Procurement strategy update

Part 1

2. Carrying out our functions and purpose

In this first part of our procurement strategy we describe our key strategic priorities and describe how our procurements will contribute to the delivery of those priorities by reference to some examples.

The Scottish public sector spends over £11 billion a year buying goods, services and works. We use this spend to achieve improvements to what we buy and how we buy it. For example, simplifications that can be made to improve supplier access to public contracts can help to support economic growth.

The Scottish Government’s Purpose of creating a more successful country, with opportunities for all of Scotland to flourish, through increasing sustainable economic growth remains central. This is underpinned by the National Performance Framework, 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 whole of the public sector in Scotland is expected to contribute to the Purpose. Different organisations are now working towards shared goals which are defined in terms of benefits to the people of Scotland rather than simple efficient service delivery.

To meet this expectation the sustainable procurement duty has been aligned with the National Performance Framework. The National Outcomes and Indicators are embedded in the sustainable procurement duty tools which provide a structured approach to what we procure. They help to identify opportunities to include economic, social, and environmental considerations in contracts and show how our procurement activity contributes to the National Outcomes and, in turn, to Scotland’s Economic Strategy.

Using the prioritisation methodology at an organisational and category level and the sustainability test in our individual procurement projects we identify a range of sustainable outcomes under the following broad headings:

• Bio-security;
• Bio-diversity (protection and enhancement);
• Climate change (carbon and energy consumption, carbon in production, adaption, carbon in vehicle emissions);
• Communities (including rural communities);
• Employment (opportunities to achieve skills and training; to encourage SMEs, social enterprises, supported businesses as main providers or to form part of the supply chain);
• Equality (protected characteristics);
• Fair and ethical trading (working conditions, conflict materials);
• Fair Work;
• Hazardous materials/emissions;
• Heritage (protection and enhancement);
• Materials (scarcity, security);
• Security and crime (impact and improvement);
• Water (consumption and production); and
• Waste (production, reuse, recondition, remanufacture).

The prioritisation methodology allows us to see where there is the most scope to do things differently and where we have the most influence on the market so that we recognise the best opportunities in our procurement activity.

Compliance with the sustainable procurement duty is the recommended mechanism through which public procurement contributes to and tracks its contribution to the Scottish Government’s purpose and priorities. Key priorities are defined in Scotland’s Economic Strategy as:

• promoting inclusive growth and creating opportunity through 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.

We design our contract and procurement process to contribute to these priorities as far as is practical and in a way that achieves value for money and makes contracts accessible to businesses, including SMEs, the third sector and supported businesses. Some examples of how we do this are described on the next page.

Inclusive Growth

We have defined inclusive growth as ‘growth that combines increased prosperity with tackling inequality; that creates opportunities for all and distributes the dividends of increased prosperity fairly’. Inclusive growth incorporates the traditional growth policies of investment, innovation and internationalisation, while tackling inequalities in outcomes and inequalities in opportunity. Inclusive growth is multi-dimensional and includes social inclusion, wellbeing, participation, as well as the environment. It promotes growth in Scotland’s cities, regions and rural areas recognising the importance of place and community to the delivery of inclusive growth across Scotland.

Scotland’s Economic Strategy states that 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

Public procurement contributes to inclusive growth, for example, by:

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

For example, the Scotland Act 2016 transfers a wide range of powers to Scottish Ministers most significantly the powers over social security and employment support. These powers and the supporting commercial arrangements are important as they underpin some of the aims in our Economic Strategy and Scotland’s National Purpose. This will include the use of contracting and commissioning models that enable collaborative working and adopting a person centred approach.

Investment

Procurement underpins our investment in people, infrastructure and assets. For example, a competitive dialogue procurement process for Next Generation Access ( NGA) Infrastructure as part of the reaching 100% Superfast Broadband Programme commenced in December 2017. The resulting public investment will ensure premises in Scotland have access to Broadband Infrastructure capable of delivering speeds of at least 30 Mbps by the end of 2021. This will build on the deployment that has been, and will be, realised through the two Digital Scotland Superfast Broadband programmes (Highlands and Islands and the Rest of Scotland) and through commercial roll-out. This procurement seeks to support our 2017 Digital Strategy refresh entitled ‘Realising Scotland’s full potential in a Digital World’ and is noted as a commitment in the Scottish Government’s Programme for Government 2017-18.

