SME and third sector organisations access to public contracts

We are working to improve access to public contracts for SMEs, the third sector and supported businesses.

This is a key part of our approach to meeting the sustainable procurement duty and it is an objective of the Public Procurement Strategy for Scotland to consider the structure of contracts in the development phase to reduce (or remove) barriers to participation for SMEs, third sector and supported businesses.

Measures include the following.

Procurement support and advice for SMEs and third sector organisations

We have put in place a set of tools, policy support and guidance to simplify procurement processes and increase access to information and opportunities.

Public bodies are required to advertise all regulated procurement opportunities on the Public Contracts Scotland website, making it easier for SMEs to find and win contracts.

Regulated procurements are contracts of values of £50,000 and above for goods and services and of £2 million and above for works.

Public bodies are also required by law to ensure that their procurement practices are open to SMEs, the third sector and supported businesses.

We fund the Supplier Development Programme which runs events and works with partners to help SMEs and third sector organisations win work and grow their business.

And we continue to develop our collaborative procurement strategies to take account of the potential impact on and ease of access for SMEs and third sector organisations. This includes splitting larger requirements into smaller lots, making it easier for smaller firms to bid for work.

Figures show that almost 80% of public sector contract awards now go to SMEs.

Guidance on public procurement for SMEs and Third Sector Suppliers

We have created a helpful document detailing sources of support for SME's and Third Sector looking to bid for and win public sector contracts.

Project Bank Accounts for construction projects

Our Project Bank Account model for construction projects ensures that payments to subcontractors - many of whom are SMEs - are prompt and protected.

Instead of money owed to subcontractors reaching them through the main contractor's bank account – where it can be delayed – they get it through the PBA.

Third sector support

From 2016 to 2022, we funded the Partnership for Procurement (P4P) programme which provided specific support for third sector organisations wishing to form consortia to bid for public sector contracts. Funding for P4P ceased on 30 June 2022, with a view to incorporating the services provided within a revised business support contract for the third sector from May 2023

We also provide support and training for third sector organisations linked to the Just Enterprise third sector contract

Removal of the option for public contracts to be awarded on the basis of lowest cost

We have removed the option for higher value public contracts (i.e. those defined by the Public Contracts (Scotland) Regulations 2015) to be awarded on the basis of lowest cost or price only.

Our statutory guidance selection of tenderers and award of contracts makes it clear that this approach should also be applied to award criteria for contracts defined in the Procurement Reform (Scotland) Act 2014, which are between £50k and the Public Contracts (Scotland) Regulations 2015 threshold.

Reserving contracts for supported businesses

The Sustainable Procurement Duty outlined in the Procurement Reform (Scotland) Act 2014 requires that a public sector organisation must think about how they can improve the social, environmental and economic wellbeing of the area in which they operate, with a particular focus on reducing inequality.

Public bodies are able to reserve contracts for Supported Businesses under the public procurement rules in Scotland.

A public body is able to reserve contracts to Supported Businesses whose main aim is the social and professional integration of disabled or disadvantaged persons, and where at least 30% of the employees are disabled or disadvantaged persons.

We are making it easier for public bodies to contract with supported businesses through the national requirements reserved for supported businesses a dynamic purchasing system (DPS).  The DPS runs until 08 September 2025.

A key objective of this DPS is to continue to provide the Scottish public sector and third sector bodies a straightforward, flexible route to market for a range of goods and services provided by supported businesses and in doing so, support the integration of disabled and disadvantaged citizens into the mainstream workforce.

The DPS will be on a single lot basis that will hold a wide range of goods and services provided by supported businesses. Descriptions of these goods and services and any subsequent categorisation will be provided via publicly available guidance documentation.

Further information:

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