Scottish Government procurement: annual report 2023 to 2024

3. Summary of Scottish Government procurement activity

3.1 Overview

Throughout the reporting period the Scottish Government procurement teams, mindful of a number of challenges such as inflationary pressures, tailored their support, taking direct action to work all sectors. This helped inform and further embed sustainable procurement policies. The aim was to maximise the impact of procurement, encouraging an increased focus on wellbeing and inclusive economic growth together with value for money.

This also included ongoing work with industry to support the post-pandemic recovery.

Our Procurement Strategy 2022-2024 set out our key policies and how we would monitor them and the following sections explore our approaches and achievements against this in reporting year 2023-2024.

3.2 Good for businesses and their employees

‘Maximise the impact of procurement to boost a green and inclusive economic recovery. Promote and enable innovation through Procurement.’

By business we also include any organisation or enterprising entity engaged in commercial, industrial, or professional activities including, voluntary, charity, for-profit and non-profit entities

This section also provides a summary on our work to enable innovation through procurement.

We remain committed to improving access to public contracts for businesses, and throughout the reporting period continued to review and refine the suite of tools available to both public bodies and suppliers, as well as working actively with the supply base to understand challenges and work collaboratively to provide solutions.

3.2.1 Access to Contracts

Our national Supplier Journey provides free online, easy-to-access guidance for suppliers on all aspects of bidding, from finding opportunities and preparing bids to lessons learned, and signposts additional support. Our Single Point of Enquiry offers an impartial and confidential service for businesses with any concerns about a procurement exercise carried out by a Scottish public body.

We continue to part fund and support the Supplier Development Programme (SDP), an independent business initiative which delivers free training, online resources, and guidance on how to prepare, submit and win public procurement bids. This includes training on how to bid for public sector contracts, using the national eProcurement solutions, and understanding contracts and frameworks, and (our focus) sustainable procurement.

In this reporting period (2023-2024), 3,512 people from 2,927 unique Scottish SME businesses attended over 100 SDP training events.

We also supported the SDP national and regional ‘Meet the Buyer’ events that bring suppliers and public sector buyers together. Meet the Buyer are networking events, where buyers can engage with suppliers, to discuss new projects, contracts, framework opportunities and supply chain developments in total, 1,971 Scottish SMEs registered with SDP in 2023-2024. SDP hosted and supported seven Meet the Buyer Events, with 1,637 attendees from 1,233 Unique Scottish SME businesses.

Our national eProcurement and Management Information Shared Service offers a range of services and solutions which enable public sector organisations across Scotland and their suppliers to automate and streamline their business processes, from advertising contracts to paying invoices. These solutions help make it easier for interested parties to access public sector procurement opportunities.

3.2.2 Small and medium-sized enterprises (SMEs)

We remain committed to making it as easy as possible for SMEs, the third sector and supported businesses to bid for and win public procurement contracts and/or participate in local supply chains.

Although not every SME will be interested in contracting with the Scottish Government, many SMEs do continue to engage through our contracting opportunities and our data demonstrates that a significant percentage of our contracts are won by SMEs.

We openly engage with SMEs, through roundtables and procurement workshops, more detail on this can be found at Section 3.5.3.

Our spend with SMEs

Data from the Scottish Government’s Procurement Information Hub shows that the Scottish Government’s continued efforts to engage with SMEs are reflected in significant levels of spend with these organisations, as shown below.

Table: Direct Spend with SMEs supplying goods and services to core Scottish Government

Financial Year	2020-2021	2021-2022	2022-2023	2023-2024
Spend with SMEs	105,957,790	174,133,835	380,427,467	299,876,754

• Of the £561 million core Scottish Government spend with suppliers, over £299 million (54%) went directly to SMEs.
• Just over £177 million (31%) of the £561 million core Scottish Government spend in 2023-2024 was spent with suppliers in Scotland. More than £119 million of that, £177 million (69%), went to Scottish SMEs.

SMEs winning Scottish Government contracts and frameworks

We continue to develop our procurement strategies to make our contracts more accessible and provide opportunities for SMEs bid for public sector contracts. As a direct result of core Scottish Government procurement activity^[3], we awarded 132 out of a total 245 (54%) regulated contracts and frameworks to Small and Medium Sized Enterprises (SMEs) with a value of over £982 million.

3.2.3 Third sector

The third sector, including social and community enterprises and enterprising charities, play an important part in the Scottish economy and in society more widely by contributing to economic growth, helping to improve people’s wellbeing and supporting local communities. Social enterprises, for example, are businesses with a social or environmental mission, which re-invest their profits into fulfilling their organisational aims – which largely focus on empowering local communities and tackling socio-economic disadvantage

We are continuing to deliver support to organisations tendering for contracts through the business support contract for the third sector, ‘Just Enterprise’ – which is delivered by a consortium of third sector organisations. The service provides free and comprehensive business support services specifically tailored to the needs of the sector including advice and training on how to bid for contracts. Throughout the reporting period, we also continued to fund Partnership for Procurement to provide specialist support to third sector organisations wishing to form consortia to bid for public sector contracts.

Our part funding of the Supplier Development Programme has continued to provide third sector organisations with access to the free training on how to tender for and win public sector contracts. Since 2017, more than 829 charities, community interest companies and supported businesses registered with SDP. Five hundred and four (504) attendees from the third sector attended Meet the Buyer events.

Whilst all national collaborative framework agreements placed by the Scottish Government are open for use by third sector organisations to procure goods and services and benefit from the VfM they offer; work has also been continuing with our co-delivery partners to grow engagement in public procurement across the third sector and to raise awareness amongst local and national public bodies of the significant additional benefits of doing business with the enterprising third sector beyond service delivery.

3.2.4 Supported businesses

Supported businesses are defined as organisations whose main aim is to integrate disabled or disadvantaged people, both socially and professionally, and whose workforce comprises at least 30% disabled or disadvantaged people.

Spend by Scottish public bodies through our national supported business framework for the reporting period was over £22 million. The Scottish Government has continued its collaboration with the British Association for Supported Employment (BASE) to increase the number of new supported businesses in Scotland. A regularly updated list of supported businesses (in addition to those on the national framework for supported business) has steadily increased the number of additional supported business available to the public and private sector. Work was underway during this report period on a Dynamic Purchasing System (DPS) for supported business that was be awarded in Q2 of FY 2023-2024. This DPS replaced a current framework. The increased the number of additional supported business available to the public and private sector are expected to be listed on this new DPS.

