The Scottish Government

Supported by the financial indices:

• % spend with private sector suppliers
• % spend with third sector suppliers
• % spend with SMEs.

The public sector procurement market spends approximately £8 billion with a wide variety of suppliers of goods and services. It is vital that this significant investment is spent in full compliance with UK and EU legislation.

The Scottish Government is also keen to see organisations making better use of public procurement to recognise environmental and community aspects with a particular emphasis on sustainability, and is committed to reducing red-tape and widening access to public procurement contracts. This also helps meet the Governments commitment, through the social enterprise strategy, to make public sector markets accessible for social enterprises.

It is therefore important to have in place a mechanism with which to monitor suppliers' perceptions and experiences of working with public sector organisations, to ensure that any public sector wide behaviours or practices that act as a barrier to productive business relationships are identified and addressed.

At a local level, this measure will help organisations understand their suppliers' views on the organisation as a business partner as part of establishing an overall picture of performance. This data helps establish a baseline for improvement and allows suppliers the opportunity to specify improvements to business relationships.

At a national level, this measure, and its accompanying financial indices, will give an overview of public spending behaviours.

In future, as part of a national drive towards understanding and taking account of the carbon footprint of all we purchase in the public sector; and reducing the local and global environmental impact of Scotland's consumption, further work is proposed against this deliverable, to develop additional indicators which capture the role procurement can play in ensuring good quality sustainable purchasing decisions. The goal of this will be to develop indicators which measure the extent to which procurement processes are 'green proofed' and based on sustainable choices, with whole life costs factored in.

A standard supplier satisfaction questionnaire has been provided ( Annex 2).

This questionnaire will be automatically generated from the Hub to a specifically identified supplier group.

This facility will not be available until late 2008. Therefore this BPI is on hold until then. Organisations are not expected to issue these questionnaires until then.

A web based function has been added to the reporting tool to allow organisations to identify the suppliers that should receive the automatically generated questionnaire. There are different types of suppliers, e.g. companies from different sectors, large, small suppliers, local and national, so authorities may wish to consider how to sample this as relevant to them.

The procurement function (or in smaller organisations, the procurement lead) will be asked to provide the email addresses of the suppliers that should be approached to give feedback on recent interaction with the procurement function and the process of contract management on the goods, works or services that have been procured and delivered in the past year.

For the purpose of this indicator, 'supplier' is defined as a private, public or voluntary organisation that is providing goods, works or services to an organisation. The questionnaire should be sent to suppliers chosen from those responsible for the top 80% of spend in an organisation. A fair representative sample should be selected - a minimum of 5% of the suppliers that account for 80% of overall spend.

The questionnaire is divided into three sections:

We need to ensure that we give Scottish suppliers, including smaller companies, the best possible opportunity to compete for the £8 billion worth of public sector spending each year. Organisations have a responsibility to ensure that suppliers can quickly and conveniently find out more about business opportunities from the Scottish public sector.

The National Contracts Advertising Portal will provide the ideal place to ensure that potential suppliers are aware of all Scottish public sector tendering opportunities, and that contracting authorities meet their obligation of ensuring adequate publicity for contracts.

By listening, and responding, to feedback from suppliers, organisations can greatly improve access to Scottish public procurement opportunities.

indicates the level of awareness of business opportunities likely to originate from the organisation - does the organisation's advertising and tendering process reach the appropriate supply base?

indicates the perception of the transparency of the organisation's tendering process.

indicates the quality and detail of information contained within tenders issued by the procurement function.

Part of the crucial governance role of any procurement function, whatever its size, is the active management of any contracts that are in place, to ensure that suppliers continue to deliver goods, works or services that are accurate, on time, and of acceptable quality to users.

This section, while contributing to the overall supplier satisfaction rating, also directly corresponds to the key process - 'Ensuring effective contract and supplier management'.

indicates that when a contract is awarded, the roles and responsibilities of the supplier are clearly articulated.

indicates that these roles and responsibilities are appropriately recorded by appropriate performance measures.

indicates that these performance measures are regularly and jointly reviewed by the supplier and procurement team.

indicates that problems are addressed quickly and effectively.

Overall satisfaction with organisation rating.

Perception of improvement or otherwise of doing business with the public sector.

The questionnaire will also have a free text comment field to allow respondents to make specific comments that they wish the procurement function to be aware of.

Annually.

Local Organisation and automatically generated electronic questionnaire from the Hub.

Local Organisation

Local

Organisations should seek to increase the proportion of suppliers agreeing with the statements.

Questionnaire scores can offer insight into communications or contract management problems that adversely affect productive relationships with suppliers and ensure continued value for money and prompt delivery of requirements. Scores against BPIs 7&8 may indicate a resource shortfall which could improve supplier relationships if addressed.

The following data which examines participation levels by the private and third sectors will be monitored by SPD at a National Level with a view to informing Ministerial policy decisions.

• % spend with private sector suppliers

The Hub will be able to automatically calculate the ratio of overall spend that is with private sector suppliers.

• % spend with third sector suppliers

The Scottish Government is working with the Interdepartmental Business Register ( IDBR) to produce a database of social economy organisations. Once the register is established, the Hub will automatically identify the ratio of spend with suppliers who appear under that classification. Nationally, this data will be used to inform policy decisions with regards to engaging and supporting social enterprises and the third sector.

• % spend with SMEs

The Federation of Small Businesses advise that the most widely accepted definition of small and medium enterprises is the one shown below:

In the UK, sections 247 and 249 of the Companies Act 1985 define a SME for the purpose of accounting requirements. These sections have been amended a number of times, most recently by Statutory Instrument 2004/16 - The Companies Act 1985 (Accounts of Small and Medium-sized Enterprises and Audit Exemption) (Amendment) Regulations 2004. According to this a small company is one that has a turnover of not more than £5.6 million, a balance sheet total of not more than £2.8 million and not more than 50 employees. A medium-sized company has a turnover of not more than £22.8 million, a balance sheet total of not more than £11.4 million and not more than 250 employees.

FSB have agreed with the Scottish Government that the number of employees is the most important criterion to use, and this is consistent with previous reporting. Therefore, the key factor used by the Hub in determining spend data with SMEs will be the number of employees.