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

Appendix 2: Case Studies from the Qualitative Research

Scottish Government – Effective Supplier Relationship Management to sustainable outcomes from the Warmer Homes Scotland scheme (2015)

Situation

Warmer Homes Scotland (WHS) is the Scottish Government's national fuel poverty scheme designed to reduce the number of Scottish households living in fuel poverty.

The contract, valued at £224 million, was awarded to Warmworks Scotland LLP in 2015 for 5 years with the option to extend for a maximum of 2 years.

Task

The task was effective management of the entire contract process from tender to delivery, which ensured maximum sustainable procurement outcomes.

Actions

Scottish Government Procurement were involved in the supplier relationship management of this contract from the outset, using lessons learned and building on the 'gold standard' WHS model.

Members of the contractor's team were invited to sit on both the operations and strategic board as part of the supplier relationship management dual governance approach to create a strong partnership approach where the contractor feels empowered and at the centre of decision making.

The project applied an innovative approach to managing key performance indicators (KPIs) which were monitored monthly and broken down by each region. The KPIs were linked to the contractor's payment, meaning when the contractor failed to achieve the required KPI score per region, a pre-set deduction was made which was reinvested directly into WHS, allowing the Scottish Government to support additional Scottish households living in fuel poverty.

To achieve additional ethical outcomes, the Scottish Government opened negotiations with Warmworks concerning a possible two-year contract extension. During negotiations, the Scottish Government outlined the requirement to build on the existing excellent reputation of the scheme with ethics, the environment, customers and service quality at the heart of any additional offers.

Customer engagement was achieved through ministerial visits and events, staff participation in inspection visits and customer focus groups.

The Scottish Government participated in every Warmworks' contractor forum where ministers and senior officials delivered presentations and ran workshops. The contract management team was available throughout the event to answer questions and learn from installers.

Results

The impact of the continuous improvement requirement in the contract and excellent supplier and relationship management (SRM) have enabled more households to be supported through the introduction of additional innovative measures to WHS.

The outcomes sought from the scheme were reducing fuel poverty, reducing carbon emissions and supporting the economy through jobs and skills training while delivering value for money for the Scottish Government. To date, WHS has helped nearly 20,000 customers reduce their fuel bills by an average of £323 a year, saved 33,033 tonnes of CO2, and supported 2,859 jobs and training opportunities.

The total financial savings on 31 March 2020 were £8.57 million equating to approximately 1,244 additional households benefiting under WHS.

WHS has achieved community benefit and social outcomes unmatched against other Scottish Government contracts. During contract extensions negotiations, the Scottish Government worked with the contractor to agree a package of social commitments that surpass the existing contractual commitments including the creation of 611 new jobs and 119 trade apprenticeships.

In terms of emissions, a range of new measures and technologies have been successfully introduced to the scheme including low carbon heating options and Q-BOT, a remote-controlled robot that delivers underfloor insulation beneath previously inaccessible floors thereby increasing the energy efficiency of the home.

Drawing on the experience of contract managing the WHS contracts, the Scottish Government's innovative approach of managing KPIs resulted in a KPI saving of £1,845,543, allowing the Scottish Government to support an additional 264 fuel poor households. This approach ensured that none of the £32 million annual budget was lost whilst also driving improvement in the contractor's performance. In addition, more fuel poor customers were supported, whilst ensuring the full scheme budget filtered down to the supply chain and was reinvested into the Scottish Government Employment Skills Plan.

In terms of ethical outcomes, the Scottish Government secured the following improvements through contract extension negotiation:

• Introduction of an annual Ethical Supply Chain Audit including modern slavery requirements
• Extending the time that manufacturers warranties cover installations
• Extra language translation services
• Putting in place formal partnerships with schools and colleges to promote apprenticeships and training opportunities
• Expanding the provision of enabling funds for customers; and
• Carrying out pilot projects to inform future policy development.

When WHS closed in March 2020 due to COVID-19 restrictions, the strong, established relationship helped both organisations respond in an efficient and proportionate manner. The Scottish Government provided supplier relief funding to keep staff operational while Warmworks provided an emergency service to customers, both parties agreeing contract variations and developing a new physically distant customer journey ready for the restart.

