Public body procurement reports and strategies 2023 to 2024: analysis

7. Value for money

Section 15 (5)(a) of the 2014 Act requires public bodies to report on how they deliver value for money on their regulated contracts (Scottish Government, 2014). The Scottish Government advises public bodies that they can achieve value for money in their regulated procurements through the following:

• fully involving people whom the goods/services/works will have an impact on to ensure their needs are being met and to minimise unintended consequences;
• understanding the marketplace and supporting a collaborative approach to the market where appropriate;
• seeking out opportunities for innovation;
• selecting the appropriate route to market, applying fair, open and transparent duties to processes as appropriate;
• utilising an effective and efficient contract & supplier management approach (Scottish Government, 2024b).^[27]

This chapter presents findings on information about value for money provided in annual procurement reports and strategies.

7.1 Information provided on achieving value for money

All but one procurement strategy (124, 99%, n=125) included information on how value for money would be achieved in the public body’s 2023 to 2024 procurement activities. This is slightly higher than last year’s percentage, which was 97%. The percentage of annual procurement reports including this information was slightly lower, with 94% (117, n=125) including content on achieving value for money, which is more than the 80% of reports that included this information in 2022 to 2023.

Throughout strategies and reports, an extensive range of approaches to achieving value for money were described. The most common methods included:

• Working collaboratively: some local government strategies outlined how they achieved value for money by working with other public sector partners. Internal collaboration was also detailed by some, with organisations engaging with their own departments to understand their needs. Strategies also outlined how they would use collaborative frameworks and contracts to achieve best value.
• Monitoring contracts and supplier performance, regularly reviewing suppliers and through robust contract management.
• Adopting a whole life costing approach.^[28]
• Awarding contracts based on the Most Economically Advantageous Tender (MEAT).
• Undertaking market research: several public bodies described analysing current markets and conducting early market engagement to increase efficiencies.

Some examples from annual procurement reports and strategies are provided below.

“Effective contract and supplier management throughout the duration of any contract will ensure the Councils deliver innovative, consistent, compliant and collaborative market solutions demonstrating value for money and return on investment to meet or exceed challenging commercial performance targets”

Aberdeen City, Aberdeenshire, Highland Council Joint Procurement Strategy (Aberdeen City, Aberdeenshire, Highland Council, 2023)

“We will also continue to use relevant collaborative Frameworks and contracts such as those set up by the Scottish Government, Scotland Excel, the Ministry of Justice (HMPS), or the Crown Commercial Services (as appropriate) to provide an effective route to market. Such joint, collaborative work will support value or best use of scarce procurement resources"

Scottish Prison Service Procurement Strategy 2023-2028 (Scottish Prison Service, 2023)

“When identifying procurement activities, Clyde Valley explore and access available collaborative contract types. This may be through contract award against national and regional Framework Agreements, or through collaboration and subsequent tendering of local contracts alongside other Housing Associations. The full options will be reviewed at the outset of each project.”

Clyde Valley Group Annual Procurement Report 2023-24 (CVHA, 2024)

7.2 Challenging market conditions

A few 2023 to 2024 strategies and annual procurement reports contextualised their approach to securing value for money by noting the current market conditions and economy. This had an impact on how some organisations framed and approached their procurement activities, as seen in the example below from Aberdeen City Council.

“The effects on the global economy and financial markets from geopolitical conflicts, inflation, recession and climate change impacts have made for another challenging year for the Council and its supply chain. The Commercial & Procurement Shared Service have worked collaboratively with Services and Suppliers throughout the financial year, identifying solutions to challenges and minimising impacts of pricing increases as they have arisen (wherever possible), supporting delivery of vital frontline services whilst maintaining sustainability of our supply chain.”

Aberdeen City Council Procurement Annual Report 2023/24 (Aberdeen City Council, 2024)

The need to demonstrate value for money was a significant concern for many public bodies, given the economic challenges resulting from the COVID-19 pandemic, Brexit and rising inflation.

7.3 Cash savings

The Scottish Government provides standardised approaches to calculating cash savings on procurement activities. These approaches are outlined in the procurement benefits reporting guidance (Scottish Government, 2024d).

Eighty-nine annual procurement reports (71%, n=124) provided information on cash savings delivered for the 2023 to 2024 period. This represented a reported total of £352.1 million. Central government reported the largest cash savings at £201.8 million (n=25), followed by local government (£59.2 million, n=20) and health (£57.8 million, n=16).

Twenty-five annual procurement reports (20%, n=124) provided information on the delivered cash savings for Category A^[29] contracts. This represented £6.7 million in reported cash savings overall.

Twenty-four annual procurement reports provided information on delivered cash savings from Category B^[30] contracts (19%, n=124) and twenty five provided information on delivered cash savings from Category C^[31] contracts (20%, n=124). These represented reported cash savings of £5.1 million and £7.4 million respectively.

Source: 2023 to 2024 annual procurement reports

7.4 Non-cash savings

Sixty-nine public bodies (55%, n=124) provided data about non-cash savings in their data template.^[33] The total reported non-cash savings value for the 2023 to 2024 period was £113.2 million, a higher value than what was reported in the previous financial year (£75.0 million).