Update To The Scottish Government Procurement Strategy

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Update to the Scottish Government Procurement StrategyUpdate to the Scottish GovernmentProcurement Strategy1

Contents1.Introduction 32.Carrying out our functions and purpose 83.How our procurement activity contributes to value for money 144.Some other key policies and principles linked to public procurement 175.Sustainable procurement and our approach to engaging SMEs, the third 19 Part 1sector and supported businessesPart 26.Our Policies 236.1Applying community benefit requirements in our contracts236.2Consulting and involving people affected by our procurements256.3 Fair Work practices including paying the ‘real’ Living Wage to27people involved in delivering our contracts6.4 Making sure our contractors and subcontractors keep to29the Health and Safety at Work Act 1974 and any provision made underthat Act6.5Procuring fairly and ethically traded goods and services6.6 Using contracts involving food to improve the health,3031wellbeing and education of communities in Scotland and promote thehighest standards of animal welfare6.7Paying invoices in 30 days or less to our contractors and subcontractors347.Annual procurement report368.Strategy ownership and contact details372

Update to the Scottish Government Procurement Strategy1. IntroductionThis document updates the ScottishGovernment’s 2017-19 procurement strategywhich was published in December 2016.We need to review our strategy each yearand make changes to it where appropriateand this update is the outcome of that firstreview. It sets out how we plan to carry outour procurements for this financial year,1 April 2018 to 31 March 2019 and beyond,providing some more focus on some of thosepolicies that we aim to support throughprocurement. The broad principles andpolicies described in this update are expectedto remain relevant until at least 31 March2020 and so we are also extending the periodcovered by the strategy until then. We willhowever continue to review our strategy atleast once a year and make changes to it ifthese are needed. We will publish any newversions on our website.Scottish public procurement rules and scopeof this procurement strategyLegislation governs how Scottish publicbodies buy their goods, services or works.One of the things that it requires us to dois to publish a procurement strategy, or toreview an existing one, to set out how weplan to carry out our regulated procurementsfor a set period. Regulated procurements arecontracts of values of 50,000 and abovefor goods and services and of 2 million andabove for works. Our procurement strategymust include statements about how ourprocurements contribute to the followingthemes: the carrying out of our organisationalfunctions and purpose; the delivery of value for money; and how our procurements will be carriedout in accordance with our general dutieswhich include the sustainable procurementduty (see section 4 for a description of thesustainable procurement duty).These statements are in Part 1 of thisprocurement strategy.3

Update to the Scottish Government Procurement StrategyOur procurement strategy must also includestatements about our general policy on: community benefit requirements; consulting and engaging with thoseaffected by our procurements; the payment of the ‘real’ Living Wage topeople involved in the delivery of ourcontracts; how we will promote compliance bycontractors and subcontractors with theHealth and Safety at Work etc. Act 1974; the procurement of fairly and ethicallytraded goods and services; how our procurements, involving theprovision of food, will improve the health,wellbeing and education of communitiesand promote the highest standards ofanimal welfare; and paying our invoices (or similar claim) tocontractors and subcontractors in 30 daysor less.These statements are in Part 2 of thisprocurement strategy and are the principalareas that we will monitor in our annualprocurement report of our performanceagainst this strategy.4Public Procurement in ScotlandThe Scottish Government is responsiblefor developing public procurement policyand legislation in Scotland and, likeall public bodies, its own procurementactivity. These functions are managedthrough our Scottish Procurement andCommercial Directorate (SPCD). There hasbeen a substantial programme of activityacross the public sector in Scotland tohelp improve public procurement since2006. We have moved from a centrally ledprogramme to a more collaborative landscapewith a shared common vision, underpinnedby the Procurement Reform (Scotland) Act2014 (‘the 2014 Act’). The 2014 Act providesclear direction to public bodies and setsout clear procurement responsibilities andaccountabilities, promoting local decisionmaking.We engage with our stakeholders and clientsearly in projects to improve commercialoutcomes. Our role within this landscape ischanging from: leading process and procedure to onewhere we strive for even greater impactand influence; having a focus on contracting andcompliance to also being a critical friendand trusted adviser; approving and endorsing to stimulatingand challenging approaches; and central resourcing to flexible models madeup of cross-functional teams.