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 sustainable procurement duty requires public bodies to consider innovation for regulated procurements. The procurement rules also encourage innovation in public procurement through new and revised procedures. For example, we have introduced a Dynamic Purchasing System ( DPS) for Digital Services. This innovative and completely electronic approach encourages SME participation and drives wider competition for digital projects, resources and cyber services. Suppliers can join the DPS at any time and it has over 250 suppliers of which 81% are SMEs. While at the early stages of delivery, we will be looking to expand the use of dynamic purchasing systems to other commodity areas.

We are also working to identify “pathfinder” projects that will help drive innovation. Current examples of how procurement can support innovation include our Non Domestic Energy Efficiency Frameworks and also CivTech® which are described in more detail below.

Non Domestic Energy Efficiency Frameworks

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 that it covers multiple and diverse energy efficiency and renewable energy solutions under one contract. We involved industry extensively when designing the framework and used the sustainable procurement tools to help develop the associated 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 key performance indicators developed specifically for this framework public organisations can track and report progress across a range of environmental and socio-economic outcomes. So far, four campus wide college projects and one local authority project, for eight buildings, have been awarded. All of these projects involve multiple buildings. The college projects are a mix of efficiency and renewable energy generation across campuses. More projects will be awarded in 2018.

CivTech®

Our ‘CivTech®’ programme also addresses public service challenges in an innovative way. The project involves public organisations setting civic challenges which smaller businesses are encouraged to tackle using innovative solutions. It enables the rapid development of creative, cost-effective solutions delivered by those businesses. CivTech® is providing pathways for tech SMEs and start-up businesses to secure public sector contracts. It offers real opportunities to deliver even better services for people and even better value for service providers. The CivTech® approach is valued in procurement because of the innovative way it finds solutions to challenges.

Our key aim is to deliver innovation in procurement to address public sector challenges and we will continue to work with our partners and use the flexibilities in the public procurement rules that enable us to do this. Public procurement will continue to support innovative and agile ways of working to deliver digital public services and public service reform. This commitment is reflected in the Scottish Government’s Digital Strategy.

Internationalisation

We value Scotland’s trading relationships with other nations and believe that fair competition supports economic growth. We treat all suppliers fairly, equally and without discrimination. Our involvement with suppliers and supply chains is aimed at developing their potential to bid for public contracts whether these are advertised in Scotland, the UK or further afield. To achieve our vision of being ‘world leaders in innovative public procurement’, we work with UK, European and global networks to set standards 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 is an informal problem solving mechanism in the event of cross border disputes about market access.

We have also 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 one of which is public procurement. As part of the Open Government Partnership Scottish National Action Plan 2017 we developed the Scottish Procurement Open Contracting Strategy. That strategy states our intention to publish even more coherent and consistent procurement information in a format that is useful and easily understood. We also outlined our phased approach to implementation where we gradually increase the amount and types of information we publish.

Also, in May 2018 the data protection rules will change. To ensure that all current and future procurement exercises are compliant with the new legislation we have updated our own general Terms and Conditions that apply to our contracts to ensure that these properly reflect the new legislation. We also take cyber security matters very seriously and the Scottish Government issued its cyber resilience strategy Safe, Secure and Prosperous: A Cyber Resilience Strategy for Scotland in November 2015. Since then, the Scottish Government has also agreed a Public Sector Cyber Resilience Action Plan and Cyber Resilience Implementation Toolkit with public bodies and issued these on 8 November 2017.

Overall, we help to deliver our key priorities through what we buy and how we buy it, which includes considerations of the wider economic and social impact of our contracts and how we manage our supply chain.