Scottish Government procurement annual report: 2018

6. Delivery of policies

The Scottish public sector spends over £11 billion each year buying goods, services and works. This is a significant sum and it is right that people expect it to be spent in a way that aims to deliver the most benefits possible to society. Our Procurement Strategy set out our general policies and also how we will monitor those policies.

Impact of Scottish Government policy

We updated the Procurement Journey. This is our online source of step-by-step guidance aimed at buyers across the whole of the Scottish public sector. It is tailored to the value and risk of a particular procurement exercise.

It has been widely recognised as helpful by those using it in Scotland, across the UK, and also in other countries. It is continually updated with changes in legislation, policy and best practice. For example, it was updated in this reporting period with guidance on care and support services as well as speculative frameworks, demand management and dynamic purchasing systems.

As part of our ongoing support for the Scottish public sector we continued to provide training, advice and support on policy and practice. We successfully presented at events for suppliers, such as the Supplier Development Programme's annual Meet the Buyer Event, and held workshops for buyers across the country which became very popular with good engagement across all sectors.

We provide guidance to suppliers on how to bid for public sector goods and services contracts via the Supplier Journey and during the reporting period gathered supplier feedback on the Supplier Journey content and structure. Our structured supplier questionnaire received substantial feedback with 2,674 responses from micro, SME and large organisations, including those which had not bid for public contracts as well as those which had. As a result of this feedback and engagement with the Supplier Development Programme and Procurement Supplier Group, the Supplier Journey was improved and tested over the period, with the formal re-launch published in June 2018.

6.1. Applying community benefit requirements in our contracts

Our Procurement Strategy set out our intention to consider the opportunities to include community benefit requirements in the development phase of all regulated procurements, and to include them, either on a contractual or voluntary basis, wherever there is an opportunity to benefit the community.

Monitoring

We said in our Procurement Strategy that:

• For contracts of £4 million or above, we will set out details of the required community benefit in the contract notice. If we do not think it is appropriate to include a community benefit clause, the contract notice will include our reasons why.
• We will collect information about community benefits delivered for any regulated contracts.

Delivery

The Procurement Reform (Scotland) Act 2014 requires us to consider community benefits in procurements of £4 million or above and include them where relevant and proportionate to the contract.

During the reporting period, we awarded eight contracts at a value of £221 million which included community and social benefits.

We also considered community benefits in all our regulated contracts and, as a result, currently have 30 live contracts valued at around £3 billion within which community benefits are now embedded.

Examples of community benefits secured from our contracts are detailed below.

Work First Scotland

Our suppliers, Remploy, Shaw Trust and Momentum committed to delivering the following community benefits.

Shaw Trust

• 13 new jobs filled by disabled or disadvantaged job seekers.

Remploy

• Six new jobs.
• Three jobs to be filled by people from priority groups.
• Four apprentices recruited to deliver the contract.
• Two work placements for school pupils, college or university students.
• Two work placements for people from priority groups.

Momentum

• 36 staff recruited to deliver the contract.
• Three work placements for people from priority groups.

Next Generation Broadband

As well as supporting the Scottish Government's priority on investment, as part of our approach to this procurement, we set out in our market engagement paper that we expected the contract to encourage:

• The targeted recruitment and training of the long-term unemployed and those furthest from the job market.
• Educational benefits to communities, including working closely with educational establishments and community groups to maximise educational opportunities that arise through performance of the agreement, increasing awareness, skills and digital accessibility.
• Awareness of opportunities, either in a prime or sub-contracting role, for SMEs and social enterprises.

Warmer Homes Scotland

This contract has been running since September 2015 and it continues to deliver community benefits including 436 new employees, 22 apprenticeships, 55 work placements for pupils in education and 527 qualifications which have been achieved through work-related training.

Scotland's Baby Box

Scotland's Baby Box is aimed at tackling inequality and promoting infant health. Our strategy for the procurement was specifically designed to support this ambition while creating sustainable employment. Our contract has created 26 new jobs in a number of roles including managerial positions, data processors, call-centre operatives and warehousing personnel. Six of these jobs were filled by Modern Apprentices. Two work experience placements were also provided.