Procurement have designed, developed and implemented a seven-module bespoke training programme, including a supplier relationship management module. The programme is mandatory for all Scottish Government Contract Managers (and available to all Scottish Government agencies), with 70+ colleagues having been trained to date. This approach, including the continuous improvement model, embedded quality assurance and ensured lessons learned were shared with other public bodies including the UK Government and the Welsh administration, helping to shape the design of similar schemes across the UK.

Scottish Prison Service (SPS) Innovative collaboration with the third sector (ongoing)

Situation

The SPS procurement team has a well-established appreciation of the Scottish Government policy objectives which have related to their organisational objectives and purpose (this includes linking back to National Outcomes).

They have developed an approach towards leveraging a range of economic, social and environmental outcomes from their larger contracts that support those in or leaving custody.

Many in custody have complex needs and are from economically/socially disadvantaged groups.

There are established links between certain economically disadvantaged areas of Scotland and many of those in custody come from those areas.

SPS procurement have delivered community benefits for over a decade, from the build of the new HMP Low Moss in 2011, to each successive new build. This has allowed them to develop their approach.

They have benefited from consistent leadership in the procurement team, who champion social impact.

Over the years, SPS started to realise there were many different touch points where they could engage or get partners to engage in relation to community benefits.

Task

SPS requires a broad canvas and range of partners (third sector or Supported Business) to address sustainability outcomes.

Actions

The approach SPS take is to start early and signpost early. As they are not responsible for the delivery of community benefits, they instead create the space for partners to deliver these, which is where they have had more success.

They make use of the Prioritisation Tool on the Sustainable Procurement Tools platform at the pre-procurement planning stage. This provides a means of prompting narrative-based outcomes and dialogue with the internal client around a range of social-economic and environmental outcomes that may be relevant to the project, themes which then flow into the tender and contract.

SPS has an eco-system of third sector partners in and around the justice sector with whom they engage. They provide services to those in or leaving custody or their families.

SPS engage with the Criminal Justice Voluntary Sector Forum (CJVSF) via their Strategy & Stakeholder Engagement Directorate (S&SE). Whilst there are some services commissioned and procured by the SPS directly from the third sector, the majority of SPS work here is the result of grant funded activity by the Scottish Government and/or others. For example, the Scottish Government fund several Public Social Partnerships to £4.5 million per annum.

Where not 'procured' and contracted by the SPS, they typically seek to agree a Third Sector Partnership Agreement to underpin the work with individual third sector organisations.

The third sector works to provide a throughcare bridge from custody to community by addressing homelessness, tackling addiction, and supporting individuals towards employability. There is a drive to direct social impact from SPS contracts towards partners in this justice eco-system and for SPS tenders to prompt work with these organisations. That provides a broad canvas of organisations working across different social needs that contractors/suppliers could engage.

SPS have also promoted use of Supported Businesses in main contractor supply-chains that has proven fruitful in terms of some work flowing towards that sector.

Kier Construction pivoted their approach to community benefits on their Barlinnie contract to work with Families Outside, an organisation that acts on behalf of families who have people in custody. See results below.

Results

SPS and Kier Construction identified that IT and graphic design support was needed, and this was subsequently provided through Kier Construction's IT department.

Keir Construction provided IT awareness training to 34 beneficiaries and supplied a graphic designer to support the charity to undertake in-house marketing and design.

NHS Scotland's Procurement Services (2020)

Situation

The emergence of the COVID-19 pandemic in 2020 introduced the need for the development of virus test kits.

Task

NHS Scotland were required to develop a virus test kit (VPSS Kit) to obtain potential coronavirus samples from care homes and other organisations. These were transported to newly established Regional Laboratories for testing. The previously supplied Virus Transport Medium kits (VTM Kit) provided by the Department of Health & Social Care (DHSC) were proven not to be suitable for the new laboratories. This change in process allowed safer transportation and handling, a faster testing process and a reduction in equipment processing once received at the Regional Lab.

Actions

The requirement to design and assemble a specific medical device (VPSS Virus test Kit) based on a known and tested product allowed an innovative approach to be taken.

Maximisation of the Scottish supply chain working in combination with Scottish Enterprise, the Regional Laboratory Clinical Leads, the Scottish National Laboratory Programme and National Procurement to design an efficient, safe, cost effective and environmentally improved product.

Results

The utilisation of the VPSS solution within the virus test kit makes the sample transportation and further testing a safer option for all staff involved in the process.

