Scottish Government procurement: annual report 2020 to 2021

3. Key priorities

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 are underpinned by Scotland's Economic Strategy and our annual Programme for Government which sets out our plan for policy delivery and legislation over the next 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 Scotland's Economic Strategy.

Figure 2: Strategic drivers for our work

• Procurement Reform (Scotland) Act 2014
• Programme for Government
• National Performance Framework
• Four Outcomes
• Climate Change Scotland (Amendment Order 2020)
• Sustainable Procurement Duty
• Scottish Government Procurement Strategy
• Scotland's Economic Strategy

To meet our obligations under the National Priorities, the Scottish Government develops sourcing strategies for each of our procurement projects worth £50,000 or more. When writing these, we use the Sustainability Test and where appropriate the Sustainable Public Procurement Prioritisation Tool (SPPPT).

We also track our contribution to the Scottish Government's purpose and priorities which forms part of our compliance with the sustainable procurement duty. Key priorities are defined in Scotland's Economic Strategy as:

• promoting inclusive growth and creating opportunity through a fair and inclusive jobs market and regional cohesion;
• investment in our people and our infrastructure in a sustainable way;
• fostering a culture of innovation and research and development; and
• promoting Scotland on the international stage to boost our trade and investment, influence and networks.

3.1 Inclusive growth

We define inclusive growth as 'growth that combines increased prosperity with tackling inequality; that creates opportunities for all and distributes the dividends of increased prosperity fairly'.

The importance of public procurement in driving such growth is all the more relevant in the context of our recovery from the COVID-19 pandemic. Through our procurement activities, we contribute to inclusive growth and local economic wellbeing by:

• incorporating community benefits into our contracts which provide training and employment opportunities along with other community enhancements;
• advancing the use of Fair Work practices through procurement;
• using our market knowledge, systems and processes to improve access to our contract opportunities for SMEs, the third sector and supported businesses; and
• taking actions to address the Climate Emergency.

Examples of our contribution are included within the relevant sections of this report.

3.2 Investment

Infrastructure investment to create jobs, help businesses and support delivery of better and modern public services and growth in the Scottish economy remains a top priority for the Scottish Government. To help businesses and others plan for the future, we publish our infrastructure investment project pipeline on our website.

Procurement underpins our investment in people, infrastructure and assets. We use well-designed procurement of goods, services and works as a driver of business growth and innovation with many of our procurement projects directly enabling the Scottish Government's wider ambition in this regard.

Examples of our approach and commitment in this area are provided throughout the report and in the example below.

Construction

In 2019 we became aware of an increasing appetite, stemming from both public and private bodies, for the establishment of a portfolio of core Scottish Government construction frameworks to ensure that contracts placed are both compliant with the Public Contracts (Scotland) Regulations 2015 and embrace Scottish Government's agenda for economic, environmental and social sustainability.

During this reporting period we continued a period of dialogue with public bodies involved in construction and with industry to discuss the merits of existing sector frameworks and what core Scottish Government construction frameworks should look like. We also collaborated with Centres of Expertise, Scottish Future Trust and Transport Scotland. Additionally, we continued collaborative activities with industry's Civil Engineering Contractors Association (CECA) and with Construction Scotland (CS). Collaborative activities with industry were primarily conducted via a Civil Engineering Steering Group and with stakeholders via a National Portfolio Forum for Construction and a Civil Engineering User Intelligence Group.

In autumn 2020, following Scottish public sector procurement Centres of Expertise sign-off, we delivered a Construction Portfolio Review; an overall strategy for construction frameworks which includes sector-specific considerations following extensive 'request for information' exercises conducted with both public bodies and with industry.

The review identified an indicative spend on construction by the public sector of around £2.9 billion per annum and therefore a potential list of commodities which could be procured through a series of frameworks. In instigating this work, we have developed a Procurement Strategy for a Civil Engineering Framework which will be the first construction framework we will take to market.

We will of course, continue to work with the Centres of Expertise, our policy colleagues within the Scottish Government and with industry to agree our programme of procurement activity.

The latter part of this reporting period brought new and emerging initiatives and the identification of potential procurements.

• Prompt Payment: to continue to provide guidance and supporting mechanisms to ensure better and faster payment terms throughout the construction supply chain.
• Initial site investigations for a nationally significant construction project: scoping the initial procurement exercises.
• A Procurement Strategy for an Estates Professional Services Framework: a potential requirement for our Directorate's Property and Construction Division, which could develop into a collaborative exercise to be added to our Construction Portfolio.

Following the publication of the 'Client Guide to Construction Projects' in the reporting year 2019 to 2020, we have continued to review and update our three construction procurement handbooks which were originally published in 2018.

• Handbook 1: project initiation and business case handbook
• Handbook 2: construction procurement handbook
• Handbook 3: construction phase handbook

These handbooks form a suite of guidance which aim to assist contracting authorities in becoming more "intelligent clients", allowing them to work more closely and co-operatively with contractors and consultants to deliver successful projects.

The guidance is primarily to help clients better manage their construction projects and should also be of assistance to contractors and consultants alike in developing their understanding of how the public sector delivers construction projects. We will continue to update and add new chapters to the Client Guide, as the need arises.

We have also piloted the Construction Capability Assessment Tool, which allows contracting authorities to assess their ability to procure publicly funded construction. Feedback from the pilot process has been analysed, and utilised in the creation of a finalised version.

We have also agreed with industry to review the tender assessment process for construction projects and in particular investigate sustainable pricing. To this end, a working group will be established early in 2022.

3.3 Innovation

The Procurement Reform (Scotland) Act 2014 places a duty on public bodies to consider how, through their procurement activities, they can promote and support innovation in the way in which public sector services are provided in Scotland.

