In September 2021, Scottish Government commissioned Blake Stevenson Ltd. to undertake research with third sector organisations and new private businesses to explore their experiences of public procurement in Scotland. It builds on previous research undertaken and the findings will be used to ensure that future delivery of public procurement is as inclusive as possible and enables third sector organisations and new private businesses to better access and compete for public contracts.
A mixed-methods approach was adopted for this research. It combined an online survey of third sector organisations and new private businesses and interviews with representatives of third sector organisations and new private businesses. In addition, web-based interviews were conducted with representatives from a small number of key bodies that represent the interests of third sector organisations and new private businesses, in order to gain an understanding of the wider context for this research.
48 responses were received to the online survey – 43 from third sector organisations and five from new private businesses, of which 33 organisations had bid for public contracts in the past five years. In addition, we spoke to 49 individuals through interviews and focus groups – 36 from third sector organisations, six from new private businesses, and seven stakeholders. Organisations participating in the survey and interviews were geographically diverse, and represented a wide range of sectors.
The relatively low number of survey responses does mean that caution should be exercised in interpreting the data and taking the findings as representative – they are, rather, a snapshot of recent experiences which provides useful learning for future developments.
Experiences of public procurement to date
Organisations participating in the research described the benefits of bidding and contracting with the public sector. Responses were consistent, with research participants noting that security of contracts and reliability of payments were the greatest benefits of public contracts.
Organisations felt that they had a lot to offer the public sector in return, citing local knowledge and expertise in particular.
There were mixed views about the extent to which third sector organisations and new private businesses believed that the public sector was willing and able to do business with them. Around half of survey respondents felt that this was the case to some extent, and a further third indicated that it was to a great extent.
Over 80% of survey respondents indicated that the process of bidding for Scottish public sector contracts was difficult or very difficult, and this was backed up by interviewees during the research. Most frequently, organisations referred to challenges with a lack of time or capacity to bid, the complexity of the bidding process and difficulties in meeting the requirements of the contracts.
Training and support
Take-up of current public procurement training and support provision is reasonably good, and those third sector organisations and new private businesses that had participated in training or received advice from some of the existing support bodies were positive about the quality of support they had received. However, organisations were keen to see more in-depth, intensive support provided in future.
Barriers to engagement with Scottish public procurement for third sector and new private businesses
Research participants identified a range of barriers to participation in Scottish public procurement. These are outlined briefly below:
Lack of capacity
This related to having both the staff time and the skills to take part in tendering processes. This was particularly the case for small third sector organisations, but also an issue for small private businesses. Stakeholders also raised this as a key concern.
Complexity of procurement processes
The majority of research participants described the procurement processes they had participated in as too complex and disproportionate to the size of contracts being bid for. This was a barrier highlighted by participating organisations, regardless of size, sector or location. This related to both specifications for contracts and the tendering process itself. Particular challenges faced included the excessive amount of time required to prepare bids due to a lack of standardisation of approach; word count requirements which were not proportionate to the information being requested; and too many onerous requirements in relation to additional information required such as their organisation’s approach to climate change or modern slavery.
Public Contracts Scotland (PCS) and Public Contracts Scotland-Tender (PCS-Tender)
The majority of research participants (but not all) were familiar with PCS and/or PCS-Tender. Across the board, participants who were familiar with these systems stressed the difficulties of using them. Both systems were unpopular – being described variously as “cumbersome”, “old-fashioned”, “not user-friendly”, “frightening for new organisations” and “confusing”.
Insufficient early market engagement with potential bidders
Early market engagement was felt by many interviewees to be an important way of ensuring that all interested organisations had equal access to tender opportunities. It was also seen as an opportunity to explore alternative approaches such as innovation partnerships or collaboration. However, despite its importance being recognised, interviewees commented that early market engagement did not happen, or happened too late in the process to be meaningful.
A significant number of research participants also felt that early market engagement was an important way of ensuring that tendering was the most appropriate way of commissioning services, and that the market engagement often needed to take place earlier in the pre-commissioning process.
Lack of transparency in relation to short-listing of suppliers
Some research participants raised concerns about a lack of transparency within procurement processes, and felt that this was a barrier to them making effective decisions with regards to whether to tender for contracts. They raised particular concerns about a lack of transparency in relation to which organisations were selected for Quick Quotes processes, and how to ensure that their own organisation was included in a list of potential suppliers.
Ineffective tender assessment processes
Many research participants felt that the tender assessment processes they had experienced to date did not always result in the best provider being selected, or in the best outcomes for individuals (in the case of service contracts). Some interviewees had experience of poor assessment and had been put off bidding again.
There was a strong feeling that the assessment processes are currently driven by a fear of breaching procurement rules, resulting in a risk-averse approach to decision-making. Assessment was felt by some to be too punitive – with reports, for example, of tenders being eliminated from the process because a page was missing.
Insufficient lotting of contracts
Many research participants reported that lotting was not yet happening enough, although there was recognition that there is now more lotting of contracts than previously. A significant number of research participants noted that insufficient use of lotting continued to be a barrier to their engagement with public procurement. This was particularly the case for smaller companies or third sector organisations that may be able to fulfil one element of a contract but not all of it.
