Our procurement strategy 2016-2017

The Scottish Government’s purpose is to create a more successful country, with opportunities for all of Scotland to flourish through sustainable economic growth. The Scottish Economic Strategy published in March 2015 focuses on two main objectives to achieve this:

• Increasing competitiveness
• Tackling inequality

These themes are repeated in the Programme for Government.

These aims are also mirrored in the Procurement Reform Act and EU Directives which together address procurement’s core aims of transparency, equal treatment and non-discrimination, and emphasise our key role in delivering innovation, sustainability and social justice.

The key themes of our Business Plan 2015-18 are also supported by this Procurement Strategy including encouraging SMEs to apply for our contracts, building stronger relationships with other public sector organisations, ensuring equality through our processes and encouraging suppliers to work in a socially responsible manner.

The aim of Scottish Enterprise (SE) Procurement is to deliver transparent and effective procurement services that offer best value, are legally compliant, follow best practice, align with Scotland's Economic Strategy and address the needs of our business plan. We'll do this through working with internal customers and external suppliers, collaborating across the public sector, and ensuring we have a professional and capable team. We'll continuously improve and measure our progress through results from customer surveys, supplier surveys, external evaluation through Scottish Government assessments and delivery of efficiency savings.

Undertaking regulated procurement (over £50,000)

SE Procurement follows the ‘Scottish Model of Procurement’, using the Scottish Government’s Procurement Journey as the basis for our policy and procedures.

During early strategic procurement discussions with project managers, options available will be discussed and agreed to ensure the most appropriate route is developed to meet their needs and ensure value for money is achieved. SE will continue to use Scottish Procurement frameworks and Crown Commercial Service frameworks where appropriate.  Where there are no appropriate frameworks available, for regulated procurement (over £50,000), the procurement team will work with our internal customers to design, develop and procure contracts that are fit for purpose, ensure value for money and are compliant with legislation. We will use the open process for the majority of our procurement to open up the opportunity to suppliers, in particular, to SMEs, and reduce paperwork and timescales.  Our policy, where possible, is to advertise tender opportunities above £50,000, excluding VAT, on the national advertising portal, Public Contracts Scotland, in order to make opportunities available to all potential suppliers.  We will award contracts on the basis of the most economically advantageous tender (MEAT) which balances value for money and the required quality of the service, goods or works being procured.

At the end of each regulated procurement, we will continue to complete a tender completion report that reviews the procurement exercise including lessons learned. We will work continuously to improve our policies and procedures for our internal customers and suppliers. We will ensure that our regulated procurement, so far as reasonably practicable, is carried out in accordance with this procurement strategy.

Working with customers

Procurement is part of the induction that new staff undertake when they join SE. Further tailored procurement training will continue to be given depending on the post and responsibility. 

Each SE division has a named procurement contact with a developed knowledge of the division, and its work.  These contacts will continue to undertake regular presentations at operational team meetings to share procurement good practice and to ensure our internal customers know how we can assist them.

Further, the procurement contacts are based in various offices to ensure that they are accessible and available to help where needed.  We have undertaken procurement roadshows across all SE offices to explain the current changes to procurement and how they affect project managers.

Consulting customers

SE Procurement undertakes internal customer surveys annually. The 2014-15 internal customer survey found that 90% of respondents to the low value (under £50,000) procurement survey found that the procured contract delivered both quality and value for money and 96% of respondents to the regulated (over £50,000) procurement process agreed that they were satisfied with the service they have received from SE Procurement and were satisfied with their working relationship with their procurement contact. Going forward, we will undertake this survey annually with a sample of project managers who have undertaken procurement in the previous twelve months.

In addition to the above, we also have a feedback from the SE Procurement Intranet site for our internal customers’ comments. This also acts as a mechanism for colleagues to report any concerns regarding potentially fraudulent activity.

Ensuring value for money

We will provide a high quality service for our internal customers which is responsive, pragmatic, timely and delivers value for money.

Working with project managers, since 2008-09 SE Procurement has consistently exceeded the Scottish Government procurement efficiency savings target of 3% and achieved an  efficiency saving of over 6% in 2014-15. We will continue to provide value for money while maintaining the required quality of service.  SE’s collaborative savings from the use of Scottish Government frameworks is included in this figure and has increased from £593,000 in 2012-13 to over £1,500,000 in 2014-15.  In addition, using these Scottish Government frameworks has and will continue to provide a quicker, compliant procurement route for project managers.