3.2.5 Prompt payment

It is critical that we use the power of procurement to support Scotland’s economic recovery and longer-term wellbeing, and that includes ensuring suppliers and sub-contractors are paid on time.

We remain committed to prompt payment to, and by our own contractors and subcontractors. During the reporting period, we paid 98% of valid invoices within 10 days and 99% of valid invoices within 30 days. Our model prompt payment clauses, available for public bodies to use in their contracts, flow 30-day maximum payment terms down our supply chains.

We monitor the percentage of valid invoices paid on time, our average payment performance, any complaints from contractors and subcontractors about late payment, and we act where appropriate.

In April 2022, we published SPPN 2/2022 providing details of how public bodies should embed prompt payment in their supply chains. It includes steps to check payment performance of suppliers during bids for public contracts and guidance on monitoring prompt payment during the life of a contract.

We expect suppliers at all levels of the supply chain to adopt our prompt payment policy to ensure all suppliers are paid on time, getting cash flow into the economy as quickly as possible.

We also provide advice to suppliers through our Single Point of Enquiry (SPoE), where late or non-payment of valid invoices has not been resolved by the public body the contract pertains to.

3.2.6 Health and safety

Our aim is to be a leading employer in the delivery of health and safety and to ensure the wellbeing of our staff and those that deliver our contracts. Our policy makes sure our contractors and subcontractors keep to the Health and Safety at Work Act 1974 and any provision made under that Act.

During this reporting period, there were no incidents that required to be reported to the Health and Safety Executive. For those contractors working on our premises, we meet monthly and review all relevant accident reports and any investigation findings.

Additionally, we encourage our catering and cleaning suppliers to use the in-house Contractor Safety Management System. This allows both suppliers and ourselves to check that subcontractors have the relevant security clearance, permits and qualifications.

3.2.7 Innovation

The new Public Procurement Strategy for Scotland underlines the importance of innovation through procurement to maximise the impact of procurement to boost a green, inclusive and wellbeing economy.

Scotland has a vision of becoming one of the most innovative small nations in the world over the next decade. This is key to our efforts to transform the economy and drive lasting improvement in Scotland’s economic performance. The Procurement Reform (Scotland) Act reflects this by placing a duty on public bodies to consider how, through their procurement activities, they can promote and support innovation. Our Scottish Government Procurement Strategy 2022–2024 sets out how, through procurement, we aim to support the forthcoming innovation strategy, maximising the impact of procurement to boost a green, inclusive and wellbeing economy. Through this reporting year, work has progressed to further embed innovation in public sector procurement approaches.

Innovation is a key consideration for all regulated Scottish Government procurements.

Scotland Innovates and Public Contracts Scotland (PCS)

Our national supplier led innovation service Scotland Innovates and Public Contracts Scotland developments to improve processes and reporting for procurement of innovation were both launched in 2022. Innovation Notices for Preliminary Market Consultations (PMCs) and Pre-Commercial Procurements (PCPs) are available on PCS in addition to a research, pilot and innovation register and innovation questions added to existing PCS notices. A supplier collaboration tool is available within the PMC functionality.

Scotland Innovates

Scotland Innovates was launched in October 2022 at Procurex by the then Minister for Trade, Innovation and Public Finance. This service is a joint collaboration between the Scottish Procurement & Property Directorate (SPPD) and NSS National Procurement, with help from other sectors – APUC (Higher and Further Education), Scotland Excel (Local Authorities) and CivTech (SG Innovation Accelerator). It has allowed businesses and members of the public to submit innovative solutions to the entire Scottish public sector including Health. During the reporting period, Scotland Innovates received 64 submissions from suppliers, 19 targeted at non-health sectors and 45 targeted at Health.

Submissions have been mainly received from SMEs with most ‘at or nearly at market’. They have covered a wide range of areas from hydrogen production, education support and the circular economy through to artificial intelligence in various health areas. Some of the submissions have been referred to competitive procurement processes, while others are either being considered for assessment or are being formally assessed for use in the public sector. All submissions receive feedback with suppliers directed to appropriate support and guidance.

Innovation Case Study: Closed Loop Systems for Type 1 Diabetes

Diabetes is a clinical priority for the Scottish Government investing over £19 million since 2021 to support the increased provision of diabetes technologies, including Closed Loop Systems (CLSs). In a CLS, an insulin pump and a continuous glucose monitor use technology to ‘talk’ to each other and adjust insulin dosing to help control blood glucose levels. The Scottish Government Diabetes Improvement Plan sets out priorities and commitments to improve the prevention, treatment and care for everyone in Scotland living with diabetes. It includes a specific commitment to increase access to diabetes technologies for all who would benefit from them. In 2023 a value case was approved to create a national CLS onboarding team, working closely with Health Boards, to assist with challenges experienced in rolling devices out to individuals with type 1 diabetes. This life-changing technology will become more widely available thanks to an additional £350,000 of Scottish Government funding to accelerate the distribution of CLSs. This investment saw a dedicated team created by the national Centre for Sustainable Delivery at NHS Golden Jubilee to support NHS health boards to roll out the technology faster and more efficiently across Scotland before moving to the current business as usual process. The creation of this team to support the national rollout of diabetes CLSs was one of the first innovations to be approved through the Accelerated National Innovation Adoption (ANIA) Pathway.

Improving Outcomes for People

The technology is considered the most significant development in type 1 diabetes treatment in recent years and can transform lives, particularly for children and young people. CLSs help people improve their glycaemic control and in turn reduce the likelihood of complications, which at their most serious can include blindness, renal failure and amputations, as well as unplanned admissions to hospital. Minister for Public Health and Women’s Health Jenni Minto said: ‘There’s no reason why someone living with type 1 diabetes shouldn’t live a long and healthy life, but some people find managing their condition difficult. Diabetes technologies make the process easier and can enhance people’s quality of life. That’s why we’re aiming to provide access to Closed Loop Systems at the earliest opportunity and are working with NHS boards to improve access.’ National Diabetes Lead Professor Brian Kennon said: ‘Closed Loop systems are truly transformative technologies and help

The CivTech programme

CivTech sits in the Scottish Government’s Digital Directorate. Its mission is to drive daring and innovation in the public sector by collaboratively solving challenges to make people’s lives better – and in doing so create generations of sustainable, high growth potential businesses.

