Public procurement - views and experiences: research

4. Factors that enable third sector and new business engagement with Scottish public procurement

While there is no doubt that the nature of this research inclines research participants to focus on the barriers they face to participating in public procurement, the research also aimed to determine the key enablers to third sector organisations and new private businesses in accessing and competing for public sector contracts.

From the evidence gathered through this research, we identified a number of key factors or enablers which must be in place. These link directly to some of the key barriers noted in the previous chapter. The extent to which these enablers are in place currently (and the quality of their provision) is variable, and there was a very strong message across research participants that despite improvements in the delivery of public procurement in recent years, there remains significant scope for further improvement.

The key enablers identified by research participants are illustrated in the infographic below:

• Provision of relevant and timely feedback
• Independent appeals process
• Standardised and streamlined central procurement systems
• Strong relationships between buyers and suppliers
• Lotting of contracts and effective use of Quick Quotes and Frameworks
• Capacity building and effective training and advice for suppliers
• Simple, consistent tendering processes with proportionate terms and conditions

Simple, consistent tendering processes with proportionate terms and conditions

In the previous chapter we highlighted some of the challenges organisations had encountered with complex tendering requirements. In order to ensure easier access to Scottish public contracts, research participants emphasised the need for processes that were streamlined, clear, and which only required essential information that allowed for good decisions to be made about contract awards.

There were serious concerns raised about the extent to which procurement was used as the vehicle through which to deliver on key policy priorities (such as Fair Work or climate change), without due consideration to the relevance of these issues to a particular contract or them being proportionate. Procurement is an important lever for delivering on some of these policy agendas, but there is a sense that this should be done with much more nuance than is currently the case.

In addition, some research participants felt strongly that the requirements placed on micro or small organisations should be less stringent than for large organisations.

“Businesses under a certain size should not be required to do some things.” (New private business interviewee)

“Needs to be proportionate – small charities = small procurement.” (Third sector interviewee)

To increase engagement with public procurement, it is important that the requirements of tender processes are proportionate and relevant to the work being commissioned, and take account of the size and nature of organisations bidding for the contract.

Capacity building and effective training and advice for suppliers

A lack of capacity – in the form of staff skills and staff time – remains one of the biggest barriers to participation in procurement. Some research participants noted that the last two years have been particularly challenging in this respect, with the restrictions resulting from the pandemic.

In Chapter Two, we described the range of support mechanisms that third sector organisations and new private businesses have engaged with in recent years. This included, but was not limited to, SDP, P4P and Just Enterprise. Not only is the support on offer well-used, but the feedback also indicates that it is useful. Taken from the survey responses, Figure 17 shows that 20 (87%) respondents who had accessed training and support (and who had recently bid for a public contract) had found it either ‘quite’ or ‘very’ helpful. This tallies with what interviewees told us.

Among organisations responding to our survey that do not currently bid for public sector contracts but had accessed procurement-related training or advice, five out of seven organisations (71%) had found the support ‘very’ helpful or ‘quite’ helpful.

“In the past six months we have used the Supplier Development Programme a lot. It has been excellent.” (New private business interviewee)

“Clear training regards cradle to grave of the procurement process is urgently needed for third sector small organisations.” (Third sector survey respondent)

Research participants valued the advice they were given through these support mechanisms and had found it helpful in developing bids. A few felt that the current support offering was too generic and that more tailored, intense support would be more beneficial.

Some organisations are making big strides in developing their capacity to engage with public procurement. Others, however, need more help than is currently available. In order to facilitate better access to public contracts, it is vital that capacity continues to be built and providing the right kind of support to organisations is central to this.

There remains a need for support that is more tailored to individual organisations’ needs. A few participants stressed that the support required was of a practical nature. One third sector organisation described the type of support they need as “Somebody sitting down next to me while I prepare the bid, highlighting where I am going wrong, and helping me to get all of the policies in place that I need to address the requirements of the tender.”