Working with Scottish Government

SE Procurement works and will continue to work closely with the Scottish Government’s procurement team and other public sector organisations. We have contributed to many of the Scottish Government’s working groups to improve procurement across the Scottish public sector including, at a strategic level, the Procurement Supervisory Board and the Procurement Collaboration Group.

We have participated and will continue to participate in the procurement of Scottish Government collaborative frameworks as a representative of both SE and the wider public sector in Scotland. SE Procurement has and will continue to assist Scottish Government with the implementation of the Procurement Shared Service initiative.

Working with other public bodies

We will continue to collaborate with other public sector organisations through a ‘Cluster’ approach where SE is the lead organisation for a group of other Central Government organisations facilitating the sharing of knowledge, encouraging partnership working and assisting our cluster partners to ensure that the public sector delivers value for money, pools resources and expertise, and better meet the needs of their internal customers.

More widely, we will continue to undertake collaborative procurement with many organisations such as SDS, Visit Scotland, HIE, as well as several councils and universities. We will continue to work collaboratively with partners where it meets SE’s priorities and where we can gain efficiencies through economies of scale and reduction of resources required to undertake procurement exercises.

Working with suppliers

To ensure transparency and to assist prospective suppliers, existing suppliers and other stakeholders, SE includes a procurement related section on SE.com where we outline our procurement processes, current framework agreements, SE’s Sustainable Procurement Policy, advice on collaborative bidding, our standard terms and conditions and our commitment to the Government’s Suppliers Charter. From April 2016, we will also publish our Procurement Strategy, our current regulated contracts register and our forward procurement plan.  This additional information will advise suppliers when SE contracts will be procured and assist them in bidding for our work.

Consulting suppliers

Previously SE Procurement has undertaken supplier surveys on an ad hoc basis to understand supplier satisfaction with, and improve on, our processes. SE Procurement will survey all of our successful and unsuccessful tenderers on contracts over £50,000 to understand if, in their opinion, they were treated fairly and transparently, and if we could improve our processes to reduce the burden on suppliers.

Ensuring health and safety

SE has a comprehensive Health and Safety Policy and associated guidance/procedures which relate to staff and contractors. Health and safety policies and associated information are requested where relevant from suppliers as part of the procurement process. Further health and safety policies are covered in SE’s standard terms and conditions to ensure that suppliers comply with all relevant regulations and best practice.

Ensuring prompt payment to contractors and their sub-contractors

We are committed to paying our suppliers promptly, and include a clause in our standard terms and conditions stating that we will pay undisputed invoices within 30 days from receipt. Further, to ensure that this flows through the supply chain we have included a further clause stating that, “where you sub-contract any work under the Contract, that sub-contract must contain a clause requiring you to pay your sub-contractor within 30 days of you receiving a valid invoice from your sub-contractor”. SE has gone further implementing a revised payment policy of payment within 10 working days for all suppliers. In the year ended 31 March 2014, Scottish Enterprise paid 81% (2013: 85%) of suppliers’ invoices within the revised standard. The average number of days taken to pay valid invoices during the year was 8.3 days (2013: 6.9 days). SE will continue to pay undisputed invoices within 10 days.

Working with SMEs, local businesses, supported businesses and the third sector

We will continue to review and update our procurement policies and procedures to ensure that we contribute to improving social, economic and environmental wellbeing where relevant in delivering our contracts. This ongoing review will ensure that we remain an inclusive organisation and encourage a diverse range of suppliers including SMEs, the third sector and supported businesses. A supported factory or business is an establishment where over 50% of the employees are people with a disability. Our tender strategies are designed to promote SME participation wherever possible and our terms and conditions have been simplified in order to share risks with our suppliers in a more equitable manner, as well as being easier to understand. SE follows the code of conduct laid out in the Scottish Government’s Suppliers Charter, which aims to facilitate access to public sector procurement opportunities. Also, we will continue to participate in “Meet the Buyer” events aimed at providing advice and guidance to businesses wishing to work with us.

