The Scottish Government

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Procurement Centres of Expertise

In 2005, at the request of the then Minister for Finance and Public Sector Reform, John McClelland commenced a detailed Review of Public Sector Procurement in Scotland. The remit of this review was to report and provide recommendations in the following areas:

• current structure and organisation
• current skills and capability
• current practices and procedures
• performance indicators and targets
• opportunity for improvements and new techniques

The review was conducted within a distinctive agenda of efficient government with a particular focus on procurement such as that referred to in the Scottish Executive's "Building a Better Scotland" publication. The review recommended that procurement be managed over three levels:

• Category A: Nationally procured commodities across all of the public sector.
• Category B: Commodities procured on a sector specific basis - Health (NHS National Procurement), Higher and Further Education (Advanced Procurement Universities & Colleges, APUC), Local Government (Scotland Excel) and Central Government (Central Government Centre of Procurement Expertise, CGCoPE).
• Category C: Commodities procured on a local or regional basis.

In response to these recommendations, national and sectoral 'Centres of Procurement Expertise' (CoEs) have been established to drive collaboration in the public sector.

The Centres of Expertise, namely Procurement Scotland, APUC, Scotland Excel and CGCoPE are supported by eProcurement Scotland, who assist in enabling eProcurement across the organisations represented by the Centres of Expertise, thereby making access to contracts placed by the CoEs a lot easier. The service allows buyers and suppliers access to a common platform for tendering and transacting online. All CoEs report into the Procurement Reform Board chaired by the Cabinet Secretary for Finance and Sustainable Growth, John Swinney. ePS report into the Procurement Reform Board via the Scottish Procurement Directorate.

Procurement Scotland

Procurement Scotland (PS) is primarily responsible for developing and implementing procurement strategies for national 'Category A' commodities on behalf of all Scottish public bodies. Working closely with the sector-specific Centres of Expertise (CoEs) and 200+ public bodies, it aims to deliver benefits to the people of Scotland through improved value for money for taxpayers, improved goods and services for our citizens, and economic opportunities for businesses, all in support of the Government's purpose.

All strategies are developed in consultation with representatives from across the public sector via National Category Forums (NCFs) and with suppliers and supply chain partners. PS strives to meet the demanding requirements of end-user organisations and, in doing so, balance sustainable best value, environmental, social and economic objectives. Currently in scope high level Category A areas are: IT hardware, IT Software, Office Equipment, Corporate Services, Professional Services, Telecoms and Utilities.

Benefits that are attributable to PS's activities include significant cashable savings derived from national collaborative procurement activity; minimising duplication of effort and optimising the use of resources, allowing local resources to focus on unique local requirements; improved management information relating to common national spend; and a commitment to supporting sustainability and economic development.

Located within the Scottish Procurement Directorate, PS has an annual budget of £2.45 million. Since its inception, PS has secured £30 million of savings through Scottish Public sector organisations accessing its contracts. For the £1.1 billion of spend initially identified against Category A commodities, PS has in place or in hand strategies to address around £870 million of this total. Targeted savings over the 3 years of the spending review period (to March 2011) are in the region of £83 million.

In addition to Collaborative Procurement Delivery, Procurement Scotland has a number of functions including Capability Development (e-enabling and facilitating the development and ease of access to national contracts); Project, Business and Communications Management (structured planning, tracking and reporting of activities); and National People and Skills (providing a collaborative platform to develop and enhance the skills of procurement staff across the public sector).

Case Studies

In July 2008, Procurement Scotland established a national approach for the provision of office supplies for all Scottish public sector bodies. The resultant national contracts, covering general stationery, paper and IT consumables, are anticipated to deliver a £7.6 million annual saving for the Scottish public sector. The duration of the proposed contract is three years with the option to extend for a further year.

Following the success of the last IT Hardware Collaborative Procurement Arrangement (CPA), when £7 million of cashable savings were shared by over 100 organisations during 2008, Procurement Scotland held its second e-auction event on 16th December 2008. Suppliers were offered the opportunity to win cross-sectoral business in Scotland for a committed volume in excess of 80,000 units of IT hardware equipment, including PCs, laptops and monitors.

Following the First Minister's approval of a recommendation to adopt a phased approach to collaborative electricity procurement, an Invitation to Tender was issued in August 2008 for the supply of electricity on a cross-sectoral basis, with contracts due to be awarded in March 2009. The agreements will cover an initial supply period of three years (1st October 2009 - 30 September 2012) with options to extend by a further year. The total value of the contracts is likely to be around £200 million per annum, with predicted annual savings of up to £10 million plus significant environmental benefits.

e-Procurement Scotland

The eProcurement Scotland (ePS) Service has been live since 2002 and is one of the most comprehensive and successful Public Sector eCommerce initiatives in the world. The Efficiency and Reform Fund provided funding to aid in the development of ePS. ePS enables public sector organisations in Scotland to win cost savings and efficiencies by participating in using a national shared service. To date, 96 public sector organisations, including central government, local government, NHS, universities and colleges are participating. ePS is a fully hosted and managed 24/7 eProcurement service which supports the full procurement and purchase to pay cycle. It provides a range of services including eSourcing (eTendering, eAuctions, Contract manager and performance manager) and transactional purchase to pay solutions. By the end of the financial year 2007/08 2.3 million purchase orders had been raised via the system covering 9.3 million item lines to a total value of circa £3 billion.

ePS was procured by the Scottish Government for the whole of the public sector in Scotland to use. ePS is an approach to public sector procurement that delivers rapid, sustainable and significant benefits to participating organisations. It drives forward commitment to public sector excellence, focuses on achieving the best value for government, business and for the people of Scotland.

ePS plays a key role in making Scotland the best and easiest place for suppliers to do business with the public sector. By bringing together public bodies in Scotland, ePS contributes significantly to providing the public services required to meet the challenges of the 21st Century.

ePS is now live in 96 public bodies in Scotland with £2.47 billion worth of transactions in 2008, an increase of 69% on the previous year. This equates to over a quarter of public sector procurement.

