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

Chapter 4: What Good Looks Like in Terms of Sustainable Procurement

A key research objective was to gather information on current practice and examine what good looks like in relation to sustainable procurement. Respondents outlined a range of factors that equate to 'good procurement' and are discussed in this chapter.

Embedding and integrating sustainable procurement in the contract management process

The most common opinion of what good looks like was embedding sustainable outcomes within the procurement process and the core of the contract, making it a "golden thread" from strategy to contract to delivery. Some spoke of community benefits being embedded in practice from procurement strategy to tools and training, considering it as "business as usual". On the other hand, many considered it a wasted opportunity that sustainable procurement was currently conceptualised as an add-on rather than a core element of practice. In almost all cases, procurement teams are involved mainly in the 'middle third' of contract delivery and management which involves supporting the tendering process. Although there is some level of involvement by procurement teams in the pre-tender stage, there was general consensus that earlier initiation of this involvement would generate better outcomes.

"We get involved in the procurement process at a stage where a project's been approved…by the time it gets to us, we can influence bits of it but not the whole thing…some of it is not in our control…we don't have a team that's involved with someone at the project approval stage…where we could maybe have a bit more impact." (Other public body)

In fact, it was suggested by some respondents that sustainable procurement outcomes should be considered at the earliest opportunity, at needs conceptualisation and strategy creation stage in order to maximise outcomes. It was recognised that this did require additional resource. One public body had split their procurement team into a contract development team and contract management team, which they perceived to be successful.

"A golden thread throughout the entire procurement process…It's at the core of the contract…It's not your add on." (Wider stakeholder)

"Good procurement will deliver sustainability if you consider the right things at the right time…If you're not in that project definition and planning stage, and you're brought in when they're just about to go to market, you've lost the opportunity to influence the direction of travel…Procurement doesn't start with a specification…procurement starts with when a commissioner thinks that they might need something. And that need hasn't even been articulated…We need to have an influence that far back in this." (Government)

Linked to integration, for some respondents, sustainable procurement was procurement which represented best value.

"Sustainability should be best value…it should be releasing efficiencies." (Other public body)

Collaboration and networking

A common opinion on what good looks like to enable continuous improvement within sustainable procurement is the extensive range of forums that exist across the public, private and third sectors. The research has highlighted that there is an ethos of enabling collaboration and engagement to drive the agenda. The actions arising from the McClelland report in the form of the Procurement Reform Programme were perceived by some respondents to have spearheaded the creation of networks and forums across Scotland, together facilitating collaborative and integrated approaches. Examples include the Procurement Capability Group, the Scottish Local Government Procurement Forum, and the Procurement Improvement Programme. Another example is the widespread engagement with approximately sixty organisations on the development of the Sustainable Procurement Tools. This commitment to engagement helps to ensure coproduction and buy-in to new activity to increase its chance of successful implementation.

"When we develop a new tool, it's not done in an ivory tower. It's done with and by the buying community." (Government)

The establishment of virtual networks and meetings due to COVID-19 was mentioned by a few respondents as having increased accessibility and attendance at such forums.

The Community Benefit Champions network, funded by the Third Sector Division in Scottish Government and supported by the Procurement Directorate (this illustrating early and ongoing cooperation across the Scottish Government), was clearly popular among respondents. The perceived benefits of peer networks facilitating exchange and generation of solutions were thought to be significant, with it being suggested by some respondents that this network could be reinstated, or in fact, similar networks could be created.

"I happen to be a believer that people learn a lot more from talking to colleagues…I think there's a lot to be said for reinstating networks of people who can find solutions themselves." (Wider stakeholder)

The Centres of Expertise were said to be key in facilitating such networks by a few respondents. To illustrate, the Sustainable Procurement Steering Group within NHS National Procurement encourages consistent understanding of issues faced and allows for the commissioning of solutions to progress key strategic areas (such as how to apply a consistent approach to Fair Work First). This collaboration was reported by some respondents to have driven sharing of best practice, reduced duplication via sharing of knowledge and resources so as not to 'reinvent the wheel', and generated cost savings. Another important source of networking mentioned by some respondents was between public bodies and suppliers, much of which is facilitated by the Supplier Development Programme.

