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Scottish Government procurement strategy: April 2022 to March 2024

Scottish Government procurement strategy covering the period from April 2022 to March 2024.


Appendix 3 – Policies, Tools and Procedures

The Scottish Government spend over £300 million each year buying goods, services and works. This is a significant sum and it is right that people expect it to be spent in a way that aims to deliver the most benefits possible to society. We design our procurement policies with that aim in mind while also carrying out procurements that are transparent and fair. Our procurement policies shape and support public procurement activity across Scotland.

Over the last couple of years, we had a significant focus on gathering and analysing evidence on the impact of public procurement in Scotland to identify opportunities for improvement and/or to do things differently. We did this through a variety of means, including independent research, supplier surveys, desk-based analysis of annual procurement reports, the UK Government Green Paper on transforming public procurement and other international benchmarking and, importantly, by listening to our customers in targeted conversations with industry and stakeholders.

In response to this evidence we have highlighted areas for improvement and acted upon them, achieving quick wins or taking steps for long-term transformations, some of which are detailed in our aims and key priorities above. We will continue to engage in further research to better understand our options in meeting our strategic ambitions and will ensure we continue to listen, learn and drive continuous improvement.

With our Procurement Commercial Improvement Programme (PCIP) we are continuously gathering evidence in support of our robust policies and procedures while driving improvements to increase our capability. Key actions from our last assessment include embedding further Contract and Supplier Management, continued roll out of online training, and reviewing our suite of Information and Communications Technology (ICT) tools for improvement opportunities.

We will continue to listen and learn, drawing on robust research and analysis whilst engaging and aligning with the work of partners and policy makers to understand and, as appropriate, address opportunities for improvement and change. We are committed to use the Power of Procurement to support an inclusive and green recovery and to deliver social, economic and environmental benefits. The below statements reflect the commitment that our regulated procurements will:

APP3.1 use community benefits in our public contracts where possible.

How: In line with the sustainable procurement duty and specific obligations regarding community benefits in our legislation, we continue to mainstream the use of community benefit requirements in public contracts to deliver wider benefits for local communities and wider society. This complements our activities to facilitate access to procurement for SMEs, the third sector and supported businesses and helps us to deliver wider social and economic benefits as part of our public spending decisions.

Community benefits are considered at development stage of the tender and, either added as a mandatory requirement from bidders or, where appropriate, provide bidders with the opportunity to suggest voluntary community benefits. Our contract notices for regulated procurements record whether contractors must deliver any community benefits. We also record any community benefits that have been delivered as part of our contract management arrangements and will report on these in our Annual Procurement Report.

APP3.2 consult and involve those affected by our procurements.

How: Where appropriate we work with people who use services, potential suppliers and others to help us design procurements. This can vary from market research, Requests for Information (RFI) exercises, issue Prior Information Notices, to supplier engagement days or the design and piloting of services. For national contracts we may involve people who use services through ‘user intelligence groups’, and others where we require input to specific procurements, for example trade unions.

We record any complaints about failure to consult on any of our contracts and our Annual Procurement Report on our performance will review these. It will include information about any conclusions we reach and any measures taken in response to complaints.

APP3.3 consider Fair Work practices, including paying the real Living Wage to people involved in delivering our contracts.

How: 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 by applying Fair Work criteria to public funding. FWF asks businesses bidding for a public contract to commit to adopting the seven FWF criteria, which are:

  • appropriate channels for effective voice, such as trade union recognition;
  • investment in workforce development;
  • no inappropriate use of zero hours contracts;
  • action to tackle the gender pay gap and create a more diverse and inclusive workplace;
  • providing fair pay for workers (for example, payment of the real Living Wage);
  • offer flexible and family friendly working practices for all workers from day one of employment; and
  • oppose the use of fire and rehire practices.

We have updated our procurement processes to ensure FWF criteria are included in all relevant procurements. We will consider Fair Work practices as early as possible in all of our procurements and address this by including award criteria, where relevant and proportionate in our contracts. We also ask if bidders are accredited as Scottish Living Wage employers, and if they have signed up to the Scottish Business Pledge.

We have committed to mandating payment of the real Living Wage in our new contracts from 14 October 2021 where it is relevant and proportionate. We will continue to record commitments made by suppliers to pay the real Living Wage. These will be included in the Annual Procurement Report of our performance against this strategy.

APP3.4 be satisfied our contractors and subcontractors comply with the Health and Safety at Work etc. Act 1974 and any provision made under that Act.

How: It is a standard condition of our contracts that the contractor must keep to all laws that apply, all requirements of regulatory organisations and industry good practice. This includes any relevant health and safety law. Also, whenever a contractor’s staff are on our premises, under the terms of our standard contracts, they must keep to our own health and safety requirements.

