Scottish Government procurement annual report: 2020

6. Delivery of policies

The Scottish public sector spends over £12.6 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 sets out our general policies and also how we will monitor those policies. 

Impact of Scottish Government policy

During the reporting period, we relaunched the Procurement Journey and the Supplier Journey, taking into account feedback received via a national survey and user testing undertaken.

Although almost 86% of respondents believed the Procurement Journey met their needs, a number of enhancements and improvements were made. These included: an improved look and feel to both websites; easier navigation; making text plain English; and additional functionality including checklists and quickfire guides.

The Procurement Journey 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. 

The Supplier Journey is our online source of step-by-step guidance aimed at suppliers to the Scottish public sector. It advises suppliers on how to bid for public sector goods and services contracts and was created following extensive engagement and feedback from suppliers, including SMEs. 

We will continue to gather feedback to further enhance the Procurement Journey and Supplier Journey as well as incorporating any changes/updates which result from the exit from the EU.

6.1. Our policy on 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 procurements during the reporting period. Relative to the previous year, we more than doubled the number of contracts awarded which specifically included community and social benefits to 34.

As a result, we currently have 69 live contracts valued at around £1.9 billion within which community benefits are now embedded.

As well as supporting thousands of existing jobs, during the reporting period our contracts created 81 new brand-new jobs and 40 apprenticeships; delivered 50 work placements for school pupils, college and university students and 2 work placements for Priority Groups; and we enabled 417 qualifications to be achieved through training.  

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

HP Inc. UK

Our supplier of Mobile and Desktop Client Devices, HP Inc. UK, 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 the effective use of digital technology in education. 

In September 2019, HP Inc. UK co-hosted a Digital Schools award-giving ceremony in which 114 nursery, primary and secondary schools from across the country received their national digital-schools award for excellence in digital teaching and learning. 

Capital Document Solutions  

In January 2020, Capital Document Solutions (a Scottish SME on our Office Equipment framework) opened a purpose-built Recycling Centre at their Edinburgh HQ allowing them to increase their recycling, re-use and refurbishment capabilities.

Four new apprentices were employed to work in the recycling centre and, in 2019, 660 print devices were refurbished and almost 2,000 toner bottles and over 5,000 device components were reused. This equated to over 35 tonnes of material being diverted from landfill. This initiative helps minimise negative environmental impacts and supports the Scottish Government’s circular economy objectives. 

XMA 

Our supplier of tablet devices, XMA Limited, delivered 346 days of Apple professional learning free of charge to almost 4,000 teachers and education professionals to support the deployment and use of iPads in schools across Scotland. 

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 place a minimum of 50% of framework business with SME suppliers. 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 supporting SME suppliers as part of its core operations. Currently APS works with 105 SMEs in Scotland (including two charities). In addition, APS supports (in total) 10 charities and schools.

Impact of Scottish Government policy

In the previous reporting period, we published a case study (https://www.gov.scot/publications/procurement-community-benefits-case-study/) demonstrating how, even in relatively low value contracts, community benefits can be used to benefit particularly disadvantaged groups and positively affect future recruitment and work place practices amongst our suppliers. In this instance, after a three month internship the candidate went on to secure a permanent contract with the supplier. The contractor committed to making lasting improvements, to remove previously unrecognised barriers to inclusive employment and, as a result, feel they have an additional talented and knowledgeable team member and have improved the working environment for all.”

6.2. Our policy on 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 report year, Scottish Procurement continued to identify and understand the level of Brexit impacts on Scottish Government-led contracts and frameworks. 

Consideration was again 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. 

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

Fair Work is work that offers all individuals an effective voice, opportunity, security, fulfilment and respect. It balances the rights and responsibilities of workers and employers. 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. 

Scotland’s success as an economy is built on a shared endeavour between workers, unions and employers and we must continue working together to make the right decisions to protect workers and public safety, keep people in jobs and get the economy going again. We continue to have high expectations of how fair working practices should be adopted as the economy continues to re-open. Scotland is rightly proud of its reputation as a leader on Fair Work and, in these exceptional times, adopting a Fair Work approach is more important than ever. 

