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

Rules about communication

Electronic communication

There are four decisions to be made in relation to the application of rules about electronic communication in Scotland; all of which apply to public contracts and utilities contracts.

Use of BIM

The first decision is about the use of technologies like tools for Building Information electronic Modelling (BIM). This is currently used in construction to design and manage buildings and other facilities.

Q44 We believe we should continue to progress the work plan from the Construction Review report, rather than requiring the use of BIM or similar in works contracts and design contests. Do you agree or disagree? Please explain your answer.

Seventy-three respondents agreed that the Scottish Government should continue to progress the work plan from the Construction Review report rather than requiring the use of BIM or similar in works contracts and design contests. Only two private organisations disagreed with this proposal, and another private organisation neither agreed nor disagreed but commented that they would support the best decision for the public and public funds.

Seventy-four respondents provided comments at this question. A key issue raised by respondents across most sub-groups, was in relation to time. Seventeen respondents simply referred to the need for time before this becomes mandatory, for example, to allow for time to embed electronic approaches or to allow consultants and contractors to adapt to the technology within their business processes. Other respondents, mostly in local authorities and private sector organisations, referred specifically to the need to allow time for SMEs to gain a better understanding of the BIM process.

Several respondents, primarily within local authorities and statutory organisations, referred to the current review underway and suggested that there is a need to await the outcome of this so as to allow for more detailed consideration. As noted by one local authority: " …. there needs to be much more clarity of understanding and consistency of approach in the BIM process, to enable it to become compulsory within construction procurement on all public works contracts and design contests."

There were some comments that BIM is not appropriate for all public sector construction projects and that the contracting authority should be able to decide when the use of BIM is appropriate. Allied to this, there were a small number of suggestions that BIM should be retained for larger, more complex projects.

A small number of respondents commented on the advantages of the approach suggested in the consultation document; the key ones being that this approach allows for flexibility or will reduce duplication across the sector.

A small number of respondents noted concerns and these included:

• The costs associated with using BIM.
• That the use of BIM could disadvantage some bidders because of its implementation in terms of costs, training or support.
• There should be a review as to whether BIM should apply to all types of organisation and size of project.
• That use of BIM can restrict an organisation's ability to meet the required standards.

There was also a request from a statutory organisation for ongoing dialogue and engagement with procurement and estates specialists, and public sector and industry specialists.

Security levels

The consultation paper points out that decisions also need to be taken in relation to security levels. There is an option to either set out precise levels of security that are needed for electronic communication for every contract or to set general rules, within which public bodies can act appropriately; and when advanced electronic signatures should be used, or to set general rules. It is the view of the Scottish Government that because of the wide range of contract types that are awarded, one set of rules on electronic security would not work and that public bodies should be able to choose to act appropriately on a case-by-case basis, with no set specific rules. Instead, a set of rules making up a general framework would be developed, which public bodies must stay within.

Q45 Do you agree or disagree that we should establish an overall confidentiality and security framework which individual public bodies would use to inform their own approach to the security handling of electronic communication? Please explain your answer.

Seventy-one of those responding agreed with this position. Four respondents disagreed and three provided a neutral comment.

Sixty-five respondents provided additional commentary to support their answer. A significant number of respondents commented that this approach would offer consistency or that it is good to have a standardised approach. Many respondents also commented that it is beneficial to have an approach based on an overall framework but which offers flexibility to public bodies to adopt their own approach, particularly as there is a wide range of differing types of contract. As one local authority commented: "We would support the establishment of an overall framework within which councils can design measures appropriate to their particular circumstances. This is an area where technology is outstripping legal development and practice and an overarching framework should assist councils to harmonise their approach thereby improving efficiency of communication and certainty in the execution of contract documents".

A small number of respondents commented that they would welcome general guidance and a policy perspective on what is considered best practice and legally compliant, with some specific reference to electronic signatures.

Other respondents provided qualifying comments to their response and these included that:

• This needs to fit with other government security and confidentiality requirements that already exist.
• There needs to be clarity, consistency and information to minimise unnecessary cost and uncertainty arising from variations in requirements between contracts.
• This needs to be simple for all suppliers to work with.
• This should be developed over time and evaluated before being introduced.
• Public bodies need to be able to comply with the proposed security requirements.
• If a common framework approach is adopted, it needs to be achievable by all suppliers, as well as taking account of the sector infrastructure and security policies.
• This would have to be a central or national government framework so as to avoid duplication of effort, time, resource and cost.
• This should be aligned to the PSN code of connection requirements.
• Suppliers need assurance that everything communicated electronically is secure.
• There needs to be consultation on what is in the framework.

