Scottish Government Procurement Strategy 2017-2019

4. Key priorities

We help to deliver Scotland's economic strategy and the Programme for Government through what we procure, how we procure and through the wider economic and social considerations included in our contracts.

Our priorities are defined in Scotland's Economic Strategy as: investment, innovation, inclusive growth and internationalisation. We will design our contract and procurement process to contribute to these priorities as far as is practical, in a way that achieves value for money and makes contracts accessible to businesses (especially SMEs), the third sector and supported businesses.

Figure 6 Scotland's Economic Framework

We have identified a range of key opportunities to support our priorities in forthcoming projects. We have listed these under the headings which we expect they will principally contribute to, although we expect that most will also deliver benefits against several of our priorities. These include the following:

Investment

Procurement underpins our investment in people, infrastructure and assets. We use well designed procurement of goods, services and works as a lever for business growth and innovation. It is also used to achieve good quality training and employment through our contracts. For example, through the use of community benefit clauses and our framework with supported businesses.

Project: 100% superfast broadband

As part of our Programme for Government 2016/17, we are investing in the digital infrastructure that's needed to deliver superfast broadband to all premises across Scotland. Building on the success of our existing broadband investment programme, this project aims to support a sustainable Scottish economy, with high-speed broadband extending to every corner of the country.

The main ways of achieving positive sustainability outcomes for this project relate to climate change, biodiversity, communities, employment, and skills and training. We have begun discussions with suppliers and stakeholders for this project.

Case Study - Tackling inequalities, promoting fair employment, creating training opportunities and supporting economic growth

The Home Energy Efficiency Programme ( HEEPS) contract is managed by Warmworks, a joint venture that includes a Scottish Contractor, a Scottish charity and a social enterprise. This contract installs insulation, heating and small scale power generation in the homes of households which are in fuel poverty. Fuel poverty is where people cannot afford to keep their homes adequately heated.

Warmworks has committed to achieving the community benefit targets for targeted recruitment and training, as well as advertising opportunities for subcontractors on Public Contract Scotland. To provide opportunities for local subcontractors, the contract has been split into six regional delivery areas.

Warmworks has also committed to our 'workforce matters' policies, including paying all staff (including subcontractors) the Scottish Living Wage.

Case Study - Tackling inequalities, reducing carbon emissions and creating jobs and training opportunities

Through our utilities procurement team our suppliers are:

• working in partnership with three Community Energy Savings Programmes ( CESPs) on 500 social housing properties in and around the Greater Glasgow area, investing a total of £7.3 million in CESP schemes across Scotland;
• delivering Carbon Emission Reduction Target ( CERT) insulation measures, making sure that housing in Scotland benefits from reduced carbon dioxide emissions;
• supporting vulnerable customers who are in fuel poverty by providing grants to help towards energy bills and supporting voluntary organisations to provide fuel debt services; and
• working with ourselves to plan apprenticeships and college courses for renewable-energy engineers.

Inclusive growth

Scotland aims to be:

'a society that promotes inclusive growth and creates opportunity through a fair and inclusive jobs market and regional cohesion to provide economic opportunities across all of Scotland'

Scotland's Economic Strategy, 2015

Public procurement contributes to inclusive growth both through what we buy and how we buy it. This can include:

• providing training and employment opportunities;
• driving fair work practices;
• promoting equality and tackling inequality; and
• seeking low carbon solutions.

Key forthcoming projects which will contribute to this have been identified as:

• procurements relating to powers transferred by the Scotland Act 2016; and
• our frameworks for interpreting services and for publishing, print, design and associated services.

Project: More powers

The Scotland Act 2016 transfers a wide range of powers to Scottish Ministers. These powers and the supporting commercial arrangements are important as they underpin a number of manifesto commitments and some of the aims in our economic strategy and Scotland's National Purpose. We will use to good effect the additional powers for social security and employment support. This will include the use of contracting and commissioning models that enable social enterprises to work collaboratively, adopt a person centred approach, and deliver highly effective employment focused interventions.

The transitional Work First Scotland contracts will deliver improved, high quality employment support to disabled people and those with long-term health conditions who want to work but need help to get and remain in employment. As well as improving the quality of the employment support service, we have taken the opportunity to redesign how we deliver this support and to remove wasteful processes. Four contracts have so far been awarded to support this project and over the next two years, we will be awarding over 30 more.

Project: Interpreting services

This contract delivers spoken language interpreting services, document transcriptions and translation. It is used by many parts of government in Scotland, including the Scottish Courts and Tribunal Service, to allow people who have little understanding of English to access public services in their own language. As a result, it has a significant beneficial effect on communities and for people who do not have English as their first language.

Under the current contract, around 25% of money spent is invested in people and skills and in attracting new entrants to the interpreting industry, helping to improve the quality, capacity and capability of the industry. We will continue to use this service to encourage new entrants to the interpreting industry.

