Public body procurement reports and strategies 2023 to 2024: analysis

Executive summary

Background

Introduced in 2014, the Procurement Reform (Scotland) Act (“the 2014 Act”) sets out general duties for public sector contracting authorities, stating they must treat relevant economic operators equally and without discrimination, and act in a transparent and proportionate manner. In addition, contracting authorities with an estimated total value of regulated procurements^[1] of £5 million or over per financial year are required to prepare a procurement strategy and annual procurement report (Scottish Government, 2023a).

After the end of each financial year, Scottish Ministers must prepare a report based on the information contained in annual procurement reports and strategies. To help inform the Ministers’ report, social research agency The Lines Between was commissioned to review, analyse and report on the procurement reports and strategies over three financial years: 2023 to 2024, 2024 to 2025 and 2025 to 2026.

Methodology

This report presents analysis of 125 procurement strategies and annual procurement reports, and 124 associated data templates covering the 2023 to 2024 financial year.^[2] The report also includes comparisons with findings from analysis of procurement activity in two previous financial years: 2021 to 2022 and 2022 to 2023.

The Lines Between adopted a desk‑based methodology to review the procurement strategies and annual procurement reports. The analysis was based on a set of criteria that reflected the minimum required content for strategies and annual procurement reports, as set out in the 2014 Act (Scottish Government, 2023a).^[3] Each annual procurement report and strategy was read in full and individually assessed against these standards.

A team of five analysts reviewed the reports and strategies. The Scottish Government and The Lines Between coproduced standardised guidance on the legislative requirements regarding what should be included in annual procurement reports and strategies to support the team of analysts in determining what would constitute sufficient evidence to meet the requirements. The analysts recorded these assessments in a shared analysis template using questionnaire software, and the data was then subjected to a structured quality assurance process.

As part of this analysis, The Lines Between also collated and analysed quantitative data submitted by public bodies in standardised data templates using Microsoft Excel. A total of 124 public bodies submitted data templates.

There are a number of limitations in relation to the data and analysis used in this report. For example, the analysis relies on the depth and accuracy of information included in procurement strategies, annual reports and data templates, which may not represent a full and accurate picture of all public sector procurement activity in Scotland. Further, there is no fixed deadline for public bodies to publish their reports. Therefore, to enable analysis to be completed within the required timeframe, only reports published by 6 March 2025 have been included in the analysis. In addition, fewer annual procurement reports and strategies were included in the analysis than previous years; this should be taken into consideration when looking at year on year comparisons.

Requirement to prepare an annual procurement report and strategy

A total of 124 annual procurement reports (100%, n=124) provided details of public bodies’ regulated procurement expenditure. Of those, 93 (75%) had a regulated procurement spend of £5 million or over, and were therefore required to prepare and publish a procurement strategy and annual procurement report. The remainder (31, 25%) reported the total value of their regulated contracts as below £5 million. These bodies were not required to prepare and publish a strategy or annual procurement report under the terms set out in the 2014 Act, but elected to do so. Of these 31 public bodies, there were 12 Registered Social Landlords (RSLs), seven health bodies, six universities and colleges and six central government bodies.

Regulated contracts

In their 2023 to 2024 annual procurement reports, 124 public bodies (100%, n=124) reported that 5,819 regulated contracts were awarded during the financial year. This represents an average of 47 regulated contracts per public body.

The total reported value of regulated contracts public bodies awarded in the 2023 to 2024 financial year was £11.5 billion (n=124), according to their annual procurement reports. This is over £2 billion more than the total from annual procurement reports analysed in the previous two financial years. The average total reported value of regulated contracts awarded was also higher, with an average of £92.7 million per public body in 2023 to 2024, compared to £72.0 million reported in 2022 to 2023.

As with previous years, the local government sector accounted for the highest number of awarded regulated contracts, according to annual procurement reports for the 2023 to 2024 period. This represented 39% (2,270) of the reported total of regulated contracts awarded. The local government sector also accounted for the highest total reported value of reported regulated contracts awarded in the 2023 to 2024 financial year, representing 39% (£4.5 billion) of the total reported value.

Annual procurement reports described examples of the types of regulated contracts awarded, including health and social care provision, construction, IT systems, cyber security, insurance services, legal services, and maintenance and repair services. Many contracts which relate to climate change, environmental wellbeing and net zero initiatives were awarded across a range of sectors. Examples included design and installation of solar panels, energy improvement works, decarbonisation work and carbon capture and storage leasing advice.

Unique suppliers

In their annual procurement reports, a total of 120 public bodies (97%, n=124) included the number of unique suppliers who were awarded a place on a regulated contract in the 2023 to 2024 period, totalling 7,330 unique suppliers overall. This represents an average of 59 unique suppliers per public body. Of the reported 7,330 unique suppliers awarded a place on a regulated contract, 70% (5,136) were SMEs (n=119) and 5% (398) were third sector organisations (n=108). These are higher proportions than the previous financial year, when 65% (5,821) of unique suppliers were SMEs and 3% (257) were third sector organisations.

Compliance with general duties

Nearly all of the 2023 to 2024 procurement strategies (123, 98%, n=125) addressed compliance with the general duties of equal treatment and non-discrimination. Most annual procurement reports also contained evidence of compliance with these general duties, with 93% (116) meeting this requirement in 2023 to 2024.

Steps taken to address the duty of transparency were described in 120 strategies (96%, n=125) and 120 annual procurement reports (96%, n=125).

Explanations of how procurement activity is delivered in accordance with the general duty of proportionality were provided in 116 strategies (93%, n=125) and 108 annual procurement reports (86%, n=125).

