Public procurement - views and experiences: research

1. Introduction, context and methodology

Introduction

In September 2021, Scottish Government commissioned Blake Stevenson Ltd. to undertake research with third sector organisations and new private businesses to explore their experiences of public procurement in Scotland. To date, relatively little research has been undertaken focusing on the experiences of these two groups in relation to public procurement, and there is a particular lack of qualitative evidence on this front. By addressing this gap and by expanding the evidence base around public procurement, this research aims to ensure that decisions related to next steps and actions to improve access to contract opportunities for these two groups are well informed. For the purposes of this research, “new businesses” are defined as businesses that were set up within the last five years.

The findings from the research will be used to ensure that future delivery of public procurement is as inclusive as possible and enables third sector organisations and new private businesses to better access and compete for public contracts.

Note that the views expressed in this report are those of the researchers and do not necessarily represent those of the Scottish Government or Scottish Ministers.

Context for the research

Published in 2006, the Review of Public Procurement in Scotland ('the McClelland Report’)^[1] set in motion the building blocks for improved services and better value for money. Structures were put in place to drive change – including the Public Procurement Reform Board (PPRB) – which successfully promoted transparent, collaborative working across a wide range of procurement activities and practice, across the public sector.

In 2010, the second phase of public procurement reform was launched^[2] to speed up reform to successfully promote a value for money balance between cost, quality and sustainability into mainstream procurement.

The Procurement Reform (Scotland) Act 2014^[3] (‘the 2014 Act’) was another milestone in public procurement reform, giving ministers powers to issue regulations and guidance within a European framework. Statutory guidance (effective April 2016) was developed by the Scottish Government in partnership with key stakeholders.

It includes guidance in relation to:

• procurement strategies and annual procurement reports
• Sustainable Procurement Duty and community benefit requirements
• selection of tenderers and award of contracts
• procurement for health or social care services, and
• addressing fair work practices and the living wage.

As part of the 2014 Act, the Sustainable Procurement Duty requires public sector organisations, before carrying out a regulated procurement, to consider how they can:

• improve the economic, social and environmental wellbeing of the authority’s area (with a focus on reducing inequality)
• facilitate the involvement of small and medium enterprises (SMEs), third sector and supported businesses, and
• promote innovation.

The 2014 Act, and subsequent legislation in 2016^[4], supported the integration of the Scottish Model of Procurement^[5] into Scotland’s economic strategy and into the work of the public sector more widely to bring about improved services alongside value for money, fairness and prosperity. The Scottish Model of Procurement is enshrined in the 2014 Act and defines how the public sector buys goods and services. The Model outlines four key principles for procurement:

• embedding sustainability in all we do
• improving supplier access to public contracts
• maximising efficiency and collaboration
• delivering savings and benefits.

There was a focus on moving the culture of procurement on from a back-room function to something of major strategic impact both nationally, at government level, and institutionally, for public bodies – a reflection of the 'government-led, public-body owned' ethos of procurement encouraged throughout reform.

By ensuring that procurement is embedded into strategy and policy across the public sector, the intention was that maximum public value could be achieved beyond the transaction of buying and selling of services and would contribute to: jobs and growth; innovation; training, apprenticeships and employment opportunities; and helping businesses (including SMEs), third sector bodies, and supported businesses to compete effectively for contracts.^[6]

Scottish Government has committed to continuous improvement to public procurement and during the past few years has worked to streamline how the public sector works with private businesses and the third sector, putting in place measures to ensure that they can compete equally and effectively for public sector contracts. These measures have included putting in place Public Social Partnerships which design and commission new public services and support innovation in service design, as well as raising awareness of the benefits of adopting the Public Social Partnership model. In addition, Scottish Government has funded a range of other support services in recent years including the Supplier Development Programme, Partnership for Procurement and the Just Enterprise service.

While the stakeholder organisations involved in this research confirm that these initiatives have helped third sector organisations become more confident in participating in public procurement and tendering, they have also reported that some of these developments have resulted in the public procurement process becoming more complex and onerous.

