Scottish Government procurement: annual report 2020 to 2021

7. Our approach to engaging SMEs, the third sector and supported businesses

We use the power of procurement to deliver outcomes that are good for businesses and employees; good for places and communities and good for society. This includes improving access to public contracts for SMEs, the third sector and Supported Businesses.

SMEs

We continue to develop our procurement strategies to make our contracts more accessible and provide opportunities for SMEs to tender, win and deliver public sector contracts. In our collaborative national procurements we consider splitting up or "lotting" larger-value contracts and frameworks into specialist or geographical requirements. We also consider placing multi-supplier frameworks in order to create other supply chain opportunities for SMEs wherever possible. Across all our contracting activity, we actively seek out opportunities for SMEs, third sector and supported businesses to compete within our supply chains. Combined, these enhance the opportunities for smaller firms that otherwise might not be able to bid for our contracts.

Micro, small and medium-sized suppliers supplying goods and services to core Scottish Government

Analysis

The following tables provide information on SME suppliers, by (a) micro, (b) small and (c) medium-sized suppliers, who have supplied goods and services to core Scottish Government during the period 2017 to 2021. This information is based on data contained in the Scottish Procurement Information Hub (the "Hub").

The total number of SME suppliers may vary in some years from previous publications. This is because the data held in the Hub is revalidated and may change as additional information about suppliers is applied, or as supplier status changes.

As a direct result of core Scottish Government procurement activity:

• 57% of the 268 suppliers delivering our regulated contracts during the reporting period were SMEs
• 644 SME subcontractors on these contracts are based in Scotland
• Of the £329m million that we spent through our contracts, around £106 million or 32% went directly to SMEs.
• Almost £133 million of the £329 million was spent here in Scotland, £76 million of that going to Scottish SMEs. 59% of the Scottish spend through our contracts is with SMEs (where size and postcode is known).
• There are many more SMEs in our supply chains; they shared at least £75 million as subcontractors, Scottish SMEs receiving at least £23 million of that.

*Information is not available on the size and location of every supplier in our supply chains

Our data shows that in 2020-21, across Scotland 15,656 suppliers were awarded public sector contracts through Public Contracts Scotland. Of these:

• 11,422 (73%) were Scottish;¹*
• 9,272 (59%) were Scottish SMEs;** and
• 11,953 (76%) were SMEs *** from all locations.

*Supplier size is based on number of employees where it is known.

SMEs are defined as suppliers with less than 250 employees.

Micro suppliers are defined as suppliers with less than 10 employees.

Small suppliers are defined as suppliers with 10-49 employees.

Medium suppliers are defined as suppliers with 50-249 employees.

Data correct at October 2021. Data is revalidated and may change in subsequent reports as additional information about suppliers is applied.

¹*Suppliers registered on PCS with a Scottish-based business address, where address is known;

** Suppliers registered on PCS with less than 250 employees where size is known and where address is known

*** Suppliers registered on PCS with less than 250 employees where size is known

Notes on SME statistics

Data is provided for core Scottish Government spend only.

Data is taken from the Scottish Procurement Information Hub and is based on suppliers that have been classed as commercial organisations or as non-trade social care providers and with whom core Scottish Government has spent over £1,000 in aggregate in a 12-month period.

How we work with SMEs

We are committed to leveraging the full procurement rules to make it as easy as possible for SMEs to bid for and win public procurement contracts and/or participate in local supply chains, with a strategic focus on legislation, policies and practice that encourage and support SMEs.

Our legislation (through the Sustainable Procurement Duty) requires public sector contracting authorities to consider and act on opportunities to facilitate the involvement of SMEs, third sector bodies and supported businesses through public procurement.

We offer a suite of tools and guidance to help SME and third sector organisations who wish to tender for public sector contracts and to challenge any unfair practice.

Our Supplier Journey provides online, easy to access guidance for suppliers on all aspects of bidding, from finding opportunities and preparing bids to lessons learned, and signposts additional support.

Our Single Point of Enquiry offers an impartial and confidential service for businesses with any concerns about a procurement exercise carried out by a Scottish public body.