Update to the Scottish Government Procurement StrategyPublic procurement in Scotland has five mainobjectives: improving supplier access topublic contracts; embedding sustainability;maximising efficiency and collaboration;developing people and capability and alsodelivering savings and wider benefits. Thiswork is collaborative and is overseen by: The Public Procurement Group(PPG) which makes sure that publicprocurement in Scotland stays on courseto deliver benefits and that obstacles tothis are removed or reduced. The Procurement Supply Group (PSG)which provides an ongoing frameworkfor discussion about, and influence on,public procurement practices as theseaffect suppliers, in particular, small andmedium sized enterprises (SMEs)1, thethird sector2 and supported businesses3and the trade unions. The PSG isconsulted on key policy developments,live issues and priorities. The five Strategic Forums whichare concerned with Best Practice;Collaboration; e-Commerce andManagement Information; Policy; andProfessional Practice and Development.These groups are responsible fordelivering projects and activities thatare aligned to public procurement inScotland and they inform and influencethe PPG.More information about these groups andSPCD’s vision, mission and aims is availableon our website.SPCD also provides a range of commercial,property, programme management andproject management services for the ScottishGovernment and the wider Scottish publicsector.eCommerce and best practiceWe provide an eCommerce Shared Servicethat allows public bodies to carry outprocurements and business transactionselectronically. eCommerce brings efficienciesand savings to public organisations byreducing the time it takes to get the goods,services and works needed to deliver publicservices. It brings benefits to suppliers suchas providing access to contract opportunitiesand more efficient ordering and paymentprocesses. These systems are regularlyupgraded and developed to ensure that theycontinue to meet user requirements anddeliver additional efficiencies and benefits.We also provide a number of best practicetools to improve and enhance procurementcapability. Our eCommerce solutions and bestpractice tools are described below: Public Contracts Scotland (PCS) is aone stop shop for suppliers lookingfor Scottish public sector contractopportunities. PCS has enabled strongercommunication links between buyersand suppliers and the use of it byScottish public bodies to advertise theirregulated contract opportunities is nowmandatory. PCS – Tender is the national e-tenderingservice that allows suppliers tosubmit tenders for a public contract inelectronic format. It also enables publicbodies to manage their contracts andsuppliers electronically.1 S ME generally means a company with no more than 250 employees.2 T he third sector, which includes charities, social enterprises and voluntary groups, delivers essential services,helps to improve people’s wellbeing and contributes to economic growth. It plays a vital role in supportingcommunities at a local level.3 S upported businesses generally mean those businesses for which the core purpose is the social andprofessional integration of disabled or disadvantaged persons.5

Update to the Scottish Government Procurement Strategy The online Procurement Journeyprovides a single source of procurementguidance and documentation for theScottish public sector. The purpose ofthe Procurement Journey is to growand improve procurement capabilityacross the Scottish public sector byfacilitating best practice, standardisationand compliance at all levels from simplepurchases to complex procurementexercises. It also makes it easier forpotential suppliers of all sizes to bidfor public contracts. The ProcurementJourney is kept up to date and reflectschanges in legislation and policy. The Supplier Journey provides onlineguidance to suppliers interested inbidding for public goods and services.We are currently reviewing thisguidance and the Supplier Journey willbe re-launched in 2018 with updatedformat and content. The Procurement and CommercialImprovement Programme (PCIP) canalso be found within the ProcurementJourney. The programme focuses onthe culture, scope and approach of theorganisation which manages, supportsand enables procurement activity fromthe identification of a need through tocontract delivery. It is based around setquestions and other evaluation methodswith a detailed examination of activitiessuch as contract management, ensuringthat procurements are conductedsustainably and some other indirectareas such as learning and development.Organisations can then, based on theoutcome of the assessment, develop anaction plan to achieve maximum value6for money and improve their abilitywhen buying goods, services and works.The PCIP has moved into phase two andwe are now working to expand the scopeof the programme to support continuousimprovement. The Scottish Procurement InformationHub is a sophisticated spend analysistool that enables public bodies to seetheir spend, identify who their keysuppliers are, highlight spend with SMEsand local suppliers and identify potentialcollaborative opportunities. It reflectsspend from key public bodies. Professional Electronic CommerceOnline System (PECOS) automates thepurchase-to-pay (P2P) process fromcreating shopping baskets, raisingorders and presenting valid invoicesfor payment. It also embeds standardand consistent business workflows andaudited approval processes to ensurecompliance to procurement and financeguidelines. eInvoicing is delivered through PECOSand enables the receipt of electronicinvoices from suppliers. These are thenautomatically passed to public bodiesfor matching and payment in financesystems. Catalogue Content Management (CCM)is the national hub that managescatalogues that are made availableas a result of national, sector or localcontracts. CCM allows catalogues to bepublished in a number of ways that caneasily be accessed by purchase to paysystems (including PECOS) that are inuse across the Scottish public sector.

