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Public sector review of construction in Scotland

24/5/12 

Construction is the largest single area of procurement spending in Scotland - accounting for over £2bn per annum of the £9.2bn annual procurement spend.

On 6 February, Cabinet Secretary for Infrastructure and Capital Investment, Alex Neil MSP, announced a “root and branch review of construction procurement across the public sector. . . .to tackle industry concerns and ensure that procurement practices deliver best value for Scotland’s economy.” The review will also include social and affordable housing.

Scotland’s public works and affordable housing sectors offer what are likely to be very significant opportunities to improve use of both buyers’ and suppliers’ resources, potentially generating:

  • increased savings;
  • improved sustainability;
  • adoption of innovative techniques, materials and technology;
  • better practice, leadership, accountability and governance; greater integration of the supply chain; and
  • improvements to outturn quality.

The review will explore those opportunities by examining:

  • Current works procurement structures, organisation and effectiveness across the wider Scottish public sector, including affordable housing and Registered Social Landlords;
  • existing practices, procedures and guidance sources, including buyers’ skills and capabilities;
  • measures of performance indicators, targets and delivery assurance;
  • sustainability in a construction context; and
  • lessons to be drawn from experience elsewhere.
What next?

Scottish Procurement has been taking soundings from leading figures in the construction sector on the proposed Terms of Reference for the review, and also with the Public Procurement Reform Board.  Feedback so far has generally been very positive and helpful. The processes to determine the appointment of the review leader and to establish the anticipated likely level of secretarial support are also underway: further news will follow when available.

Scottish Government’s Housing Supply Division have also engaged with key figures in the social and affordable housing sector to ensure the scope of review reflects the potential for delivering better value.

Next steps include:

  • finalising the structure, governance, terms of reference and timescale of the review;
  • appointing the review leader and establishing the secretariat; and
  • announcing the commencement of the review.
Key facts

A substantial amount of procurement spend across the public sector in Scotland takes place outwith Scottish Government e.g. 56% is by local authorities. The Scottish Procurement Information Hub has 10,400 suppliers in the “construction” category. 44% of spend is won by SMEs and over 70% by Scottish Suppliers.

While significant progress in strategic market engagement has been made through activities such as SFT’s “hubcos” and schools’ building programme; and in Health, through Framework Scotland, construction procurement has not yet been substantively and holistically addressed by the Public Procurement Reform Programme.

Periodic updates will appear in the e-Bulletin.