The cross-sectoral Procurement Innovation Leadership Group was established to improve the outcome of innovation in the Scottish public sector. During the reporting period, members of the group have begun work on the development of a national supplier led innovation service, and improvements to reporting and processes of innovation using Public Contracts Scotland. Some examples of the Scottish Government's work on innovation is described on the following page.

Case Study : Innovation Partnerships – Cytosponge

Incidence of oesophageal cancer has increased sixfold over the last 20 years with Scotland having one of the highest rates in Europe, with citizens often presenting late with consequent poor outcomes. Cytosponge technology (cell collection device) is a simple, cost-effective and relatively non-invasive test which can be administered in an office setting by a nurse or health care professional. It is able to diagnose pre-cancerous Barrett's Oesophagus (known pre-malignant lesion for oesophageal cancer).

This programme is sponsored by the National Centre for Sustainable Delivery's Modernising Patient Pathways Programme, and led by Professor Grant Fullarton with significant input from cross disciplinary team members from the NHS, Scottish Government, supply chain partners, academia and beyond, working together to create this new service. Professor Fullarton notes, "Cytosponge has enabled specialist teams to triage Barrett's Oesophagus and find patients with established pre or early malignancy in the oesophagus who require endoscopy and treatment." Work on Cytosponge has further developed our understanding of the requirements to successfully deliver innovative services to many citizens across Scotland. It has shown the need for integrated cross-disciplinary/sectoral teams inclusive of procurement to co-design, develop and roll out new innovative services at scale.

CivTech® Programme

CivTech® continues to address public service challenges in an innovative way. This Scottish Government led programme involves collaborative solving of problems public sector organisations face to create better products and services, and by doing so, helping create sustainable, high-growth potential businesses. It enables the rapid development of creative, cost-effective solutions delivered by those businesses. 2020-21 saw further expansion of the programme with more challenges launched, and increasingly robust evidence that the approach works extremely effectively. Products and services have been successfully implemented and are delivering genuine benefits to public sector organisations and citizens, and increased levels of economic activity including turnover and investment in CivTech alumni companies. Both case studies and evaluations now indicate the CivTech is delivering outstanding value for money.

Case Study: CivTech HITRANS and The Routing Company

In 2020, HITRANS brought the following Challenge to CivTech 5.0.

The geography of the Highlands and Islands results in a challenging transport environment, covering almost 50% of Scotland's landmass but with only 10% of its population. While dispersed settlements are reliant on a good transport network for connectivity and access to key services, the financial sustainability of traditional transport services is a significant challenge. Traditional models are based on a 'critical mass' of demand which by its very nature is lacking in most rural and remote areas.

So how can we transform the future of rural transport and support our highland communities to thrive?

The Routing Company responded to this Challenge.

The Routing Company's app tracks a vehicle's real-time location, its capacity, and rider pick-ups and drop-offs: even in low or no-internet connectivity environments. This data is supplemented by data feeds generated from vehicles that do have the requisite hardware installed, and is converted into actionable insights, via a dashboard, that show the network's performance and other critical reporting statistics in real time.

The TRC team consists of mathematicians, computer scientists, and academics alongside policy professionals and shared ride experts. They have a growing staff of 35+ spread across the US and key international markets, including Los Angeles, New York, Boston, Washington, D.C., Edinburgh, Sydney, Singapore, Zurich, and Cairo.

Their goal is to start deploying the driver application on vehicles in the HITRANS area. By later in 2021, and with a recent funding round, they now have space for five more innovative agencies to trial their products in Scotland / UK.

Dynamic Purchasing Systems

We continue to adopt an innovative and flexible approach to the procurement of Digital Services through the use of Dynamic Purchasing Systems (DPS).

We operate four of these covering Digital Technology Services, Telephony Services, Network Advice and Internet of Things. The streamlined application process provides easier access to public sector contract opportunities for suppliers and our DPS arrangements provide more than 500 suppliers (99% of which are committed to paying the real Living Wage and 77% are SMEs) with direct access to Scottish public sector contract opportunities forecast at over £100 million over the duration of the DPS.

A further DPS was established during the last reporting period, to enable the Social Security Directorate and Social Security Scotland to award contracts for ongoing Social Programme Management (SPM) development and support. Through this reporting period, we have continued to utilise the DPS to deliver and it has been utilised to procure and deliver three SPM projects. During the period a new supplier has been added and the SPM DPS now includes four suppliers.

3.4 Internationalisation

We continue to support members of staff to promote and drive procurement practice on a world stage.

We are represented on Chartered Institute of Procurement and Supply's (CIPS) Global Foundation Steering Group, leading the development and implementation of their international philanthropic strategy. The Foundation's mission is to improve peoples' lives through better supply chains, with aims aligned with UN Sustainable Development Goals. This has included very active engagement and support of partnership with Action Aid in Africa.

In June 2020, we developed and delivered a presentation on the Power of Procurement to the Agrifood Knowledge Transfer Network (KTN) across Africa. As well as sharing the work of the CIPS Foundation and its Agrifood projects, we promoted our resources and toolkits to underpin better procurement and supply chain management in the Agrifood industry. The presentation was recorded and shared widely across the global procurement and supply network and the KTN have requested to use it with PhD student placements and for highlighting more broadly to early career researchers.

We also actively share research and best practice with governments around the world. In the reporting period we supported the Procurement Leaders worldwide awards, we were represented on the judging panel of the Welsh Go Awards and we shared best practice approaches to sustainable procurement as an adviser to the UK Government's BEIS sustainable procurement project.