"Community benefits and social value doesn't just happen, you need to drive it and manage it to make sure it's actually done and that's facilitated by market engagement with suppliers." (Other public body)

"Networking is the biggest thing that has led to tangible success, and genuine collaboration." (Government)

The extensive procurement community network within Scotland was said to have flourished due to the smaller size of the country. In fact, the effective collaborative networking across Scotland facilitated by these established networks was viewed as critical in the COVID-19 response and the fact that Scotland did not run out of PPE during the pandemic.

"An absolutely critical factor in our success with PPE was the reform programme having established a network of public procurers, right across Scotland across every single sector. So, if a local authority was running low on PPE, they not only knew that national procurement, the NHS, was able to give them some, they knew who to phone as the mobile number was already in their phone, and they actually knew the person on a personal basis." (Government)

These networks were said to facilitate engagement (and early engagement) among procurement stakeholders, and the principle of full stakeholder engagement in the planning/strategy stage to facilitate the most integrated approach and maximum impact. A key benefit would be enhancing shared understanding, buy-in and involvement in the early phases of determining what need should be addressed and what the preferred outcomes would encompass.

"Where do we intercept the interest of the community with the interests of the council with the interests of the business community? Where do those meet?...The closer those circles become, the wider the intersection between those becomes." (Wider stakeholder)

"Going forward, we're going to have much more emphasis on the teams who are developing these major construction projects…At the point where they're doing the design, development and consultation with the local communities in the project Inception stages, they should be starting to develop the community benefits plan for the project at that point." (Other public body)

Similarly, many respondents indicated that ensuring sustainable procurement outcomes are tailored to local need, facilitated by robust and comprehensive community engagement and consultation, is considered critical to driving meaningful benefit. This aligns with the place-based approach.

"It's making sure that what we're doing captures the needs and the requirements of not just the people who are receiving the service, but the wider community as a whole…it's so important to do things with people and not to people." (Other public body)

Developing the Supply Chain

There appears to be a long history, and a demonstrated commitment in Scotland to developing the supply chain and the local economy.

"A lot of my time and focus is spent on getting the first bit right – supplier development…if you build it, they will come." (Other public body)

A key strength of this approach is the joined up, collaborative nature of the programme facilitated by a range of resources and activity including the Supplier Journey and the Supplier Development Programme^[120]. The Supplier Development Programme was spoken of highly by many respondents; to date funded primarily by local authorities and the Scottish Government. This is a collaborative, proactive programme involving procurement and economic development. The programme aligns with Community Wealth Building given its aim of providing local suppliers with the knowledge, skills and preparation required to maximise contracting opportunities in their communities. This approach aims to support the supplier community to be 'tender-ready', and to develop their capability and expertise for embracing tender opportunities. This is achieved through the facilitation of engagement opportunities, information sessions and sharing contract pipelines and future opportunities.

"What are the skills and what's the industry capability we're going to rely on in the future to deliver all our ambitions? That's what this programme is about." (Government)

"Looking at how we can be engaging with our local supply base, identifying those who maybe are currently not accessing council opportunities, and trying to help understand why they're not engaging with council tenders. So what are the barriers for them?...How can we help to build capability in the sector…and help them to improve the way that they look at public sector tenders on the whole?" (Other public body)

An example of this approach was the introduction of a specific buyer engagement team procurements in the run-up to the Commonwealth Games in Glasgow in 2014. This team undertook business engagement to help build the proportion of local businesses with the capacity and capability to tender for opportunities. It is recognised that in the current climate of ongoing resource constraints, this would be a significant programme and resource commitment, but it is an element of best practice that could be borne in mind for larger projects.

The concept of proactive development also appears to exist within the supplier community, with some larger suppliers indicating that they have initiated early engagement with the SME community to establish a network of businesses that can collaborate to deliver contracts.

"Some of the larger organisations have SME, pre-registration capabilities…the basic concept is that you go into the indigenous SME community, and you find subject matter experts…and you bring them on board, and you get them able to do business with you ahead of procurements coming out. I think that is very valuable. I think that needs to continue." (Supplier)

Public bodies also focus on supplier development through supplier surgeries (information events for suppliers), Meet the Buyer events and Talking Tender events organised by the Supplier Development Programme. The statutory requirement for such authorities to produce and share a two-year action plan was highlighted by one respondent as an enabler to supply chain development and readiness.