We have also identified opportunities to:

• improve working practices, including pay and conditions;
• reinforce health and safety; and
• consider how the contract could bring these services to a wider range of people while keeping data security up to date.

We will achieve these aims by agreeing with policy areas which requirements we will target during the procurement competition. We will also make sure there are appropriate and effective terms and conditions through contract and supplier management processes.

Project: Publishing, print, design and associated services

This contract delivers services associated with publishing, design and printing. It is used to help public sector organisations communicate their policies to the public. The current supplier has gained accreditation in Scotland from the Living Wage Foundation, and in our contract management reviews (where we monitor performance against a contract) we have made sure they continue to keep to their public-sector equality duties.

Through contract management, we have identified scope to:

• increase targeted recruitment and training (for example apprenticeships);
• enhance community engagement through schools; and
• increase partnerships with third sector suppliers and supported businesses.

Innovation

Public procurement has a key role to play in supporting and promoting innovation in the way public sector services are provided in Scotland. The Programme for Government 2016/2017 includes a commitment to establish a cross sector Procurement Innovation Reference Group led by us. This is intended to give business innovation an extra boost by improving how these types of projects are co-ordinated.

The Public Contracts (Scotland) Regulations 2015 (which came into effect in April 2016) make provision for innovation partnerships. The innovation partnership process is designed to allow buyers to approach the market for the design and development of innovative solutions to how public services are delivered in future. We intend to pilot this during the course of 2017/2018.

Case Study - Creating innovative solutions, protecting the environment, promoting fair employment and saving money

Our procurement activity is already recognised for its innovation. In March 2016 we set up a new framework for Non-Domestic Energy Efficiency ( NDEE), with an estimated value of up to £300 million over four years.

The NDEE framework is innovative in the way it covers multiple and diverse renewable energy technologies and energy efficiency under one contract. This allows the technologies to be managed as a whole, and to deliver more than the sum of their parts.

We involved industry extensively when designing this unique framework and used the sustainable procurement tools to help develop the procurement strategy. The framework covers environmental, community benefit and fair work considerations. Expected benefits include:

• savings in energy and maintenance costs;
• a direct contribution to our target to reduce climate change emissions;
• reduced costs to the public and third sector; and
• delivery of energy efficiency work to meet the Assessment of Non-Domestic Buildings (Scotland) Regulations 2016.

By using the key performance indicators developed specifically for this framework, public organisations will be able to track and report progress across a range of environmental and socio economic outcomes.

Our Digital Directorate has set up a 'CivTech' pilot to solve public service problems in an innovative way. Rather than relying on established methods, the project involves public organisations setting civic challenges which smaller businesses are encouraged to tackle using innovative solutions.

Public procurement will continue to support innovative and agile ways of working to deliver digital public services and public service reform. This commitment will be reflected in the Scottish Government's refreshed digital strategy to be published in early 2017.

Internationalisation

Our involvement with suppliers and the supporting supply chains is aimed at developing their potential to bid for public contracts, whether they are advertised in Scotland, the UK or further afield.

We have been named as a subnational pioneer country, as part of an international initiative under the Open Government Partnership. This is aimed at government and civil society working together to develop and implement ambitious open government reforms including in public procurement.

In 2015, we published our Open Data Strategy which sets out a number of national actions to help support public sector organisations as they put in place their own open data publication plans. To support our open data strategy, we will develop an open contracting strategy and publish procurement information in a way which makes sure that the data (information) we publish is in a format that is useful to all audiences.

To achieve our vision of being 'world leaders in innovative public procurement', we work with UK, European and global networks to set standards for and share best practice. For example, Scotland is a member of the Public Procurement Network which covers the EU and countries seeking accession to the EU. The network provides a mechanism for sharing good practice and an informal problem solving mechanism in the event of cross border disputes regarding market access.

Support for the public sector

We provide a range of support and guidance to the public sector to help it contribute to national outcomes. This guidance includes:

• policy notes and information covering a wide range of policy and legal considerations;
• sustainable procurement tools which make sure sustainability is an established part of our procurement activity; and
• best practice guidance in the form of the procurement journey.

We will continue to develop this guidance to keep it in line with developing policy, law and best practice.

The Procurement People of Today and Leaders of Tomorrow programme aims to improve procurement and commercial skills. Working across the Scottish public sector, we are supporting a 'joined up' approach to developing procurement professionals and existing and future talent through identified career paths. The public procurement profession in Scotland can use a procurement competency framework which helps identify opportunities for continuous professional development.

eCommerce brings efficiencies and savings to public organisations by reducing the time it takes to get the goods, services and works needed to deliver public services. It brings benefits to suppliers, from providing access to contract opportunities to more efficient invoice and payment processes. It also allows us to be more open about the availability of information to do with procurement. We also provide a free to access portal, Public Contracts Scotland ( PCS), where we publish contract notices for regulated procurements. Over 60,000 users are registered on PCS.

