Scottish Government procurement annual report: 2019

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

During the reporting period 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 in other countries. It is continually updated with changes in legislation, policy and best practice.

During the reporting period we undertook a national survey and user-testing exercise to identify potential areas for improvement. Although almost 86% of respondents believed the Procurement Journey met their needs, a number of enhancements and improvements are scheduled for future implementation.

We continued to provide guidance to suppliers on how to bid for public sector goods and services contracts via the Supplier Journey. Following extensive engagement and feedback from suppliers, including SMEs, the new Supplier Journey was launched 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 we would:

• Consider the use of community benefits in the development of all our regulated procurements.
• For contracts in excess of £4 million set out details of the required community benefits in the appropriate Contract Notice.
• In our Contract Award Notices record where we expect contractors to deliver community benefits.
• Collect information about community benefits delivered under our regulated procurements.

Delivery

We considered community benefits in all our regulated contracts and during the reporting period awarded 13 contracts which specifically included community and social benefits.

As a result, we currently have 40 live contracts valued at around £1.5 billion within which community benefits are now embedded.

During the reporting period our contracts created 212 jobs and 41 apprenticeships, delivered 57 work placements for school pupils, college and university students, 52 work placements for priority groups and enabled almost 100 qualifications to be achieved through training.

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

Low Income Benefits Agile Service Delivery Contract

The Low Income Benefits Project aims to design, develop and implement processes and systems required to administer these benefits to eligible Scottish citizens.

A contract was awarded to IBM UK Limited to deliver services required for the project. One of the community benefit requirements was to provide educational support to schools and/or further education institutions. This could include activities such as, but not limited to career promotional talks, assistance with CV writing and career opportunities.

During the reporting period IBM delivered 110 hours of support to a total of 13 schools and priority groups throughout Scotland.

Warmer Homes Scotland

During the reporting period 3,800 Scottish households benefited from an installation under the Warmer Homes Scotland contract.

Under the Warmer Homes Scotland contract, Warmworks and its supply chain have so far delivered 488 new employees, 110 apprenticeships, 92 work placements and 1289 work-related training courses and qualifications.

As a result of winning the contract 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.

Social Programme Management Contract awarded to DXC

Under their contract to develop the social security core benefits platform to allow payment of devolved benefits, DXC Technology (DXC) has committed to create six apprenticeships with recruitment targeted within the 10% most deprived areas in Scotland. DXC also agreed to encourage applications from disabled or disadvantaged job-seekers through engagement with providers delivering the Fair Start Scotland programme.

At the end of the apprenticeship programme, an offer of continuous employment will be made by DXC.

APS Group (Scotland) Ltd

Our provider of Publishing, Print, Design & Associated Services, APS Group (Scotland) Ltd, is contractually bound to deliver a number of Community Benefits throughout the term of the new framework agreement (awarded August 2018). These Community Benefits include apprenticeships, work experience and a commitment to sub-contract a minimum of 50% of framework business to SMEs. APS currently has three Modern Apprentices in training and also has four permanent staff who were former Modern Apprentices.

APS’s business model (developed over a number of years working with the Scottish Government) is predicated on supporting the Scottish economy by keeping subcontracted work close to its core operations.

Currently APS works with 105 SMEs in Scotland (including two charities). In addition, APS supports (in total) 10 charities and schools.

Our ambition includes working in partnership with responsible suppliers and supply chains who are equally committed to our sustainable goals.

HP Inc

Our supplier of Mobile and Client Devices, HP Inc, are sponsors of the Digital Schools Award programme. This is a public-private initiative designed to support the digital learning and education of pupils in Scotland. The programme recognises, rewards and promotes a whole school approach to the effective use of digital technology in education. The successful collaboration between Scottish Government and Industry focuses on primary schools and encourages young people to become digitally aware and supported.

This is a key initiative in helping address the education and skills gap and directly assists in the delivery of the National Digital Strategy for investment and job creation. A key focus is the support of next generation learners towards next generation jobs utilising next generation skills and provides a roadmap for school improvement with independent validation. This is open to all primary schools at no cost and HP Inc’s role in the awards programme plays a significant role in promoting and building awareness of digital skills among young people in Scotland.

In May 2018 HP Inc co-hosted a Digital Schools award-giving ceremony in which 38 schools from across the country received their national digital-schools award for excellence in digital teaching and learning.