Update to the Scottish Government Procurement Strategy The European Single ProcurementDocument (ESPD) (Scotland) replaced thestandard Pre-Qualification Questionnairein April 2016 and the use of it is nowmandatory in Scotland. The introductionof the ESPD is intended by the EuropeanCommission to reduce the administrativeburden on bidders and to removesome of the barriers to participation inpublic procurement especially for SMEs.It allows buyers to identify suitablyqualified and experienced bidders andreplaces the requirement for suppliers toprovide up-front evidence or certificatesby allowing them to self-declare thatthey meet the relevant criteria.We work continuously to develop thecapability and skills of buyers and othersinvolved in procurement and commercialactivity. We do this through: The Procurement People of Today andLeaders of Tomorrow programme –which is underpinned by our nationalprocurement competency framework,setting out procurement and commercialstandards and facilitating continuousprofessional development and careerpaths. The Procurement People of Tomorrowprogramme – which focuses onencouraging, enabling and developingnew entrants in our profession acrossScotland. The Scottish Government DelegatedPurchasing Officer Scheme – whichensures that those accountable forprocurement within the ScottishGovernment have the necessaryqualifications, training or experience fortheir level of delegated accountability. The emerging Commercial CapabilityProgramme – which seeks to improvecommercial outcomes through targetedtraining and earlier engagementof procurement with clients andcommissioners.7

Update to the Scottish Government Procurement StrategyPART 12. Carrying out our functionsand purposeIn this first part of our procurement strategywe describe our key strategic prioritiesand describe how our procurements willcontribute to the delivery of those prioritiesby reference to some examples.The Scottish public sector spends over 11 billion a year buying goods, servicesand works. We use this spend to achieveimprovements to what we buy and howwe buy it. For example, simplifications thatcan be made to improve supplier access topublic contracts can help to support economicgrowth.The Scottish Government’s Purpose ofcreating a more successful country, withopportunities for all of Scotland to flourish,through increasing sustainable economicgrowth remains central. This is underpinnedby the National Performance Framework, byScotland’s Economic Strategy and our annualProgramme for Government which sets outour plan for policy delivery and legislationover the next year. The whole of the publicsector in Scotland is expected to contributeto the Purpose. Different organisations arenow working towards shared goals which aredefined in terms of benefits to the people ofScotland rather than simple efficient servicedelivery.8To meet this expectation the sustainableprocurement duty has been aligned withthe National Performance Framework.The National Outcomes and Indicators areembedded in the sustainable procurementduty tools which provide a structuredapproach to what we procure. They help toidentify opportunities to include economic,social, and environmental considerations incontracts and show how our procurementactivity contributes to the National Outcomesand, in turn, to Scotland’s Economic Strategy.

