Procurement activity: annual report 2022 to 2023

1. Introduction

1.1 Background

This report provides a summary of Scottish public bodies’ procurement activity during the 2022 to 2023 reporting year, and was published in line with the requirements of section 21 of the Procurement Reform (Scotland) Act 2014 (‘the 2014 Act’).

The financial year of 2022 to 2023^[1] For the purposes of this report, a “financial year” covers the period between 1 April and 31 March for most public bodies. However, some universities and colleges use a financial year from 1 August until 31 July.› saw several pressures placed on the Scottish economy, from issues relating to the global supply of consumer goods, supply chain disruptions and the Russian invasion of Ukraine.^[2] These were identified as the main drivers of the cost crisis by the House of Commons Library in July 2024.› The impact on the supply of fuel and other goods contributed to the cost of living crisis which saw the highest inflation rates in 40 years according to the Office for National Statistics. These shocks came at a time when Scotland was still recovering from the impact of the COVID-19 pandemic.^[3] The report outlining the Scottish Government’s ongoing steps towards COVID-19 recovery can be found here.› These factors all impacted on public procurement activity in the period covered by this report, as did the nationalisation of rail services, which saw significant transport-related spend no longer classed as procured contracts.

This report is an opportunity to better understand the procurement activity of the Scottish public sector, both in the context of these challenges, and also in delivering goods, works and services for Scotland’s varied communities.

As part of the 2014 Act, any public body^[4] For the purposes of this report, a “public body” is an organisation that is subject to Scottish public procurement legislation, and is required to produce a procurement strategy and annual procurement report. The five main categories of public body are local governments (i.e. local councils), National Health Service (NHS) or other government health bodies, universities and colleges, registered social landlords, and central government bodies.› which expects to have significant procurement expenditure in a given financial year must prepare a procurement strategy, setting out how it intends to carry out its regulated procurements.^[5] For the purposes of the 2014 Act, procurement expenditure is deemed to be significant if it equates to at least £5 million of regulated procurement spend. A regulated procurement is any procurement carried out by a public body in relation to the award of a contract with an estimated value of £50,000 excluding VAT and above for goods and services and of £2 million and above excluding VAT for works.› As soon as reasonably practical after the end of that financial year, the public body must then publish an annual report on their regulated procurement activities, demonstrating how they have conducted their procurements in a manner which is compliant with their procurement strategy. Additionally, a group of two or more public bodies may publish a joint procurement strategy and annual report.

While the legislation does not require lower-spending public bodies to produce a procurement strategy and an annual procurement report, some nevertheless do so in line with good practice guidance.^[6] Guidelines and best practice for annual procurement reports are outlined in SPPN 2/2023.› However, because not all public bodies are required to publish an annual procurement report and because some annual procurement reports are submitted after the deadline for analysis, there are fewer reports analysed for this report than there are public bodies across Scotland.

In line with the 2014 Act, this report, which is laid before the Scottish Parliament, must be prepared based on information contained in the annual procurement reports. It must include information on:

• the regulated procurements that were completed during the reporting year;
• any community benefit requirements that were fulfilled during the year;
• any steps taken to facilitate the involvement of supported businesses in regulated procurement;
• anticipated regulated procurements over the following two years; and
• any other information that the Scottish Ministers may consider to be appropriate.

The report is structured around the four key objectives which underpin the delivery of public procurement in Scotland.^[7] These four categories are identified and defined in more detail in the Public Procurement Strategy for Scotland 2023 to 2028.› It demonstrates the steps which public bodies have taken to deliver procurement activity which is:

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

1.2 Methodology

This report provides an overview of public procurement in Scotland 2022 to 2023. This is based on the data collected from two main sources: 133 public bodies’ annual procurement reports, and 108 public bodies’ procurement spend data made available through the Scottish Procurement Information Hub (“the Hub”). The methods employed for this report are mainly descriptive, using a combination of quantitative and qualitative methods where appropriate. In several cases, this data is compared with other publicly available data sources, such as the Scottish Indices of Multiple Deprivation.

It is important to note that there were a number of limitations to the data available for analysis for this report. The specific limitations of the data sources are detailed below and, where relevant, in the discussion of results throughout the report. A key limitation of the data is that both of the main data sources rely on public bodies’ reporting of their procurement activity.

The primary source of data for this report is the annual procurement reports submitted by Scottish public bodies. For the financial year 2022 to 2023, 133 reports were included in the analysis, an increase of one from the last report.^[8] Public bodies also provide a data template submission alongside their annual procurement reports. Details of how the annual procurement reports and data submission should be laid out are provided in the Scottish Procurement Policy Note SPPN 2/2023.› There is no fixed deadline for public bodies to publish their reports. Thus, to enable analysis to be completed within the required timeframe, only reports published by 23 February 2024 have been included in the analysis.

Consequently, data from some public bodies with significant regulated procurement spend (over £5 million) may not be represented in this report, as their reports were not available by 23 February 2024. Additionally, for public bodies with less than £5 million in regulated procurement spend, participation in this analysis was voluntary.

Furthermore, while criteria for information provided in annual procurement reports is outlined in SPPN 2/2023 and the 2014 Act, not all submitted reports contain data for every measure examined in this analysis. Where data is not available from all 133 reports for a particular measure, the number of reports providing relevant information is specified in the text.

A full list of the public bodies whose reports were included in the analysis for this year is provided at Appendix 1.

As seen in figure 1, in this reporting period, central government provided the most annual procurement reports for analysis with 32 (24.1%, n=133).

Source: Scottish Procurement and Property Directorate, Scottish Government

The second main source of data for analysis in this report comes from information held within 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 data from the Public Contracts Scotland (PCS) platform and publicly available data in order to classify suppliers by size, location, area of business, charity status and other characteristics, where this information is known. The data is then uploaded to the Hub and made available to participating public bodies for analysis.

Inclusion in the Hub is voluntary, and so information from the Hub relates only to the public bodies who opted to submit their data. For financial year 2022 to 2023, 108 public bodies provided spend data for the Hub.

Information on the Hub relates to known procurement spend with suppliers that were classed as commercial organisations or as non-trade social care providers, and with whom individual public bodies spent £1,000 or more in aggregate spend in any given year.

There are gaps in the data where information is unavailable in the data sources used to populate the Hub (i.e. raw accounts payable, PCS, and publicly available data). One example is omissions in the voluntary registration information suppliers provide on PCS. This is particularly of note for suppliers registered outwith Scotland. These gaps are acknowledged where relevant in the analysis.

As seen in figure 2, local government was the most represented group of public bodies providing their spend analysis with 33 in total (30.6%, n=108).^[9] This includes all 32 Scottish local authorities, and the local authority contracting organisation Tayside Contracts.› It is worth noting that registered social landlords do not submit data to the Hub. A full list of the public bodies whose reports were included in the analysis this year is provided in Appendix 2.

Source: Scottish Procurement Information Hub (the Hub)