"We have a two year forward plan that's a statutory requirement…we have to gather information from the services and what they're planning to procure over the next 48 months. And that has to be published. Now, it's never going to be perfect…Any supplier can go into it and see where there's maybe going to be opportunities, and they can gear themselves up towards that. So, it helps get the market ready…it gives them that time." (Other public body)

To facilitate early engagement and planning, a supplier suggested that further detail on the sustainable procurement requirements when advertising prior information notices would be of huge benefit. This would provide suppliers with the time to put the most effective solutions in place.

"The longer you have…to respond or prepare for a procurement, the better you can get those outcomes…when the Scottish Government put out a prior information notice, you get to see a procurement is coming. That never talks about the sustainable element." (Supplier)

Well-resourced, integrated and skilled team

Good practice in sustainable procurement was considered by many respondents to necessitate investment and resource in an experienced, highly skilled team with the capacity and capability to influence all stages of the procurement. Commonly, respondents spoke of public bodies having a Community Benefits/Sustainable Procurement Champion (a dedicated resource to facilitate supplier development, the tender process, and contract management to measure and demonstrate outcomes) as being a significant enabler to maximising impact from procurement outcomes. The existence of this resource did vary between public bodies. Procurement was described as a craft, necessitating a multi-skilled team.

"Procurement isn't just following a process or a procedure. You have to be intelligent; you have to understand your craft…You have to…understand the market, understand the players, and how you can make the most value through that." (Government)

Integration in the form of cross-team/departmental partnership working across local and regional government, public bodies and suppliers was said to be key to success. Similarly, an integrated team with a range of skills and expertise to effectively procure, manage and deliver a contract was viewed by some as best practice, given that procurement staff were experts in procurement rather than on other specific topic areas. A further benefit of integration within a public body was suggested by a few respondents as different specialisms being called upon to advise and manage different parts of the contract (such as the Employment and Training Unit within a local authority taking responsibility for the management of modern apprentices).

"People who are procurement people, are very necessary and important, because you need to do the procurement right and keep within the rules…if they don't know what they're buying, they shouldn't be buying it." (Other public body)

Conversely, a lack of integration in terms of embedding social impact within the core of the contract, and contract management to ensure the demonstration of outcomes was thought by some respondents to bring significant challenge.

An example case study included in Appendix 3 is Renfrewshire Council where sustainable procurement outcomes are enabled by an integrated team comprising representatives from different departments. Further benefits of this integrated approach include a dedicated Community Benefits Officer, resource investment in that team, and the establishment of a Community Benefits Forum.

"It's not just procurement professionals looking at this…we've got the levers through procurement and the regulations, and the activities that procurement teams can undertake, but actually they can't deliver all of this…Procurement…is a hub of this, but all the spokes need to come off and bring in other colleagues as instruments to drive that to other parts of the organisation." (Other public body)

Provision of support and training enabling consistency

In the view of some respondents, a key characteristic of the Scottish Government approach is to support the effective delivery and implementation of sustainable procurement (enabled by the Act) by means of practical support, frameworks and sharing of information and best practice. Crucially, some respondents highlighted the production and refinement of the Sustainable Procurement Tools and increasing transparency enabled via the Procurement Journey and Supplier Journey website.

"The transparency of the Procurement Journey and the tools that go along with it has been a major success and sets us apart from the UK." (Government)

Some respondents spoke of the procurement team within the Scottish Government prioritising and enabling cross fertilisation of ideas, concepts and methods.

"We've got all the support we need from government colleagues. We're really fortunate and have a great relationship…I think anything we asked for them to help us with regionally they're absolutely there. They're really good…constant engagement at our groups." (Other public body)

Ongoing training was perceived by many respondents as critical to embed and refresh ideas and contextualise new developments. Perhaps the most important aspect of the training highlighted by some was to continue to translate, interpret and simplify the procurement tools and the requirements of the Act. A key aim suggested by some respondents was to provide updates and ongoing communication to ensure consistency of practice at both a regional and local level.