CivTech develops solutions to Public Sector Challenges using methodologies common in the private tech sector but rare in the public sector, including open challenges and tech accelerators. These have done much to transform almost every sector in the world, and CivTech has adapted them, so they produce beneficial products and services for public sector and citizen use, and in doing so harnesses the potential of the ‘tech revolution’ for public good. Central to the approach is a highly innovative but robust and fully assured procurement process, together with a team with deep experience of innovation management and the handling of intelligent risk.

CivTech is now acknowledged as the world’s first successful public-sector-focused tech and innovation accelerator system, is internationally recognised as a leading GovTech initiative, and is described as the ‘gold standard’ in terms of innovation drivers.

All this is not by chance: CivTech can demonstrate outstanding and robustly evidenced delivery of benefits to public sector organisations, citizens, citizen groups and communities across many different areas of life, as well as economic return-on-investment.

Since the approval of CivTech’s Full Business Case in 2022, CivTech has fully delivered three Rounds of Challenges, with a fourth – CivTech 10 – currently running. CivTech 9 completed in June 2024, with a maximum committed spend on the Challenges of circa £10 million. CivTech 10 launched a month later with a similar maximum spend anticipated.

Examples of Challenges delivered can be found on the CivTech website, and include the following.

Health; empowering women to manage their menopause: NHS Scotland, together with the Chief Scientific Officer for Scotland, sponsored a Challenge that produced two innovative products from companies Lumino and Adora Digital Health, using different AI-driven approaches – they are genuine breakthrough products.

Environment; revolutionising tree seed germination, planting and survival rates: Forestry and Land Scotland has massively increased performance across the board (germination rates on average doubled, the world record for tree planting in a day going from 60,000 to over a million). It has resulted in a remodelling of the business, helping to trigger its new tree nursery in Newtown, Scotland.

Communities and justice; the world’s first national AI Register: in 2021, aware of the growing use of many different forms of AI in the public sector, the Scottish Government set about building trust and agency in the population for these emerging technologies. The result, developed by Finnish company Saidot, was the world’s first national AI Register, ensuring that anyone in Scotland could access information about the use of AI in the public domain.

Economy; the National Business DataSpine: Scotland will soon be the first country in the world to have both a panoramic view of its economy and granular information about every business, from the largest multinational corporation to the smallest unincorporated business. The system integrates hundreds of datasets from multiple organisations in a safe, secure and assured way, and offers Scotland groundbreaking possibilities including but not limited to strategic economic planning, supply chain strengthening, and identification of opportunities for public-private sector collaboration.

Justice and communities; intelligent citizen support for caring organisations: Citizens’ Advice Scotland needed to improve its client engagement, especially around initial contract triage. The resulting product, developed by HelpFirst utilising Large Language Models (LLMs), low- and no-code powers better, faster and more effective operations and support. It has saved costs and has freed up caseworkers to do far more valuable work.

Biodiversity and carbon capture; creating better land management decisions: Aviemore-based company Rethink Carbon has developed an automated, AI-empowered land management platform to enable every land manager, regardless of their expertise or location, to make informed choices that improve land use, increase carbon capture and storage, restore nature and unlock new revenue streams.

Economy; National Benefits Realisation System: governments and public sector organisations across the world have long struggled to predict, track, record and evaluate the benefits that accrue from projects, programmes and other initiatives. The system developed by PortF is capable of tracking results across the board – from ‘hard numbered’ outputs (for example, jobs created, tax and national insurance receipts, public sector efficiencies), to softer outputs (for example, societal objectives). The product is already in use at organisations including Social Investment Scotland, Scottish Enterprise, the Scottish National Investment Bank, and CivTech, where the system has itself produced significant efficiencies. It also has a long waiting list at CivTech for additional use cases.

The effects of the products and services created by CivTech can take time to accumulate: a snapshot of progress indicates –

• since 2016 and across 103 Challenges, CivTech has received 1,155 applications, taken 317 teams through to its Exploration stage and 106 into Accelerators.
• of these, over 90% are pre-starts or SMEs.
• at March 2024 over 80% of CivTech Alumni companies are operational. This survival rate is far higher than the private sector norm in which some 34% of new businesses go under within two years and 50% do so within three years.
• more than 90% of the Accelerator companies have received follow-on contracts with their Challenge Sponsor. This compares highly favourably with the typical private sector accelerator, in which 20-30% of the teams go on to win further investment.
• over 80% of the products created are in active use.
• CivTech companies have created over 400 well-paid jobs. The average salary stands at between £35,000 - £47,106 per year (from desktop research and as reported by companies respectively).
• these deliver significant in-year tax and NI revenue, and local economic impact. Tax and NI revenue in-year is between £2.5 million and £3.9 million, and the in-year local economic impact sits between £21.0 million and £28.2 million.
• there is a marked acceleration in investment beyond CivTech contracts: at March 2020 the total private sector investment into alumni companies stood at some £4.2 million, which rose to £76 million by March 2024, and now sits at over £126 million.

Together with Scotland Innovates, Scotland has two important routes to procure innovation. CivTech ‘pulls’ in innovation by launching Challenges, and Scotland Innovates allows ‘push innovation’ where private sector companies and organisations can offer potentially beneficial products and services. This two-way procurement system is a world first and offers significant advantages to the Scottish public sector.

3.2.8 Dynamic Purchasing Systems

We continue to adopt an innovative and flexible approach to the procurement of Digital Services through the use of Dynamic Purchasing Systems (DPS) in national collaborative agreements, covering Digital Technology and Cyber Services, Telephony Services, and Internet of Things.

The streamlined application process provides easier access to public sector contract opportunities for suppliers, including SMEs. Our DPS arrangements provide more than 400 suppliers with direct access to Scottish public sector contract opportunities valued in excess of £100 million over the duration of the DPS. All of our DPS suppliers are committed to paying the real Living Wage, and, because of their ease of use and flexibility, over 75% of suppliers are SMEs.^[4]

3.3 Good for places and communities

‘Maximising the impact of procurement with strong community engagement and development to deliver social and economic outcomes as a means to drive wellbeing by creating quality employment and skills.’

