Procurement activity: annual report 2023 to 2024

Minister’s foreword

This report summarises public procurement activity across Scotland in 2023 to 2024, and outlines how national spending in this area continues to underpin the smooth delivery of public services. Procurement is a key driver to the creation of opportunities and an essential contributor to Scotland’s wider ambitions for fair and inclusive economic growth.

Throughout the year, public bodies harnessed the power of public procurement to deliver meaningful benefits for their communities, with organisations remaining focused on maximising public procurement to create positive outcomes.

With public procurement being an enabler of high-quality public services across Scotland, contracting authorities worked proactively to maintain reliable supply chains and consistent service delivery in areas that matter most to people’s wellbeing – including health and social care, education, local government services and infrastructure. Their efforts reflect a continued commitment to achieving the right balance between affordability, quality, resilience and long-term value for the communities they serve.

The scale and reach of public procurement activity during 2023 to 2024 is clearly evidenced through this report, which reflects contributions from 125 public bodies who submitted their annual procurement reports before our cut off. It also reflects the spend information held in our Scottish Procurement Information Hub, which recorded £17.5 billion in total spend, an increase from the£16.6 billion recorded in the previous year. A total of £9.5 billion of that was directed to suppliers registered in Scotland, an increase from the £8.9 billion reported in 2022 to 2023. This level of engagement and data sharing provides a strong evidence base to understand the positive impact of procurement activity across the country.

Public procurement plays a vital role in supporting businesses, communities and inclusive economic growth. During the year, 17,310 suppliers were awarded public sector contracts through the Public Contracts Scotland platform with over 71% of these suppliers based in Scotland. Small and medium-sized enterprises remain central to public procurement, accounting for £7.6 billion of overall reported spend and 62 pence for every pound spent on public contracts in Scotland, where supplier size was known.

This reporting year also marked a significant milestone with the publication of the first Public Procurement Strategy for Scotland in April 2023. The strategy sets out a clear long-term vision and road map by “putting public procurement at the heart of a sustainable economy to maximise value for the people of Scotland”. Underpinned by the four national outcomes for procurement: Good for businesses and their employees; Good for society; Good for places and communities; and open and connected. Evidence within this report demonstrates delivery supporting these ambitions. This includes £3.5 billion of spend reported with suppliers located in the 40% most deprived areas of Scotland, helping to direct investment into communities that need it most.

During the reporting period, the Economy and Fair Work Committee commenced its post-legislative scrutiny of the Procurement Reform (Scotland) Act 2014 to establish if the Act was achieving its aims. The Committee issued a call for views which closed in October 2023 and then conducted a number of in person evidence sessions which continued into the next reporting year. The Committee published its report in June 2024, with recommendations that were welcomed by the Scottish Government. Work continues to respond to these recommendations, publishing progress.

In February 2023, a procurement workshop, hosted by the Federation of Small Businesses and Women’s Enterprise Scotland, was held as part of the annual Business in Parliament Conference which provides direct engagement between businesses and MSPs. As a result of the workshop discussions, during the year under review, we progressed a number of actions. These were targeted at helping to help SMEs (particularly micro and minority led businesses), third sector bodies and supported businesses engage more easily with public procurement in Scotland. This included publication of one-stop-shop “Guidance on public procurement for SMEs and third sector suppliers” which we developed in collaboration with the Federation of Small Business, Women’s Enterprise Scotland, Supplier Development Programme and other members of our Procurement Supplier Group. We also ran targeted regional engagement events to reach a broad and diverse group of potential suppliers across Scotland to disseminate the guidance.

Looking ahead, public procurement is well placed to continue supporting Scotland’s ambitions and we are driving meaningful progress. Even more so as fiscal pressures, economic uncertainty and long term challenges such as climate change influence longer-term options and decisions. The opportunity and importance of progressive and sustainable procurement as a strategic tool for influencing decisions, delivering value, and strengthening resilience should not be under-estimated.

By maintaining a clear focus on outcomes, public procurement can continue to make a positive and lasting contribution to the economic, social and environmental wellbeing of Scotland’s people and communities - helping to build sustainable services, support inclusive growth and deliver long-term benefits across the country.

Ivan McKee MSP, Minister for Public Finance