"The key to getting people motivated is giving them the skills that they need to feel confident." (Other public body)

"Not all organisations are equal in terms of their skill set, in terms of their systems…So having really clear tools, having training that's managed and refreshed on a regular basis…And for people to understand what it is they're asked to do and whether it's a nice to have or whether it's a mandatory requirement." (Government)

Some respondents suggested that the provision of a more defined interpretation of the Act via training would be of benefit to public bodies. Respondents did, however, acknowledge that the guidance was less defined to allow for flexibility, nuance and the ability to tailor to local needs. This echoes a common theme within the research which is the balance between less defined guidance and structures to allow for nuance, with a desire among some respondents for greater direction, frameworks and specific guidelines on implementation. This again indicates a need for further support and training in this area, echoing back to the McClelland report recommendations on annual training for procurement professionals.

"I think sometimes the Scottish Government are quite vague with our guidance and I know why we do that because it allows people to develop their own, but in the absence of that people make it up…So I think there's something about helping people interpret what it actually means." (Government)

Monetisation of social impact

Linked to the concept of evaluating the impact of community benefits, was allocating monetary value to the impact of the benefit. Respondents spoke at length about the Scottish Government approach of non-monetisation, a view which was generally supported and viewed as best practice. Some maintained that it was incredibly difficult to allocate a monetary value to the potentially wide-ranging social impact associated with an action delivered through a contract. Instead, many respondents spoke of focusing on more qualitative outcomes and the often, intangible benefits delivered to an individual, family or community by providing opportunities. Monetisation was thought by many to drive the wrong outcomes by assuming that monetary value equated impact. This was described as a crude measure that attempted to "make order into something that's really quite complicated". It was felt by some respondents that the far-reaching complexity and nuance of community or social benefits were said to be impossible to capture by means of a calculated figure.

That being said, some respondents did acknowledge that attributing a monetary value offered a more simplistic, standardised solution that many would find helpful, despite being an arbitrary rather than valuable solution. Despite broad agreement that monetisation was ineffective, many respondents expressed a desire to work towards a solution for how such benefits could be conceptualised or monitored in the longer term to demonstrate clearly articulated outcomes. One suggestion was to have more of a hybrid approach where an element of monetisation was considered (when appropriate) alongside more qualitative outcomes. Given the complex nature of this solution, a few respondents offered other solutions such as a longer-term strategy or project on demonstrating impact, or advanced training for the supplier community on how to demonstrate the "nuance" of community and social benefits.

"Buyers are very comfortable with numbers in a spreadsheet…but when it comes to community benefits...as soon as you introduce something that just monetises, you remove all the nuance, you remove all the local thinking about…what's important for our community?...What we're trying to get at here is much more complicated than a number in a spreadsheet. So it comes down to are we able to give our buyers the correct training and the correct support for them to think about the nuance?…If we're not doing it enough…we need to know that. We need to put more resources into that." (Government)

High-level commitment to continuous improvement

Many respondents within Scotland perceived high-level leadership buy-in, and commitment to and belief in investment in the sustainable procurement agenda within Scottish Government, public bodies and suppliers to have been a key enabler.

"Elected members have become a key to that…so having that buy in at that level is so important." (Wider stakeholder)

Ministerial objectives and priorities (including Climate Change, Fair Work and Equality practices) were considered by some respondents as pivotal in driving activity and improvement. This links to the common research theme that sustainable procurement is perceived as an effective enabler to achieving holistic outcomes, and to making a tangible difference to the lives of people in communities across Scotland.

"I think very early on, we had real good ministerial support…I think that visible leadership was really, really important." (Government)

Linked to this is the ongoing development of sustainable procurement in response to stakeholder needs, facilitated by a continuing process of engagement. This has resulted in investment in system development to e.g., track local spend across Scotland, and has been evidenced by how learning from key initiatives or pilot schemes has shaped the development of public programmes, building on best practice and lessons learned.

This commitment has also been demonstrated by the commissioned independent research and reviews that measure the impact and progress of community benefits and the Sustainable Procurement Duty. It has also been demonstrated through the publication and sharing of case studies. This activity aims to build on best practice and share key areas of success to drive improvement.