We continue to use public procurement as a means to drive wellbeing by creating quality employment and skills and providing opportunities for Scottish SMEs, third sector and supported businesses to bid for public contracts and to participate in public sector supply chains.

3.3.1 Local economic development

Scotland has been pushing the boundaries to use public procurement to achieve wider economic and social outcomes for nearly two decades. This work aligns with the Scottish Government’s commitment to Community Wealth Building. Community Wealth Building has five pillars.

1. Spending

2. Workforce

3. Land and Property

4. Inclusive Ownership

5. Finance

As part of one of the five pillars, public procurement supports delivering this approach in Scotland through Fair Work, community benefits, maximising local spend and developing our supply chain to enable them to bid for and win public contracts.

We are focusing on what and where we can do things better or indeed do things differently, particularly on local practice, initially using the levers and flexibility afforded by existing policy and legislation.

In line with our Programme for Government commitment (2021-2022) to introduce legislation on Community Wealth Building, the Scottish Government conducted a public consultation to get views on how we might grow local wealth and give communities a greater stake in the economy. The consultation opened ran from 31 January to 25 April 2023 A consultation analysis report was published on October 2023.

3.3.2 Community benefit requirements across core, sectoral and national contracts

We considered community benefits in all our regulated procurements during the reporting period and included these where it was relevant and proportionate to do so. We awarded 53 contracts which included community benefits.

We currently have 93 live contracts with a combined value of over £3.9 billion that include community benefits.

As well as supporting thousands of existing jobs, during the reporting period our contracts created 867 brand-new jobs and 26 apprenticeships; delivered 184 work placements for school pupils, college and university students and 18 work placements for priority groups and enabled 2,344 qualifications to be achieved.

3.3.3 Provision of food – Using contracts involving food to improve the health, wellbeing and education of communities in Scotland and promote the highest standards of animal welfare

Our national food and drink policy: Good Food Nation continues to promote buying healthy, fresh and environmentally sustainable food and catering.

Putting our policies into practice. The consultation on the national Good Food Nation Plan closed in April 2024 and the final plan will be laid before Parliament in 2025. The contract for Scottish Government catering services requires:

• a menu cycle based on fresh, seasonal produce.
• Vegan options are provided in Scottish Government catering daily – sandwiches, seasonal fruit and veg, occasional vegan dishes on the main menu.
• Food spoilage is recorded, and we have seen a reduction in food waste since the contract commenced.

The welfare of farm animals, reared for products used in food provided in our catering contract and other public contracts, is generally safeguarded under legislation we have introduced to protect farm animals on farm and at slaughter.

At a national level, the Scottish Government funds the Soil Association to support the Food for Life Scotland programme across a number of local authorities. The programme aims to increase the amount of healthy, locally sourced food served by local authorities in schools and operates in 16 Scottish local authorities. As well as aiming to put more Scottish food on the table, the wider benefits include: educating young people about food and culture, reassuring parents and pupils that their school meals are responsibly sourced, and freshly prepared with trained cooks, promoting fresh, local and seasonal food, ensuring that at least 75% is fresh and unprocessed and improving healthy options for pupils by putting more fresh fruit and vegetables, fish, and wholegrains on the menu.

3.4 Good for society

The Scottish Government Procurement Strategy outlines our commitment to ensure that we are efficient, effective and forward thinking through continuous improvement to help achieve a fairer and more equal society.

‘We aim to boost sustainable and socio-economic outcomes through our investment in construction and infrastructure.’

3.4.1 Fair Work (including payment of the real Living Wage)

Fair Work is work that offers all individuals an effective voice, opportunity, security, fulfilment and respect. We want Scotland to be a world-leading Fair Work Nation by 2025. Scotland’s success as an economy is built on a shared endeavour between workers, unions and employers.

We apply Fair Work criteria to contracts for public funding. The strategic ambitions for Fair Work are set out in the Fair Work Convention’s Framework and we have set out actions in our Fair Work Action Plan. That Action Plan prioritises Fair Work First (FWF), which is our flagship policy for driving high quality and Fair Work across the labour market in Scotland.

The seven criteria are:

• payment of at least the real Living Wage;
• provide appropriate channels for effective workers’ voice, such as trade union recognition;
• investment in workforce development;
• no inappropriate use of zero hours contracts;
• address workplace inequalities; including pay and employment gaps for disabled people, racialised minorities, women and workers aged over 50;
• offer flexible and family friendly working practices for all workers from day one of employment; and,
• oppose the use of fire and rehire practices.

It is our normal practice to include Fair Work First provisions in our invitations to tender, where appropriate, and we consider these along with other relevant criteria as part of the tender evaluation process.

The real Living Wage

The Scottish Government is an accredited Living Wage employer, and we pay at least the real Living Wage to all direct employees and to all contracted staff who regularly provide services on our sites. We routinely mandate payment of at least the real living wage to workers involved in delivery of our contracts.

In consultation with the wider public sector, business and trade unions, in March 2024 we published updated practical guidance on how to address Fair Work First through procurement. The guidance:

• explains Fair Work First criteria, why it is important and what good looks like in procurement;
• reflects the Scottish Government policy on payment of at least the real living wage to workers involved in Scottish Government contracts and frameworks;
• describes options to exclude bidders from competition for breaches of social, environmental and employment law including relevant collective agreements; and
• provides detail on taking a proportionate approach including guidance on how to evaluate responses from larger and smaller organisations fairly and proportionately.

It is available on the sustainable procurement tools.

3.4.2 Climate change

Public Bodies Climate Change Duties (PBCCD) Report 2023-2024 (A50039534)

How procurement policies have contributed to compliance with climate change duties

The Scottish Government is committed to using public procurement to contribute towards the strategic priority of transition to a more resource efficient, lower carbon economy. The Scottish Government National Performance Framework ‘National Outcomes’ reflect the values and aspirations of the people of Scotland and are aligned to the 17 UN Sustainable Development Goals.

Our policy on climate and procurement is set out in Scottish Procurement Policy Note (SPPN) SPPN 3/2022: Public procurement - taking account of climate and circular economy considerations.