The 2019 Social Enterprise in Scotland Census report^[7] suggests that a smaller proportion of social enterprises are doing business with the public sector than four years earlier (61% in 2015 and 53% in 2019). Whilst each year approximately one in five social enterprises bids for public contracts, the 2019 survey responses indicate two main challenges in doing so: first, the capacity, capabilities and experience of social enterprises to deliver the requirements of the tender; and second, a mismatch between what the public sector requires and the product or service offering of the social enterprise.

Published in 2019, a report of the Federation of Small Businesses Scotland^[8] goes further, suggesting that “While most parts of the public sector say supporting SMEs is a priority, there’s an absence of specific objectives, action plans, monitoring or evidence from public sector organisations to back this up”. When they asked smaller businesses about their views of public procurement in Scotland, they found that while just under a quarter of businesses had bid for public contracts in the last two years, the majority described the process as difficult (61%).

The Scottish Government’s Public Procurement Survey of Suppliers^[9] (published in 2021) found that while suppliers generally felt well-placed to bid for a contract, they often encountered a range of difficulties. It should be noted that this survey had some limitations due to a dominance of responses from relatively well-established companies. As a result, the views and experiences of newer and less-established businesses in relation to public procurement were less forthcoming. Conclusions noted that suppliers often found the process “overly-complex, burdensome and in need of simplification and streamlining”. Sixty-three per cent of respondents 'sometimes' or 'always/often' found it difficult to understand questions in tender documents, while 61% 'sometimes' or 'always/often' had difficulties with the timescales for preparing a bid.

The report also noted that SMEs, third sector organisations, sole traders and local firms face heightened difficulties in navigating procurement systems and in accessing, bidding for and delivering Scottish public sector contracts. Sixty-one per cent of SMEs reported facing difficulties identifying available contracts 'sometimes' or 'always/often', compared to 42% of large businesses.

The Scottish Government Social Enterprise Action Plan^[10] (2021-2024) recognises the challenges faced by third sector and new private businesses and makes specific reference to procurement in their key actions. Commitments include an intention to spread best practice in implementing the sustainable procurement duty, looking at how to best support mechanisms that will enable social enterprises to prepare, bid for and win public sector contracts and continued action to realise the potential of supported businesses to access public contracts, through the use of reserved contracts and other mechanisms.

Despite the progress made to date, and the commitments made in the Social Enterprise Action Plan 2021-2024, there is recognition that more needs to be done to ensure that there is a level playing field for suppliers of all kinds who wish to do business with the Scottish public sector. This applies to third sector organisations and new private sector businesses in particular – two areas where less is understood about the range of challenges they face in their engagement with public procurement.

The purpose of this research was therefore to find out more about the views and experiences of third sector organisations and new private businesses in relation to public procurement, to help inform future thinking and next steps. Accordingly, this research provides a snapshot of recent experiences for consideration by Scottish Government and the wider public sector.

Scope of the research

Specifically, the research set out to address the following questions:

• Why do third sector organisations and new private sector businesses bid – or not bid – for Scottish public sector contracts?
• Among those which do not bid for Scottish public sector contracts, is there an underlying appetite to do so?
• In their view, what are the potential benefits for third sector organisations/new businesses of contracting with the public sector, and vice versa?
• To what extent do third sector organisations and new businesses think they are able to bid for – and deliver – Scottish public sector contracts?
• What helps these groups to bid for and deliver contracts? What hinders them?
• To what extent do these groups engage with – and how useful are – the currently available programmes offering training, support and advice that are geared towards them (e.g. Supplier Development Programme, Just Enterprise and Partnership for Procurement)?
• If they do not engage with the available support programmes, why not?
• What further training, support and advice is required, if any? Should this be targeted towards any particular business sectors?
• To what extent do third sector organisations and new businesses think that the Scottish public sector is willing and able to do business with them?
• What more, if anything, can the public sector do to enable more third sector organisations/new businesses to bid for and deliver public contracts?
• Are there any differences and/or similarities in terms of how third sector organisations and new businesses view and experience public procurement in Scotland? Do views and experiences vary among individuals working in different business areas/locations/sizes?
• Is there any potential to open up public contracts to new markets? If so, how can this be encouraged?

