Procurement activity: annual report overview 2020 to 2021

1. Introduction

1.1 Background

This report provides an overview of Scottish public bodies’ procurement activity during the year 2020 to 2021. In doing so, this report helps to ensure transparency and visibility around public procurement while also meeting important legislative requirements as outlined in Section 21 of the Procurement Reform (Scotland) Act 2014 (‘the 2014 Act’).

When we use the term ‘public procurement’, we are referring to the design, award and management of contracts, suppliers and supply chains by Scottish public bodies, to deliver the goods, services and works which are vital to the everyday functioning of our public bodies and the services they provide to the people of Scotland.

The 2014 Act was designed to support inclusive economic growth in Scotland by providing a national legislative framework for sustainable public procurement. In line with the 2014 Act, public bodies are required to fulfil a number of general duties, while taking the steps necessary to promote transparency and consistency across the public sector.

At the same time, the 2014 Act also requires any public body expecting to have significant procurement expenditure in a given financial year (at least £5 million regulated procurement spend),^[1] to develop a procurement strategy which sets out how it intends to carry out its regulated procurements. After the end of each financial year, public bodies must publish an annual report on their regulated procurement activities, demonstrating how they have complied with their procurement strategy. Although it is not necessary for public bodies with an estimated regulated procurement spend of less than £5 million to produce an annual procurement report, it is encouraging that some do produce such a report as a matter of good practice.

The contents of this report are structured around the four key outcomes which underpin public procurement in Scotland. In doing so, this report sets out the importance of Scottish public sector procurement in delivering economic growth in a manner that is:

• good for businesses and their employees
• good for society
• good for places and communities
• open and connected.

Figure 1.1: The four outcomes for Scottish publicsector procurement

Our Purpose - To use our collective spending power to deliver sustainable and inclusive economic growth.

• Good for businesses and their employees
• Good for society
• Good for places and communities
• Open and connected

The findings in this report also reflect the impacts of the COVID-19 pandemic which greatly affected public bodies as well as their suppliers and wider supply chains during 2020 to 2021. In doing so, it provides an overview of the Scottish Government’s response to the pandemic – as well as that of the wider public sector – in relation to public procurement, and demonstrates the profound impact of the pandemic on procurement activity during the year.

This report also sets out the Scottish Government’s response to key research either conducted or commissioned by the Scottish Government during the year, where it relates to Scottish public procurement. This is in recognition of the increasing role of research, analysis and evidence in shaping the development of policy and practice in relation to public procurement.

1.2 Methodology

A range of sources were consulted in the preparation of this year’s report, but two sources stand out as being of particular importance. First, the report is shaped largely by an analysis of the information contained in public bodies’ annual procurement reports, submitted in fulfilment of the requirements of the 2014 Act. This year, 120 reports were analysed – an increase on the 115 reports analysed in the last report which focused on 2019 to 2020. A list of the public bodies whose reports were included in the analysis this year is provided at Appendix 1.

Figure 1.2 below provides a breakdown of the 120 reports analysed by sector.

Figure 1.2: Number of annual procurement reports analysed by sector (2020 to 2021)

• Local government 31
• Central government 31
• Universities and colleges 26
• Health 18
• Registered social landlords 14

Second, this report draws on an analysis of public procurement spend data which is available through the Scottish Procurement Information Hub (‘the Hub’). Each year, the Scottish Government requests raw accounts payable data from bodies across the Scottish public sector. This data is enhanced by a third-party supplier using publicly available data in order to classify suppliers by size, location, area of business, charity status and other characteristics, before it is uploaded to the Hub where it is made available to participating public bodies for analysis.[2]

It is important to note that geographical spend data from the Hub is based on known postcodes which are obtained from a supplier’s invoice address, with regions and local authority boundaries being determined by areas specified by the Office for National Statistics (ONS). As such, where this report draws on the Hub data to refer to procurement spend in different geographical areas (for example, in Scotland), the data and calculations are based on spend where postcodes are known.

It is also important to note that where this report draws on the Hub figures for procurement spend during the year, these figures are not always based on the total amount of spend as set out in Section 3.1.2. This is because the supplier information that is used to undertake subsequent analyses of the total spend – for example, the breakdowns of spend by business size, sector, location, Scottish Index of Multiple Deprivation (SIMD) classification and so on – is not always known for all suppliers.

During 2020 to 2021, 106 Scottish public bodies provided procurement data for publication on the Hub. Figure 1.3 below provides a sectoral breakdown of the 106 public bodies represented in the Hub dataset this year.

Figure 1.3: Number of public bodies submitting data to the Hub by sector (2020 to 2021)

• NHS 22
• Central government 25
• Local government 33
• Universities and colleges 26

Where relevant, the information from both the annual procurement reports and the Hub is supplemented by evidence from other sources – for example, from the Centres of Expertise, the Social Enterprise Census and other research carried out by the Scottish Government during the year.[3]

As in previous years, it is important to avoid making direct comparisons between data from different sources, owing to the considerable differences in the scope and data collection methods that apply to each source. As such, the sources have not been used to draw any direct comparisons but, rather, they have been combined to provide a comprehensive overview of public sector procurement activity in Scotland.