Through the work of the Climate and Procurement Forum, we have modernised and further developed the suite of online Sustainable Procurement Tools based on the National Performance Framework which link intended outcomes to sustainable outcome delivery. The Tools support Scottish public sector procurers to adjust to a more resource-efficient and sustainable procurement practice.

The centrally funded, national Sustainable Procurement Tools include:

• climate literacy and circular economy e-learning, which helps to encourage and assist public bodies, including Scottish Government, to take account of climate and circular economy in their procurement activity;
• a range of guidance, including model wording, covering – climate change; biodiversity, natural heritage, waste and energy efficiency;
• model sustainability tests to help buyers to maximise economic, social and environmental outcomes in procurement of specific commodities; and
• a suite of procurement case studies from across the public sector.

We support practical application of our Sustainable Procurement Tools to identify risks and opportunities relating to climate change in individual projects focussed on what and how we buy. We have applied this to Scottish Government contracts and national collaborative framework agreements with examples including the Heat in Buildings Scotland National Scheme contract and the Civil Engineering (Scotland) framework.

Having introduced an update to the Single Procurement Document (SPD) in April 2022, public bodies were asked to apply SPD-standardised statements, guidance and templates from 2023. Where relevant, we require bidders to have a Climate Change Plan. The level of detail required in this plan is scalable to encourage smaller bidders to develop their climate capability. We have developed a proportionate approach for all contracts to encourage smaller organisation to participate. This was piloted in the Heat in Buildings procurement and is being embedded in all relevant Scottish Government procurements.

Climate Literacy eLearning is mandatory for all Scottish Procurement and Property Directorate staff and is strongly promoted across Scotland with 1,292 people having completed training by 31 March 2024.

To improve understanding of how to apply Fair Work First and other economic, social and environmental requirements through public procurement, between January and March 2024, we provided training to 287 people from across the public sector on sustainable procurement. This was in addition to widely promoting the progressive legislative and policy framework, guidance and tools and providing targeted on-shoulder support to help embed sustainable procurement practice.

The Climate and Procurement Forum continues to meet quarterly. Co-chaired by Scottish Government Procurement and Advanced Procurement for Universities and Colleges (APUC), the focus in the 2023-2024 period has been to drive a focus on priority projects and to share learnings across the Scottish Public Sector. The Forum provides an opportunity to share information about related Scottish Government work including, for example, the development of the Scottish Government Adaptation Plan and the role that Procurement has to play in that.

Our guidance on ‘Sustainability in Construction’, published in January 2023, offers a roadmap for public sector clients to run construction projects that limit the impact on the environment. The sustainability guidance is covered in the ‘Client Guide to Construction Projects’ and supports the move towards positive climate change objectives within a key sector.

How procurement activity has contributed to compliance with climate change duties

The Scottish Government applies procurement and climate change policy across a range of contracts and frameworks, including national collaborative frameworks, for services and materials to drive waste minimisation and reuse, as well as efficiency and sustainability. We are addressing emissions in relevant contracts, and there are a number of examples where procurement activity has contributed to our efforts to limit negative environmental impact.

Water and Waste Water Framework

The Water and Waste Water framework required the supplier to promote initiatives and schemes aimed at improving efficiencies and reducing overall water consumption. This was achieved by minimising leaks through detection measures and meter re-sizing that helped reduce environmental damage. Financial savings of up to £2 million and carbon reduction of 592,985 kg CO₂ were achieved in 2023-2024 through these efficiency initiatives.

A ‘Water Efficiency Fund’ allocated resources for framework customer initiatives. For example, Moray Council utilised the fund to replace taps in schools, resulting in an 85% reduction in annual water usage and significant cost savings. Similarly, Heriot-Watt University installed new laboratory refrigeration units, leading to annual financial savings of over £2,650 and associated environmental benefits.

Non-Domestic Energy Efficiency over £1 million Project Framework

Awarded in 2020, the Non-Domestic Energy Efficiency over £1 million Project Framework supported delivery of the Climate Change (Scotland) Act 2009 (Section 63, Energy Performance of Non-Domestic Buildings), Scotland’s Energy Strategy and the Energy Efficient Scotland Programme. It helped to reduce CO₂ output, whilst aiding carbon reduction commitments of public sector authorities by making potential lifetime CO₂ savings of 88,533 tonnes for projects carried out under the period of the framework.

The framework is being redesigned and re-let to reflect Scottish Government decarbonisation policy and is due to be awarded in 2025.

Civil Engineering (Scotland) Framework

The Civil Engineering (Scotland) Framework was awarded in March 2024. The procurement was designed to address the Scottish Government’s and framework public bodies’ requirement for suppliers and their supply chains to support rapid transition to net zero and a circular economy.

In addition to having completed a Climate Change Plan as part of the supplier selection process, the Invitation to Tender asked tenderers to describe how they would minimise the environmental impact of the framework and associated Work Orders including how they would:

• minimise the use of energy, water consumption, vehicle emissions, waste, embodied carbon (through use of sustainable materials and/or those with the highest level feasible recycled content, at no additional cost)
• using the ‘unusable’ food products to make edible dishes such as melon skin chutney;
• protect, and where practicable, improve the natural environment and minimise other environmental impacts of works and services provided, products and materials used and associated packaging;
• identify, assess and apply relevant innovative approaches that improve the transition to net zero and a circular economy, or other environmental improvement; and
• assist framework public bodies in achieving their environmental objectives, including through the identification of carbon impacts of projects, carbon mitigation measures and the provision of relevant carbon and other relevant environmental data.

Tenderers were required to describe how they would objectively monitor and report relevant outcomes.

Framework suppliers will provide a range of environmental key performance indicators, including the volume of fuels purchased, electricity purchased, water consumption and use and managing and reducing waste to landfill.

Heat in Buildings Scotland National Scheme (WHS2)

The Heat in Buildings scheme that commenced in October 2023, valued at up to £728 million over a seven-year term, seeks to:

• reduce greenhouse gas emissions from Scottish homes through the installation of low and preferably zero-emissions heating technologies and insulation;
• support those in or at risk of fuel poverty through the heat transition;
• support development of the supply chain and skills base across Scotland.