Our commitment to securing community benefits does not end when a contract is awarded and community benefits have also been delivered through the ongoing management of existing contracts. Two examples are provided below with other examples of community benefits delivered detailed in Annex B.

Scotland's Baby Box – From Babies with Love

From Babies with Love is a multiple award-winning social enterprise baby brand that donates 100% of its profits to orphaned and abandoned children worldwide. As a successful supplier on the Baby Box project, From Babies with Love has doubled the number of children receiving their support.

Publishing Print Design and Associated Service framework ( PPDAS)

We worked closely with our prime supplier on the £14.6 million PPDAS Framework to continue to drive added value through its supply chain over the life of the contract, which included sub-contracted spend across 114 SME suppliers and the delivery of a range of community benefits. During the reporting period, our supplier worked with Skills Development Scotland to establish a programme of Modern Apprentice intakes through diploma level Modern Apprenticeship schemes and they operated a work placement and summer undergraduate placement scheme. Examples of some of the wider community benefits included:

• Leavers books for a primary school in Leith.
• Tomorrow's People and the Lifeboat Fund (Design and Print support).
• Play As One Scotland (disabled children focus).
• Fathers Network Scotland (support and empower parenting skills).
• Zaafi, Scottish Borders (support to bereaved parents).
• Breakfast Club funding for a primary school in Edinburgh.
• Printed material for a primary school in Edinburgh.
• Ups and Downs (Printed Material for Down's Syndrome theatre group).

Impact of Scottish Government policy During the reporting period we worked with a range of other public bodies to deliver community benefits in their contracts. We also worked with the Construction Industry Training Board ( CITB), which provides support to public bodies who wish to secure community benefits in construction contracts.

Our shared services team, acting on behalf of other organisations, included community benefit requirements in a further three procurement exercises, details of which will be available in the respective organisations' Annual Procurement Report:

• Provision of Hard Facilities Management Services for Scottish Police Authority and Scottish Fire and Rescue Service.
• Provision of Soft Facilities Management for Royal Botanical Gardens Edinburgh.
• Provision of Illuminated Trail for Royal Botanical Gardens Edinburgh.

6.2. Consulting and involving those affected by our procurements

Our Procurement Strategy set out our approach to consulting and involving those affected by our procurements. This approach includes regular meetings with formal representatives of different groups as well as tailored consultation about specific contracts.

Monitoring

We indicated in our Strategy that we would record any complaints about a failure to consult and report on our performance, any conclusions reached, and any measures taken in response to complaints.

Delivery

We did not record any complaints arising from our approach to consultations during the reporting period.

Where appropriate we work with people who use our services, potential suppliers and others to help us design procurements. This can vary from market research to supplier engagement days or the design and piloting of services. When developing our contracting strategies and approaches, we involve people who use the services or their representatives through User Intelligence Groups.

Interpreting, Translation, and Transcription Services

Our 2017 Interpreting, Translation, and Transcription Services framework provides access to public services for those whose first language is not English and who would otherwise be excluded from using those public services.

We embarked on a broad engagement plan consulting with, amongst others, people who use services, business, courts, equality and human rights representatives. We used existing research into perceived barriers to ethnic minority communities' participation in Scottish society and engaged cyber security professionals to address concerns about confidentiality and data security. Meetings took place with current and prospective suppliers to gather their experiences of the current service and their ideas for service improvement. The experiences of citizens who have benefited from the services was gathered as was the knowledge of the interpreters themselves for consideration in the re-let of this contract.

Our Prior Information Notice began our formal consultation with the market through a Request for Information exercise and a similar consultation ran in tandem with public bodies.

The views of the market and stakeholders informed the tender documents for the framework.

We collaborate closely with others across the public and private sectors to inform, develop and test national policies, processes, toolkits and practices to ensure that they are fit for purpose and underpin the ambition set out in our Procurement Strategy.

Impact of Scottish Government policy

We put a legal framework in place which requires public bodies to consider how they consult and engage those affected by their procurements. We recommend that they follow similar consultation strategies when buying goods and services of their own and we share our documentation and knowledge and experience with them.