SMEs play a vital role in Scotland’s economy, providing employment and innovative solutions to our contract requirements. From 2007-2008 onwards SE has had an annual procurement spend with SMEs in excess of 50%, which is significantly higher that the Scottish public sector average.  We will continue to adopt contracting strategies which allow smaller suppliers to enter the market and to ensure that SMEs have fair and equal access as suppliers.

SE will continue to identify and reserve appropriate contracts for supported businesses. Scottish Government has set a target for all public sector organisations to award at least one contract of over £50,000 per year to a supported business. In 2015-16 SE awarded contracts totalling in excess of £100,000 to supported businesses and we aim to meet or exceed the Scottish Government target each year. Therefore SE Procurement will review requirements and where possible place contracts with supported businesses. We will also continue to procure fairly and ethically traded goods and services in accordance with current legislation.

Implementing community benefit requirements

We will continue to promote the use of community benefit clauses within procurement exercises where relevant and proportionate to the contract, and ensure such clauses are considered within all contracts over £50,000 in value. To date in 2015-16, 62% of regulated procurements have community benefits included in the tender requirements. Community benefits are extremely varied, and can range from training opportunities such as apprenticeships to promoting careers to school children from disadvantaged areas. Third sector organisations can benefit from community benefits. SE Procurement representatives attend Community Benefits meetings to keep up to date with good practice sustainable procurement activity.

Ensuring equality

In line with the Equality Act 2010 and the Equality Act 2010 (Specific Duties) (Scotland) Regulations 2012, we consider equality throughout our tender processes and comply with legislation.  Suppliers are required to provide details of any equality policies and systems that they have in place that will be utilised when delivering the contract. This is included in our standard terms and conditions.

Discrimination in relation to the treatment of workers in the main contract and sub-contracts is also addressed in tender documentation and our standard terms and conditions.  
Also included in our tender documentation and our standard terms and conditions is the Employment Relations Act 1999 (Blacklists) Regulations 2010 which addresses blacklisting activities.

Paying the living wage through our regulated procurement

We are committed to promoting the use of the Scottish Living Wage and are working to ensure zero hours contracts are only used by suppliers in the delivery of services to Scottish Enterprise where this is in the interests of their employees. We will continue to incorporate evaluation of workforce matters into all contracts where the use of labour is a key deliverable. We also aim to go further than required by the current legislation. As approved by our senior management, we will monitor closely the use of zero hours contracts, the living wage and community benefits and we will provide reporting information on these in future. These activities illustrate our commitment to the delivery of the Scottish Business Pledge. Furthermore, where suppliers have staff working on SE premises, these employees are being paid the Scottish Living Wage.

Realising sustainability

The SE Sustainable Procurement Policy was published in 2014 and reflects the Sustainable Procurement Duty in the Procurement Reform (Scotland) Act 2014. The Sustainable Procurement Duty requires public bodies to consider how, through their procurement activities, they can promote innovation including undertaking comprehensive market engagement prior to defining procurement requirements. More widely, the SE Sustainable Procurement Policy sets out how SE intends to ensure best practice and to meet our legal and financial obligations as well as achieve wider economic, social and environmental benefits. The policy also encourages the procurement of low carbon options to support the development of a low carbon economy. Further SE develops a Public Sector Climate Change Duties annual report and which also addresses sustainable procurement. 

As part of the policy, we will continue to consider the whole life cost and environmental impact of construction projects as appropriate, including specifying high Building Research Establishment Environmental Assessment Methodology (BREEAM) ratings for sustainable design and construction, encouraging recycling and the reuse of materials through waste management plans in order to minimise waste to landfill, look to the use of low energy equipment and environmentally friendly chemicals, and maximise use of materials from sustainable sources in accordance with government buying standards. We are currently reviewing policies to take account of whole life costs of premises and evaluation on the basis of energy performance certificate (EPC) ratings.  We hope to introduce these initiatives during the next financial year.

An action plan is in place to further develop of policy and procedures in relation to sustainability.

Continuing improvements

Scottish Government has been undertaking Procurement Capability Assessments (PCA) with public sector organisations since 2010-11. The PCA is a wide ranging best practice tool and in the most recent assessment SE Procurement achieved the highest rating of “superior performance”. Scottish Government is introducing a new assessment regime (the Procurement and Commercial Improvement Programme (PCIP)) this year and SE Procurement is working to ensure we continue to be one of the leading Scottish public procurement organisations.

