BLOG: The Power of Procurement

Scott Bell, Deputy Director, Head of Procurement Development and Construction at the Scottish Government

In the first of two P4P blogs for December, the Scottish Government’s Scott Bell discusses how public sector buyers can better leverage procurement spend to help achieve inclusive and sustainable economic growth.

Introduction

Public Procurement is one of the strong levers we have to help us deliver on our purpose, to increase well-being and achieve inclusive and sustainable economic growth.  

While procurement itself can’t cure all of societies’ ills, nor resolve endemic problems, we can help create growth that combines increased prosperity with greater equality, creates opportunities for all, and distributes the benefits of increased prosperity fairly.

It doesn’t matter if you are placing high or low value contracts. Imagine making life better for a service user by being imaginative and innovating how they receive care, or if you lifted a family out of poverty by helping them be paid the real Living Wage. Imagine the sense of pride if you were able to create work for someone. If you provided a job for someone who is disabled or long term unemployed. You might not be able to change the world, but you may be able to improve someone’s life?

Several years ago we developed the Scottish Model of Procurement. It describes the process of procurement which puts sustainability at the heart of what we do. It creates an environment of openness and accessibility which has been emulated by many across the world.

However, it is time for us to focus on the outcomes that we need to achieve. Purpose to go with the process. Working with the Procurement Centres of Expertise, we have defined these as using the power of procurement, in a way which is:

  • Good for business and employees
  • Good for society
  • Good for places and communities, and is
  • Open and connected

Good for Businesses

We have a responsibility to think about how we can strengthen our approaches and behaviours in a way that’s good for businesses. We need to think about how we can do that in a way which develops our local economies and communities. The areas we live in, work in, do business in and serve.

Having businesses which can grow in an inclusive and sustainable way helps create thriving local economies. More money being earned and spent in an area sustains further growth. With that, we can create jobs.

The ability to create meaningful jobs and opportunities will also deliver more fairness for our country – as well as driving increased productivity and competitiveness.

Good for Employees

We now expect those that receive public funds, whether through grants or public contracts, to adhere to certain standards. Standards which drive fair working practices – which expect them to:

  • pay the Real Living Wage;
  • have no inappropriate use of zero hours contracts;
  • help us redress gender pay inequalities;
  • and generally invest more in our people.

We expect these standards to be considered in all public contracts. These things matter to real people. It’s important that we hold these standards and values as a nation and as a government.

That’s why these principles are included in the Scottish Business Pledge – to drive economic success through fairness, equality and sustainable employment. 

Already almost 700 businesses have made their Pledge to invest in their employees, their communities and environment – it’s good for business, good for employees and good for Scotland.

Good for Society, for Places and Communities

We believe that the power of procurement should be used to do more for the places and communities we serve. 

For a long time, the “value for money” message has been echoed over and over. This is only natural – it is a fundamental element of all contract award decisions.

But we have an opportunity to do more. We need to be flexible in how we respond to new and emerging priorities, and be prepared to listen to our communities and reflect their needs in what we seek to achieve.

For example, everyone knows about the climate emergency. The political response was passed in parliament in September with the Climate Change Bill. This means, by law, we have a target of net zero emissions by 2045. But we can’t just sit and wait. We need to take action.

The power of procurement means there are things you can do now. Things like:

  • challenging the need to buy – do we really need it?;
  • buying products and services that are delivered in a way to reduce emissions – that can be reused or repurposed – using the circular economy; and
  • looking at how we can make our buildings more eco-friendly in their construction, use and repurposing

It’s a real and exciting opportunity to make a difference. A difference which is good for society, places and communities.

Open and Connected

The introduction of annual reports and strategies in Scotland has brought in a breadth of transparency which is unparalleled; probably more than anywhere in the world.

These strategies and reports give public sector buyers the opportunity to demonstrate all the good work they’re doing and celebrate their successes. They have given us a much better picture of what’s being delivered and a national picture of what collectively is being achieved. Public sector spend:

  • creates £10 billion of economic activity in Scotland – that adds £6 billion to our GDP
  • supports 100,000 jobs, and
  • Scottish businesses are winning 3 quarters of contracts.

The list could go on, about the amount of money being spent with SMEs, about community benefits, about training opportunities, about the Real Living Wage.

The reality is, that by being open and transparent, through measurable evidence, we can be pro-active and positive about the real power of procurement.

New Outcomes

These four outcomes, which are aligned to the National Performance Framework, will help us frame and shape the services we provide. They can’t be deployed equally in all circumstances, but we need to have rational arguments for and against their relative importance in our procurement related activity.

Rather than distil a set of indicators for these outcomes, it’s more important that we do the right thing given a particular set of circumstances. Purpose beats process. Stepping back and looking at the national indicators associated with these can help shape how they may influence your local decisions.

We want to deliver more around fairness, equality, jobs, local supply chains and local economic benefits. Finding savings is good – it’s our day job. But let’s think differently. Collaboration and innovation can help us deliver so much more.

The Power of Procurement

Defining these outcomes is an opportunity to think differently about the £11 billion of spend that the public sector collectively controls. It’s a time to think about how we can work across organisations to focus on local communities, places, businesses and of course people.

Everything evolves. We urge contracting authorities to continue in their creativity and use the flexibility of the procurement regulations. But we also urge you to be more mindful of the behaviours and approaches which you can adopt. Seize the opportunities, challenge the norm and see what we can do differently.

Let’s make the power of procurement work and let’s shout about it.