6.3. Fair Work practices, including paying at least the real Living Wage to people involved in delivering our contracts

We believe that Fair Work practices are central to improving business, society and the lives of individuals and their families. Our policy on the payment of the real Living Wage to those who work on our public contracts is influenced by our belief that those organisations which adopt Fair Work practices, including the real Living Wage, are likely to deliver a higher quality of service. For example those which have a diverse workforce and whose staff are well rewarded, well motivated, well led and who have appropriate opportunities for training and skills development.

Monitoring

In our Strategy we stated that if a commitment has been made in a tender to pay the Living Wage, we would record this in the contract award notice, it would form part of the contract, and we would monitor it through our contract and supplier management processes. We also stated that 'Information on which of our contractors pay the real Living Wage will be gathered centrally and we will include it in the annual report of our performance against this Strategy'.

When we refer to "the real Living Wage" we mean the hourly rate set independently and updated annually by the Living Wage Foundation.

Delivery

Where Fair Work practices were relevant to the contract, we included this as an award criterion to be considered as part of the tender evaluation.

The Scottish Government is an accredited Living Wage Employer and we pay at least the real Living Wage to all direct employees and to all contracted staff who regularly provide services on our sites.

We secured a range of Fair Work practices in a number of our significant contracts, improving pay and conditions for those working in our supply chain.

Since the introduction of the Statutory Guidance on Addressing Fair Work Practices, including the Living Wage, in Procurement (Fair Work Statutory Guidance), the real Living Wage is paid to workers engaged in the delivery of 94% of our contracts.

It is now our normal practice to include Fair Work provisions in our invitations to tender, where relevant, including questions which are scored along with other relevant criteria when we do tender evaluations.

We also promoted the Scottish Business Pledge through procurement.

Ministers wrote to over 300 Scottish Government suppliers in March 2018 asking them to make a commitment to the Business Pledge and we now include sign-up to this as a standard agenda item at Contract and Supplier Management meetings.

Work is also underway to promote the Business Pledge to suppliers in procurement systems and tools.

Examples of those adopting Fair Work Practices include:

Fair Start Scotland

Fair Start Scotland committed to a number of Fair Work policies and community benefits in addition to paying the real Living Wage, including:

• No use of zero hours contracts or umbrella companies.
• Commitment to Modern Apprenticeships and development of the young workforce.
• Supporting the Scottish Business Pledge.
• Targeting priority groups for recruitment and training.

Marketing Services

Of the 23 SME suppliers appointed to the framework, 21 currently pay at least the real Living Wage and 14 have signed the Scottish Business Pledge.

Digital Services Dynamic Purchasing System ( DPS)

The Digital Services DPS has over 260 suppliers, of which over 80% are SMEs. Over 95% committed to paying at least the real Living Wage.

Water and Waste Water Billing Services

On winning the national contract for Water Billing Services, our contractor signed and committed to the Scottish Business Pledge. Its efforts to meet the Pledge includes a commitment to 'Invest in Youth' which is demonstrated through its ongoing employment of Modern Apprentices.

Warmer Homes Scotland

As a result of winning the tender for the Scottish Government's national fuel poverty scheme, Warmer Homes Scotland, Warmworks Scotland LLP committed to paying all employees working on the contract, including those working in its supply chain, the real Living Wage and went on to become an accredited Living Wage Employer and a signatory of the Scottish Business Pledge. Each of the contractors within the Warmwork's supply chain is committed to paying their staff the real Living Wage. To date, 32 individuals have received a pay rise as a direct result of this contract.

Impact of Scottish Government policy

The Scottish Government supports the work of the Fair Work Convention, whose vision is that by 2025, people in Scotland will have a world-leading working life where Fair Work drives success, wellbeing and prosperity for individuals, businesses, organisations and society.

We lead by example. We fully support the Living Wage campaign and were the first Government in the UK to adopt the real Living Wage in our pay policy.

6.4. Making sure our contractors and sub-contractors keep to the Health and Safety at Work Act 1974 and any provision made under that Act

Our aim is to be a leading employer in the delivery of health and safety and to ensure the wellbeing of our staff and those that deliver our contracts.

Our Procurement Strategy set out that it is a standard condition of our contracts that the contractor must keep to all laws that apply, as well as the requirements of regulatory organisations and good industry practice.

