26/06/2012
May ended, and June began with a contrasting picture of Scotland from without and from within.
I ended last month with a trip to Rome to give a speech at the closing conference of the PEPPOL project. PEPPOL stands for Pan-European Public Procurement On Line, and has been one of the large scale pilots in the European Commission’s e-Government initiative. It’s an area where Scotland represents the UK interest in Europe. The project has focussed on defining common standards to facilitate the electronic conduct of procurement business across borders, but clearly has much broader potential around streamlining and reforming public procurement across Europe.
My presentation described how e-Commerce had underpinned the transformation of public procurement in Scotland through a Government-led but public sector owned programme of reform; and, how through the Procurement Journey and Supplier Journey had re-engineered and streamlined procurement processes from the point of view of the user, whether purchaser or supplier. You can read it if you’re interested..
I’ve rarely given a better received speech, and the audience reaction really brought home to me the strength of Scotland’s story of procurement reform, and the importance of looking beyond the focus on cost to the broader economic benefits that good public procurement can deliver.
I returned to a rain swept Edinburgh and a meeting with a selection of business representatives whose view of public procurement was, shall we say, less than flattering. Now I’d be the first to acknowledge that there’s huge scope for improvement; and that the best policies, process and systems are nothing without the right behaviours and mindset within the procurement profession. But as one speaker referred to “the neoliberal hell that is public procurement in Scotland” (his exact words), I was put in mind of Carol Craig’s excellent book “The Scots’ Crisis of Confidence”.
Dr Craig, who is the Director of the Centre for Confidence and Wellbeing, published this work back in 2003. Top of her list of barriers to the development of Scottish self-confidence is “a strong tendency to criticise and focus on what is wrong with something rather than to praise, appreciate or be positive”. She quotes a story told by the author and historian Moray McLaren in his book “Understanding the Scots” of a young couple who visited their old uncle on returning from honeymoon, taking with them their carefully assembled photograph album. The old man looked through the album without saying a word, and then slowly went through the pictures again. “The young couple”, writes McLaren, “a trifle dampened by his silence, awaited his verdict. At length it came. Putting a broad spatulate finger upon one picture he uttered the words, ‘That’s the worst’”.
The serious point here is that, in recognising the challenges that lie ahead, and in acknowledging that some businesses have bad procurement experiences in Scotland, it’s important not to ignore what has been achieved and the good news stories that regularly occur. What Dr Craig describes as the “perfect/worthless dichotomy”.
Like the new national electricity contract, for instance. The previous contract was a ground breaker that won a number of awards for innovation and sustainability, saving significant amounts of money, effort and carbon. The new contract, awarded to EDF earlier this month, is even better. Covering 99% of the public sector, it will provide 100% renewable electricity, deliver even greater savings and continued community benefits like allowing Registered Social Landlords access to the new tariffs.
Or, the ability to move quickly to rectify matters when things go wrong, like the recent policy note on evaluating businesses’ economic/financial standing and levels of insurance cover. This reacts to a recent series of instances (and in fairness, one of the issues raised by the speaker I referred to earlier) where public bodies have set disproportionately high levels of business turnover, sometimes as much as ten times the contract value, or unreasonable levels of insurance cover, as part of their prequalification criteria. Turnover is a poor proxy for judging a company’s economic or financial standing, and in many cases of low value procurement or where the payment doesn’t occur until the delivery of the goods or services has happened.
The note explains the need for proportionality in setting minimum financial requirements, and stresses that turnover should only be used in exceptional circumstances, and then to a maximum of three times the contract value. We’re hoping that this will be reflected in the revised European Commission directives later this year/early 2013. But, in the meantime, it sets out clearly what we consider to be acceptable good practice.
The social benefits of procurement are also areas where more can be done to promote good practice and, I’m particularly pleased at the ongoing work to establish a four-lot framework for supported businesses. Too often social benefits are seen as a “nice to have” add-on. This new framework, planned to be in place by September, will make it easier for public bodies to factor these in at the start of the procurement process, and achieve the ambition set out in the Sustainable Procurement Action Plan of every public body having at least one contract with a supported factory or business.
We have a good track record of success in the use of community benefit clauses in public procurement in Scotland since 2008, and one of the expectations for the Sustainable Procurement Bill Consultation is around increasing creation of job opportunities through public procurement. Getting a more systematic picture of the social and community benefits that can be delivered through procurement – both directly and through the supply chain – will be important to demonstrate progress, and there’s good work happening, for example through the Scottish Futures Trust’s Hub initiative, on developing performance indicators around this.
All of that requires procurement professionals in Scotland to ensure that they have not only access to the right tools and processes, but also that they have the right skills and capabilities. Improving the capability of the profession is one of the strategic objectives of the reform programme, and I shall come back to our plans around this later in the summer.
This column will be taking a break in July, as I shall be on holiday (a mixture of camping, sailing and visiting relatives down south). July will also see the launch of the consultation paper on the Sustainable Procurement Bill, so you won’t be short of reading! Alex Neil and I both spoke on the future challenges of procurement at a Mackay Hannah Conference, where we were able to give a flavour of the main themes of the consultation.
With the days lengthening, it is perhaps strange to be thinking ahead to autumn, but planning for the National Procurement Conference website is well underway. With the Bill hitting Parliament early 2013, this year’s conference will be one of the most important ever. The Procurex Scotland website is already up and running – have a look.
Have a great summer.