Public Sector Procurement Reform

7th February 2012

The Cabinet Secretary for Infrastructure and Capital Investment Alex Neil, has outlined his intention to further reform public procurement to improve Scottish businesses' access to contract opportunities.

Mr Neil said:"I have spent a lot of time in recent months engaging with businesses and others who have concerns about public procurement.

"The Scottish Government has done a great deal to improve the way the procurement system operates in Scotland, but clearly there is still room for significant further improvement, both in relation to efficiency and the extent to which Scottish businesses are able to access contract opportunities.

"We have already announced our intention to introduce a Sustainable Procurement Bill during the life of this Parliament and that the Bill will seek to ensure that major public contracts deliver training and employment opportunities through the inclusion of Community Benefit Clauses. Having listened to business concerns about procurement I can announce that the Bill will also seek to ensure that all public bodies in Scotland adopt transparent, streamlined and standardised procurement processes that are friendly to Scottish businesses.

"Many of the issues that have been raised with me have related to the construction sector. This sector is facing particular challenges in the current economic climate and many of the improvements we have introduced to public procurement have had limited impact as our work on improving practice has been focused largely on goods and services rather than construction .

"Against this background, I believe the time is right to commission a root and branch review of construction procurement across the public sector, with a view to tackling industry concerns and ensuring that procurement practices deliver best value for Scotland's economy.

"We will work up detailed proposals for the review and I will make a further announcement on this shortly."

Liz Cameron, Chief Executive of the Scottish Chambers of Commerce and a leading advocate for change within public sector procurement has welcomed this timely intervention and said: "Businesses have been working with the government in identifying and implementing improvements to public sector procurement processes.

"There still however remains much work to be done and the need to quicken the pace of introducing this change.

"Our goals are the same - to ensure the procurement levers are being pulled in the right direction and that every public sector agency and its employees are doing all they can to support small and medium sized businesses across Scotland.

"We welcome the focus on the construction sector. There has been major downsizing with many high quality construction companies going out of business with the loss of highly skilled jobs.

"The bottom line is that we want to see more small local businesses being able to compete and more importantly win contracts. We look forward to working with government and others in this review to ensure the proposed bill contains and addresses the issues raised by businesses across Scotland."

The Sustainable Procurement Bill will ensure that:
contract opportunities are advertised or awarded through Public Contracts Scotland - helping Scottish businesses find and win contracts;
public bodies adopt transparent, streamlined and standardised procurement processes that are friendly to Scottish businesses; and
that Scottish firms have the right to access information about all contract award decisions and to challenge them if they believe the decision is unfair.

The review will set out to help ensure that the construction sector, including industry and its public sector clients:
achieves efficiency improvements through opportunities for collaboration where appropriate;
raises its performance through improvements to capability, procurement practice and project assurance;
is able to identify and quickly adopt emerging best practice and that practices are standardised wherever possible;
adopts good practice in relation to sustainability, including life cycle costing and reduced carbon and energy consumption;
manages common/major contractors and projects effectively;
makes best use of available construction procurement/project skills; and
makes best use of new and emerging innovations in techniques, technology and materials (eg Building Information Modelling).

Scotland's public sector spends over £2 billion per annum on construction related contracts and the review will examine how we can improve the impact of this spending on Scotland's economic growth.