The service has received recognition nationally and internationally, including one of the inaugural Whitehall and Westminster Awards, both for its use of technology and as a shared service. The service continues to develop with work already well underway on eInvoicing, collaborative content management and supplier eEnablement.

It is the ambition of the Scottish Government to see all publicly funded organisations using eProcurement Scotland. This will streamline the way they do business, enabling the cost benefits to be ploughed back into their sector. Using this service provides sustained benefits and savings and enables collaboration. In terms of supporting the Government's commitment to promoting economic growth, ePS also helps all businesses in Scotland by providing a consistent way of doing business with the public sector.

Central Government Centre of Procurement Expertise

The Central Government Centre of Procurement Expertise (CGCoPE) is a professional team of public sector purchasing staff delivering best practice in procurement that was established in December 2007. CGCoPE aims to stimulate, facilitate and deliver Advanced Procurement across the £1.4 billion per annum central government procurement spend for core Scottish Government and 75 Agencies and Non-Departmental Public Bodies (NDPBs).

CGCoPE will enable this by:

• conducting and facilitating collaborative procurement and contract management for the Central Government sector for Category B commodities;
• supporting the work of Procurement Scotland for Category A commodities;
• conducting Category C procurement and contract management for the core Scottish Government; and
• continually developing excellent procurement and contract management practices and leading edge thinking, solutions and technology for and /or with all our stakeholders enabling their continuous delivery of value and commercial benefit.

In order to represent central government bodies' views and to achieve buy-in to the reform programme, new governance arrangements are in place with a Supervisory Board primarily populated with Chief Executives and other senior managers from Executive Agencies and NDPBs. There have been 7 meetings of the board to date in which key approvals have been given to:

• the CGCoPE Business Case;
• the Operating Model;
• the initial 3-year Collaborative Procurement Programme; and
• the 2009 - 2012 Business Plan in 1st draft.

The CGCoPE website was set up in January 2008 and within its first year accumulated over 12,500 visitors, 80,000 page views and a Government Opportunities Gold Award for usability and was most recently recognised as an example of communication "Best Practise" within the Scottish Procurement Directorate.

The website holds up to date information on CGCoPE collaborative contracts and sub-contract opportunities as well as a wealth of knowledge on partner and supplier guidance. The website also has a secured log-in members' section designed to support collaborative working practices.

In addition, CGCoPE continues to progress areas regarding the reduction of barriers to SMEs within Central Government and new systems of working to deliver better outcomes including enhanced 'value for money'. CGCoPE has increased SME involvement in the marketing services framework from 9 to 37 firms.

To date CGCoPE has awarded 8 collaborative contracts with a total value between £122 million -£219 million, creating savings of £5.59 million - £6.19 million over a 4 year period. Additionally 14 Collaborative Procurements continue to make good progress with an estimated total contract value of £98.6 - £142.1 million.

Located within the Scottish Procurement Directorate, CGCoPE has an annual budget of £1.1 million (excluding the Scottish Government Procurement Team located within CGCoPE and responsible for Category C procurement). In 2007/2008, CGCoPE delivered £8.8 million of savings.

Building on its progress so far, CGCoPE has developed a new 3 year Business Plan the objective of which is to complete delivery of Advanced Procurement. CGCoPE is also currently developing a shared services model for the management and delivery of Category C procurement currently estimated at around £800 million per annum.

Advanced Procurement for Universities and Colleges (APUC)

Advanced Procurement for Universities and Colleges (APUC) is the procurement Centre of Expertise for Scotland's 62 universities and colleges. The overall focus of the programme is to:

• deliver advanced procurement performance in Scotland universities and colleges, in line with the McClelland Review recommendations, by the establishment of a Centre of Expertise;
• the development of strengthened collaborative procurement and comprehensive implementation of ePS with the aims of reducing cost and increasing the quality of service from suppliers;
• increase the level of procurement expertise and capacity to the universities and colleges and further development of the skills already in place;
• facilitate more effective dialogue within the sectors; and
• implement ePS service using a best practice implementation approach and delivering benefits in line with the McClelland Review recommendation by 2011.

ePS has been implemented in 36 institutions with a further 3 in progress and others in the planning phase. To date, there have been 143,000 purchase orders placed through the system with a total value of £206 million. Process efficiency savings are £759,000.

The Centre of Expertise has been working on collaborative procurement contracts. A total of 20 Category B contracts worth £110.8 million have already been awarded, resulting in annualised savings of £11.3 million cashable and £7.4 million non cashable. There is a further £73.9 million worth of contracts in progress with expected savings of £5.2 million. Three Category A contracts worth £46.9 million have also been placed with savings of £5.2 million achieved.

As well as working on the collaborative procurements, APUC has been working on capital projects. The Capital Projects team has helped 8 colleges deliver savings in excess of £772,800. APUC are well placed to help colleges contend with a capital projects programme valued in excess of £700 million over the next four years.

There has been some resistance to change in embracing the full ePS proposition of the public procurement reform programme. Work will be done with those institutions not participating during 2009/10 where they will be invited to demonstrate that their alternative eProcurement systems are capable of delivering equivalent or greater functionality and value.

Significant cash and value-added benefits that this programme has already brought, and will bring in the future, would not have been possible without the funding from the ERF. There is a long learning curve in terms of skills and awareness development, design and introduction of improved tools and performance, but this also makes the delivery of the benefits more sustainable in the long term.

Scotland Excel

The Scotland Excel is another example of a procurement centre of expertise. Further detail can be found under Local Government Projects.

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