A weighted Climate Emergency question in the procurement process resulted in the successful supplier committing to a range of sustainable benefits and practices in the delivery of the contract including:

• maintaining existing certification to the PAS 2060 carbon neutrality standard;
• becoming an accredited net zero carbon business by the end of 2025;
• achieving full net zero scheme delivery (including sub-contractors) by 2029;
• ensuring a 100% electric fleet by 2025 (50% by 2024);
• eliminating the use of fossil fuels in their buildings by 2025;
• measuring and reporting on all scope 3 emissions by 2025;
• ensuring zero waste is sent to landfill by 2025; and
• working with scheme customers to increase the proportion of zero-emissions heating systems installed year on year throughout the lifetime of the contract.

In practice, this means that the supplier’s management of the contract will not only increase the proportion of fuel poor homes benefitting from zero-emissions heating systems, it also means that the actual footprint that they generate in that delivery will be reduced.

Key deliverables against these commitments to the end of March 2024 include:

• creation of a carbon reporting tool to support full net zero scheme delivery;
• delivering on the 50% electric fleet (by 2024) target;
• 175 employees achieving the SQA Climate Accelerator qualification; and
• providing dedicated aftercare advice and support to 150 vulnerable customers.

To the end of March 2024, the scheme has only been operational for 6 months and has:

• completed installations in 3,800 Scottish households – with 478 renewable measures installed (including 230 Air Source Heat Pumps, 246 Solar PV and 2 Solar Thermal);
• delivered a SAP points improvement of 6.9 points per installation;
• delivered a Total Carbon Saving of 3,307 tCO₂; and
• achieved average annual fuel bill savings of £292 per household.

General Office Supplies

Another good example of a Procurement exercise where we have secured a very good level of measures was on our General Office Supplies Framework awarded in June 2023 to Lyreco UK Ltd.

We asked tenderers to highlight how they would work to support the Scottish Government’s agenda in relation to sustainability and environmental considerations with regard to actively managing, measuring and minimising their impact to the environment in respect of the operation of this framework. This included the promotion of greener products, recycling, management of carbon emissions arising from delivery of products and use of packaging.

Environmental

1. As part of their response to environmental management, Lyreco UK Ltd has committed to the following during the lifetime of the framework.

• Prevent the use of single-use plastic (SUP) in their supply chain product ranges, packing and business operations.
• Support the Scottish Governments Zero Waste Plan providing product/packaging recycling services backed up by their zero to landfill status.
• Deliver the contract in accordance with the Climate Change (Scotland) Act 2009.
• Support the Authority’s aim for a circular economy and have aligned principles with the ‘Making Things Last: a circular economy strategy for Scotland’.
• By 2025, to be the first company in the workplace industry to develop:
• full ranges of recycle-ready items;
• collection and ‘second life’ solution for all recycle ready products;
• zero noncircular packaging; and
• zero single-use plastic items in Lyreco offices.
• Roll out 130 new Euro 6, 6.1 emissions vans providing; increased fuel efficiency and payload (50 kg per van) - reducing the number of deliveries and CO₂ emissions.
• Use Electric Vehicles to cover two delivery routes in Edinburgh and will monitor the progression of technology/feasibility to increase Electric Vehicle coverage across Scotland to reduce CO₂ emissions.

This will be achieved through:

• ISO 14001 Environmental Management System covering all business operations; and
• a Lyreco Goodness strategy covering environmental, social and governance (ESG) commitments ingrained in all their business activities.

These initiatives will be measured and reported on annually and will provide us with a tangible and quantifiable way of measuring Lyreco’s contribution to meeting framework objectives.

• Sustainable product selection identified as ‘Good for the Planet’ means either its productions and/or disposal is deemed sustainable. Any product must evidence meeting mandatory requirements:
• certified to a sustainable accreditation (Cradle to Cradle/FSC/etc);
• provided with packaging recycled up to 80% of its weight; and
• recyclable or reusable up to 80% of its weight.
• Dedicated Framework Management Team (FMT) responsible for spearheading sustainability initiatives, strategies, reporting and continuous improvement.
• FMT will keeping abreast of the Scottish Government’s sustainability objectives/strategies throughout the duration of the framework to ensure alignment of their commitments/activities.
• Provide a free recycling service for all toner cartridges.

National Collaborative Frameworks for Client Devices.

Energy Efficiency – One of the main environmental impacts from the use of ICT products including laptops, desktops and tablets (Client Devices) is energy consumption. Client Devices supplied under our frameworks are required to meet the Green Electronics Council’s EPEAT accreditation standards which are designed to reduce the environmental impact of devices across their lifecycle.

EPEAT-accredited devices are more energy efficient, less toxic, longer-lasting, and easier to recycle than products that do not meet EPEAT eco-label standards, while addressing labour and human rights issues along the entire supply chain.

In 2023 Scottish Procurement was again recognised by the Global Electronics Council at their annual Purchaser Awards for excellence in procurement of sustainable IT products.

The Global Electronics Council estimate that over their lifetime, client devices purchased through Scottish Government frameworks in 2023-2024 will result in a number of environmental benefits, including:

• saving 63,365,261 MWh of electricity;
• reducing greenhouse gas emissions by 13,500 metric tons of CO₂ equivalents;
• reducing Solid Waste by 1,272,672 kg;
• reducing water consumption by 187 million litres; and
• saving 7.2 metric tons in hazardous waste, and 3,000 metric tons of solid waste and primary materials.

Our success in the global EPEAT awards programme is recognition of our continued determination to deliver the highest levels of sustainability and environmental benefits to the Scottish public sector.

Packaging, Recycling and Reuse – Our Client Device framework includes minimum standards for the use of recycled and recyclable content. Our framework suppliers are required to manage and reduce waste to deliver the best environmental outcome in accordance with the waste hierarchy. This includes minimising the use, and environmental impact, of packaging.

Biodiversity – During the reporting period, our framework supplier of Laptop and Desktop Client Devices funded the planting of native Scottish tree species in Aberdeenshire and Skye in partnership with Forest Carbon and the Arbor Day Foundation. This is helping to restore and revitalise Scotland’s natural biodiversity and eco-systems and reduce the long-term impact of CO₂ on the climate.

The Sustainable Procurement Tools host a growing range of best practice case studies from across the Scottish public sector.