It also explained that this includes health and safety laws, and that contractors must keep to our own health safety standards when they are on our premises.

Monitoring

We stated in our Procurement Strategy that we would gather information through our standard contract management arrangements, about health and safety incidents relating to delivery of our contracts and measures taken.

Delivery

During this reporting period, there were no incidents that required to be reported to the Health and Safety Executive.

We developed standard reporting templates for monitoring health and safety incidents and these are being rolled out to all contract managers in the Scottish Government.

For those contractors working on our premises we meet monthly and review all relevant accident reports and any investigation findings.

Additionally, we encourage our catering and cleaning suppliers to use the in-house Contractor Safety Management System. This allows both suppliers and ourselves to check that sub-contractors have all the relevant security clearance, permits and qualifications.

6.5. Procuring fairly and ethically-traded goods and services

The sustainable procurement duty requires public bodies to consider how they can improve the economic, social and environmental wellbeing of their area, with a particular focus on reducing inequality, and to act in a way to secure these improvements.

This includes taking a robust approach in procurement processes to tackling criminal activity, including human trafficking and exploitation, modern slavery, corruption and fraud and also to promote positive practices. Respecting human rights, for example, can have business benefits such as enhancing reputation and brand value, increasing the customer base, attracting and retaining a diverse skilled workforce (which can in turn increase innovation and productivity) and reducing risk of court proceedings.

Our Procurement Strategy set out our policy that if fairly-traded goods and services are available to meet our requirements, we will consider how best to promote them. It also described how our standard terms and conditions allow us to end a contract if the contractor or a sub-contractor fails to keep to their legal duties in the areas of environmental, social or employment law when carrying out that contract.

We believe that those we contract with should adopt high standards of business ethics, this includes taking a robust approach to ensuring the goods and services are sourced fairly and ethically.

Monitoring

We stated in the Strategy that we would:

a) include a statement about the effectiveness of our selection procedures
b) keep a record of the value of fairly traded products bought and sold under our catering contract

Delivery

All invitations to tender issued over the reporting period included a provision to ensure that our supply chains are free from human trafficking and exploitation, including modern slavery, permitting us to terminate contracts with suppliers for breaches of social, environmental or labour law.

a) Effectiveness of our selection procedures.
We used sustainability tools to inform our commodity strategies, which helped us to identify opportunities and mitigate potential risks in all of our regulated procurements. We used targeted selection and award criteria relating to fairly and ethically traded supply chains where relevant for all regulated procurements.

Examples of those adopting fair and ethical trading considerations include:

Client Devices and Office Equipment Frameworks

When developing the strategy for the procurement of our national Client Devices and Office Equipment frameworks, which includes multi-functional devices ( MFDs), desktop, laptop and tablet personal computers, we recognised that there were a range of potential ethical risks in terms of working conditions that could occur in the global supply chain for these electronic products. As part of the criteria for delivering these contracts, we therefore required successful contractors to have comprehensive systems in place which demonstrated an ongoing and systematic approach to identifying and managing risks relating to labour standards, working conditions, and for example, the use of child labour in the supply chains. A separate balanced scorecard was developed with the successful contractors to monitor the areas of concerns and highlight risks and issues as soon as they have been identified. The approach taken to this procurement exercise, which also focussed on the end of life management of devices, energy and environmental management and packaging is outlined in a case study which has been featured in the European Commission's Green Public Procurement (GPP) News Alert for March.

b) Fair Trade products bought and sold under the catering contract.
The contract incorporates various fairly and ethically traded products, including tea and coffee purchased through the Scottish Government's contract for staff catering in its main buildings. Within the reporting period we actively worked with our supplier to maintain and increase:

• The quantity of local produce supplied, including Scotch beef and lamb.
• Menus based on:
  • Freshness and high nutritional value, using food in-season.
  • Free range and organic food.
  • Food produced according to recognised assurance schemes accredited to EU standard EN40511, e.g. Quality Meat Scotland, MSC, Red Tractor.
• Consideration of all stages of the life- cycle including sourcing, manufacturing and production, transportation, service delivery, re-use, recycling and disposal to minimise waste packaging, including:
  • Increasing the use of re-usable containers and/or recyclable packaging.
  • Delivering in bulk units and providing a take back service.
  • Provision of flexible and frequent delivery schedules.

