Procurement strategy update

3. How our procurement activity contributes to value for money

This section describes how our procurement activity contributes to value for money. Procurement is a key enabler in delivering Scotland’s Economic Strategy and contributing to sustainable economic growth. We will continue to work together with the public, private and third sectors to deliver maximum value through public procurement activity.

Our involvement in public procurement is far broader than buying on behalf of Scottish Ministers. We also buy for the public sector and other organisations in Scotland and provide procurement support to Scottish Government agencies and non-departmental public bodies ( NDPBs). Our contracts deliver a wide range of economic, social and environmental benefits as well as significant financial savings for the public sector. Our contracting activity covers three main areas:

• Contracts we let for Scottish Government use only.
• Sectoral collaborative frameworks. These are let by the Scottish Government for use by the central government family of organisations which includes agencies and non-departmental public bodies.
• National collaborative frameworks and contracts. We provide framework agreements and contracts for commonly purchased goods and services which are used across the public sector.

A description of what we mean by both national and sectoral collaborative frameworks is included further below.

Details of the contracts that we have placed can be found on PCS. In the financial year 2016-17 our portfolio of contracts was valued at over £940 million and delivered savings of more than £143 million. These figures are broken down against procurement portfolio in the table and charts immediately below and opposite.

Table 1 Procurements led by us – spend and savings by portfolio 2016-17

Collaborative frameworks and contracts

Collaborative procurement is about achieving value for money for the Scottish public sector by working in partnership with buying organisations, the centres of expertise and suppliers. Our three collaborative procurement portfolio teams cover Utilities, Information and Communication Technology and Corporate and Professional Services and award framework agreements for the whole of the Scottish public sector and also for the central government sector. The contracts and frameworks awarded by our buying teams have a combined value of over £800 million per year. They can be used by public organisations across Scotland and cover a range of goods and services. Details of our current Collaborative Agreements can be found on our website.

From 2008-09 to 2016-17 we have delivered over £740 million in savings through buying common goods and services on behalf of the public sector. Delivered savings against collaborative contracts (both current and new) in the three-year period 2016-17 to 2018-19 are expected to exceed our £256 million target.

Forward plan of our collaborative contracts

We publish a forward plan of our national and central government sector collaborative opportunities along with collaborative opportunities covering the health, higher education and local authority sectors in Scotland and which may be advertised over the next 12 to 18 months.

Value for money

Our 2018-19 budget provides the resources to deliver the vision set out in the Programme for Government and to strengthen the social contract. In light of wider uncertainties however (for example, Brexit and also the continued challenging financial circumstances) it is increasingly important that public sector procurement continues to deliver value for money. We aim to achieve this by:

• working closely with the people who use the goods and services we buy to help understand their requirements;
• understanding the 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.

Also, we removed the option in our procurement legislation for EU regulated contracts to be awarded on the basis of lowest cost or price only, recognising that value for money is rarely achieved by simply accepting the lowest priced bid. Our approach to this is described in more detail at section 5. We also encourage public sector organisations in Scotland to take part in the Procurement and Commercial Improvement Programme to help them to report on their levels of procurement capability.