3.4.3 Equality and Diversity

Equality sits at the heart of public procurement through our Sustainable Procurement Duty, requiring public bodies to consider and act on opportunities to improve the social, environmental and economic wellbeing, with a particular focus on reducing inequality within their procurement activity.

Our commitment in the Scottish Government to delivering equality is laid out in our Scottish Government Procurement Strategy and in the national procurement policies we set for Scotland. We enable compliance through our national sustainable procurement tools, guidance and support. We require organisations to track compliance (against their corporate procurement strategies) in their Annual Reports on Procurement, reporting our overall impact in the Scottish Ministers’ Annual Report on Procurement Activity in Scotland.

Scottish Government routinely acts on opportunities to further equality, diversity and inclusion through its procurement activity.

3.4.4 Fairly and ethically traded goods and services

We believe that those we contract with should adopt high standards of business ethics, this includes taking a robust approach to ensuring the goods and services are sourced fairly and ethically.

All Invitations to Tender issued during the reporting period included a provision to ensure that our supply chains are free from human trafficking and exploitation, including modern slavery, permitting us to terminate contracts with suppliers for breaches of social, environmental or labour law.

We continued to use the national sustainability tools to inform our commodity strategies which helped us to identify and mitigate potential risks in all of our regulated procurements. We also use targeted selection and award criteria relating to fairly and ethically traded supply chains where relevant for all regulated procurements.

We continue to engage with a range of organisations on ethical procurement, including learning from best practice used by others across Europe, and working with relevant stakeholders. If fairly traded goods and services are available to meet our requirements, we will consider how best to promote them.

3.4.5 Equal treatment and Non-discrimination general duty

Public bodies are required to carry out their regulated procurement activity in line with the General Duties of equal treatment and non-discrimination, encouraging a wider range of potential suppliers to engage with public procurement, while also stimulating greater levels of competition and innovative thinking, which ultimately allows us to achieve better value for public money.

The Scottish Government has complied with these duties in a number of ways:

• recognising that one size does not fit all we have developed approaches and solutions that are proportionate, flexible and scalable to help minimise unnecessary bureaucracy for buyers and suppliers, for example, our approach to developing standardised statements and guidance in the SPD;
• listening, adapting and remaining flexible in our approaches, engaging and consulting widely with external stakeholders as appropriate to incorporate feedback;
• focusing on encouragement and enablement versus mandates where we can, and maximising the impact of existing legislation and policy where we can; and
• working with counterparts to align approaches (including on reporting) to avoid duplication of effort, for example, agreeing that corporate annual reports on Procurement can be used for our climate reporting obligations.

Specifically, we have:

• used PCS and ‘Find a Tender’^[5] to advertise all regulated procurement opportunities;
• used clear, precise and plain language in tender documents, to facilitate understanding of requirements;
• ensured that only staff with appropriate training and experience are authorised to oversee regulated procurements; and
• used a toolkit of standard procedures, templates and processes to ensure best practice and consistency.

3.4.6 Respecting human rights

We take a robust approach in procurement processes to tackling criminal activity, including human trafficking and exploitation, modern slavery, corruption and fraud and to promote positive practices. Respecting human rights is not only a moral and legal obligation, but it can also have business benefits such as attracting and retaining a diverse skilled workforce (which can in turn increase quality, innovation, and productivity); reducing risks, including court proceedings; and enhancing reputation and brand value, increasing the customer base.

3.4.7 Social Care Procurement Policy

Work to embed ethical procurement within health and social care is ongoing. We gathered feedback on the draft ethical principles of commissioning and procurement from professionals, people with lived experience, providers and trade unions. Our aim is to publish the principles in the summer of 2025. Building on the work of the Adult Social Care Ethical Commissioning Working Group, we have established a Social Care Procurement Subgroup, to focus on the health and social care procurement.

The National Care Service (Scotland) Bill is at Stage 2 of the parliamentary Bill process. The NCS Bill includes some changes to procurement legislation for community health and social care. Ahead of Stage 2 commencing, Scottish Government procurement policy colleagues engaged stakeholders, including procurement professionals and provider representatives, on potential legislative interventions to support procurement practice.

We have also established a series of workshops, with procurement professionals, to consider challenges, opportunities and realities of social care procurement. The findings from these workshops will support the delivery of updated guidance for social care procurement.

3.4.8 Construction

In 2023-2024, we implemented Stage 2 of the restricted procedure for the multi-lotted, multi-supplier Civil Engineering (Scotland) Framework. This ultimately led to the successful award of the framework on 25 March 2024 to eight suppliers across three Lots, for call-off contracts valued between £5 million to £100 million. The estimated value for the duration of the Framework Agreement is £600 million over the four-year period.

The ITT was issued June 2023, with five broad evaluation categories to be assessed by Tender Evaluation Panels made up of fourteen policy experts, civil engineers, and professionals in the field across public bodies. For the first time in a Scottish Government Framework, a Graduated Pricing Mechanism (GPM) was used to assess the commercials with the goal of combating unsustainable/unrealistic pricing in the industry. Further innovations include the mandating of Project Bank Accounts to aid in prompt payment, as well as comprehensive KPIs and contract conditions agreed in collaboration with the UIG, Procurement Centres of Expertise, Scottish Futures Trust and Transport Scotland, and with industry.

The framework secures high quality suppliers and is projected to save Public Bodies 6% in costs. Further benefits from the framework include:

Value for money

• Low Management Charge (0.05%)
• Prices secured through competitive tender
• Graduated Pricing Mechanism

Speed to market

• Three-month target from mini-competition invitation to award
• Substantial time saved in conducting full procurement process
• Early Contractor Involvement provision

Sustainability

• Net Zero embedded in scope
• Carbon data capture
• Commitment to knowledge sharing and innovation

Fair Work

• Real Living Wage mandated
• Commitment to employee representation and platforms to raise concerns

Community benefits

• Contractor commitment to local resource use and skills development
• Offer of mentoring, student engagement and site experience targeting vulnerable groups

Collaboration

• Extensive consultation with industry (via Construction Scotland and steering group) and Public Bodies
• Commitment to Construction Accord and CQIC goals

Compliance

• Adheres to Procurement legislation
• Endorsed by Scottish Government
• Standardised approach to Terms and Conditions
• Project Bank Accounts mandated

Performance

• Contractors measured on environmental, social and fair work metrics via Balanced Scorecard
• Quarterly data used to assess performance at Framework level

Following Centres of Expertise endorsement of a Strategy for a Civil Engineering (Scotland) Dynamic Purchasing System (for projects up to £5 million); collaborative work continued throughout this reporting period to design and to build the system with the intention to publish a Contract Notice after the Framework contract award in late March 2024.

