Procurement - SME and third sector action plan 2024-2026: business and regulatory impact assessment

Purpose and Intended Effect

Background

Current Scottish Government procurement policy and legislation identifies how Small and Medium Enterprises (SMEs) and Third Sector organisations are critical to the social, economic and environmental health of Scotland. There is currently a range of support and guidance provided to make it as easy as possible for SMEs and Third Sector organisations to bid for and win public contracts as well as to participate in local supply chains and promote innovation.

Recently we published the one-stop-shop Guidance on Public Procurement for SMEs and Third Sector Suppliers which summarises tools, sources of support, hints and tips and case studies to help suppliers engage with public procurement in Scotland. At present however there is not a plan of action with timelines for implementing and maintaining support to SMEs and Third Sector organisations.

Objective

The Action Plan brings together a number of pre-existing guidance documents, policies and engagement mechanisms, and makes clear how the Scottish Government’s commitment will be delivered to SMEs and Third Sector organisations on opening up opportunities for public sector procurement.

The objective of the plan is to support the National Outcome of:

thriving and innovative businesses, with quality jobs and fair work for everyone

It meets the National Programme for Government 2023 commitment to “tackle(s) poverty by sharing opportunities, wealth and power more equally”

It also matches the Public Procurement Strategy for Scotland 2023-2028 objective to “Consider how procurements are conducted and contracts are developed, to reduce barriers and enable participation for SMEs, Third Sector organisations, and Supported Business, in Public Sector Procurement.”

The New Deal for Business recommended that public bodies should promote opportunities for purposeful businesses to advance sustainability, fair work and community benefits. The procurement action included in the New Deal for Business Group Implementation Plan (October 2023) was:

“Publication of an SME and Third Sector Action Plan as part of the wider Scottish Government work through Public Procurement policy and approaches to better support suppliers, especially SMEs and third sector organisations, who want to bid for public sector contracts.”

Rationale for Government intervention

The rationale for the Action Plan is to provide guidance and information to SME and Third Sector organisations. Spend in this sector is significant to the public sector. In 2021-22 (latest financial year for which full data are available), SMEs accounted for over half (54.9%, or £4.2 billion) of public sector spend, with procurement from Third-Sector Organisations accounting for £1.11 billion, i.e. around 12.5%, of all Scottish public body procurement spend in Scotland.