Update to the Scottish Government Procurement StrategyUsing the prioritisation methodology atan organisational and category level andthe sustainability test in our individualprocurement projects we identify a range ofsustainable outcomes under the followingbroad headings: Bio-security; Bio-diversity (protection andenhancement); Climate change (carbon and energyconsumption, carbon in production,adaption, carbon in vehicle emissions); Compliance with the sustainable procurementduty is the recommended mechanism throughwhich public procurement contributes toand tracks its contribution to the ScottishGovernment’s purpose and priorities. Keypriorities are defined in Scotland’s EconomicStrategy as: promoting inclusive growth and creatingopportunity through fair and inclusivejobs market and regional cohesion; investment in our people and ourinfrastructure in a sustainable way;Communities (including ruralcommunities); fostering a culture of innovation andresearch and development; andEmployment (opportunities to achieveskills and training; to encourage SMEs,social enterprises, supported businessesas main providers or to form part of thesupply chain); promoting Scotland on the internationalstage to boost our trade and investment,influence and networks. Equality (protected characteristics); Fair and ethical trading (workingconditions, conflict materials); Fair Work; Hazardous materials/emissions; Heritage (protection and enhancement); Materials (scarcity, security); Security and crime (impact andimprovement); Water (consumption and production); and Waste (production, reuse, recondition,remanufacture).We design our contract and procurementprocess to contribute to these priorities asfar as is practical and in a way that achievesvalue for money and makes contractsaccessible to businesses, including SMEs, thethird sector and supported businesses. Someexamples of how we do this are described onthe next page.The prioritisation methodology allows usto see where there is the most scope todo things differently and where we havethe most influence on the market so thatwe recognise the best opportunities in ourprocurement activity.9

Update to the Scottish Government Procurement StrategyInclusive GrowthWe have defined inclusive growth as‘growth that combines increased prosperitywith tackling inequality; that createsopportunities for all and distributes thedividends of increased prosperity fairly’.Inclusive growth incorporates the traditionalgrowth policies of investment, innovationand internationalisation, while tacklinginequalities in outcomes and inequalitiesin opportunity. Inclusive growth is multidimensional and includes social inclusion,wellbeing, participation, as well as theenvironment. It promotes growth in Scotland’scities, regions and rural areas recognising theimportance of place and community to thedelivery of inclusive growth across Scotland.Scotland’s Economic Strategy states thatScotland aims to be:‘a society that promotes inclusive growthand creates opportunity through a fair andinclusive jobs market and regional cohesionto provide economic opportunities across allof Scotland’Scotland’s Economic StrategyPublic procurement contributes to inclusivegrowth, for example, by: providing training and employmentopportunities; driving fair work practices; promoting equality and tackling inequality;and seeking low carbon solutions.10For example, the Scotland Act 2016 transfersa wide range of powers to Scottish Ministersmost significantly the powers over socialsecurity and employment support. Thesepowers and the supporting commercialarrangements are important as theyunderpin some of the aims in our EconomicStrategy and Scotland’s National Purpose.This will include the use of contractingand commissioning models that enablecollaborative working and adopting a personcentred approach.InvestmentProcurement underpins our investmentin people, infrastructure and assets.For example, a competitive dialogueprocurement process for Next GenerationAccess (NGA) Infrastructure as part ofthe reaching 100% Superfast BroadbandProgramme commenced in December2017. The resulting public investment willensure premises in Scotland have accessto Broadband Infrastructure capable ofdelivering speeds of at least 30 Mbps bythe end of 2021. This will build on thedeployment that has been, and will be,realised through the two Digital ScotlandSuperfast Broadband programmes (Highlandsand Islands and the Rest of Scotland)and through commercial roll-out. Thisprocurement seeks to support our 2017Digital Strategy refresh entitled ‘RealisingScotland’s full potential in a Digital World’and is noted as a commitment in theScottish Government’s Programme forGovernment 2017-18.