Improving contract and supplier management

SE Procurement has participated in contract management training and, in accordance with Procurement Journey best practice, we completed the Contract Management Benchmarking Survey co-ordinated by the Royal Bank of Scotland. Currently we include contract management guidance to Project Managers within our processes, as well as providing appropriate supporting documentation. It is clear, however, that further work is required to strengthen our processes in this area in order to better manage our contracts and suppliers. Going forward, and in line with good practice as outlined in the new PCIP process, we will work with other SE teams to further develop contract management in SE.

Measuring benefits

Best Performance Indicators (BPIs) are reported to the Scottish Procurement Information Hub on a quarterly basis.  Over and above these, SE Procurement has internal measures which are detailed in the table below.

Informing management

A monthly progress report is produced by SE Procurement to inform management of the value of SE procurement undertaken, savings generated and length of time procurements have taken.  Where relevant, this monthly management information report informs the upward briefing for senior management and for Scottish Government.

Professionalising the team

There has been and will continue to be a focus on developing the procurement team professionally to ensure they have both the skills and knowledge to maximise the benefits of procurement to SE. The senior director has completed a Procurement MBA, the senior manager has completed an MSc in Procurement and a senior executive has completed a LLM in Procurement Law and Policy. Seven members of the Procurement team are now members of the Chartered Institute of Purchasing and Supply (MCIPS). This knowledge is proving invaluable in implementing the various changes in policy and procedures in relation the new EU directive and the Procurement Reform Act.  All members of the team have and will continue to have training and development plans in place.

Ensuring compliance

SE Procurement activity across SE is audited by SE Internal Audit several times a year. The results of the audit are consistently positive confirmed by the fact that no category “A” recommendations have been raised in the previous three years. Further, SE Procurement itself undertakes quarterly audits of lower value procurement across SE, and these audits consistently demonstrate a high compliance level. Where any issues are identified, the Procurement team follows up with relevant project managers to ensure improvements are identified and implemented.

SE Procurement will continue to identify, manage and control risk by developing policy and procedures which consider risk, and balance operational effectiveness and compliance. This is further managed by pragmatic decision-making.  The Procurement team will consider risk proportionately in our activities, for example, ensuring that financial thresholds and other short listing criteria do not unreasonably discriminate against participation by SMEs.

To support our approach to risk management, anti-fraud training has been undertaken with the SE Procurement team and some key internal and external colleagues.  SE has a named procurement anti-fraud champion and a procurement anti-fraud senior responsible owner. Furthermore, all procurement contacts have completed the Chartered Institute of Purchasing and Supply (CIPS) professional ethics course, and all SE staff are required to signed up to SE’s code of conduct policy. Additionally, and in line with the Bribery Act 2010, we include an anti-corruption and anti-bribery clause our standard terms and conditions.

SE also has in place a Counter Fraud Policy which outlines where fraud may occur, who is responsible for reporting fraudulent activity and who to report it to. Appropriate preventive and detective controls, such as “separation of duties” and robust systems of control, have been put in place to counter the risk of fraud. A feedback mechanism has been developed for staff to give feedback anonymously through the procurement intranet pages.

Also, SE has a comprehensive whistle blowing policy which encourages employees to raise concerns about possible improprieties in the conduct of our business, whether in matters of financial reporting or other malpractices, at the earliest opportunity and in an appropriate way.  In line with good practice there is an internal contact and an external helpline which provides anonymity if necessary.

Managing risk

SE has a Risk Management Policy and Risk Management Procedure. In addition, guidance for risk management at project level is available via SE’s Project Lifecycle guidance.  In relation to procurement, a risk assessment is undertaken for each regulated procurement with risk management allocated to relevant individuals. The Procurement team will continue to feed relevant risks into the divisional risk register and where required these will be escalated to the SE corporate risk register in line with SE’s Risk Management arrangements.

Conclusion

In line with Procurement Reform Act requirements, this Procurement Strategy will be reviewed and updated annually with any slippage in targets addressed. Furthermore in accordance with the requirements of the Act and as part of this strategy development, an action plan has been developed to monitor and continually improve the strategy. An annual procurement report will also be developed to record progress.

Read more about our procurement processes