module within the Scottish Procurement Information Hub. This tool provides management information to organisations to help them assess the potential to increase economic activity within a local area or region. The information helps to inform initiatives to develop supply chain activity and encourage local companies to bid for an increased share of public sector spend on goods and services. It was said to constitute effective collaboration between procurement, economic development and enterprise.

A challenge raised by a few respondents was over-prioritisation of local spend detracting from best value and generating wealth in the overall economy across Scotland, including releasing economies of scale (as was highlighted in the Scotland Excel case study in Appendix 3).

"One of the things that we are keen on and have been for a while is…don't close your borders to the other council area, in terms of only buying from suppliers in your area…you need to look at it from a holistic point of view…[What] Scottish Government have done well, since we began the whole area of procurement reform, is building a good network of data and data analysis…through the Information Hub, because that enables councils and other public bodies to be able to track what was spent with whom, and on what." (Wider stakeholder)

Some respondents highlighted the challenges involved in achieving and measuring consistent and increased local spend, with it being described as "erratic" and difficult to predict. A further reported challenge highlighted by one respondent was lack of capacity and capability within the local supplier community to deliver contracts. This supports the rationale of ongoing resource being directed to supplier development. Finally, given that sustainable procurement in Scotland encompasses economic, social and environmental outcomes, a few respondents maintained that focusing purely on local spend as the outcome is insufficient.

"We work hand in hand with our economic growth team, and every time we go to procure something, we'll say 'are there any locals that we should be engaging with, and can we invite them if it's a quick quote' and quite often, it's a case of…there's nobody…in that industry, or there are people, but they don't have the capacity. So that is the biggest barrier for us increasing our local spend." (Other public body)

"It has to include fair, ethical work, not just local work." (Other public body)

Collaboration across the UK

Some respondents spoke of the positive, collaborative relationships they shared with their counterparts across the UK, with an ethos of sharing best practice and generating mutual benefit. These respondents felt the UK nations have a shared objective of embedding sustainability "for the best reasons" although they may apply different approaches or have differing priorities.

"We're not actually racing against anyone else. We're all trying to embed sustainability…we keep handing the baton to each other, not just the people in our own lane…and if someone's fallen behind a wee bit, they're always welcome to ask." (Government)

Many respondents did not appear to have a wealth of knowledge of different procurement practices across the UK, other than general reflections of best practice. That being said, many spoke of the general progress being made across the UK and the devolved nations, with a few mentioning the real desire and commitment within Scotland to seek out new practice and lessons learned. This suggests a need for the current research which aims to benchmark and share best practice to increase awareness and understanding.

A key theme in terms of sharing best practice and process to reduce duplication of effort, was the need for contextualisation of setting and context. A few respondents stressed that they did not advocate for 'lift and shift' models but instead were keen to learn from other areas and nations and then apply that learning to their own practice.

"I never think these things are directly transferable…. What we're developing here might be the framework, but it has to be contextualised, it's never going to be…a one size fits all…I think it has to be more nuanced than that. I think it has to be more contextualised…but build on lessons learned…We just have to make it fit into the National Performance Framework." (Wider stakeholder)