“Have someone that can support organisations individually with the bid, i.e. take on the legwork. Advice and training is good but most SMEs do not have the staffing capacity or capability to undertake this.” (New private business survey respondent)

In addition, some organisations remain unaware of the support that is available and are not accessing it. Twenty per cent of organisations that had bid for public contracts in the past five years – and who had completed our survey – had not accessed any form of support for tender development (see Figure 11), and 69% of organisations that do not currently bid for public sector contracts had not engaged with any training, support or advice (see Figure 12). It is unclear whether this was due to a lack of awareness of opportunities, but continued awareness raising of these support mechanisms will remain important.

Strong relationships between buyers and suppliers

All of the key stakeholders consulted during the research, and many of the new businesses and third sector organisations that participated in the research, emphasised the importance of strong relationships between buyers and suppliers. This was seen as crucial to ensuring that all potential suppliers were aware of tender opportunities; but additionally, it was considered key to ensuring that procurement achieves the best outcome for individuals.

“Stronger relationships between buyers and suppliers [are]] needed. They need to invite the supplier community in annually. We also need more transparency from buyers about what they’re doing – they need to put more detail into their annual procurement reports.” (Stakeholder)

“Get local authority officers and procurement officers together to ensure collaborative commissioning processes.” (Stakeholder)

“There needs to be more equitable partnership working and involvement of our sector in service design and commissioning.” (Third sector survey respondent)

“We need increased engagement with local social enterprises to enable social enterprises to be aware of, bid for and secure contracts/sub-contracts.”

A risk–averse procurement culture was considered to be the main barrier to this happening.

“There is too much risk aversion – they need to have more conversations with suppliers.” (Stakeholder)

“Procurers need to be risk-pragmatic and use all of the tools available to them. Purpose over process!” (Stakeholder)

A few research participants noted the importance of different parts of the public sector joining up to improve procurement – in other words, of having strong working relationships within and across buying organisations themselves. This related to Scottish Government’s work with local public bodies, such as local authorities, but also between different departments within organisations.

“The notion that procurement sits separately in an organisation has to be gotten rid of. Procurement departments need to be involved earlier in the process.” (Stakeholder)

“The procurement policy team in Scottish Government are doing everything they can to make improvements but it has to trickle down to implementation of changes at local level. We need to make bigger strides.” (Stakeholder)

Lotting of contracts

As highlighted in the previous chapter, insufficient lotting of contracts has a significant impact on organisations’ (especially smaller organisations’) ability to bid for public contracts. As previously noted, lotting contracts also has benefits for the buyer – by spreading risk across a number of contracts and by creating greater levels of competition.

We heard a number of examples in a range of sectors of where lotting is vital. In the food sector, for example, lotting seemed to be a particularly important enabler to bidding for public contracts – one participant from that sector explained that if a supplier only supplies one type of dairy product, then it is hard to bid to some of the relevant frameworks as they rarely break down contracts to individual product level. The result is that small suppliers go straight to market themselves instead. This suggests that the public sector is missing out on opportunities to work with potentially high quality, local producers.

A number of third sector organisations and new private businesses we interviewed described some contracts they had been involved in which had been split into geographic lots, and also contracts that involved the supply of products only (separate to distribution) which they noted were more attractive to smaller organisations.

It is clear that the size and breadth of contracts is a barrier to some organisations participating in public procurement, and more lotting of contracts is an important enabler in making procurement more inclusive.

Effective use of Quick Quotes and Framework Agreements

The Quick Quotes system, which involves a smaller number of organisations being invited to tender for a contract and can be used to procure goods and services below £50,000 (excluding VAT), is already frequently used by buyers to procure low-value goods and services. Quick Quotes can be an effective way of ensuring bids are received from organisations that have the relevant track record in delivering similar work. It can also increase the chances of success for organisations bidding, since they may be bidding against a smaller number of organisations compared with an open tender situation.