Those who disagreed had concerns that too onerous a framework could be difficult for all organisations to comply with, that the existing PCS-T could be modified and adopted, that public bodies should be able to do this in a way that suits them, or that the framework is only useful if everything is on one system.

Time available for implementation of fully electronic procurement processes

The consultation paper went onto explain that a decision is also needed for making sure all communication about procurement is electronic. There is an option for all communication to be electronic on the day that new rules come into force. Alternatively, there is an option to delay this deadline until 18 October 2018 for all public bodies, with the exception of central purchasing bodies (this deadline can be delayed until 18 April 2017 for central purchasing bodies). There is also an acknowledgement of the need to ensure that all public bodies' systems can cope with this change, so the Scottish Government is planning to delay these deadlines for the longest possible time period.

Q46 Do you agree or disagree that we should maximise the time available to implement fully electronic procurement processes and defer the requirement for full electronic communication for the maximum permissible time?

Sixty-nine respondents agreed with the Scottish Government's proposals for delay, eight disagreed and two made other comments. Sixty respondents, across most sub groups, also provided further commentary in support of their answer.

Of those agreeing with the proposal, many noted that more time would be beneficial. For example, that it would allow for better preparation and training for the required systems, or that it would allow for proper planning and implementation and to ensure that new systems and processes are fit for purpose. A small number referred specifically to suppliers and SMEs who they felt might be disadvantaged without delays to implementation.

A small number, mostly local authorities, commented specifically that public organisations currently operate at different levels of capacity and need time to achieve fully electronic procurement or that rapid adoption would be challenging for some organisations and public bodies. As noted by one organisation in the executive agency / NDPB sub group and summing up the views of a number of these respondents: "Implementing the Procurement Reform Act, Procurement Regulations and a new procurement Capability Assessment Regime will place significant burden on the Scottish procurement community and suppliers themselves who engage with public sector buyers. The systems and process changes required are significant and will take time to establish, enact and embed. Buyers, the internal customers and suppliers themselves also need time to become ready for this".

Other comments made by those in agreement with the proposal included:

• The need to consult with suppliers.
• That there will be cultural resistance to change that will need to be counteracted.
• The maximum time period will allow for more informed introduction of changes to processes and will help to minimise costs.
• That consistency within public bodies will help to assist the supply chain.

While there was majority support for this proposal, eleven respondents provided some qualifying commentary. For example, three statutory organisations requested clarity on the definition of 'central purchasing bodies'. A small number of organisations requested support or guidance on what will be required, with some reference to SMEs and suppliers specifically. One Statutory organisation requested Scottish Government funding for public authorities so they could meet any additional costs from introducing the required legislative changes; they also had concerns over the potential for different standards across different European countries and the impact these might have on international collaborative work.

The small number disagreeing with this proposal were primarily in the private sector, local authorities, or representative bodies. The key issue raised by these respondents was that the maximum permissible time should not be needed, given that electronic communication is common to all businesses already; and that this would lead to reduced efficiency benefits for a longer period of time. A small number felt that an option to delay would simply mean that some businesses will delay making the necessary changes until the latest possible time. One private sector business noted that Scotland should be leading the way in the use of digital technology in creating a more competitive economy.

Electronic communication in concession contracts

The Concessions Directive says that public bodies must use electronic communication for sending concession notices, concession award notices and notices about changes to a concession contract. Under Article 29 of the Concessions Directive, the Scottish Government is allowed to make rules to say that all other communication must also be electronic.

The consultation paper noted that concession contracts are largely complex, high economic value contracts that are more likely to be handled through an electronic procurement system. Also that electronic communication helps to make procurement simpler, faster and more transparent.

Q47 Do you agree or disagree that all communications about concession contracts in a procurement exercise should be by electronic means?

Fifty-nine respondents agreed that all communications about concession contracts in a procurement exercise should be by electronic means, eight disagreed. Thirty-six respondents, across most sub-groups, went onto provide commentary in support of their response. Many of those in agreement with this proposal echoed the reasons given in the consultation paper, namely, that this would offer a simple, efficient and transparent system. A number also commented that this would offer consistency in approach. Other advantages cited for this approach included that electronic communications are less open to challenge and more secure than other forms of communication.

A small number of respondents also commented that the approach for concession contracts should not differ from other types of contract and that all contracts should use electronic communications.