Update to the Scottish Government Procurement StrategyInnovationPublic procurement has a key role to playin supporting and promoting innovation inthe way public sector services are providedin Scotland. The sustainable procurementduty requires public bodies to considerinnovation for regulated procurements. Theprocurement rules also encourage innovationin public procurement through new andrevised procedures. For example, we haveintroduced a Dynamic Purchasing System(DPS) for Digital Services. This innovativeand completely electronic approachencourages SME participation and driveswider competition for digital projects,resources and cyber services. Suppliers canjoin the DPS at any time and it has over 250suppliers of which 81% are SMEs. While at theearly stages of delivery, we will be lookingto expand the use of dynamic purchasingsystems to other commodity areas.We are also working to identify “pathfinder”projects that will help drive innovation.Current examples of how procurement cansupport innovation include our Non DomesticEnergy Efficiency Frameworks and alsoCivTech which are described in more detailbelow.Non Domestic Energy Efficiency FrameworksIn March 2016 we set up a new frameworkfor Non Domestic Energy Efficiency (NDEE)with an estimated value of up to 300 millionover four years. The NDEE framework isinnovative in the way that it covers multipleand diverse energy efficiency and renewableenergy solutions under one contract. Weinvolved industry extensively when designingthe framework and used the sustainableprocurement tools to help develop theassociated procurement strategy. Theframework covers environmental, communitybenefit and fair work considerations.Expected benefits include: savings in energy and maintenance costs; a direct contribution to our target toreduce climate change emissions; reduced costs to the public and thirdsector; and delivery of energy efficiency work to meetthe Assessment of Non-Domestic Buildings(Scotland) Regulations 2016.11

Update to the Scottish Government Procurement StrategyBy using key performance indicatorsdeveloped specifically for this frameworkpublic organisations can track and reportprogress across a range of environmentaland socio-economic outcomes. So far, fourcampus wide college projects and one localauthority project, for eight buildings, havebeen awarded. All of these projects involvemultiple buildings. The college projects area mix of efficiency and renewable energygeneration across campuses. More projectswill be awarded in 2018.CivTech Our ‘CivTech ’ programme also addressespublic service challenges in an innovativeway. The project involves public organisationssetting civic challenges which smallerbusinesses are encouraged to tackle usinginnovative solutions. It enables the rapiddevelopment of creative, cost-effectivesolutions delivered by those businesses.CivTech is providing pathways for tech SMEsand start-up businesses to secure publicsector contracts. It offers real opportunitiesto deliver even better services for people andeven better value for service providers. TheCivTech approach is valued in procurementbecause of the innovative way it findssolutions to challenges.Our key aim is to deliver innovation inprocurement to address public sectorchallenges and we will continue to work withour partners and use the flexibilities in thepublic procurement rules that enable us todo this. Public procurement will continue tosupport innovative and agile ways of workingto deliver digital public services and publicservice reform. This commitment is reflectedin the Scottish Government’s Digital Strategy.12InternationalisationWe value Scotland’s trading relationshipswith other nations and believe that faircompetition supports economic growth.We treat all suppliers fairly, equally andwithout discrimination. Our involvementwith suppliers and supply chains is aimed atdeveloping their potential to bid for publiccontracts whether these are advertisedin Scotland, the UK or further afield. Toachieve our vision of being ‘world leadersin innovative public procurement’, we workwith UK, European and global networks toset standards and share best practice. Forexample, Scotland is a member of the PublicProcurement Network which covers theEU and countries seeking accession to theEU. The network provides a mechanism forsharing good practice and is an informalproblem solving mechanism in the event ofcross border disputes about market access.We have also been named as a subnationalpioneer country as part of an internationalinitiative under the Open GovernmentPartnership. This is aimed at governmentand civil society working together to developand implement ambitious open governmentreforms one of which is public procurement.As part of the Open Government PartnershipScottish National Action Plan 2017 wedeveloped the Scottish Procurement OpenContracting Strategy. That strategy statesour intention to publish even more coherentand consistent procurement information in aformat that is useful and easily understood.We also outlined our phased approach toimplementation where we gradually increasethe amount and types of information wepublish.

Update to the Scottish Government Procurement StrategyAlso, in May 2018 the data protection ruleswill change. To ensure that all current andfuture procurement exercises are compliantwith the new legislation we have updatedour own general Terms and Conditions thatapply to our contracts to ensure that theseproperly reflect the new legislation. We alsotake cyber security matters very seriouslyand the Scottish Government issued itscyber resilience strategy Safe, Secure andProsperous: A Cyber Resilience Strategy forScotland in November 2015. Since then, theScottish Government has also agreed a PublicSector Cyber Resilience Action Plan and CyberResilience Implementation Toolkit with publicbodies and issued these on 8 November2017.Overall, we help to deliver our key prioritiesthrough what we buy and how we buy it,which includes considerations of the widereconomic and social impact of our contractsand how we manage our supply chain.13

