Sustainable procurement duty - impact and value analysis: main report

Chapter 7: Discussion and recommendations

The purpose of this research was to provide evidence of the early impact of the Duty. A requirement of public bodies since the Procurement Reform (Scotland) Act 2014 came into force, the Duty has led to a step change in procurement practice.

However, while Scotland is ahead of many other countries in its practice in relation to sustainable procurement, and there has been significant progress in recent years, much remains to be done and public bodies and stakeholders alike recognise that a further push is required to take implementation to the next level.

Austerity and budgetary challenges have undoubtedly limited some of the potential for change, but despite these challenges there is more that public bodies can do to deliver impact. Creativity and ambition in relation to implementing the Duty are not universal and there are many lessons to be learned from organisations that are at the forefront of successful implementation.

Levels of understanding of the Duty still vary significantly between organisations and between levels of staff within organisations and while comprehensive training and guidance are available, take-up is not universal. The Sustainable Procurement Duty Tools are welcomed by many but research participants voiced concerns about how detailed and cumbersome these are. The ongoing review of these tools is an opportunity to ensure that they are streamlined and user-friendly.

Feedback is clear - there is a need to better maximise the leverage of the public sector, and a need to pick up pace.

National Performance Framework

The Duty is linked to the National Performance Framework and this research has shown that, in many ways, activities undertaken by public bodies to implement the Duty are making a positive contribution to Scotland’s national outcomes, as summarised in Table 7.1.

Table 7.1 Contribution of sustainable procurement to national outcomes

National outcome	Examples of outputs that support the national outcome
We grow up loved, safe and respected so that we realise our full potential	Commissioning of early learning, childcare and education services delivered in line with GIRFEC and SHANARRI outcomes help children and young people to develop skills and work towards their full potential. Procurement of family support services that help parents to enhance their parenting skills, leads to improved family relationships and more positive outcomes for families
We live in communities that are inclusive, empowered, resilient and safe	Support for community organisations and clubs through community benefit requirements
We are creative and our vibrant and diverse cultures are expressed and enjoyed widely	Support for community organisations focused on arts and culture through community benefit requirements Provision of arts and crafts resources for schools and other public bodies
We have a globally competitive, entrepreneurial, inclusive and sustainable economy	Contracting/sub-contracting, business support and development opportunities for suppliers, particularly SMEs, social enterprises, supported businesses and third sector bodies Procurement of creative and innovative solutions to address challenges faced by public sector bodies
We are well educated, skilled and able to contribute to society	Activities, often through community benefits, to enhance local people’s skills and employability including work experience placements, apprenticeships and other training opportunities, and talks and workshops for schools, colleges and universities Creation of employment opportunities linked to delivering the goods or services procured, often supported by community benefit requirements
We value, enjoy, protect and enhance our environment	Reducing/eliminating the use of single use plastic Increasing the use of energy efficient products such as electric vehicles Activities to enhance the environment such as tree planting and landscaping works Increasing recycling and reducing waste Constructing and refurbishing buildings to maximise energy efficiency
We have thriving and innovative businesses, with quality jobs and fair work for everyone	Contracting/sub-contracting, business support and development opportunities for suppliers, particularly SMEs, social enterprises, supported businesses and third sector bodies Promoting fair work practices among suppliers, for example the real Living Wage, through tender assessment criteria
We are healthy and active	Support for activities that aim to improve healthy eating among communities Construction or upgrading of community amenities that promote physical activity including play areas for children, greenspace and sports facilities Sponsorship/support of local sports teams and groups through community benefit requirements
We respect, protect and fulfil human rights and live free from discrimination	Promoting fair and ethical working practices throughout the supply chain, for example taking steps to guard against worker exploitation and involuntary or underage labour
We are open, connected and make a positive contribution internationally	Procurement of creative and innovative solutions using technology to address challenges faced by public sector bodies Promoting fair and ethical working practices throughout the supply chain, for example taking steps to guard against worker exploitation and involuntary or underage labour
We tackle poverty by sharing opportunities, wealth and power more equally	Activities, often through community benefits, to enhance local people’s skills and employability including work experience placements, apprenticeships and other training opportunities, talks and workshops for schools, colleges and universities Creation of employment opportunities linked to delivering the goods or services procured, often supported by community benefit requirements

However, while the Duty is linked to the National Performance Framework and is universally applicable, some representatives in public bodies believe that more still needs to be done to make the business case within organisations for sustainable procurement.

Impact to date

Measures are being implemented to varying degrees across the three strands of the Duty (improving, involving and promoting innovation). Of the three, promoting innovation is the main area where many bodies continue to indicate a need for further guidance and support.

Community benefit requirements, often the mechanism used to address the requirements of the Duty, are now a regular feature of regulated procurement contracts – with 81% of public bodies (89) reporting in their 2018-19 procurement reports that these are incorporated into their regulated contracts. This is significant progress within a relatively short time-frame. Many go further and include these across both regulated and unregulated contracts. Some of these community benefits are well-recorded by public bodies, however many are not recorded systematically or in a way that can be shared with Government or others.