Ineffective use of framework agreements
While some research participants noted the potential value of being on a framework agreement, a number of research participants had had poor experiences of these. Despite putting in a significant amount of time and effort to bid to be on a framework in the first place, a few that had been successful reported that they had not been awarded any contracts through them.
Lack of feedback from public bodies
Receiving feedback from buyers in the event of an unsuccessful bid can be helpful in supporting organisations to improve the quality of future bids. Some organisations we interviewed reported that feedback was sometimes non-existent, and that when it was available, it often lacked detail.
Short duration of contracts and low contract values
Some research participants raised concerns about the duration of contracts awarded through public procurement. Among these participants, there was a sense that contracts were often short, usually a maximum of 2-3 years in duration. Some felt this was not long enough and that the burden of re-tendering was too great. This seemed to be a particular issue in relation to health and social care contracts where services were often delivered over a long-term period but funding contracts were limited to, for example, three years.
Low contract values were also cited as a barrier to engagement in procurement – in two respects. Firstly, organisations observed that if contract values were too low, they often spent a disproportionate amount of time preparing bids which meant it was not financially worthwhile to bid. Secondly, a number of organisations raised concerns about the hourly rates that buyers were prepared to pay for specialist services. In particular, this applied to budgets for contracts within the local government sector, with local authorities often being perceived as unwilling to pay a fair and realistic rate for high quality service provision.
Onerous terms and conditions
All research participants, across both new private businesses and third sector organisations, and across a range of different sectors, reported that one of the biggest barriers to participation in public procurement were the requirements imposed by buyers during the bidding process. These were varied and included requirements related to insurance, accreditations, minimum IT requirements, community benefits clauses, financial standing, and requirements to address a range of policy issues such as Fair Work and climate change. Many of these were a barrier for smaller organisations and companies in particular but some large organisations also raised concerns about some of these issues. Stakeholders confirmed these concerns.
Lack of a robust appeals process for lower value contracts
Some research participants were concerned that there was currently no effective means of challenging decisions taken within public procurement processes for lower value contracts, nor any recourse for bidders if poor or unfair decisions were made.
Currently, organisations do have the right to legally challenge decisions made in relation to contracts of £50,000 and over for goods and services and £2 million for works. However, few research participants were aware of either their right to legal recourse (in the case of higher value contracts) or of the Single Point of Enquiry (SPoE) service, suggesting a clear need for increased awareness raising. Those that were aware of the SPoE were concerned that it was not meeting the needs of organisations. The service is considered by those that were familiar with it to be ineffective, as it has no power to reverse decisions taken by public bodies in procurement processes.
Conflicts of interest
A small number of interviewees identified conflicts of interest as a barrier to participation in some areas. This issue was raised specifically in relation to organisations which were acting as both commissioners of contracts and deliverers of other contracts. A few interviewees also raised concerns about conflicts of interest on the part of organisations that provided capacity building and business support to bidders, but who themselves could potentially bid against those organisations for contracts.
Buyer and supplier preconceptions
Third sector research participants indicated that there remain a number of false perceptions that are hindering third sector organisations’ access to public procurement. These include a fear of participation based on misconceptions about processes and perceptions on the part of some buyers in the public sector that the third sector does not have the experience or capacity to deliver large contracts.
Factors that enable third sector and new business engagement with Scottish public procurement
An important focus of this research was to determine the key enablers that must be in place to ensure ease of access.
These are illustrated in the diagram below and described in further detail in the main report:
Considerations for improving access to public procurement for third sector organisations and new private businesses
The research identified a number of considerations, outlined below, which will help public bodies to reflect on potential ways to address the barriers highlighted above. They take account of the fact that while Scottish Government has a role to play in improving access to public procurement, the wider public sector – including local authorities, the NHS and a wide range of other buyers – as well as supporting bodies such as the Centres of Expertise, also have an important role in improving access to public contracts for third sector organisations and new businesses.
1. Consider potential for ongoing improvements to PCS and PCS-Tender; support for training and development in public procurement; and sharing of experiences of tendering processes.
2. Consider opportunities to simplify tender processes, ensuring that tender processes only require information to be provided that is proportionate and relevant to the work being commissioned.
3. Consider opportunities to engage earlier, and more meaningfully, ahead of tendering opportunities.
4. Consider potential for greater transparency around selection for Quick Quotes, and for support to organisations to improve chances of selection for Quick Quotes.
5. Consider opportunities to ensure that local supply of goods and services are appropriately valued in assessment processes, without breaching procurement rules.
6. Explore opportunities to encourage greater use of lotting, where this is appropriate.
7. Explore potential to improve frequency and quality of feedback to unsuccessful bidders for lower value contracts not currently covered by any legislative requirement to provide feedback.
8. Consider opportunities to reduce onerous terms and conditions and ensure these remain proportionate to contract type and value.
9. Work towards ensuring that the SPoE is more visible and facilitate greater transparency of its work. Find ways of enabling it to make better use of available data to share lessons learned.
10. Explore opportunities to enhance understanding of the role of the third sector in the delivery of public contracts.
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