The Scottish Government is currently consulting on a Procurement Reform Bill. The Bill follows proposals at the European Commission to address issues of growth for member states through procurement reform, which identified three priorities:
- Developing an economy based on knowledge and innovation
- Promoting a low carbon, resource efficient and competitive economy
- Fostering a high employment economy delivering social and territorial cohesion
And has two objectives:
- To increase efficiency of public spending, through the simplification and ‘flexibilisation’ (their word not mine) to benefit all economic operators and especially to facilitate the participation of SMEs
- To make better use of public procurement in support of societal goals such as protecting the environment, higher resource and energy efficiency, combating climate change, promoting employment and social inclusion and “ensuring the best possible conditions for the provision of high quality social services” (Proposal for a Directive of the European Parliament and of the Council on public procurement, Brussels, 20.12.2011 COM(2011) 896 final).
In Scotland public sector spend on goods and services amounts to some £9 billion per annum. The Procurement Reform Bill is intended to direct this spend in ways which grow the Scottish economy and to provide a lever in support of Government policy, be that job creation, infrastructure development, strengthening communities or low carbon initiatives.
While sustainable procurement has been defined as:
“A process whereby organisations meet their needs for goods, services, works and utilities in a way that achieves value for money on a whole life basis and generates benefits not only to the organisation, but also to society, the economy and the environment.”
Scottish Sustainable Procurement Action Plan, 2009
For the voluntary sector with its mixed experiences of local authority tender exercises the consultation on the proposals offer an opportunity to influence the legislative framework, particularly as a central tenet appears to be that public procurement ought to be more open and accessible to SMEs (in private and voluntary sectors). In doing so the market will become more mixed, feature a wider variety of contractors/providers and thus stimulate economic growth.
In addition to market management Government wishes to streamline procedures and processes ie to standardise procurement, to ensure best value and to support public service reforms outlined by the Christie Commission.
The consultation proposes six areas for improvement:
- Public procurement processes are transparent, streamlined, proportionate, standardised and business-friendly
- Making it easier for business, particularly newer businesses, SMEs and the third sector, to access public contract opportunities and sub-contracting requirements
- Smarter use of public procurement to encourage innovation and growth
- Taking account of social and environmental sustainability issues through public procurement
- Dealing with inappropriate conduct and poor performing suppliers
- Application and compliance
and asks a number of questions around those issues.
Shaping the Market
The legislation provides for a general framework which tries to strike a balance between the twin aims of standardising procedures and processes while offering flexibility. For local voluntary sector providers a transparent, streamlined and accessible market place would generally be welcome. However, procurement issues commonly raised by agencies often relate to the detail of processes, at a level not covered in national legislation. Therefore a question for local agencies arises in the extent to which the legislation mitigates against market drivers which reduce the number of providers and create a scenario oft described as a ‘race to the bottom’ ie to compete for contracts by offering the lowest price.
No less an issue is the notion of an open market, which the voluntary sector finds challenging in that local authority services are neither assessed in the way third party providers experience, nor opened up to a competitive bidding process. Can and should the legislation offer a more equal playing field in opening up more public services to competitive tender or other procurement methods, giving further impetus to the public service reform agenda?
At the same time the issues for potential providers may not lie in procurement rules but concern the manner of application. Which is to say the issue may not be the legislation but the methodology. For example a common complaint among voluntary sector bidders is the period of notice required to advertise a tender before closing dates for bids, which many find create considerable pressure on organisational resources (particularly management time) in a near scramble to prepare submissions.
Proposals which streamline this aspect of the process can be found in ensuring the process is proportionate, standardising the prequalification process or alternative procurement methods like Public Social Partnerships. Comments and suggestions on what the legislation can say that will promote accessibility and reduce the burden of participating in the process are sought.
Social Impact
Across the piece it is clear large contracts available from Government carry the highest potential to achieve the aims of more sustainable procurement. In the proposals much is made of training and employment opportunities. Perhaps a way into thinking around this issue is to take the new bridge over the Forth as an example. Or how can the local voluntary sector become involved and to what end in the issue of a contract for say the construction of a school? Evidently the large scale contracts have gone to construction companies and do not on the face of it mean much to local voluntary agencies. However were the legislation to require a clear beneficial social impact of such contractors a door potentially opens. What can legislation include that makes demands of such companies to engage with local communities and the local voluntary sector in ways which demonstrably add value to a contract and enable contractors to make positive contributions to for example community capacity or augment services to communities?
Co-Production
Much talk emanates from Government about the value and desirability of co-production. Locally public sector partners have taken up this mantra and push for greater degrees of cooperation and joint working within a context of mutual understanding. Procurement legislation provides a significant opportunity to embed co-production in procurement procedures and contractual arrangements. Co-production between the private and voluntary sectors does not feature large in the current landscape and this legislation has the potential to promote a stronger engagement between private, public and voluntary agencies and local communities. The proposals contain suggestions for the use of community benefit clauses – can the legislation go further in promoting a wider concept of social value beyond a use for community benefit clauses? You can read more about co-production in this EVOC brief.
Outcome-based procurement
Finally procurement is identified in the proposals as a process which has a direct impact on outcomes, tying into moves towards outcome-based commissioning and person-centred services. While this theme relates specifically to health and social care services what can legislation include that promotes person-centred services and better outcomes for individuals and communities across the piece?
Next Steps
EVOC intends to submit a response to this Scottish Government consultation, on behalf of Edinburgh’s Third Sector. To gather your views we have published a short questionnaire online. Please share your views with us. If you have other views you’d like to share, or would like to speak about the Procurement Reform consultation, please contact Colin Murray at EVOC in the first instance. Depending on the level of interest, we are happy to bring people together for a discussion. Please let us know if you’d like to attend.
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