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Review of Public Procurement in Scotland - Report and Recommendations

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12 Competitive Supplier Base

Background

The existence of a base of high quality and cost competitive suppliers is a vital ingredient of an optimum environment in which to achieve Best Value in procurement expenditure. The availability of that grade of supplier locally in Scotland can provide good service to the Public Sector, benefit the Scottish economy, and at the same time, conform to all EU and other purchasing legislation and guidelines. However, irrespective of the local, national or international characteristics of suppliers there is undoubtedly an important responsibility within the public sector to conduct procurement operations in a way that meets highest standards from the beginning to end of the procurement process yet delivers Best Value.

Findings

There is a high level of general dissatisfaction amongst suppliers with the procedures and practices operated by Public Sector organisations in Scotland. These concerns are particularly strong amongst small and medium-sized enterprises.

The dissatisfaction level has been strongly enforced by CBI, Chambers of Commerce, Federation of Small Businesses and a number of individual suppliers. Their documented concerns and aspirations include the following:

  • Poor general communications to and from the public sector
  • Access to, and information about, tenders and potential tenders
  • Tender management process, feedback and formal decisions reviews
  • Inconsistent standards in public sector from unit to unit
  • Multiple sets of terms and conditions
  • Artificial barriers to entry perceived
  • EU rules seen to be not conformed with
  • Accreditation of suppliers not consistent nor portable to other public sector organisations
  • Delays in finalising contracts
  • Absence of interface point for complaints or review requests
  • Lack of transparency in decision-making process and in who decision makers are
  • Small and medium-sized indigenous businesses specially disadvantaged by pre-tender specs
  • Social economy agenda not well articulated
  • Evaluations do not fully recognise whole life cost and in particular the value provided by local service
  • Poor awareness of full-cost recovery requirement of voluntary-sector providers bidding for contracts

12.1 Recommendation

A Charter for Suppliers should be established for the complete public sector in Scotland. It should essentially describe the sector's commitment to suppliers by defining the generic standards which suppliers can expect from the operation of public-sector procurement and in turn what will be expected of them as suppliers to the sector. Establishment and publication of the Charter, which will bind all units within the public sector to its contents, will require extensive work across the sector in a number of areas and the undernoted recommendations highlight the topics and areas where focus, agreement and improvement is required before a "Charter" can be finalised.

This report commends the existing work being conducted within the Scottish Executive, including the Procurement Directorate, to address the issues raised by SMEs.

12.2 Recommendation

Whilst recognising the diversity of operations there should be some standardisation across the public sector in Scotland of the Terms and Conditions required by the public sector from suppliers. The following areas are those indicated in my findings as causing most concern to suppliers but should not be regarded as exhaustive:

  • Minimum business scale
  • Indemnity insurance
  • Number of years of audited accounts demanded
  • Payment terms
  • e-auction rules
  • Procedures and timing parameters
  • Portability of supplier accreditation across public organisations

12.3 Recommendation

It is vital to maintain the competitive market environment referred to above. Therefore an open market environment supported by a single public sector "electronic portal" should be established. Suppliers must be able to access all essential information on opportunities to offer services and bid for contracts for the supply of commodities and services to the whole Public Sector in Scotland. Access to, and participation in, tenders should be free of charge.

12.4 Recommendation

There should be total transparency in connection with procurement decisions. All awards should be formally notified to the successful bidder and then publicly through the Public Sector portal website. All unsuccessful bidders should have access to the decision principles and be able to understand why they were unsuccessful on this occasion. A closed loop is mandatory.

12.5 Recommendation

Suppliers need to have a single point of enquiry within Scotland to which they can address concerns and obtain clarification of decisions and procedure related to public procurement. There should be a designated point of appeal positioned within the Scottish Executive and authorised to address this need. If the appeal concerns a decision or procedure of SPD, the point of appeal should include some element of independence from SPD.

12.6 Recommendation

The Centres of Expertise described at 11.1 should have commodity and supplier strategies. In support of this each Centre of Expertise should conduct regular "supplier forums" during which buyer and supplier issues can be exercised, logged and resolved.

12.7 Recommendation

There should be a special effort to ensure that regional suppliers are developed to provide goods and services locally. In the context of the collaborative procurement recommendations at 11.1, the opportunity being created for local suppliers to competitively bid for all categories of commodities and services should be encouraged, especially for Category C items.