As with some previous questions, there was a degree of qualified support for this. Some local authorities and executive agencies / NDPBs commented that this should have a timescale in place similar to that suggested for the time available to implement fully electronic procurement processes (question 46), or that it is necessary to have a timescale allowing for the appropriate systems and procedures to be put in place. There were also concerns from a small number of respondents that businesses should not be disadvantaged in applying for public contracts, with one executive agency / NDPB suggesting support should be provided to SMEs.

Of the eight respondents disagreeing with this proposal, most were local authorities. There were comments that a degree of flexibility and choice should be retained, with some discretion being offered for public bodies to use other forms of communication. For example, one local authority suggested that: "There should be an opt-out allowing the procuring authority discretion to have other communications by non-electronic means where it would be disproportionate (in the opinion of the authority) to do otherwise; that decision and the reasons for it to be communicated in the concession notice. As is recognised in the consultation document, not all concession contracts will be high value and the rules should accommodate a lighter-touch approach in those circumstances."

There was also comment that some degree of flexibility and choice should be offered, mostly in relation to lower value concession contracts, although one respondent noted flexibility was needed for complex and high value concession contracts.

Two local authorities commented that all communications about concession contracts should be electronic, although an organisation within the third sector commented that all forms of communication for procurement need to be inclusive.

Electronic catalogues

The consultation paper noted that an electronic catalogue is an electronic list of things which a business sells and the prices which it charges. The Scottish Government can, if it wishes, say that electronic catalogues must be used for some types of procurement, although it is not the intention to make this a rule. The Scottish Government thinks public bodies should be able to choose when it is appropriate to use electronic catalogues.

Q48 Do you think that public bodies should retain the flexibility to decide when the use of electronic catalogues is appropriate? Please explain your answer.

Sixty-eight respondents across most sub-groups agreed that public bodies should retain the flexibility to decide when the use of electronic catalogues is appropriate. Three organisations gave a negative response to this question.

Seventy organisations commented further. The reasons for saying 'yes' to this question were largely that electronic catalogues are not appropriate for all contracts and flexibility needs to be retained to make decisions on a contract-by-contract basis. A number of these respondents also noted that public bodies are best placed to make the decision on whether or not to use an electronic catalogue.

A small number of organisations commented that technology is not sufficiently developed or understood for electronic catalogues to be used on all contracts. A small number also noted that this approach does not disadvantage the supplier community, with one local authority noting that in their experience many suppliers are not in a position to be able to tender using electronic catalogues.

Other advantages cited by respondents included:

• This will help to further e-commerce objectives.
• For contracts suitable for electronic catalogues, it will save time, resources and cost.
• When electronic catalogues are used, there will be a visible electronic audit trail.

A small number of organisations felt that support would be needed to help with implementation.

For two of the organisations opposed to this, there was a perception that there should be consistency across the marketplace and that all catalogues should be submitted, shared and used in an electronic format.

European single procurement document

The consultation paper noted that Article 59 of the Public Procurement Directive says there should be a European Single Procurement Document (ESPD) which allows businesses to declare that they meet the selection criteria set out for a contract and that they are not in any of the situations which would mean they should be excluded from bidding. It is intended that this makes it easier and faster to bid for public contracts. The Scottish Government can choose to delay the need to provide the ESPD in electronic format only until 18 April 2018.

Q49 Do you agree or disagree that we should defer the requirement to provide the European Single Procurement Document in electronic form only until 18 April 2018? Please explain your answer.

Sixty-five respondents agreed that the requirement to provide the ESPD in electronic form only should be deferred until 18 April 2018. Fourteen disagreed with this proposal.

Eighty respondents commented further with over half of those agreeing with this proposal echoing the need for delay so as to give public bodies enough time to prepare and change their systems appropriately. There were also comments from a small number of respondents that rapid adoption of this change would be challenging for many businesses and public sector bodies. Other comments raised by small numbers of respondents included:

• This requirement should be deferred as ESPD is not yet in circulation and this will take time to be agreed and embedded.
• There are so many changes going on at present that it would be useful to defer this one aspect of procurement.
• There needs to be time to align the ESPD and SPQQ.
• Time is needed for bidders to fully understand the implications and requirements of the new Act.

Three Statutory Organisations noted there is a need to consider whether it will cause confusion if the ESPD is adopted by other European countries before it is adopted in Scotland; and an executive agency / NDPB respondent commented on the need to ensure that Scotland is not disadvantaged if other European countries adopt the ESPD earlier.