While information provided in recent procurement reports indicates that significant impact is being made, evidencing the full extent of the impact of measures taken to fulfil the Duty remains challenging. Many bodies find evidencing their impact difficult – citing resource constraints, inadequate systems, information spread across different parts of organisations, lack of skills, and lack of willing as key barriers to this being done effectively. Individual public bodies have responsibility for ensuring that this evidence is available, however continuing support from Scottish Government will be important in ensuring this happens.

There remains some way to go to make contracts as accessible as they can be to encourage third sector participation in particular. Only 35% (11) of the 31 public bodies that responded to our survey had involved third sector bodies in contracts awarded in 2018-19. In addition, the Social Enterprise in Scotland Census Survey from 2019^[152] found that 79% of social enterprises did not tender for public contracts. The main reason for this was insufficient capacity, capabilities or experience to deliver the contract (56%), followed by the goods and services offered by social enterprises being inconsistent with the needs of public bodies (41%). However, some cited other challenges such as difficulties in finding suitable partners (14%), a perception that there were too many risks associated with public contracts (12%), and unrealistic budgets (9%) and/or timetables (8%), and this perhaps suggests areas where social enterprises and third sector bodies might require support to help them access public contracts.

Interviewees indicated that there remains a lack of understanding or awareness of what the third sector can offer and the third sector continues to lack capacity and skills to bid for contracts. Support continues to be needed to address these gaps. Feedback from participants in our research suggested that, while the issues faced by SMEs, third sector bodies and supported businesses in terms of accessing public sector contracts are often similar, progress in making procurement accessible to SMEs and supported businesses has been quicker, but there remains room for further progress to be made in this aspect of the Duty.

Innovation is another area where impact is more difficult to determine. Feedback from interviewees suggests that more support is needed to help public bodies to understand how innovation is defined within the Duty, how this applies to their work and to understand how best to encourage innovation through procurement.

Cost continues to be a key deciding factor for some organisations and while this will always be an essential factor in assessments, some public bodies may need to consider more frequently whether economies of scale and price are always the most important criteria. In some cases, social impact may need to be more highly prioritised. An important element of this will be considering more carefully the relative priority of different elements of tender processes, and whether elements of tender assessments are scored.

Enablers and barriers to effective fulfilment of the Duty

Through the research we identified a number of enablers which research participants believed to be key to building on the impact already delivered through the Duty. These included strong leadership; improved capacity and resources within procurement teams and across public bodies more widely; effective contract management (including robust monitoring of impact); more extensive sharing of good practice; sustainability featuring more heavily in assessment processes (and being a scored component where appropriate); and building strong relationships with suppliers pre and post-tender.

Barriers identified included lack of time and resource to fully consider the Duty in each procurement exercise; a lack of funding; insufficient skills and knowledge to implement the Duty effectively; inadequate monitoring of impact; risk aversion; and a lack of ambition and creativity. However, it should be noted that these barriers were not experienced uniformly and many organisations were able to put in place systems to mitigate these challenges.

The recommendations outlined in the next section address the barriers highlighted above. In setting out these recommendations, we recognise that, while the Scottish Government has a role to play in supporting public bodies’ procurement, ultimately, responsibility for meeting the requirements of the Duty, and for ensuring that procurement delivers value for money, lies with individual public bodies. The recommendations set out below seek to address the challenges highlighted during the research.

Recommendations for public bodies

Some 2018-19 annual procurement reports continued to contain minimal detail in relation to implementation of the Duty. Many public bodies only provided a policy statement or statement of confirmation in their annual reports, with detail of how they implemented the Duty lacking. This does not necessarily indicate a lack of action and it may be the case that organisations are under-reporting on their efforts to address this element of the Duty.

Recommendation 1: Public bodies should continue to improve the level and quality of information provided in annual procurement reports in order that the full impact of the Duty can be better understood across organisations.

Some public bodies raised concerns about a lack of clarity around what is expected in addressing environmental wellbeing, which they felt had led to mixed interpretations by both vendors and suppliers. While extensive advice and support is available to public bodies from the Scottish Government on implementing the environmental wellbeing aspect of the Duty, including the statutory guidance associated with the Duty and specific topic guidance,^[153] take-up of this is mixed, and understanding and capacity is still lacking.

Recommendation 2: Public bodies should continue to grow their capacity to address the environmental wellbeing element of the Duty, by accessing existing support and learning from good practice.

A relatively low number of public bodies make any reference to ethical supply chains in their annual procurement reports. It is again unclear whether the gap is in information provided in reports or whether there are gaps in practice.

Recommendation 3: If the former, then public bodies must work to include more comprehensive information in their annual procurement reports. If the latter, then public bodies must re-visit their practice and consider how ethical supply chains may be better encouraged and achieved.

Feedback indicates that there is strong commitment to procurement as a lever for change at strategic levels in many of the public bodies, but that there is less commitment at operational level (outside procurement teams).