We continue to fund and support the Supplier Development Programme (SDP), an independent business initiative which delivers free training, online resources and guidance on how to prepare, submit and win public procurement bids. This includes training on how to write tenders and improve bid scores, use of the SG provided eProcurement and Tendering Platforms (PCS and PCS-Tender) and understanding frameworks, community benefits and sustainable procurement. The SDP also brings suppliers and public sector buyers together through their national and regional "Meet the Buyer" events.

Our Public Contracts Scotland (PCS) portal aims to make it as easy as possible for SMEs to bid for public contracts through notifications that alert suppliers to relevant contracts and enabling main contractors to advertise sub-contract opportunities, giving suppliers the chance to bid for contracts, further down the supply chain. PCS also advertises Quick Quotes for lower-value contract opportunities which are often of most interest to SMEs.

Our Dynamic Purchasing Systems, because of their ease of use and flexibility, are improving SME and microbusiness access to technology contracts. In each of our four Dynamic Purchasing Systems over 75% of suppliers are SMEs.

We are listening to and learning from suppliers

We have engaged with suppliers about their experiences of public procurement, what works well and where there is scope for improvement, and will do more to challenge barriers that SMEs may face in competing for public sector contracts.

We have published research into the effectiveness of the Sustainable Procurement Duty and separately, the results of a comprehensive survey of suppliers which received over 1550 responses. We are identifying priorities for action to maximise the impact of procurement. This will include activity to increase understanding and application of procurement policy and standards, build local capacity, promote innovation and strengthen our supply chains.

We have held a programme of SME round table meetings to hear directly from SME suppliers about their experiences of bidding for and winning public contracts, with Ministerial involvement at one of the meetings.

We actively engage key small business and third sector representative bodies through our Procurement Supply Group, with organisations including:

• the Federation of Small Businesses
• the Scottish Council for Development and Industry
• Construction Scotland
• Social Enterprise Network Scotland,
• Coalition of Care and Support Providers in Scotland
• the Supplier Development Programme
• the Scottish Council of Voluntary Organisations

influencing policy and improvements to public procurement on behalf of their members.

The Third Sector

We deliver support to individual third sector organisations tendering for contracts. This includes training in how to get ready to tender, and tender writing through the Business Support for Third Sector contract, delivered by Just Enterprise. It is a comprehensive programme designed to help sustain, develop and grow social enterprises and enterprising charities in Scotland by offering tailored business support, from start-up, sustainability to scaling up and winning contracts.

We have also funded Partnership for Procurement since 2016, a programme that provides a range of support specifically to third sector organisations wishing to form consortia to bid for public sector contracts. The Partnership for Procurement website hosts Social Enterprise Finder Scotland, which is a searchable database for accessing information on third sector suppliers and is a useful resource both for purchasers and suppliers.

In addition, all national collaborative framework agreements placed by the Scottish Government are open for use by third sector organisations.

We are not resting on our laurels however, and we will work with partners and stakeholders to continue to improve access to public contracts for the third sector. In March 2021, we published Scotland's Social Enterprise Action Plan 2021-224 – Inclusive Growth through social Enterprise. It describes our priorities for 2021-24, and details how we will work across the public sector and with partners to build forward and put the social enterprise model at the heart of Scotland's recovery. The action plan sets out a number of actions that will, for example, drive transformative change in commission practices and support public sector commissioners, and explore ways to invest in and support new financial products and services, as well as test innovative commissioning models, which will support the delivery of better public service outcomes.

Supported Businesses

Our Procurement Strategy highlights the importance we place on providing opportunities for supported businesses to participate in public procurement. Procurement legislation defines supported businesses as businesses for which the core purpose is the social and professional integration of disabled or disadvantaged persons and where at least 30% of the employees of those businesses are disabled or disadvantaged persons.

In addition to our other collaborative framework contracts, we have in place a Supported Business framework with an advertised value totalling £12 million. This framework comprises six suppliers and provides an easier route for public bodies to contract with these six supported businesses for the following goods and services.

• Furniture and associated products
• Document management services
• Personal Protective Equipment (PPE) and uniforms
• Signage

Spend by Scottish public sector bodies through our Supported Business framework totalled £6.8 million during the reporting period.

To help increase the profile of Supported Businesses and to make the process of identifying the market easier for public bodies, Social Enterprise Finder Scotland enables users to filter searches to show only those organisations that consider themselves to meet the definition of a Supported Business.