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

During this period, we have updated our internal procedures and processes to include a stronger focus on the Fair Work First criteria. 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 alongside other criteria. 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. 

Also during this period, we have continued to secure a range of Fair Work practices in a number of our significant contracts improving pay and conditions for those working in our supply chain. In implementing Fair Work First, the Scottish Government is leading by example: the £400 million facilities management contract encouraged all bidders to adopt Fair Work practices for all workers engaged on the contract, over its seven year duration and as a default commit to working towards all five Fair Work First criteria. 

91% of our suppliers with current live contracts, have committed to paying at least the Real Living Wage.

Impact of Scottish Government policy 

Through our Fair Work First approach, which is being promoted in government funding streams, we will ask those bidding for public contracts to commit to working towards five criteria to benefit their workers, these are:

• Appropriate channels for effective voice and employee engagement, such as trade union recognition; 
• Investment in workforce development; 
• Action to tackle the gender pay gap and create a more diverse and inclusive workplace;
• No inappropriate use of zero-hours contracts; and
• Payment of the real Living Wage.

We are committed to doing this in partnership with stakeholders by taking a phased approach to implementation which will take account of the economic context, including the impact of EU exit. 

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.

Early Learning and  Childcare Workers

The Scottish Government and local authorities remain committed to the introduction of an increased entitlement to 1,140 hours per year of funding Early Learning and Childcare. The planned implementation timeline has been adjusted to take account of the sector’s response to the coronavirus outbreak. The Scottish Government remains committed to promoting Fair Work practices, through funding which enables payment of the Real Living Wage to childcare workers, which will include provision established through public procurement procedures.

The technical guidance which was developed, “Funding follows the child and the national standard for early learning and childcare providers: transition options guidance on contracting”, has more recently been updated to better empower local authorities and funded providers to make a commitment to work together to plan and deliver this commitment.

Adult Social Care Workers

Fair Work in Social Care is one of the key priorities in the joint Scottish Government and COSLA Reform of Adult Social Care Programme, launched in 2019.

The Fair Work in Social Care Group, which was established to take forward the Fair Work Convention’s recommendations in the Scotland’s Social Care Sector 2019 report was initially paused during the pandemic. However, work in relation to improving recruitment, terms and conditions for the social care workforce has been progressed at pace to respond quickly to emerging issues that were identified. Where these services are subject to a public procurement process, fair work practices form a key part of ongoing decision making. 

6.4. Our policy on 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. Our policy on procuring fairly and ethically-traded goods and services

We take 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 is not only a moral and legal obligation, it can have business benefits such as attracting and retaining a diverse skilled workforce (which can, in turn, increase quality, innovation and productivity); reducing risks, including court proceedings; and enhancing reputation and brand value, increasing the customer base.

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

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 labour law. 

The national sustainable procurement tools and supporting guidance were revised in August 2019 to encourage public sector buyers to take a relevant and proportionate approach to equality in their procurements. The updated equality guidance aligns with the fair work best practice guidance and toolkit, and was endorsed by the Equality and Human Rights Commission (EHRC). We have also updated the tools so that their content is consistent with the National Performance Framework. A Scottish Procurement Policy Note (SPPN) was published in February 2020 on reducing the risk of human trafficking and exploitation in the performance of public contracts. We are using the updated tools, guidance and SPPN to consider human rights, equality, and Fair Work consistently in our procurements and we are encouraging buyers across the public sector in Scotland to do the same. 

The value of fair and ethically traded products sold through the Scottish Government’s catering contract (which includes tea, coffee, chocolate and sugar) was £58,000 in the reporting period.

Effectiveness of our selection procedures

We continued to use the national sustainability tools to inform our commodity strategies which helped us to identify and mitigate potential risks in all of our regulated procurements. We also use targeted selection and award criteria relating to fairly and ethically traded supply chains, where relevant, for all regulated procurements.

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 refresh 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 the 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.

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 contracts 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. Our policy on paying 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 10 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 10 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 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. 

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.