Impact of Scottish Government policy

We continue to engage with a range of organisations on ethical procurement, including learning from practice across Europe, and working closely with stakeholders including the Equality and Human Rights Commission and the Scottish Fair Trade Forum.

6.6. Using contracts involving food to improve the health, wellbeing and education of communities in Scotland and promote the highest standards of animal welfare.

Our Procurement Strategy set out our belief that the way in which the public sector buys food and catering services can have major social, economic and environmental impacts. As an organisation, we seldom buy food directly, but we do use our catering contract to achieve a range of benefits. Our approach is to make sure that this keeps to government policies on healthy eating and nutrition, promoting fresh, seasonal, fairly traded and local produce and to UK buying standards. These standards take account of factors including, production, traceability, authenticity, origin, ethical trading, animal welfare, environmental standards and health and waste.

Monitoring

We monitor this requirement through contract management arrangements for our catering contract.

Delivery

The Scottish Government's catering contractor was re-accredited with the Soil Association's Food for Life Catering Mark Silver Award across the four main Scottish Government sites. The service provider also holds the Healthy Living Plus award within all of its Scottish Government restaurants. The Principles of the Catering Mark accreditation are:

• Fresh food you can trust.
• Menus free from controversial additives and artificial trans fats.
• Sourcing environmentally sustainable and ethical food.
• Food which meets or exceeds UK animal welfare standards.
• Making healthy eating easy.
• Compliance with national standards or guidelines on food and nutrition where these apply. Processes to make healthy eating easier for their customers, in line with public health priorities.
• Championing local produce and producers.
• Catering Mark holders champion local produce and local producers.

Impact of Scottish Government policy

Our national food and drink policy: Good Food Nation promotes buying healthy, fresh and environmentally sustainable food and catering. Existing guidance 'Catering for Change: Buying food sustainably in the public sector' is for use by public sector organisations when buying food or catering services. The welfare of farm animals reared for products used in food in our catering contract and other public contracts is generally safeguarded under legislation we have introduced to protect farm animals on farm and at slaughter. We are also working to increase the sourcing of Scottish products further through public sector contracts. Our Programme for Government outlines a number of commitments that put local sourcing at the heart of public sector supply chains. This includes expanding the Food for Life programme to increase the amount of locally sourced and produced food in Scotland's schools.

6.7. Paying invoices in 30 days or less to our contractors and sub-contractors

Our Procurement Strategy set out that it is a standard term of our contracts that we will pay valid invoices within 30 days, that any subcontract must contain a clause which says that subcontractors will be paid within 30 days, and that this clause must apply through the supply chain. It also explained that this clause must make clear that if a subcontractor believes that invoices are not being paid within 30 days, they can raise the issue directly with us. We also aim to pay as many valid invoices as possible within ten days.

Monitoring

Our Strategy indicated that through contract management arrangements we would monitor complaints from suppliers and subcontractors and take action if appropriate.

Delivery

During the reporting period we paid 99% of valid invoices within ten days, getting cash into the economy as quickly as possible.

We are working with contract managers to ensure that payments to suppliers and subcontractors are discussed and addressed through the contract management process.

Impact of Scottish Government policy

The construction sector in particular can suffer from late and extended payment terms from business to business. To help counter this, we encouraged the use of Project Bank Accounts. These are accounts out of which a public body can pay firms in the supply chain directly as well as making payments to the main contractor. By speeding up cash-flow Project Bank Accounts have the potential to transform the process and to ensure the ongoing solvency of businesses. This particularly applies to smaller firms at tiers two and three which are more vulnerable to the effects of late payments.

Public bodies covered by the Scottish Public Finance Manual need to include project bank accounts in their tender documents for building projects over £4.1 million and civil engineering projects over £10 million. The first public works projects to include project bank account requirements were advertised by public bodies on PCS during the period covered by this annual report (2017/18). Valued at around £375 million, these projects are expected to start on site from financial year 2018/19.