"The whole programme that ran in 2020, the independent review is because we really know there's more we can do…we are on this journey of continuous improvement…we're not complacent. And we are continuing to evolve." (Government)

Use of the Sustainable Procurement Tools

The tools have been available for many years, with the online platform being launched in 2020. Although the tools website is primarily aimed at the public sector to help embed sustainable procurement into all parts of their procurement process, there are a range of users from different disciplines including the majority of public sector bodies, private sector companies, and individuals (including students) from across Scotland, the UK and beyond.

Overall, respondents spoke of the procurement tools very favourably (particularly the Sustainability Test and Prioritisation Tool, with the Flexible Framework to a lesser extent). Some respondents had been making effective use of the tools for some time, and in fact, one organisation had mandated the use of the Sustainability Test. Others had further embedded the tools within procurement including the contract management phase, which was said to increase accountability to report on progress.

"The tools are fantastic...We have been using the Sustainability Test for a long time very successfully…we're actually using it much better now than we ever have…The prioritisation is really useful for us as well, because it helps us to decide at what level we can be really influencing with our own strategy." (Other public body)

A suggested improvement for maximising effectiveness of the tools was a best practice library of worked examples on the website to enable organisations to develop further expertise. A further suggestion was including guidance regarding Fair Work First. Despite the success of the tools, some respondents did reiterate the ongoing recognised challenges involved with achieving effective engagement and use of the tools and ensuring tangible outcomes, given the range of indicators to be considered. As such, it would appear to be beneficial to continue an ongoing training and support programme on effective use of the tools.

"Best practice examples…a library, that's online…I still think that there's probably expertise that's missing, people are probably reluctant to put their sustainability tests on there because they probably know that they're a bit light in terms of information…so having some examples would be really good." (Other public body)

"Getting people to use the tools, getting people to understand that they have to put considerable effort in to get a good output…There are 23 or 24 indicators that people are expected to consider in every contract which can be daunting…and people are not experts on every topic so it's overwhelming." (Government)

Defining the scope of sustainable procurement requirements within a contract

Current practice varies in terms of how public bodies outline their requirements for community benefits/social impact requirements within a tender, although enabling benefits that are relevant and proportionate is a common thread and considered best practice. Some public bodies include their priorities for community benefit as a condition of contract and specifically outline what is to be delivered (e.g., number of work experience placements) to increase transparency, and ensure tenderers are clear on what benefits are required.

Some public bodies have introduced a points-based menu system for community benefits with the contract value linked to the level of deliverables. This was felt to aid transparency and accountability. It also ensured a spread of community benefits across a range of varied areas including employability, ensuring SME, third sector and supported businesses involvement, and community and educational projects.

"We have almost set up a menu of what we're looking for…we're not necessarily saying you as a contractor have to provide this...we're saying, here's what we're looking for, do you think you can deliver? Or what bits do you think you can deliver?...It's just a bit more specific and a bit more targeted." (Other public body)

Some public bodies, whilst acknowledging the wide scope of community benefits, have prioritised employability and training as a key, local need. In some cases, this has translated to a points-based system outlining a requirement for a certain proportion of community benefits to be employability focused.

Assessment processes and requirements

Within the general ethos of accountability, transparency and continuous improvement, the introduction of the Procurement Capability Assessments (PCA) was viewed by some respondents as a significant enabler to measuring and demonstrating impact and progress. PCAs were replaced by the Procurement and Commercial Improvement Programme (PCIP) in 2015 with the most recent iteration including a section specifically related to sustainable procurement. This programme was thought by some respondents to be introduced to raise the bar in terms of measuring performance and driving behaviour change and improvement.

"What it was saying is that…you've all done really well on your PCA, and that's brought you all up to this level. What do we need to then do…take you up to the next level?" (Other public body)

Respondents had conflicted views of PCAs (now PCIPs) in terms of the positive outcomes derived from having a transparent assessment process in place, balanced against the resource required to deliver the assessment. Despite resource issues, the PCIPs were described by some as an enabler to driving improvement.

"It's massively labour intensive….you're obviously always wanting to be as close to the top of the level as you can be… it's something that motivates us to keep going with the good practice because you know that you're getting assessed every two years…So it's quite a strong driver to keep going in the right direction…it's actually the amount of work that goes into it that people struggle with when they're really, really resource strapped but the principles behind it are sound." (Other public body)

Reporting processes and requirements

Many respondents spoke of the importance of monitoring, demonstrating and publicising sustainable procurement outcomes, with the annual reports providing a clear opportunity and format to drive improvement and behaviour change and increase transparency and share best practice. In some cases, respondents spoke of such reports being shared with elected members which helped to drive improvement and focus, and put simply "what gets measured, gets done".