Update to the Scottish Government Procurement Strategy3. How our procurement activitycontributes to value for moneyThis section describes how our procurementactivity contributes to value for money.Procurement is a key enabler in deliveringScotland’s Economic Strategy and contributingto sustainable economic growth. We willcontinue to work together with the public,private and third sectors to deliver maximumvalue through public procurement activity.Our involvement in public procurementis far broader than buying on behalf ofScottish Ministers. We also buy for thepublic sector and other organisations inScotland and provide procurement supportto Scottish Government agencies and nondepartmental public bodies (NDPBs). Ourcontracts deliver a wide range of economic,social and environmental benefits as well assignificant financial savings for the publicsector. Our contracting activity covers threemain areas: Contracts we let for Scottish Governmentuse only.Portfolio Sectoral collaborative frameworks. Theseare let by the Scottish Government foruse by the central government family oforganisations which includes agencies andnon-departmental public bodies. National collaborative frameworksand contracts. We provide frameworkagreements and contracts for commonlypurchased goods and services which areused across the public sector.A description of what we mean by bothnational and sectoral collaborativeframeworks is included further below.Details of the contracts that we have placedcan be found on PCS. In the financial year2016-17 our portfolio of contracts wasvalued at over 940 million and deliveredsavings of more than 143 million. Thesefigures are broken down against procurementportfolio in the table and charts immediatelybelow and opposite.Spend ( m)Saving ( m)Utilities and Facilities Management 477.90 28.00Corporate and Professional Services 190.70 28.60Information and Communication Technology 138.20 69.50Scottish Government Procurement 123.40 14.60Scottish Government More Powers Procurement 5.90 2.20Central Government Procurement Shared Service 4.60 0.60 940.70 143.50TotalTable 1 Procurements led by us – spend and savings by portfolio 2016-1714

Update to the Scottish Government Procurement StrategySpendScottish GovernmentMore PowersProcurement 5.90 millionCentral GovernmentProcurement SharedService 4.60 millionScottishGovernmentProcurement 123.40 millionInformation andCommunicationTechnology 138.20 millionUtilities and FacilitiesManagement 477.90 millionCorporate andProfessional Services 190.70 millionSavingsScottish GovernmentMore PowersProcurement 2.20 millionScottishGovernmentProcurement 14.60 millionInformation andCommunicationTechnology 69.50 millionCentral GovernmentProcurement SharedService 0.60 millionUtilities andFacilitiesManagement 28.00 millionCorporate andProfessional Services 28.60 million15

Update to the Scottish Government Procurement StrategyCollaborative frameworks and contractsForward plan of our collaborative contractsCollaborative procurement is about achievingvalue for money for the Scottish publicsector by working in partnership with buyingorganisations, the centres of expertiseand suppliers. Our three collaborativeprocurement portfolio teams cover Utilities,Information and Communication Technologyand Corporate and Professional Services andaward framework agreements for the wholeof the Scottish public sector and also for thecentral government sector. The contractsand frameworks awarded by our buyingteams have a combined value of over 800million per year. They can be used by publicorganisations across Scotland and cover arange of goods and services. Details of ourcurrent Collaborative Agreements can befound on our website.We publish a forward plan of our nationaland central government sector collaborativeopportunities along with collaborativeopportunities covering the health, highereducation and local authority sectors inScotland and which may be advertised overthe next 12 to 18 months.From 2008-09 to 2016-17 we have deliveredover 740 million in savings through buyingcommon goods and services on behalf ofthe public sector. Delivered savings againstcollaborative contracts (both current and new)in the three-year period 2016-17 to 201819 are expected to exceed our 256 milliontarget. working closely with the people who usethe goods and services we buy to helpunderstand their requirements; understanding the markets we work in; awarding contracts on the basis of fair,open and transparent competition whichis in proportion to the contract in questionand which keeps to our legal oblig

Scottish public procurement rules and scope of this procurement strategy Legislation governs how Scottish public bodies buy their goods, services or works. One of the things that it requires us to do is to publish a procurement strategy, or to review an existing one, to set out how we plan

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