There were also a small number of requests for guidance or support on implementation of the ESPD.

Two executive agency / NDPB respondents suggested that consideration needs to be given to other legislation, namely, Digital Transformation Planning Scotland Strategy and the Scotland's Digital Future: Delivery of Public Services Strategy. The same two organisations also asked if ESPD applies to Regulated procurement and whether it will be necessary for sub-OJEU activity.

Of the 14 organisations - mainly private sector organisations or representative bodies - disagreeing with this proposal, a key theme was that ESPD should be implemented as quickly as possible, as this will help to make procurement easier for businesses. The ESPD was seen by these organisations as a means by which the burden on businesses in completing lengthy and often repetitive PQQs could be reduced, for example, in reducing the time that suppliers and SMEs have to provide information to numerous contracting authorities or in speeding up the tender process.

The Directives also say that when a public body already holds documents from a business, the business should not have to send these documents to the public body again. The Scottish Government can delay this provision coming into force until 18 October 2018. As with the ESPD, the Scottish Government thinks it would be sensible to delay this to give public bodies time to prepare and change their systems.

Q50 Do you agree or disagree that we should defer until 18 October 2018 the provision that says businesses should not have to submit supporting documents where the public body awarding the contract holds these? Please explain your answer.

Sixty-one agreed while 21 disagreed.

Of the 83 respondents who provided commentary on this question, most gave largely the same response as at the previous question. The key reason given by many who supported a delay was that time is needed to enable businesses to plan and prepare systems in line with the requirements of the Directive. This comment came from most sub-groups of respondent. Again, there were a small number of requests for guidance or support, or for links into other strategies.

Of the 21 respondents disagreeing with the delay, the key comments were that this should not need to take as long as three years to implement or that the bureaucratic burden placed on businesses should be reduced as quickly as possible. A small number of these organisations also noted that public bodies should already be well enough organised to be able to avoid asking for the same information more than once.

E-Certis

E-Certis will provide online information about the types of certificates and documents which businesses might be asked to provide in each Member State of the EU to demonstrate they meet the criteria needed to bid for a contract. Article 61 of the Public Procurement Directive says that public bodies should mainly ask for certificates or documents that are included in e-Certis. The Scottish Government can choose to delay the deadline for public bodies to have to use e-Certis until 18 October 2018 and is considering deferring this obligation on public bodies to allow time to prepare for this change.

Q51 Do you agree or disagree that we should defer the obligation on public bodies to use e-Certis until October 2018?

Seventy-five respondents agreed that the obligation on public bodies to use e-Certis should be deferred until October 2018. Three disagreed and two made other comments.

Seventy-eight respondents commented further on this question and the key reason given for agreement to defer this echoed that provided in the consultation paper; namely, that time is needed for organisations to adapt to the new regime or to embed new ways of working and systems that accommodate this.

Once again, a small number of respondents commented that businesses will need support to help with the obligation to use e-Certis. A small number of respondents also noted that time is needed for e-Certis to align with other systems such as ESPD, SPQQ or PCS.

Of the three organisations disagreeing with the option to defer the obligation on public bodies to use e-Certis, comments were that this should be introduced as quickly as possible, or that because it will provide clarity on various issues, it makes sense to introduce this quickly.

Award notices when calling-off a framework

The consultation paper noted that the Act says that public bodies have to publish award notices for call-off contracts that are worth at least £50,000 for goods and services and at least £2 million for works, on the Public Contracts Scotland website. However, this Act does not apply to utilities contracts. The Scottish Government thinks that call-off contracts which are worth more than the relevant threshold set out in Article 15 of the Utilities Directive should also be published.

Q52 Do you agree or disagree that we adopt this option for utilities contracts? Please explain your answer.

Fifty-six respondents agreed that this option should be adopted for utilities contracts, three disagreed and four made other comments.

Sixty-one respondents commented on this question and once again, of those who provided commentary, there was broad agreement with the reasons provided in the consultation paper. Many of those agreeing noted that this would promote consistency and uniformity as well as fairness.

A small number of consultees, mainly statutory organisations noted they did not have a view on this and three statutory organisations commented they did not understand the implications of this as the question was not worded clearly.

Only two consultees who disagreed with this option provided any additional commentary; one noting they were unsure as to who this would benefit, and the other noted that any perceived increased transparency would be negligible against the administrative burden placed on the contracting authority.