How our procurement activity contributes to value for money

We aim to achieve value for money by working closely with the people who use the goods and services we buy, to help understand their requirements. We aim to do this by:

• understanding the commercial markets we work in;
• awarding contracts on the basis of fair, open and transparent competition which is in proportion to the contract in question and which keeps to our legal obligations; and
• making sure that our contracts are effective and managed efficiently.

We recognise that value for money is rarely achieved by simply accepting the lowest priced bid, which is why procurement legislation in Scotland has now removed the possibility of Official Journal of the European Union ( OJEU) level public contracts being awarded only on the basis of price.

We will also encourage continuous improvement in organisations by encouraging them to the take part in the Procurement and Commercial Improvement Programme ( PCIP). This helps them to measure and report on their levels of procurement delivery and is based around a series of set questions and other evaluation methods. Organisations can then develop an action plan to achieve maximum value for money, and improve
their ability, when buying goods, services and works.

Keeping to our general and sustainable procurement duties

We value Scotland's trading relationships with other nations and believe that fair competition is good for our economic growth. We aim to fully keep to our legal obligations and to treat all suppliers fairly, equally and without discrimination. To achieve this, only staff with appropriate training and experience are authorised to oversee regulated procurements. Our procurement staff usually have, or are studying towards, professional qualifications offered by the Chartered Institute of Purchasing and Supply. They also receive wide-ranging policy and best-practice guidance.

We are committed to making public procurement open and accessible to businesses, especially SMEs, the third sector and supported businesses. All businesses supplying Scottish public sector organisations will be able to take advantage of easier access to contract opportunities in Scotland. We advertise our contract opportunities on PCS and in the Official Journal of the European Union where required. We also publish our contract register on PCS.

Case Study - SMEs winning contracts, reducing waste and creating training opportunities

There are 15 collaborative ICT agreements which include 25 SMEs as direct suppliers, with many more in the supply chain. These agreements provide efficient access to digital technology solutions, and make significant savings of around £50 million per year. Over 300 organisations have used the frameworks.

A national DPS ICT Procurement portfolio plan aligned to the Scotland's Digital Future - Delivery of Public Services ( DPS) strategy has been published. The ICT agreements also deliver a number of sustainable benefits:

• making ICT devices sustainable (for example laptops, desktops and mobile devices).
• digital conferencing services and hosting services supporting business efficiency and helping to reduce the negative impact of travel on the environment.
• our ' tablet client devices framework' has been particularly successful, with over 2,500 teachers so far receiving free training in how to use tablets for teaching and learning in the classroom.

Sustainable public procurement aims to make the best use of public money, helping us to achieve our overall purpose and aims. The sustainable procurement duty requires that before we buy anything, we must think about how doing so would improve Scotland's social, environmental and economic wellbeing, with a particular focus on reducing inequality. It also means we must think about (and then design) our procurement processes in a way that encourages SMEs, third sector organisations and supported business to be involved and how we can use procurement to encourage innovation.

The detail of our approach to the sustainable procurement duty is contained in the guidance that we published in March 2016. This refers to the range of opportunities relating to the procurement process that help compliance with the sustainable procurement duty including:

• early market engagement;
• use of lots; and
• the option to reserve contracts for supported businesses.

The guidance also includes a chapter on community benefit requirements.

Keeping to our sustainable procurement duty should also help us to follow other legislation that places specific procurement requirements on us, such as:

• the Equality Act 2010;
• the Equality Act 2010 (Specific Duties) (Scotland) Regulations 2012;
• the Climate Change (Scotland) Act 2009; and
• the Climate Change (Duties of Public Bodies: Reporting Requirements) (Scotland) Order 2015.

Case Study - Making things last

In support of our circular economy strategy, 'Making Things Last', our national Information and Communications Technology ( ICT) frameworks emphasise extending the useful life of devices through reusing components and devices.

We will reduce packaging waste by using innovative sustainable packaging materials and reusable crate systems, and all packaging can be returned to the supplier.

Contractors also have systems and processes in place to keep to International Labour Organisation conventions.

We consider sustainability early in the procurement process, which allows us to:

• identify risks and opportunities before commissioning suppliers;
• understand possible sustainability outcomes;
• make sure that we are engaging with the appropriate stakeholders;
• make sure that we make the most of our ability to influence these outcomes; and
• provide support to SMEs, third sector and supported businesses bidding for public contracts, for example from the Supplier Development Programme.

This then helps us to develop individual sourcing strategies for our contracts, in which we can firmly establish sustainability. For example:

• to include employment and training requirements;
• to include energy efficient product specifications;
• to open up opportunities in the supply chain;
• to access green electricity; and
• provide as many opportunities as possible for SMEs, the third sector and supported businesses to take part in the procurement process.