By Keith Aitken in Edinburgh | 6 February 2012
Scotland is to overhaul its public procurement systems after a think-tank study found they were stacked against Scottish firms, losing the country millions of pounds of business.
Infrastructure Secretary Alex Neil said he had been consulting businesses and others about potential reforms, and planned an announcement soon. A Sustainable Procurement Bill, promoting community benefit clauses, is already scheduled for introduction during this Parliament.
The study was carried out by the eminent Scottish economists Jim and Margaret Cuthbert for the Jimmy Reid Foundation, a Left-of-centre think-tank set up in memory of the late shipworkers’ leader,
The Cuthberts argue that much of the £9.2bn spent in Scotland each year is effectively beyond the reach of Scottish firms because of procedures that favour big corporations, use off-the-shelf framework agreements unsuited to Scotland, and ignore scope within European Union rules to frame contracts to support economic development and social policy.
‘If these processes had been designed to strengthen Scotland and not just save a bit of money, they would look very different,’ the Cuthberts write.
‘The opportunity to fix this is in front of us, the potential benefits are numerous and the scope for doing it is clear. Action should be taken immediately.’
Specifically, they argue that a narrow focus on cost savings has bundled procurement into ever-larger contracts that favour big firms rather than the smaller businesses typical to Scotland. This narrow focus also favours framework agreements, which can lock out Scottish participation for years. Of the 49 framework agreements created by the government’s Procurement Scotland purchasing agency, 28 have no Scottish participation.
The report blames Scottish-made policies, notably the Scottish Futures Trust’s strategy of dividing Scotland into procurement hubs, each run by a private sector partner on a 20–30 year contract. Three of the four contracts so far awarded, they say, are to consortiums with no Scottish partners.
In addition, Professor John McClelland’s 2006 review of Scottish procurement took a narrow ‘corporate’ view of procurement focused on the bottom line. ‘In failing to realise that running a country is not the same as running a business, the McClelland report again tied the hands of the Scottish public sector,’ the Cuthberts say.
