Scottish Government procurement: annual report 2021 to 2022

1. Introduction

1.1 Background

This report provides an overview of Scottish Government procurement activity during the financial year 2021 to 2022. It reflects our performance as a contracting authority and includes reference to some of the broader activities we undertake in leading and delivering procurement policy and capability across the Scottish public sector.

The Procurement Reform (Scotland) Act 2014 forms part of the public procurement legislation which governs how Scottish public bodies buy their goods, works and services. It allows us to maximise the economic benefit brought to Scotland through effective and efficient public procurement activity. The Act requires public bodies to publish procurement strategies to set out how they intend to carry out their regulated procurements and publish Annual Procurement Reports which describe how their procurement activities have complied with these strategies.

Annually, we review our Procurement Strategy to make sure it remains relevant and fit for purpose. This Annual Report demonstrates our delivery against the commitments set out in that strategy for the period 1 April 2021 to 31 March 2022, where we said we would:

a) provide summary information on regulated procurements we have completed during the period;

b) review whether those procurements kept to our strategy; and

c) provide a summary of regulated procurement we expect to begin in the next two financial years.

Our public sector procurement ambitions are reflected in our good for outcomes. These underpin public procurement in Scotland, that we believe will deliver a Just Transition to a net zero economy and society, embedding Fair Work First (including the real Living Wage), climate, local economic considerations and innovation in to more contracts. The contents of this report are structured around those outcomes, setting out the importance of Scottish public sector procurement in delivering economic growth in a manner that is:

• Good for businesses and their employees
• Good for society
• Good for places and communities
• Open and connected.

We work together with the public, private and third sectors to deliver maximum value through public procurement activity. This report focuses specifically on Scottish Government core activity and national collaborative contracts and frameworks, as well as our procurement and commercial policy function, and our eCommerce, Management Information and procurement best practice function.

We buy for the wider public sector in Scotland and provide procurement support to Scottish Government agencies and Non-Departmental Public Bodies (NDPBs). Our contracting activity covers four main areas (below):

• Scottish Government (SG) core contracts: for SG use only
• Central Government Agencies and NDPBs: non-collaborative contracts placed on behalf of individual public bodies in the Scottish central government family
• Sectoral collaborative frameworks: let by the SG for use across the central government family of organisations including agencies and NDPBs
• National collaborative contracts/ frameworks: provide framework agreements and contracts for commonly purchased goods, services, utilities and works which are used across the public sector.

Strategic Drivers

Our key priorities for procurement across the public sector are enshrined in the sustainable procurement duty which was outlined in the Procurement Reform (Scotland) Act 2014, and are underpinned by the National Performance Framework.

These priorities are centred on creating a more successful country, with opportunities for all of Scotland to flourish, through increasing sustainable and inclusive economic growth. They align with Scotland's National Strategy for Economic Transformation (NSET) and the annual Programme for Government which sets out our plan for policy delivery and legislation each year.

The sustainable procurement duty is supported by tools which include the National Outcomes and Indicators and provides a structured approach to what we procure. The tools help public bodies identify opportunities to include economic, social and environmental considerations in their contracts and show how procurement activity contributes to the National Outcomes and, in turn, to NSET.

A set of 7 Public Procurement Priorities were published in spring 2021 for all Heads of Procurement across Scotland. This was to encourage a collective focus and consistent approach by public sector bodies to support the delivery of a robust, sustainable, inclusive, economy and respond to the challenges of the climate emergency, EU exit and Covid-19.

The priorities were created and published by the Public Procurement Group – the cross-sector leadership group responsible for directing and influencing public procurement strategy in Scotland – building on the original 5 priorities created in late 2020, updated to reflect the new, additional priorities.

The priorities (see Annex C) – leadership and visibility, sustainable economic recovery, supply chain resilience, sustainability, climate, people and systems – are interwoven with the commitments set out by government in its national framework, and reflect procurement's four good for outcomes. The Scottish Government consulted Heads of Procurement towards the end of 2021 to measure progress against and provide a snapshot of progress against the priorities, and inform and influence strategic discussion.

External Impacts

The reporting period was again dominated by the significant challenge of responding to the pandemic, and economic conditions rapidly deteriorated at the start of 2022 at both a global and domestic level. The war in Ukraine interrupted the gradual recovery from Covid-19, causing an energy supply and inflationary shock that pushed the economy toward recession.

In response to the war in Ukraine, we conducted risk assessments for more than 130 Scottish Government-led collaborative frameworks and a number of other high risk/value SG-led contracts (with a total value of more than £5 billion), and assisted with the settlement of Ukrainian refugees in Scotland. We were able to at least partly mitigate increases to public bodies' energy bills as a result of our long-standing process for buying electricity and gas in tranches well in advance of consumption.

1.2 Methodology

This report draws on Scottish Government data and management information (MI) as well as two other primary sources:

• Public Contracts Scotland portal: The Public Contracts Scotland (PCS) service provides a national advertising portal for Scottish public bodies to post contract notices and awards; prime contractors on public sector contracts can also advertise sub-contract opportunities. It is mandatory for all Scottish public sector organisations to use PCS to advertise all regulated procurements (£50k and over for goods/services; £2m and over for works) and their subsequent awards; in addition, many organisations use PCS for direct requests for quotations (Quick Quotes) for lower value, non-regulated procurements.

• Scottish Procurement Information Hub: Public procurement spend data is available through the Scottish Procurement Information Hub ('the Hub'). Each year, the Scottish Government requests raw accounts payable data from bodies across the Scottish public sector. This data is enhanced by a third-party supplier using publicly available data in order to classify suppliers by size, location, area of business, charity status and other characteristics, before it is uploaded to the Hub where it is made available to participating public bodies for analysis.^[1]

Where relevant, information is supplemented by evidence from other sources – for example, from the Public Procurement Priorities report (published April 2022), the (external) Supplier Development Programme, and from other research carried out by the Scottish Government during the year.

It is important to avoid making direct comparisons between data from different sources, owing to the considerable differences in the scope and data collection methods that apply to each source. As such, the sources have not been used to draw any direct comparisons but, rather, they have been combined to provide a comprehensive overview of Scottish Government procurement activity in reporting year 2021 to 2022.