In Chapter Two, we described how, for many third sector organisations and new private businesses, the Quick Quotes process was easier compared with open tender processes. We explored participants’ views on Quick Quotes in more detail during the interviews, where the findings were again positive. Some research participants had positive experiences of Quick Quotes and were keen to see this system being used more regularly.

“We do some Quick Quotes from local authorities. They are fairly straightforward and our success rate on these is good.” (New private business interviewee)

“I would like more opportunities for Quick Quotes. They have given me great client experiences.” (New private business interviewee)

Framework Agreements are another effective way of reducing the burden of continual bidding for individual contracts. They enable a buying organisation to have a pool of suitable contractors to work with across a range of related contracts. Again, we heard positive stories about organisations’ experiences of being on frameworks.

When Quick Quotes and Framework Agreements are used properly they are a clear enabler to improving access to procurement.

“There is definitely more lotting of contracts and Quick Quotes than previously but the public sector could be doing a lot more to ease access for SMEs.” (Stakeholder)

“There is a clear reputational benefit for an organisation if you are on a framework.” (New private business interviewee)

Standardised and streamlined procurement solutions

Many research participants noted the value of having centralised procurement solutions such as PCS and PCS-Tender in place and highlighted that these procurement solutions could be streamlined in order to maximise value.

Most research participants were aware of PCS and PCS--Tender and were frustrated that they were not currently user-friendly or designed in a way to minimise the amount of information requested for individual procurements. As reported earlier in this report, feedback about the usability of these systems was overwhelmingly negative and considered to be a major barrier to participating in procurement in Scotland. Improving the accessibility and awareness of procurement portals was considered to be a crucial component of improving access to public procurement.

Relevant and timely feedback

Feedback provided in the case of unsuccessful bids was identified as a further enabler to improving access to procurement. It supports organisations to understand why they have not been successful and improve the quality of their bids in future. It is important that public bodies provide this feedback quickly, and that sufficient detail is provided for this to be meaningful.

Some research participants commented that the quality of feedback they had received was very variable but that when it was good quality it was a helpful and very important tool in improving their tender submissions in future.

Independent appeals process for lower value contracts

A number of research participants highlighted the importance of transparency in relation to decision making, and, linked to this, noted the absence of an effective means of appealing decisions taken within public procurement. An independent appeals process was considered by these organisations to be an important component of a robust procurement system.

While legal action can be taken in relation to higher value contracts, the process for raising concerns about procurement of lower value contracts is weak. Currently, the main form of recourse is to raise concerns with the client commissioning the work – which research participants noted was inappropriate and could lead to an organisation being disadvantaged within the procurement process. A few were aware of the Single Point of Enquiry within Scottish Government but this was described by those who were familiar with it as lacking in authority and too limited in its remit. Accountability should be a key tenet of a robust public procurement system and making sure that there is an effective appeals process in place was considered to be important going forward.

Other improvements that would support better access to public procurement

In addition to the enablers outlined above, research participants made a range of other suggestions about improvements that could be made to the public procurement system to increase access for third sector organisations and new businesses. These included having longer contracts to give bidding organisations financial security, the ability to build capacity, and reduce the burden of having to frequently re-bid for contracts.

Some interviewees gave examples of one or two areas which do issue four- or seven-year contracts. One organisation, for example, reported that one local authority is currently considering awarding a 10-year contract in the area of social care. These were seen as really positive changes that organisations would welcome becoming more widespread.

Other suggestions included:

• increased opportunities for social enterprises within extended supply chains and sub-contracts
• local authorities and other anchor institutions committing to a certain percentage of spend with social enterprises and/or third sector organisations
• separation of social enterprises and SMEs within contracts to create transparency regarding the percentage of spend that goes to asset-locked organisations (which must retain their assets to be used for the community purposes for which they were formed) and how much goes to private businesses
• implementing regional food hubs
• disseminating the message that the public sector wants to work with local suppliers (especially in the food sector)
• change in payment patterns – some organisations can only participate in procurement if contracts allow for upfront payments, although given current public sector finance policy this may be challenging to address.