Several sustainability benefits have been realised because of the procurement strategy adopted by NHS National Procurement in conjunction with Scottish Enterprise and the clinical quality group from the National Laboratories Programme. These include environmental impacts such as packaging reduction (outer package and contents), process flow improvement, reduction in equipment usage (flow cabinet) and waste stream optimisation and local sourcing resulting in Greenhouse Gas Reduction CO2 (transport miles).

The estimated saving in Green House Gas emissions from embodied carbon by the reduction in packaging is 297 tonnes of CO2e (carbon dioxide equivalent) against the previous VTM kit through the 84% reduction in material weight. An additional estimated saving of 3.9 tonnes per year of CO2e through avoidance of waste disposal emissions has also been calculated. All products were sourced from UK/Europe, except for the small plastic bag (Thailand).

In terms of social impact, the project involved utilisation of the Scottish and UK supply chain to source, assemble and deliver the product. The previous VTM kit provided by DHSC had no resultant employment in Scotland. The current VPSS Kit is sourced through Scottish based companies with a significant number of manufacturing, assembly, storage and distribution jobs directly related to the weekly production of the final product.

The new VPSS kit, as well as increasing efficiency in the Regional Laboratory process flow, has resulted in significant environmental savings including:

• Reduction in waste of 182 tonne p.a.
• Reduction in GHG emissions from embodied carbon of 297 tonnes p.a. (see note 1 at end of document) CO2e
• Reduction in waste disposal emissions of 3.9 tonnes p.a. (see note 1 at end of document) CO2e
• Reduction in equipment usage and resultant cleaning / maintenance and operation; and
• Reduction in additional staff time and resultant daily personal protective equipment (PPE).

Renfrewshire Council – Integrated approach to procurement

Situation

Procurement sits in the Policy and Commissioning service under the Chief Executive and has close ties with other services.

The team is responsible for all procurements ensuring the same level of scrutiny and oversight for all contracts.

The team at full capacity is 24 staff (in February 2022, there was a team of 16 due to recruitment challenges) including a Sustainable Procurement Officer (focusing on social-economic/community benefits) and a recently appointed Sustainable Procurement Officer who will focus on Environmental Benefits.

Task

The Council has considered the best methods of ensuring an integrated approach to procurement with cross-organisational involvement to ensure a range of expertise is applied to achieve maximum benefit.

Actions

The Council operates a Community Benefit Forum which is a multi-stakeholder group that represents different areas of the council and the third sector. It includes representatives from Economic Development (who focus on employability, supporting the local business community, working with young people) and Children's Services. This enables procurement to have a wider sphere of influence and ensure a wider group of people are involved in the delivery of contracts to maximise the impact.

For example, they hold mobilisation meetings where the relevant members of the Community Benefit Forum attend to help deliver and manage the socio-economic outcomes. If a construction contract contains community benefits in the form of training for people who are currently unemployed, the Community Benefits Officer links with Invest in Renfrewshire (the employability arm of economic development). They work with the contractor to find a placement and undertake mentoring and support of the person to ensure the placement sustains.

Through this forum, contractors have worked with Children's Services to support initiatives in schools. To illustrate, a contractor on the multi-trade's framework provided a joiner to attend S5 and S6 technical classes to teach the class real life practical joinery skills. This provided an opportunity to gauge if they were interested in a career in this field.

Result

Cross-organisational support enables the delivery of community benefits as it offers a range of expertise linked to the specifics of delivery.

The forum was deemed essential to the success of community benefit outcomes and was aided by a "huge team effort".

To illustrate, the ten-week joinery programme delivered in schools proved to be very successful – "the school absolutely loved it". It was a very positive programme, where the young people who were working with the tradesperson felt that they were actually talking to someone from the real world.

Shared Apprentices (2015 -)

Situation

Shared Apprentice Limited (SAL) is a not-for-profit organisation established in 2015 to support local construction employers to take on apprentices.

The rationale for this was the construction industry experiencing a downturn that resulted in a reduction in training funds. In addition, there was a lack of risk appetite for hiring apprentices due to the short-term nature of the work available. The unemployment rate among young people was rising significantly.

It was set up by Angus Council, Dundee & Angus College, Construction Industry Training Board (CITB) and local construction companies: Andrew Shepherd Construction, Pert-Bruce Construction and Robertson Group. It has also gained support from Scottish Building Apprenticeship and Training Council (SBATC), Scottish Electrical Charitable Training Trust (SECTT), Scottish Government and Skills Development Scotland.