In the next section we outline the methodology used to undertake the research.

Methodology

Due to the importance of ensuring that a breadth of views were captured through the research, a mixed-methods approach was adopted for this research combining an online survey of third sector organisations and new private businesses with interviews and focus groups with representatives of third sector organisations and new private businesses. In addition, we conducted web-based interviews with representatives of a small number of key bodies that represent the interests of third sector organisations and new private businesses, in order to gain an understanding of the wider context for this research.

The methodology was designed to gather as much quantitative and qualitative evidence as possible within the timeframe and enable a thorough analysis of the data gathered. It comprised three key phases:

Stage 1:

• Inception meeting
• Desk-based research
• Design of research tools
• Recruitment of research particpants

Stage 2:

• Online survey of third sector and new private sector businesses
• Interviews with representatives from third sector organisations and new private businesses
• Stakeholder interviews

Stage 3:

• Analysis of data
• Draft report
• Final summary and report
• Power point presentation

In addition to sending direct invitations to a small number of organisations, we shared details of the opportunities to take part in the survey and interviews through a variety of channels. This included engaging with a range of umbrella bodies which work with third sector organisations and/or with new private sector businesses. These organisations distributed information about the research with their service users and advertised on social media channels.

This approach was very successful in relation to reaching our target number of third sector organisations but less successful in respect of new private businesses. As a result, we also sent emails to new private businesses registered with Companies House within the last five years, inviting them directly to take part in the research.

The online survey was designed using Snap Surveys, a survey design, distribution and analysis software package. The survey included a mix of closed and open-ended questions which asked respondents about their reasons for bidding for Scottish public sector contracts; their experiences of doing so to date; what helps and hinders their bidding; the quality of any training and support they have accessed; and what would help them to bid in future. We also asked why organisations had not bid to date, and what would help them to bid in future. The full set of survey questions is included in Appendix 1. The survey was launched on 22^nd November 2021 and closed on 4^th February 2022.

We received 48 responses to the online survey – 43 from third sector organisations (of which six were social enterprises, 36 were charities, and one was an intermediary/umbrella organisation) and five from new private businesses^[11]. Thirty-three of the responses were from businesses and organisations that had bid for public contracts in the past five years, and 15 responses were from businesses and organisations that had not.

Alongside the survey, we conducted individual interviews and focus groups with representatives of third sector organisations and new private businesses, while also conducting interviews with stakeholder organisations representing both the private and third sectors.

A combination of convenience and snowball sampling methods were adopted to recruit representatives of third sector organisations and new private sector businesses for the interviews and focus groups. Throughout the research, we continually reviewed the profile of interviewees to ensure that the sample represented as diverse a range of businesses and organisations as possible (for example, that they were drawn from a variety of sectors and geographical locations). For the stakeholder interviews, a purposive sampling method was adopted, with participants being chosen on the basis of their knowledge of the public procurement landscape. We reached a total of 49 participants through the interviews and focus groups, a breakdown of which is provided below:

Table 1: Number of participants reached through interviews and focus groups

	Third sector	New private businesses	Stakeholders	Total number consulted
Interview participants	24	6	6	36
Focus group participants	12	-	1	13
Total participant numbers	36	6	7	49

On concluding the fieldwork, we analysed the data gathered through the surveys and interviews. Survey data was analysed using the Snap surveys programme. Snap software facilitates the analysis and interpretation of quantitative data through a variety of robust techniques including frequency tables, descriptive statistics, cross-tabulation and multi-variate statistical analyses. It can also support the analysis of qualitative data by presenting the information broken down by different variables and/or respondent characteristics to help identify areas of consensus or disagreement across different respondent groups.

The data gathered through the qualitative interviews was manually analysed. We analysed the data thematically based on the key research questions, undertaking checks for trends in relation to a range of relevant organisational characteristics such as organisation type, sector, size and geographical location.

Profile of research participants

A wide range of organisations took part in the research, including a mix of small, medium and large companies from a range of sectors and geographical areas.

In Figure 1, we provide a breakdown of the size of businesses and organisations that responded to the survey.