3.5 Open and connected

Ensure procurement in Scotland is open, transparent and connected at local, national and international levels. (Public Procurement Strategy for Scotland)

3.5.1 Openness and transparency

We are committed to improving accountability and being more transparent about how we spend public money, by publishing information about our procurement activity. In our procurement strategy we set out how we will carry out our regulated procurements, and we report on this in this annual procurement report, which also contains details of upcoming procurement projects.

• Public Contracts Scotland data is published in line with Open Contracting Data Standards, which supports organisations to increase transparency and allow deeper analysis of contracting data. This can be accessed via the Public Contracts Scotland home page - Home - Public Contracts Scotland. The data captures published procurement notice information.
• Annual publication of Ministerial Report which is an overview of public procurement activity in Scotland based on information contained in individual annual procurement reports prepared by public bodies and other relevant information
• We publish monthly reports of expenditure of £500 and over on the Scottish Government’s electronic Purchasing Cards - Government spend over £500: monthly reports - gov.scot (www.gov.scot)

We use the Public Contracts Scotland portal to advertise regulated contracts and publish award notices, and as one of Scotland’s four procurement Centres of Expertise, we also use PCS to produce a collaborative forward plan of procurement opportunities, which is updated quarterly. Our selection and award criteria are explained in detail in all our tender competitions, and we welcome input and clarification questions from bidders.

3.5.2 Collaboration

In this reporting period we’ve been working collaboratively with other public bodies and stakeholders to make improvements to our data and management information (MI). We began a major project to develop and grow our MI Platform that will support procurement’s ‘good for’ outcomes, our ambitions for a green and inclusive economic recovery, and meet National Performance Framework outcomes.

We identified and made available more information related to SMEs and the Third Sector, and we began to review accessibility of data, which will culminate in a range of new analysis formats such as graphs and maps.

Our aim is to join up data across our systems in Scotland, which will improve reporting and provide access to information previously unavailable; to improve intelligence on the impact of public sector procurement on targeted policy commitments, such as Community Wealth Building and Fair Work First; and improve supply chain transparency, engagement, resilience and diversity and demonstrate the impact public sector procurement can have in these areas.

The eProcurement and Management Information Shared Service is at the early stages of their digital transformation programme, which is looking at opportunities to improve the service, user experience and to be flexible to adapt to the changing needs of the procurement landscape. Over the course of the reporting year, we have engaged extensively with the digital and eProcurement market to get a detailed understanding of what new and innovative solutions are available, which is helping to define what the future eProcurement Service could look like. We are also working with our stakeholders to gather the required evidence to inform wider business needs.

3.5.3 Consulting and engaging with those affected by procurements

Our Procurement Strategy sets out our approach to consulting and involving those affected by our procurements. We have continued to engage with suppliers about their experiences of public procurement, what works well and where there is scope for improvement and will do more to challenge barriers that SMEs may face in competing for public sector contracts.

We held a programme of SME, social enterprise and third sector round table meetings to hear directly from suppliers about their experiences of bidding for and winning public contracts. We actively engage small business and third sector representative bodies both individually and through our Procurement Supply Group, who influence policy and improve public procurement on behalf of their members. This year the Institute of Directors, the Soil Association and Scotland IS joined the group as it evolves to reflect the more diverse businesses and organisations supplying to the Scottish Public Sector.

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 the Parliament Conference which provides direct engagement between businesses and MSPs.

As a result of the workshop discussions, we progressed a number of actions to help SMEs (particularly micro- and minority-led businesses), third sector and supported businesses, engage more easily with public procurement in Scotland. This included publication of one-stop-shop guidance which we developed in collaboration with the Federation of Small Business, Women in Enterprise, 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.

3.6 Procurement support to rapidly developing external impacts

Although the gradual recovery from the Covid-19 pandemic was well underway in the reporting period, significant other external impacts came to the fore. The ongoing war in Ukraine continued to interrupt the gradual economic recovery from Covid-19, causing an energy supply and inflationary shock that pushed the economy toward recession.

The Scottish Government Procurement Team played a key role working with the Scottish Government’s Ukraine Directorate, sourcing a compliant route to market and placing contracts, allowing for short term accommodation needs to be met through the provision of large-scale hotel accommodation, charter of ships and associated ancillary services. Long-term accommodation was also sourced and acquired and the teams also provided support in review of the policies and approaches, attending various assurance boards, project crisis meetings.

The Procurement Team was instrumental in ensuring the Ukraine Directorate understood the market options, scoping, tendering and placing a further contract to allow for world class, accountable, crisis management humanitarian response capability to be employed, enabling Scottish Government to consider options to respond rapidly, and effectively at scale and with strategic direction in the provision of further emergency accommodation with supporting services and infrastructure.

3.7 Professionalisation and capability

We continue to engage both nationally and internationally on the professionalisation of procurement. We worked collaboratively in the reporting period with other public bodies to build both the professional capability and capacity of the procurement community in Scotland. We did this through open training programmes and talent initiatives, such as connecting sectoral graduate schemes through the Procurement People of Tomorrow programme.

We also continue to provide internationally recognised best practice tools and guidance, and we set the national procurement and commercial standards for Scotland with aligned training offerings and support. We engage openly across borders with the UK and the Devolved Administrations, Organisation for Economic Co-operation and Development (OECD), National Association of State Procurement Officials (NASPO) and other foreign governments. We stay connected to professional bodies, including the Chartered Institute for Procurement and Supply.

To improve understanding of how to apply economic, social and environmental requirements through public procurement, between January and March 2024, we provided training to 287 people from across the public sector on sustainable procurement. This was in addition to widely promoting the progressive legislative and policy framework, guidance and tools and providing targeted on-shoulder support to help embed sustainable procurement practice.