We revise our contract management arrangements to make sure that we include information about health and safety incidents related to delivering our contracts and any measures that we take to put things right. This information will be included in the Annual Procurement Report of our performance against this strategy.

APP3.5 procure fairly and ethically traded goods and services which advance human rights and equality.

How: Scottish Government is driving an ambitious and progressive agenda to ensure equality and human rights are embedded in all we do. We recognise that procurement is a lever in achieving this ambition.

We have committed to develop and take forward implementation of an equality and human rights mainstreaming strategy to be in place by the end of 2024. This strategy will build on learning from COVID-19 impacts and responses as well as our work over the past decade to mainstream and embed equality and human rights. The links between procurement and achieving our equality and human rights ambitions will be explored further in this strategy.

Human rights

We are committed to ensuring that everyone in Scottish society can enjoy their human rights in full. That includes being able to live with dignity and being treated fairly and without discrimination. We should all be able to make properly informed choices. That includes participating in making decisions which affect our rights, whether services are delivered directly or are procured from third parties.

The Scotland Act 1998 and the Human Rights Act 1998 ensure that Scottish legislation and the actions of public sector organisations have to comply with core human rights standards derived from the European Convention on Human Rights. Public sector organisations are also expected to support implementation of other international human rights treaties ratified by the UK, such as the International Covenant on Economic, Social and Cultural Rights and the European Social Charter.

We are working to implement the UN Guiding Principles on Business and Human Rights (UNGPs). These provide good practice guidelines for the private sector, including where the state either contracts with, or legislates for, business enterprises to provide services that may impact upon the enjoyment of human rights.

The Scottish Government’s annual Programme for Government highlights further commitments to enhance and develop human rights protections in Scotland. Proposals developed by the National Taskforce for Human Rights Leadership have resulted in a PfG commitment for a Human Rights Bill which will be introduced within the term of this parliament. This Bill will incorporate several international human rights treaties into domestic law.

Our approach is described in Scottish Procurement Policy Note SPPN 3/2020: Reducing the risk of human trafficking and exploitation in the performance of public contracts which encourages all public sector organisations to consider a similar approach. Organisations should also note the Scottish Government’s intention to consult on extending reporting requirements on transparency in supply chains to the public sector.

We will consider the risks and opportunities at an early stage in a procurement process, enabling us to take account of ethical issues when assessing a bidder’s overall suitability and reliability to be awarded a contract. This includes considering whether the bidder has been convicted of certain criminal offences or has committed any acts of professional misconduct while running their business.

Our Annual Procurement Report will include a statement about the effectiveness of our selection procedures and we are keeping a central record of the value of fairly-traded products bought or sold under our catering contract.

Equality

We take a holistic approach to ensuring we support and enable equality through procurement spend whether that is driving Fair Work First and the real Living Wage in contracts and supply chains, embedding equality outcomes in community benefits through procurement, or reserving contracts for supported businesses, ensuring fair and ethical procurement and protecting human rights. We routinely consider equality alongside other social, economic and environmental risks and opportunities in our procurements.

The sustainable procurement duty provides a mechanism for the Scottish Government and other public sector organisations to comply with the general equality duty set out (section 149) in the Equality Act 2010 and with the specific duties in the Equality Act 2010 (Specific Duties) (Scotland) Regulations 2012. In essence, the specific legislation requires the Scottish Government, when delivering policy, to have due regard to the need to:

  • eliminate discrimination;
  • advance equality of opportunity; and
  • foster good relations between people who share protected characteristics and people who do not.

The Fairer Scotland Duty, Part 1 of the Equality Act 2010 (also known as the socio-economic duty), requires public sector organisations including the Scottish Government to have due regard to how they can reduce inequalities caused by socio-economic disadvantage when making strategic decisions.

Scottish Ministers are committed to reviewing the effectiveness of the Public Sector Equality Duty (PSED) regime in Scotland. Following extensive engagement, a consultation ran from December 2021 until April 2022 on legislative changes to the Scottish Specific Duties (SSDs) and to the wider implementation environment. As part of our consultation, we recognised that procurement is an effective lever to influence change. We sought views on whether listed public bodies should be required to set out a strategic plan on how they plan to meet their equality duties under the SSDs, and then report on how they have implemented them. This requirement would include reporting the procurement duty (regulation 9), therefore encouraging listed authorities to engage with the current duty in a more cohesive and transparent manner. Based on recommendations from stakeholders, we are also seeking views on the value of requiring award and tender specifications to stipulate that all outputs of any work must meet the requirements of the PSED and specify examples. The SSDs will be updated during the period covered by this strategy.

In addition to our Annual Procurement Report, we report bi-annually on how our procurement policy and activity complies with the Public Sector Equality Duties.