HP Inc has also worked in conjunction with schools to engage with S2 pupils to develop their understanding of the IT industry and identify the required skill sets to develop future career opportunities in this sector.

Konica Minolta

One of our Office Equipment suppliers, Konica Minolta, sponsored participation in the “F1 for Schools Challenge” Competition. Konica provided printing facilities and social media channels for an all-girl group of six S3/S4 pupils who qualified as Scottish champions and finalists in the competition.

The project focuses on STEM (science, technology, engineering and maths) subjects which form part of the Scottish Government’s Curriculum for Excellence. Its aim is to encourage young people to engage in these subjects, specifically targeting young female students; an area in which there still remains a significant deficit.

Other examples of Community Benefits are described below:

Capital Document Solutions – Edinburgh based SME, Capital Document Solutions, created seven Full Time Equivalent (FTE) jobs to service their National Framework for Office Equipment. Capital has also employed three new full-time apprentices who are undertaking SVQ qualifications in electronic maintenance.

XMA – Mission to Mars Events – XMA delivered a free coding/training event for educators and school leaders. The Mission to Mars initiative is aimed at helping to identify the links in learning and coding from primary into secondary schools, and then into Higher and Further Education and employment, focusing on the gap (now and in the future) in skilled workers within the programming sector to help with attainment and future employability. XMA also created nine new FTE jobs including new trainers hired to deliver Apple Professional Learning in support of iPad devices supplied under Scottish Procurement’s National Framework for Tablet Client Devices.

Capito – During the reporting period, Scottish based SME Capito has grown its warehouse and logistics team by a permanent headcount of two, to deliver services in support of Scottish Procurement’s Client Device frameworks. Capito also participates in school work experience placement programmes offering work placement opportunities to students. Each year up to 20 pupils from a number of schools undertake their work experience at Capito.

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 two procurement exercises, details of which will be available in the respective organisations’ Annual Procurement Report:

• Provision of Tourism Webinars for Highlands and Islands Enterprise.
• Provision of Benchmark Maintenance for Royal Botanical Gardens Edinburgh. The supplier is also a supported businesses.

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. 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.

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.

Brexit: Operational and Regulatory Readiness

During the reporting period we undertook an exercise to identify and understand the level of potential Brexit impacts on Scottish Government led contracts and frameworks.

Consideration was given to how best to address and mitigate these impacts and dialogue was undertaken with key suppliers and stakeholders across the public and private sectors on Brexit implications and preparedness – particularly in the event of a no-deal Brexit.

We also published the Scottish Government “Ready for Brexit” document for use by all organisations interested in doing business with the public sector through our Public Contracts Scotland web portal and promoted this in our dialogue with suppliers.

To ensure continuity in the application of procurement legislation post-Brexit, we created the Public Procurement etc. (Scotland) (Amendment) (EU Exit) Regulations 2019. These regulations amend existing procurement legislation to make sure that it will continue to work after we leave the EU. They will come into effect on the day of the UK’s departure from the EU in the event of a no-deal, and are designed to minimise the impact of regulatory change on public procurement.

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

In addition to supporting families and our aspirations on reducing the poverty divide, Fair Work can drive productivity, release untapped potential and inspire innovation – all of which add value to jobs and to business and in turn create stronger, more sustainable and inclusive growth. We believe that adopting such practices can make businesses more competitive by improving talent attraction, reducing staff turnover and absenteeism while improving motivation and workforce engagement. We want Scotland to be a world-leading Fair Work Nation by 2025.

Monitoring

In our strategy we stated that if a commitment has been made in a tender to pay the Real 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.

Ninety-three percent of our suppliers with current live contracts have committed to paying at least the Real Living Wage.

It is our normal practice to include Fair Work provisions in our invitations to tender, where appropriate, and we consider these along with other relevant criteria as part of the tender evaluation process.

Impact of Scottish Government policy

In February 2019 we published the Fair Work Action Plan, which describes the actions we are is taking, including a focus on Fair Work First, which means an investment in skills and training, no inappropriate use of zero hours contracts, action on gender pay, genuine workforce engagement, including with trade unions, and payment of the Real Living Wage.