Compliance with Sustainable Procurement Duty

The majority of 2023 to 2024 annual procurement reports and strategies analysed included information on how their activities aligned with the key principles of the Sustainable Procurement Duty. For example, 97% of strategies (121, n=125) and 94% of reports (117, n=125) addressed how regulated procurement will be carried out in accordance with economic, social and environmental wellbeing.

Approaches to facilitating the involvement of SMEs were described in 122 strategies (98%, n=125) and 113 annual procurement reports (90%, n=125). Data collected from the 106 annual procurement reports (85%, n=124) showed that £7.1 billion was reported as spent with SMEs in the 2023 to 2024 period. This is a higher reported spend with SMEs compared to what was reported in the previous year (£6.6 billion in 2022 to 2023).

Eighty percent of strategies (100, n=125) and 91% (114, n=125) of annual procurement reports described steps taken by the public body to facilitate the involvement of supported businesses in procurement. Overall, reported spend with supported businesses during the reporting period amounted to a total of £22.1 million (from 113 annual procurement reports, n=124), £10.3 million of which was regulated spend (from 107 annual procurement reports, n=124).

Over three quarters of procurement strategies (97, 78%, n=125) provided information on engagement with third sector organisations in procurement processes. Annual procurement reports were less likely to contain this information, with 79 public bodies (63%, n=124) providing information on the involvement of third sector organisations. An overall procurement spend of £725.6 million with third sector organisations was reported (from 86 annual procurement reports, n=124), with the local government sector responsible for the majority of this procurement spend (£614.5 million, n=30).

Almost all strategies (124, 99%, n=125) provided information on promoting innovation in procurement, while 108 annual procurement reports (86%, n=125) provided this information. This is higher than the previous reporting period, when 86% of public bodies spoke about innovation in their strategy and 69% provided evidence in their annual procurement reports.

Fifty-four public bodies (43%, n=125) included a specific reference to the circular economy, minimising waste or reusing materials in their annual procurement reports. This is a higher proportion than in the previous reporting period, when 28% of public bodies provided information on the circular economy in their 2022 to 2023 reports.

Community Benefits

A total of 121 public bodies (97%, n=125) provided a statement within their procurement strategy on their general policy on the use of community benefits.

A total of 120 2023 to 2024 annual procurement reports (97%, n=124) included information on the number of regulated contracts awarded with a value of £4 million or greater contained that community benefit requirements. This represented a reported total of 321 regulated contracts overall, or an average of 3 per public body. One hundred and eighteen annual procurement reports (n=124) also included data on the number of regulated contracts awarded with a value of less than £4 million that contain community benefit requirements, totalling 1,630, an average of 13 per public body.

Public bodies’ annual procurement reports detailed a variety of community benefits that were actioned as a result of their regulated contracts. The most common types of community benefits reflected in the 98 reports that provided this detail were: apprenticeships (64, 65%), charitable donations/fundraising (55, 56%), work placements (52, 53%), other employment related activity (e.g. careers talks at schools/universities) (50, 51%), and training and qualifications (48, 49%).

Just under three-quarters of public bodies (91, 73%) provided information on community wealth building within their annual procurement reports. This reflects greater use of the term and related actions, with a higher proportion of annual procurement reports incorporating this than in the previous year (65%).

Fair work

One hundred and fifteen 2023 to 2024 annual procurement reports (92%, n=125) contained evidence that regulated procurement activity had been delivered in accordance with the principles of Fair Work First (Scottish Government, 2023b). This represents a higher proportion than in 2022 to 2023 (84%) and 2021 to 2022 (81%).

One hundred and eleven annual procurement reports (90%, n=124) contained information on the number of regulated contracts awarded containing a scored Fair Work criterion. This represented a combined reported total of 3,116 regulated contracts awarded with a scored Fair Work criterion, which is higher than the 2,889 reported in the previous year.

Ninety five annual procurement reports (77%, n=124) contained information on the number of unique suppliers that committed to paying the real Living Wage in the delivery of a regulated contract awarded during the reporting period.^[4] This represented a reported total of 3,391 unique suppliers, which is higher than the figure reported in 2022 to 2023 (2,694). A total of 1,719 unique suppliers were reported as being accredited Living Wage employers (from 94 annual procurement reports, n=124).

Value for money

All but one public body (124, 99%, n=125) included information within their strategy on how value for money is achieved through procurement activity. This is slightly higher than the previous year’s percentage, which was 97%. The percentage of 2023 to 2024 annual procurement reports including this information was slightly lower than in the strategies, with 94% (121, n=125) including content on achieving value for money. This is, however, an increase from 80% of reports in 2022 to 2023.

Future regulated procurements

A total of 120 annual procurement reports (97%, n=124) detailed the number of regulated procurements expected for the next two years. This represented 6,484 reported regulated contracts in total, compared to 6,562 reported in 2022 to 2023. The average number of expected regulated procurements per public body in the next two years is 54.

One hundred and ten annual procurement reports (89%, n= 124) provided information on the total estimated value of future regulated procurements expected to commence in the next two financial years. This represented an estimated total value of £15.5 billion. This is £3.6 billion less (19%) than what was reported in 2022 to 2023. The average estimated value of future regulated procurements expected to commence in the next two financial years per public body is £141.1 million. This is £40.4 million less (22%) per public body than what was reported in 2022 to 2023.

It should be noted, however, that lower figures for anticipated future regulated procurement may reflect the lower number of reports that were received in 2023 to 2024: 125 were submitted, compared to 133 in the previous reporting period.