Changes to the Public Procurement Rules in Scotland Consultation - Analysis of the Responses

Making contracts more accessible for smaller businesses

Breaking contracts into smaller lots

Legislation requires public bodies to consider splitting contracts into lots and states that public bodies could be required to split certain types of contracts in this way. The Scottish Government feels that public bodies should retain discretion in this matter as well as in awarding more than one lot to the same bidder.

Q11 We believe that public bodies should retain discretion to split requirements into smaller lots and to award more than one lot to the same bidder. Do you agree or disagree with this? Please explain your answer.

Ninety-nine respondents agreed and four disagreed that public bodies should retain discretion to split requirements into smaller lots and to award more than one lot to the same bidder. Two made comments without giving an indication of specific agreement or disagreement. One hundred and three respondents made any comments.

The dominant theme across a very large majority of responses was that flexibility and discretion is appropriate and should be maintained. Many respondents indicated support for the use of smaller lots as a means of improving opportunities for SMEs and a small number also highlighted increased opportunities for third sector organisations. A large number also suggested that compulsory requirements to split into smaller lots in all instances would be potentially disadvantageous; for example, creating complex contract chains, being less cost effective and losing economies of scale.

A small number of respondents commented specifically that the capacity to award more than one lot to the same business would be beneficial. The consultation notes that this should be made clear in advertising a contract and this links to a sub-theme that emerged across a number of responses. Some respondents stressed the importance of public bodies making their intentions clear 'up-front' or in their procurement strategy if they choose not to split contracts or to potentially award multiple lots to one bidder.

A few respondents commented that guidance would be welcomed on what would be appropriate use of discretion regarding decisions not to split contracts or to award multiple lots to one business.

Asking for information about sub-contractors

There are some circumstances where public bodies are required to ask businesses for some information about their sub-contractors and this requirement could be extended. The Scottish Government feels extending the rule to additional contract types could remove flexibility, create additional work and potentially create confusion.

Q12 To avoid creating unnecessary confusion, we believe that public bodies should have the discretion to decide whether to request additional information about sub-contractors. What are your views about this?

Ninety-five respondents made comments in response to this question, of which 75 indicated broad agreement that discretion should remain with public bodies as to whether to request additional information about sub-contractors. The key themes from those that expanded on their answers related to agreement with the reasons given in the consultation or more generally on the basis of proportionality and avoiding unnecessary burden.

A number of private sector organisations and representative bodies felt it should be mandatory for public bodies to request this information; a very small number within this cohort, with a focus on the construction sector, suggested that a threshold of £50,000 should be set for this requirement to avoid unnecessary administrative burden. These respondents suggested that the gathering of information on sub-contractors would help to avoid potential for lead contractors to try and impose new or different conditions for sub-contractors after a contract has been awarded.

A small number of respondents, notably unions, commented on the importance of sub-contractors being subject to the same rules as main contractors, particularly with regard to fair treatment of workers. Some suggested that responsibility for ensuring this should lie with the main contractor and others that responsibility should be shared by the public body.

Q13 The Directives also make clear that public bodies are responsible for obtaining any information about sub-contractors from the main contractor. There is an option to transfer this obligation (to deliver the information) to the main contractor. We do not plan to transfer that obligation to the main contractor. What are your views about this?

Eighty-nine respondents made comments at this question, of which 72 indicated broad agreement that responsibility for obtaining information about sub-contractors from the main contractor should remain with public bodies. The remaining 17 respondents put forward a variety of suggestions, most commonly that it would be more appropriate to transfer this responsibility to the main contractor or that there should be the option to do so on a case-by-case basis.

As the Scottish Government is not planning to implement the optional rules outlined above, they do not believe it would be proportionate to apply similar provisions on sub-contracting to contracts covered by the Act.

Q14 We believe that we should not apply similar provisions on subcontracting to contracts covered by the Act, as we do not think this would be proportionate. Do you agree or disagree with this?

Seventy-three respondents agreed that similar provisions on subcontracting to contracts covered by the Act should not be applied and 15 disagreed. All of the four unions that answered disagreed. Four respondents made comments without giving an indication of specific agreement or disagreement. A total of 54 respondents made any comments.

The key theme from respondents who agreed at this question was affirmation that applying similar provisions on sub-contracting to contracts covered by the Act would be disproportionate. A small number of respondents noted that there might be occasions where further information would be necessary and that it would be possible to request that information if appropriate.

A variety of points emerged from the smaller number of respondents that commented and did not explicitly agree. Not surprisingly, their points reflected concerns they had already raised at the previous two questions.

Paying sub-contractors directly

The Scottish Government is committed to ensuring prompt payment of commercial debt and also encouraging ways of ensuring that sub-contractors benefit from the same prompt payment as main contractors. Direct payment to sub-contractors could be one means of ensuring prompt payment but could also be complicated and result in public bodies assuming responsibilities that should sit with the main contractor.

Q15 We believe that similar payment terms for sub-contractors, as for main contractors, is a good thing and there are some measures underway, or in place, to address this. We also believe that direct payments to subcontractors could be complicated and could mean public bodies assuming some responsibilities that should arguably remain with the main contractor. In light of this, we believe that public bodies should be able to make direct payments to sub-contractors only where the contract allows this to happen and parties agree. Do you agree or disagree?

Eighty-one respondents agreed that public bodies should be able to make direct payments to sub-contractors only where the contract allows this to happen and parties agree, whilst 13 disagreed. One made comments without giving an indication of specific agreement or disagreement. A total of 77 respondents made comments at this question.

A number of recurring themes were evident from across respondent groupings. Many respondents included comments regarding their broad support for measures that help to encourage and facilitate prompt payments to small suppliers or sub-contractors specifically.

A very large number of respondents indicated that they felt it should not widely or generally fall to public bodies to pay sub-contractors or that this would be appropriate only in very exceptional / specific circumstances. There were many suggestions that to apply direct payment on a widespread or mandatory basis would be clumsy and complex and potentially lead to disputes.

There were a number of suggestions for alternative or additional measures to help ensure prompt payment of sub-contractors, most commonly that prompt payment terms should be included as a condition of contract. However, not all respondents who commented regarding prompt payment terms as a condition of contract were in agreement that it would be beneficial.

There were a number of references to Project Bank Accounts, some respondents indicated support for further roll-out, some reserved judgment and a tiny number indicated reservations about their use.

Summary : Making contracts more accessible for smaller businesses

There were consistent and widespread comments across all questions in support of making contracts more accessible for smaller businesses. Respondents also indicated support for measures to encourage and facilitate prompt payment to sub-contractors, albeit many respondents do not perceive direct payment from public bodies to sub-contractors on a widespread or mandatory basis as an appropriate route.

Most respondents agreed that public bodies should retain discretion to split requirements into smaller lots and to award more than one lot to the same bidder.

A majority of respondents indicated broad agreement that discretion should remain with public bodies as to whether to request additional information about sub-contractors.

A majority of respondents indicated broad agreement that responsibility for obtaining information about sub-contractors from the main contractor should remain with public bodies.

Most respondents agreed that similar provisions on sub-contracting should not be applied to contracts covered by the Act as it would not be proportionate.

Most respondents agreed that public bodies should be able to make direct payments to sub-contractors only where the contract allows this to happen and parties agree.