Through Fair Work First, the Scottish Government is committed to using its financial power, including the power of procurement, to make Fair Work the norm. We have made a clear commitment, in our Economic Action Plan, that by the end of this Parliament (spring 2021), wherever it is appropriate to do so, we will extend the range of Scottish Government and public sector contracts that Fair Work criteria will apply to. We are committed to doing this in partnership with stakeholders to develop a phased approach to implementation which will take account of the economic context, including the impact of EU exit.

Early Learning and Childcare Workers

The Scottish Government and local authorities are committed to the near doubling of the funded Early Learning and Childcare (ELC) entitlement, for all three and four year olds and eligible two year olds, from 600 to 1140 hours per year from August 2020. Fair Work is a key aspect of the new National Standard that will be introduced in August 2020, which all providers delivering funded ELC will have to meet. This includes a commitment to pay all childcare workers delivering the funded early learning and childcare entitlement the Real Living Wage from August 2020. During this reporting period, Technical Guidance was developed ‘Funding follows the child and the national standard for early learning and childcare providers: transition options guidance on contracting’ , to assist local authorities deliver on this commitment when procuring these services.

Adult Social Care Workers

We continue to provide funding for councils to commission care services that pay adult social care workers the real Living Wage. This includes resource over the last two years to cover the extension of the real Living Wage to sleepover hours in 2018/19 which is part of our approach to tackle recruitment and retention in the sector, and raise the status of social care as a profession. We have worked with the Living Wage in Care Implementation Group, alongside COSLA, to agree updated Guidance which supports local authorities and providers to implement the continued commitment to pay the real Living Wage as part of a positive approach to fair work practices, including through procurement processes.

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.

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 Policy 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 duty aligns with Scotland’s purpose to focus on creating a more successful country, with opportunities for all of Scotland to flourish through increased wellbeing, and sustainable and inclusive economic growth.

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; and

b) keep a record of the value of fairly traded products bought and sold under our catering contract.

Delivery

The national sustainable procurement tools and supporting guidance were revised in September 2018 to ensure they take account of human trafficking considerations, including checking whether existing contractors have published a Slavery and Human Trafficking Statement. We used the updated tools and guidance to undertake an assurance review of our contracts to establish ethical risk and identify mitigating action. We have also checked that all relevant contracted suppliers have a Slavery and Human Trafficking Statement.

All Invitations to Tender issued during 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 employment 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 also used targeted selection and award criteria relating to fairly and ethically traded supply chains where relevant for all regulated procurements.

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 which during the reporting period accounted for 100% of our requirements;
• 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; and
• consideration of all stages of the life-cycle including sourcing, manufacturing and production, transportation, service delivery, reuse, recycling and disposal to minimise waste packaging, including:
  • increasing the use of reusable containers and/or recyclable packaging;
  • delivering in bulk units and providing a take back service; and
  • 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 best practice used by others across Europe, and working closely with stakeholders such as the Equality and Human Rights Commission and the Scottish Fair Trade Forum (SFTF).

This helped us to update our sustainable procurement tools and guidance to ensure they take account of human rights considerations, including the UN Guiding Principles on human trafficking and exploitation/modern slavery.

Work with SFTF concluded with publication of sustainable procurement case studies on taking an ethical approach .

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 positive 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 continues to promote buying healthy, fresh and environmentally sustainable food and catering. Existing guidance ‘Catering for Change: Buying food sustainably in the public sector’ can also be used by public sector organisations when buying food or catering services.

The welfare of farm animals, reared for products used in food provided in our catering contract and other public contracts, is safeguarded under legislation we have introduced. In most cases this is under regulations that specifically 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 sub-contract must contain a clause which says that sub-contractors 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 sub-contractor 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 sub-contractors 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 sub-contractors 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 introduced the use of Project Bank Accounts. These are accounts from which a public body can pay firms in the supply chain directly as well as making payments to the main contractor. Project Bank Accounts improve cash-flow and help businesses stay solvent, particularly smaller firms which can be more vulnerable to the effects of late payments

We announced on 19 February 2019 that we had delivered on our Economic Action Plan pledge to increase the number of Scottish Government construction contracts to which Project Bank Accounts can be applied and urged others to follow our lead. As a result many more small businesses in our construction industry can benefit from prompt and protected payment.

Public bodies covered by the Scottish Public Finance Manual now need to include Project Bank Accounts in their tender documents for building projects over £2 million and civil engineering projects over £5 million.