As the pie chart shows, a range of organisations responded to the survey, with the largest proportion (17, or 35%) of respondents being from small organisations, 14 (29%) responding from micro organisations, 10 (21%) from large organisations and seven (15%) responding from medium-sized organisations.

The responding organisations were also geographically diverse, with organisations responding from across 27 local authority areas, as can be seen in Figure 2.

As can be seen above, the highest numbers of responding organisations operated in Glasgow (10, or 21% of 48 respondents) and South Lanarkshire (9, 19%), followed closely by those operating in North Ayrshire (8, 17%) and those operating across Scotland (8, 17%). No responses were received from organisations operating in Aberdeen City, Moray, Orkney, Shetland and the Western Isles.

The responding organisations also represented a wide range of sectors as shown in Figure 3 below:

As the graph above shows, the largest percentage of organisations responding to the survey represented the health and social care sector (33, or 69%), followed by 13 (27%) organisations in the area of education, training and employment, and 11 (23%) organisations from “other” sectors. Those respondents indicating “other” described themselves as operating in counselling, youth and community work, support and training for third sector organisations, children and families therapeutic support, children’s services in schools, homes and in the community, volunteering, community development, social enterprise network support, and food growing. In addition, 10 respondents (21%) indicated that they operated in the information, consultancy and support services sector. It is unsurprising that organisations representing health and social care were most dominant, as health and social care is the biggest sector within the third sector.^[12]

The sample of representatives from third sector organisations and new businesses we interviewed was also diverse, and represented a good range of organisations, sectors and geographical areas. For example, we interviewed organisations operating in the fields of autism, employability, mental health and wellbeing, food and drink, consultancy, catering and cleaning, and from a range of geographical areas including Scottish Borders, Edinburgh, and Argyll and Bute.

This diversity of research participants gives us some reassurance that we heard views from a wide spectrum of organisations – however given the relatively small number of respondents overall and the fact that there were no survey responses received from some sectors at all, the findings cannot be taken as fully representative. We did not, for example, receive any responses to the survey from organisations operating in the fields of tourism, heritage and festivals, religious activities, or the arts and creative industries.

Methodological challenges and limitations

Responses to the survey were lower than we would typically expect to receive to a survey of this nature, particularly given the potential number of respondent organisations in Scotland. According to SCVO data, the Scottish voluntary sector comprises approximately 40,000 organisations; more specifically, the 2019 Social Enterprise in Scotland Census states that there are around 6,025 operating in Scotland. These figures, however, are estimations and should be treated with caution^[13].

The relatively low number of survey responses does mean that caution should be exercised in interpreting the data and taking the findings as representative – they are, rather, a snapshot of recent experiences which provides useful learning for future developments. The low response rate meant that we had to be cautious in relation to breaking down survey data, and in drawing conclusions from that data. We did not, for example, separate out the survey results by third sector and new private businesses due to the small sample size and the high level of similarity between responses across the two sectors.

We did not meet the target number in relation to new private businesses, managing only to interview representatives from six companies. Despite the range of steps taken to recruit participants from new private sector businesses (as set out previously), we encountered significant difficulties in engaging these businesses in the research.

It is impossible to know whether the lack of engagement to the survey in general, and by new private businesses in particular, was due to a lack of awareness of public procurement, or a lack of interest in taking part in the research. It is very likely to be related to capacity issues, particularly in the run-up to the UN Climate Change Conference (COP26) which took place during the fieldwork period. There is no doubt that the restrictions and challenges businesses are facing as a result of the Covid-19 pandemic also contributed to the low numbers willing to engage in the research – this is a challenge which we have encountered across a range of research contracts during the last year. Organisations are focused on recovery, and reconfiguration of services, and do not have as much capacity to participate in research as they did previously.

Structure of the report

The remainder of the report is structured as follows:

• Chapter 2 sets out third sector organisations’ and new private businesses’ experiences of participating in public procurement in Scotland
• Chapter 3 explores the barriers to engagement with Scottish public procurement for third sector organisations and new private businesses
• Chapter 4 discusses the factors that enable third sector and new private businesses to engage with Scottish public procurement
• Chapter 5 brings the research findings to a close by providing a series of conclusions.