"The annual reports are incredible. They really push public bodies to deliver and demonstrate. Because every single year, they've got to publish their success against the strategy that they also have to publish." (Government)

The reports were viewed by some respondents as an effective vehicle for demonstrating transparency and accountability of outcomes, raising the strategic profile of sustainable procurement and fundamentally, driving improvement.

"Inevitably…one local authority is going to compare itself with its neighbour. I think it introduces a…competitive nature… But it's also raising the profile of procurement as our strategic delivery tool…So I think it's improving things across the piece." (Government)

Despite there being extensive guidance and a template available to produce these reports, some respondents indicated a need for a standardised template to aid completion and allow for easier comparison across the reports. This indicates a potential lack of awareness of the guidance that currently exists, or that refinement may be required to create guidance and a template that are more user-friendly and effective.

"You really need to have prescriptive headings that people fill in. Otherwise, they'll make it up themselves what they think should be in it…and that makes it almost impossible to compare." (Government)

Alignment with National Outcomes

It was suggested by a few respondents that what good looks like in terms of outcomes, are those outlined in the National Performance Framework (NPF). The NPF enables consideration of what is good for businesses and employees, places and communities, and individuals. With this comes a requirement to demonstrate the economic, social and environmental contribution of procurement.

Given the apparent lack of true understanding of the NPF and its application among respondents, there is an opportunity to increase awareness and understanding of the NPF, specifically as it is the overarching framework against which to align progress and outcomes. There were some suggestions that the NPF should be elevated within procurement to a greater extent, to ensure greater alignment of outcomes and demonstration of success linked to the framework. A further suggestion was introducing a NPF champion within each public body with a remit of aligning procurement to the NPF.

"What good looks like is already set out in the National Performance Framework…[which] was developed...with input not just from public authorities…but from the citizens of Scotland…What we're doing in procurement is aligned to that National Performance Framework." (Government)

Linked to this issue was better promotion of the sustainable procurement agenda in Scotland. Some respondents felt that as such outcomes are embedded within process and thinking within Scotland, the Scottish Model of Procurement is not particularly publicised or celebrated to any great extent, thus comprising a missed opportunity in terms of sharing best practice and success.

"It's so, so ingrained, it's so normal, that actually we forget to talk about it even publicly, and we forget to really highlight it…We don't do news releases about it, we don't get the coverage, which means it doesn't have the same political traction…we're doing it so unthinkingly…and it's just the norm." (Government)

Future proofing of outcomes

Linked to sustainability, it was proposed that procurement outcomes should have longer-term benefits as opposed to those which are very much short-term so as to achieve maximum value and impact in the longer term. This suggestion linked to the concept of good procurement, that if the most effective processes are followed including defining local need, then outcomes should be valuable in the longer term. The concept of legacy was also mentioned, with a public body considering legacy in terms of which benefits should be provided. Taking this a step further, it could be that legacy is one element used to better scope and define the type of preferred benefits outlined in a tender document.

"All the decisions that we make have to withstand and be future-proofed…Good, sustainable procurement has to stand up to the test of time." (Wider stakeholder)

"We have a consideration of legacy…as a random example…a one-off food bank donation…we would count that as community benefits and it's obviously a very good thing for our contractors to be doing. But actually, comparatively, if…they installed a playground in the local primary school, or if they donated some of their spare topsoil to a local community gardening project, it means the community actually has a facility that is there for a long time after the project has gone, as opposed to just a one-off thing that we hand over and then leave behind." (Other public body)

A further point raised was that sustainable procurement should involve effective delivery of the service/contract that has been delivered, to enable a sustainable economy. It was suggested that the public sector had a role to play in supporting private industry to deliver sustainably and effectively.

"Sustainable procurement can also be looking at the whole life operation of the asset…we need to be doing something for industry as well as getting the best from industry…We see a sustainable industry as a key goal alongside delivering the right thing and delivering it well." (Other public body)