Task

To support small and medium size businesses, offering them an option to take on apprentices without a long-term commitment, which would help to address the rising unemployment rate in young people.

To enable apprentices to complete a full apprenticeship programme by working with several different employers and to gain the skill set they require to become qualified.

Actions

SAL employs each apprentice directly and then contracts them out to each employer when the work is available.

SAL allows employers to dip in and out of apprentice training. The Scheme allows employers to take on an apprentice, for as short a duration as three months, with no commitment to the apprentice at the end. Once the apprentice has finished working with an employer, they are found another placement, and upon framework completion, they will be assisted in sourcing permanent employment within their chosen trade.

SAL has close links with the public sector and is an excellent way for employers to offer something back to the local community whilst fulfilling their contractual obligations.

In 2017, Dundee City Council joined the programme achieving full Dundee and Angus coverage.

Although the purpose of the organisation is to support small companies, the large community benefit contractors support the organisation and are part of the board/governance structure.

Results

The Shared Apprentice allows employers to enjoy all the benefits of an apprentice, without any long-term risk or long-term cost to their business.

To date they have had 58 apprentices (with 79.31% sustainability) across seven vocational areas and worked with a total of 60 host employers (with 60% being SMEs and 27% being micro-organisations).

They achieved the Convention of Scottish Local Authorities (COSLA): Scottish Government– Delivering Excellence Award 2018.

For example, individual A has been employed with Shared Apprentice Limited since autumn 2017 as an electrical apprentice. He worked with different contractors through his apprenticeship all of which were on publicly funded projects. He worked with McGill's Construction on Robertson Construction Limited's Plot 6 (part of Dundee waterfront project). He then worked for Balfour Beatty on Regional Performance Centre funded by Dundee City Council. He also worked at a construction of energy from waste plant at MVV Baldovie (project funded by Angus Council and Dundee City Council). Once the work was completed there, he has been working with Imtech Engineering Services on Ogilvy Construction site working on Women's Community Custody Unit in Dundee.

Working on various sites with different employers has offered him a unique insight into how different companies operate, gave him experience of working with a variety of people on big commercial projects. He has now applied to sit his FICA which is the final exam after which he would be qualified electrician. Feedback from contractors has always been positive which is invaluable to him because after he qualifies, he can approach them and make a transition from his apprenticeship to employment easier as they already know him and his work ethics. At the same time using the Shared Apprenticeship model helped companies to meet their community benefit targets especially for contractors who are not local to Tayside or when projects were shorter than four years and direct employment of mainstream apprentices wasn't feasible.

Scotland Excel – Increasing quality and sustainability of food (2016 -)

Situation

Scotland Excel is the Centre of Procurement Expertise for the local government sector, serving Scotland's 32 local authorities and over 100 associate members from across the public and third sector. They input into various groups including sustainable council procurement.

They manage a range of frameworks including approximately £82 million worth of frameworks which are related to the procurement of food and the food used in schools, local authorities and care homes.

Task

There is increasing political and public scrutiny to ensure a high quality of food in schools and that it is sustainably sourced.

The aim is for all products used in schools to be sustainable through to end of life including furniture, computers whiteboards as well as food.

Actions

Food is a flagship category, with six different frameworks being in place that are sub lotted so suppliers can bid for one or any/all. In some cases, council areas are further divided into smaller sub lots to attract local suppliers and SMEs.

The supply only element on Groceries and Provisions and Frozen Food means manufacturers can bid directly.

They agreed with councils that the fresh meat sourced as part of the tender should be Red Tractor Assured, Protected Geographical Indication, or Farm Assured.

They collaborate with a range of groups including Association of Public Sector Excellence, Soil Association, Farmers Union, Quality Meats Scotland and Zero Waste Scotland.

They introduced user information groups from the councils, including pupil groups in schools.

They agreed to pool the volumes so that the increased spending power could be used to achieve better prices and increased quality.

Results

75% of the spend on the Fresh Meats framework is in Scottish produce, with almost all being British products.

Across the whole food portfolio, spending by councils on Scottish products has continued to rise. Over the past five years from 2016 to 2021, it has increased from £8.8 million to £15.8 million, and it now accounts for more than 36% of all spend through our food contracts.