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Review of Public Procurement in Scotland - Report and Recommendations

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3 Vision for Public Sector Procurement

Having described external expenditure as a very significant element of total public expenditure in Scotland, I now focus on the relevance of that expenditure and the activities that support its management.

Commodities and services purchased from suppliers represent a critical working part of the operational fabric of any undertaking. Inadequate or poor performance in this area will have at least a similar negative impact on the undertaking's service delivery and business results as those originating from the underperformance of internally-managed resources and costs. Indeed, it can be argued that because of the "arms-length" nature of procurement transactions the consequences of supplier issues can be even more severe, and certainly when they happen, more difficult to respond to, and to take under direct management control. The balancing of the most fundamental criteria of quality, price, timeliness and other interests such as corporate and social responsibilities within a supplier contract is a vital but challenging goal for management to execute.

Also the dynamism of procurement and the transactional nature of funds disbursed to outside parties make it a vulnerable area where internal control and rigorous processes are essential.

Given the combination of expenditure levels, complexity, vulnerability and criticality to operations, it should be expected that extremely high priority be given to procurement by the most senior levels of management and others responsible for governance within public sector undertakings.

In addition, it is obvious that those involved in the day-to-day conduct of procurement operations have an important and highly professional role to perform. The procurement function and its organisation should be regarded as one of the most important in the undertaking and its status should rank with that of other professional functions such as finance. Indeed, given its dynamism, variability and external perspective, not only should those involved have the backing of professional training and accreditation they should preferably have interpersonal skills which support their externally facing roles as the delegated legal and commercial representatives of their organisations as they place business with suppliers. Also, there is a growing requirement for knowledge of and ability to satisfy legal and other corporate and social responsibilities such as sustainability.

I believe that one of the keys to progress is the definition and pursuit of a vision of the ideal model for procurement including its optimum characteristics.

I envisage a public procurement scenario in which the following critical success factors of organisation and practice are consistently established and maintained:

  • Recognition and implementation of the principles of good governance and accountability as they apply to procurement activities within the public sector.
  • An overall organisational structure in which the procurement function is recognised as a high priority operation.
  • An adequately-staffed procurement organisation in terms of resources and skills and where enhancement of those resources and skills is perceived as an investment providing a financial return.
  • The operation of sound practices and business processes that fully address the complexity and criticality of procurement activities and transactions, including the wider responsibilities of the public sector.
  • The existence of effective information systems supporting the procurement operation and assisting its performance including the ability of internal users to access an information system at their work place and request goods and services independent of the organisation (local or remote) which has established the original contract.
  • Leadership of, and within, the procurement function which ensures not only the deployment of policy, accountability and best practice but also the appropriateness of staff development, training, career paths and other ongoing skills and people-related support.
  • All of the above contributing to highly-advanced and effective capabilities including collaborative procurement which consistently deliver Best Value performance and support a competitive but transparent and equitable environment for suppliers.

In summary, the management of externally-sourced public expenditure should be a very high priority and procurement is a distinct and important profession.