Policy coherence for sustainable development

Through our 2016 International Development Strategy (Global Citizenship: Scotland’s International Development Strategy), which sets out our contribution to the international community, we have committed to Policy Coherence for Sustainable Development (PCSD) as part of our holistic approach to sustainable development (‘the Beyond Aid’ agenda). A commitment to a PCSD approach recognises the impact of Global North government policies that affect Global South countries, and that some of

the greater benefits to the world’s poorest and most vulnerable can be brought about not through development assistance but through policy changes.

Taking a PCSD approach means ensuring that across government, there is greater coherence in the approach to trade, human rights, procurement, exporting and importing. We have already recognised this in our 2021 policy Vision for Trade. The use of public procurement to support ethical and fair trade producers and suppliers is also a good example of applying a PCSD approach.

The achievement of Fair Trade Nation status for Scotland, first in February 2013 and once more in March 2017, signals to the world that Scotland takes an active leadership role in challenging global poverty and recognising the dignity and rights of producers, through a commitment to fairness in international trading.

The International Fair Trade Charter (2018) describes Fair Trade as a movement which ‘works to transform trade in order to achieve justice, equity and sustainability for people and planet’. Scotland has positioned itself as a Fair Trade Nation, with the aim to embed fair and ethical trade across all functions of government and business as a transformative response to creating a fairer society.

The Scottish Government is responsible for public procurement policy and legislation in Scotland. We use contract criteria to encourage transparency in the supply chain which, in turn, supports positive practices and is in line with our Fair Trade Nation status to promote the use of fairly traded goods and services. Our policy, guidance and tools encourage others to take a similar approach.

APP3.6 ensure contracts involving food improve the health, wellbeing and education of communities in Scotland and promote the highest standards of animal welfare.

How: As a public sector organisation, we seldom buy food directly but we do use our catering framework to achieve a range of benefits. Our approach is to make sure that this keeps to government policies on healthy eating and nutrition, promoting fresh, seasonal, fairly-traded and local produce and to UK buying standards. These standards take account of factors including production, traceability, authenticity, origin, ethical trading, animal welfare, environmental standards and health and waste.

We are keeping a central record of the value of fairly-traded products bought or sold under our catering contract.

APP3.7 pay invoices in 30 days or less to our contractors and subcontractors.

How: Our late payment legislation requires all public sector organisations to pay invoices within 30 days. There is also specific guidance on late payment legislation.

We are committed to prompt payment of invoices both to and by our contractors and their subcontractors. We commit to pay valid invoices within 30 days of receipt and, as a condition of contract, we require this commitment to apply throughout the supply chain relating to the contract. This condition, when applied throughout the supply chain, must also make clear that if a subcontractor believes that invoices are not being paid within 30 days they can raise the issue directly with us.

We work towards a ten day target for paying bills to businesses in Scotland. This is a key objective and an important expression of our commitment to support businesses which goes beyond our contractual obligation to pay suppliers within 30 days. In the financial year 2020-2021 we paid 97.6% of valid invoices in ten days or less and 99.6% within 30 days.

Through our contract management arrangements, we monitor the percentage of our valid Scottish Government invoices paid on time, our average payment performance and any complaints from contractors and subcontractors about late payment and we take action if appropriate.

We will test the inclusion of prompt payment in the supply chain as a condition of awarding a contract at the selection stage of a procurement and for the inclusion of a contractual clause for payment terms to be passed through the supply chain.

APP3.8 climate and circular economy.

Existing procurement duties under the 2014 Act already require public sector organisations to consider and act on opportunities to improve the economic, social and environmental wellbeing of their areas through their procurements. The Scottish Government’s sustainable procurement tools, available to all public sector organisations, include indicators and guidance to support Scottish public sector buyers to consider and act on a number of climate change and circular economy considerations.

We are committed to taking action on climate change and to develop the circular economy by buying goods and services which reduce emissions, minimise waste and allow for repair, re-use, refurbishment or recycling wherever appropriate. We are looking for ways to reduce how much we buy as that will impact directly on the emissions and waste involved in manufacturing, logistics, distribution and servicing. Given we routinely buy on behalf of others, many of these decisions are influenced by our stakeholders and budget holders. We are exploring a range of ways to influence, support and track progress.

As per SPPN 1/2021: Taking account of climate and circular economy considerations in public procurement, we will prioritise and take account of climate change and circular economy in our procurement activity and report ongoing progress against these commitments in our public sector reporting on climate change and in our Annual Procurement Report. This is demonstrative of how we are using procurement to support Scotland’s response to the global climate emergency and drive a fairer and greener future.

Contact

Email: scottishprocurement@gov.scot

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