Dynamic purchasing systems

The consultation paper noted that the new Public Procurement Directive simplifies the rules around how a dynamic purchasing system (DPS) will work. Section 7 of the Act allows Scottish Ministers to introduce regulations about DPS for procurements regulated under the Act.

Q53 Do you think that dynamic purchasing systems should be available as a tool for purchasers in respect of regulated procurements?

Seventy-one respondents said 'yes', one said no and one made another comment.

Fifty respondents also opted to provide additional commentary to explain the reason for their response. A significant number, many of which were local authorities, noted that this would be a useful addition to the procurement toolkit or that it should be available as an option in the procurement toolkit. A small number of respondents also noted other advantages to dynamic purchasing systems in respect of regulated procurements and these included:

• These will offer flexibility.
• They will provide consistency, clarity or simplification.
• They will allow lower value regulated procurements to benefit from the advantages of DPS.

While most of those provided a 'yes' response to this question, a significant number of these respondents provided qualifying commentary, most of whom noted that support and guidance in using the tool will be needed. Examples given included the need for when and how to implement a DPS or the types of procurement for which this procedure is suitable. One organisation in the private sector commented: "In certain circumstances this process can provide a useful 'live' framework option, to allow new providers to enter the market, however there is a need for some robust guidance around how a DPS can and cannot be used as the public sector is very unclear on how to undertake this option."

Three statutory organisations specifically commented on the need to illustrate the use of DPSs by the use of examples in guidance.

Three organisations within the NHS sector noted that the cost effectiveness of this approach may be difficult to show a positive benefit. A small number of organisations were also concerned that this approach could disadvantage suppliers, specifically SMEs. The one local authority saying 'no' noted that this would disadvantage SMEs and cause additional administrative work.

The consultation paper also noted that the Scottish Government proposes to extend those provisions in relation to DPSs, which are contained in Article 34 of the Public Procurement Directive, to lower valued regulated procurements, in order to provide purchasers with an additional tool to support their procurement activity.

Q54 Do you think that the same rules which apply in Article 34 of the Public Procurement Directive should be extended to lower value regulated procurements under the Act?

Sixty-six respondents said 'yes' while six respondents replied 'no'. Forty-eight then went on to provide additional commentary to support their answer.

Of those replying 'yes' to this question, a key comment from many respondents - many of which were local authorities - was that this would offer consistency of approach. A small number also commented that this could be a useful additional option in the procurement toolkit.

Other advantages were:

• This would offer improved flexibility.
• This will provide clarity.
• It will make things legislatively simple.
• It will help to reduce costs and bureaucracy for smaller contracts.

A small number of organisations noted that the same principles should apply below and above the EU threshold so there is a standardised approach in place for all DPS procurements.

A small number of respondents made qualifying comments, the key comment being that there needs to be training and support offered or the DPS needs to be better explained in terms of policy guidance and practice.

Of the six respondents replying 'no', a local authority had concerns that this approach may disadvantage SMEs or cause additional administrative burdens. A representative body for professionals and a private sector organisation commented that Article 34 should not be applied to regulated procurements.

Summary : Rules about communication

There was majority support from respondents for:

• Continuing to progress the work plan from the Construction Review report, rather than requiring the use of BIM or similar in works contracts and design contests.
• The establishment of an overall confidentiality and security framework which individual public bodies would use to inform their own approach to the security handling of electronic communication.
• Maximising the time available to implement fully electronic procurement processes and deferring the requirement for full electronic communication for the maximum permissible time.
• All communication about concession contracts in a procurement exercise should be by electronic means.
• Public bodies to retain the flexibility to decide when the use of electronic catalogues is appropriate.
• Deferring the requirement to provide the European Single Procurement Document in electronic form only until 18 April 2018.
• Deferring until October 2018 the provision that says businesses should not have to submit supporting documents where the public body awarding the contract holds them.
• Deferring the obligation on public sector bodies to use e-Certis until October 2018.
• Publishing award notices for call-off contracts, which are worth more than the relevant threshold set out in Article 15 of the Utilities Directive.
• Have dynamic purchasing systems as a tool for purchasers in respect of regulated procurements.
• Extending provisions in the Public Procurement Directive in relation to dynamic purchasing systems (DPS) to lower value regulated procurements.

Across responses to all these questions there were requests for time to allow organisations to adapt to new ways of working and embed new systems to allow change to their working practices.

There were requests from some respondents for guidance, support and training to be provided. There were also some concerns that SMEs could be disadvantaged by these changes.