Recommendation 4: Public bodies should continue to work to develop levels of commitment and understanding among their staff of the opportunities that the Duty offers for positive change and the benefits that implementing the Duty have for the body. Staff should be aware that considerations related to the Duty apply throughout the procurement process, from developing the requirement to selecting suppliers, evaluating bids and managing the contract.

Risk aversion, combined with a lack of ambition and lack of creativity in approach were considered to be key barriers to more effective implementation of the Duty, with a sense that the level of ambition to use the Duty as a real lever for change was limited in some public bodies.

Public bodies’ procurement reports indicate that significant impact is being made through the implementation of the Duty, but evidence of the full extent of the impact is not always available. It is vital that public bodies have measures in place to monitor progress in relation to implementation of the different aspects of delivery related to the Duty but some are finding this challenging, particularly with regard to community benefit requirements. Feedback indicates that a lack of resource, in the form of both time and skills, is a barrier to this happening more comprehensively.

Research participants also noted that in many public bodies, systems and processes are not yet sufficiently sophisticated to fully understand how organisations are contributing towards delivering national outcomes through procurement. Tightening the link between policy and procurement staff in an organisation was considered to be central to this going forward.

Recommendation 5: Public bodies to work towards improving systems for monitoring progress against the delivery and impact of the Duty to ensure that more comprehensive information can be provided through annual procurement reports and impact can be better understood.

Recommendation 6: It is crucial that evidence collected by public bodies about the delivery and impact of the Duty goes beyond cost savings and considers other areas of social, economic and environmental impact, to demonstrate the contribution of these activities to wider value for money impact.

There was consensus across interviewees that learning from each other’s practice was vital to push forward implementation of the Duty and to increase innovation. Interviewees also noted the need to see more examples of good practice to make it more tangible and credible to buyers.

Recommendation 7: Public bodies should take a more active role in sharing good practice with their suppliers and with other public bodies in their sector and beyond.

Feedback during this research suggested that the Duty could be given more prominence in assessment to ensure that suppliers understand the importance placed on it by public bodies. However, there was also a recognition that weighting will only be appropriate for some contracts and that remaining proportionate was important. Some concerns were also raised about quality and experience lacking in people assessing tender responses.

Recommendation 8: Public bodies should consider whether questions related to the Duty can, where appropriate, form scored elements of more contracts than is currently the case^[154]; and ensure that staff have the necessary skills to make judgements around sustainability when assessing bids. Where scoring is not deemed to be appropriate, public bodies should consider whether the value of requiring this information is outweighed by the additional burden placed on bidders, and on staff in the assessment process.

Cost continues to be a key deciding factor in assessment processes for some organisations and while this will always be an essential factor in assessments some public bodies may need to ask themselves more frequently whether economies of scale and price are the most important criteria. In some cases, social impact may need to be more highly prioritised.

Recommendation 9: Public bodies to re-visit, and to more regularly review, the balance in assessment processes between cost and the quality of the offer from suppliers (including any offer related to elements of the Duty).

Recommendations for sectoral bodies

Related to the key points outlined above, the following recommendations are made for the four Procurement Centres of Expertise in Scotland:

Recommendation 10: Explore opportunities to provide further support for public bodies with monitoring and evidencing progress with and impact of the implementation of the Duty, including community benefit requirements. This could include signposting bodies to existing support and guidance.

Recommendation 11: Continue to support public bodies with the development of their annual procurement reports by, for example, providing templates or guidance for minimum content.

Recommendation 12: Identify further opportunities for public bodies to share learning and examples of effective practice from their experience of implementing the Duty.

Recommendation 13: Explore opportunities for further supporting public bodies with their implementation of the Duty, especially guidance around the promoting innovation and environmental wellbeing aspects of the Duty. This could include signposting bodies to existing support and guidance.

Recommendation 14: Facilitate and co-ordinate opportunities for public bodies to provide feedback to the Scottish Government on the existing support and guidance. This feedback is critical to enable the Scottish Government to continuously improve the support and guidance and to ensure it meets the needs of the sector.

Recommendations for Scottish Government

Recommendation 15: There is no Procurement Centre of Expertise specifically for registered social landlords (RSLs), but there are other umbrella bodies that support organisations in this sector. It may be worthwhile for the Scottish Government to explore whether RSLs require further support with implementing the Duty and how this might be delivered.

Recommendation 16: Support public bodies to work towards ensuring a tighter link between procurement policy and practice and local and national policy objectives.

Recommendation 17: Work with partners to put in place or re-introduce opportunities for sharing good practice on sustainable procurement between public bodies, both sectorally and cross-sectorally focused, to encourage more creative and ambitious approaches to addressing the Duty.

Recommendation 18: Continue to work with public bodies to improve the quality and depth of information provided on the delivery, impact and effectiveness of the Duty through the annual procurement reports. Re-visit the data template issued for the first time last year to ensure it is fit-for-purpose so that full and relevant evidence is captured, drawing on learning from this research.

Recommendation 19: Use the ongoing review of the Sustainable Procurement Duty Tools to consider options for refining the tools to ensure that they are more user-friendly.