Chamber
Meeting of the Parliament 17 April 2013
17 Apr 2013 · S4 · Meeting of the Parliament
Item of business
Public Procurement Reform
We hope to introduce the procurement reform bill before the summer recess. We require to give ourselves comfort that what we propose in that bill will be within the confines of the revised European directive, but I want to be in a position for that bill to be introduced to Parliament for its consideration before the summer recess. I will keep Parliament updated on that timescale.
In pursuing our own reforms, it is vital that we are aware of and frankly recognise the tension that will inevitably be at the heart of any approach to procurement. On one hand, we want the system to help our businesses to grow and become more competitive; on the other hand, we cannot afford to ignore opportunities to save money. We must always strive to strike the right balance and align those two objectives as far as we can. That is what we are seeking to do in our approach to procurement reform.
A central element of the programme is the proposed procurement reform bill. Consultation on the bill closed late last year and we have received 250—more, in fact—responses from a wide range of interests. The analysis was published earlier this year, and the findings are helping to inform the final policy content of the bill. I hope that the bill will help us to accelerate improvements in the system and ensure that, especially with major contracts, we extract additional value—whether that is economic, social or environmental value—from our spending.
The bill will also help to tackle inconsistencies for suppliers and ensure that doing business with the public sector is simpler, more transparent and more accessible to suppliers, especially SMEs. Although EU law does not allow us to discriminate in favour of indigenous businesses, removing the barriers to SME participation in procurement markets can and will contribute to our economic performance.
We do not want to add unnecessary costs or risks but, used appropriately, social and environmental contract clauses can deliver good results and add significant value for communities. Using the bill to promote standardisation and improved procurement procedures will improve value for money and reduce costs.
Nowhere is that more important than in the construction sector, which faces particular challenges. In October, we launched a fundamental review of construction procurement led by Robin Crawford and Ken Lewandowski. We want the sort of improvements that have been delivered for goods and services procurement over recent years to be replicated for construction. I know that the industry is desperate to see improvements as well.
The review is making good progress, and I can announce today that, following an early recommendation from Robin and Ken, the Government is seeking partners to trial the use of project bank accounts. We will publish guidance promoting their adoption for major infrastructure projects. Project bank accounts will help to ensure that companies all the way down the supply chain are paid promptly and that larger companies that are higher up the chain are not able to withhold payments when work has been performed. That is a good start to the review. I look forward to receiving its report later in the summer and to implementing its recommendations.
One of business’s main complaints is about prequalification procedures. Time and again we hear complaints about entry thresholds being used in prequalification questionnaires in a way that excludes capable smaller local businesses. I am pleased that the e-tendering software public contracts Scotland tender now contains a suite of standard questions that have been developed by a working group. However, those tools will be effective only if they are used. The bill will help us to promote standardisation and good practice by making it a requirement that the standard questions are adopted. Those and other improvements to PCS are designed to deliver a less complex process, reduce inconsistency and increase transparency.
The opening up of subcontracting opportunities in PCS has also helped SMEs to access and bid for major infrastructure projects as well as events such as next year’s Ryder cup. We are also seeing a rapid increase in the use of the quick quote system as a means of delivering low-value procurements, which also facilitates better engagement with local suppliers. We need the system to work for jobs, too, which is why a major priority for the bill will be the acceleration and promotion of the use of community benefit clauses in major contracts.
At the outset of my remarks I mentioned supported businesses, which are an important issue in this context. We know how difficult recent times have been for our supported businesses, with changes in funding for Remploy. That is why the national framework for supported businesses that was announced last year is so important and has the full support of Government.
Last but not least, we also need to expect companies that bid for public contracts to demonstrate high standards of ethical conduct or know that they risk being excluded from the market. The practice of blacklisting, failure to comply with tax obligations and other acts of professional misconduct may—and should—in future result in a company being judged as unsuitable to bid.
The Government regards blacklisting as wholly unacceptable. My officials have invited trade union representatives, including the Scottish Trades Union Congress, to work with us to develop guidelines for purchasers on how to address that issue when awarding contracts.
Although EU law suggests that we cannot make it a specific legal requirement that companies pay their staff the living wage, we are looking at how to further promote and encourage them to do so as a matter of good and, indeed, expected business practice.
As I said in my introduction, we can be proud of progress, but there is much more to do. I look forward to hearing members’ speeches.
15:01
In pursuing our own reforms, it is vital that we are aware of and frankly recognise the tension that will inevitably be at the heart of any approach to procurement. On one hand, we want the system to help our businesses to grow and become more competitive; on the other hand, we cannot afford to ignore opportunities to save money. We must always strive to strike the right balance and align those two objectives as far as we can. That is what we are seeking to do in our approach to procurement reform.
A central element of the programme is the proposed procurement reform bill. Consultation on the bill closed late last year and we have received 250—more, in fact—responses from a wide range of interests. The analysis was published earlier this year, and the findings are helping to inform the final policy content of the bill. I hope that the bill will help us to accelerate improvements in the system and ensure that, especially with major contracts, we extract additional value—whether that is economic, social or environmental value—from our spending.
The bill will also help to tackle inconsistencies for suppliers and ensure that doing business with the public sector is simpler, more transparent and more accessible to suppliers, especially SMEs. Although EU law does not allow us to discriminate in favour of indigenous businesses, removing the barriers to SME participation in procurement markets can and will contribute to our economic performance.
We do not want to add unnecessary costs or risks but, used appropriately, social and environmental contract clauses can deliver good results and add significant value for communities. Using the bill to promote standardisation and improved procurement procedures will improve value for money and reduce costs.
Nowhere is that more important than in the construction sector, which faces particular challenges. In October, we launched a fundamental review of construction procurement led by Robin Crawford and Ken Lewandowski. We want the sort of improvements that have been delivered for goods and services procurement over recent years to be replicated for construction. I know that the industry is desperate to see improvements as well.
The review is making good progress, and I can announce today that, following an early recommendation from Robin and Ken, the Government is seeking partners to trial the use of project bank accounts. We will publish guidance promoting their adoption for major infrastructure projects. Project bank accounts will help to ensure that companies all the way down the supply chain are paid promptly and that larger companies that are higher up the chain are not able to withhold payments when work has been performed. That is a good start to the review. I look forward to receiving its report later in the summer and to implementing its recommendations.
One of business’s main complaints is about prequalification procedures. Time and again we hear complaints about entry thresholds being used in prequalification questionnaires in a way that excludes capable smaller local businesses. I am pleased that the e-tendering software public contracts Scotland tender now contains a suite of standard questions that have been developed by a working group. However, those tools will be effective only if they are used. The bill will help us to promote standardisation and good practice by making it a requirement that the standard questions are adopted. Those and other improvements to PCS are designed to deliver a less complex process, reduce inconsistency and increase transparency.
The opening up of subcontracting opportunities in PCS has also helped SMEs to access and bid for major infrastructure projects as well as events such as next year’s Ryder cup. We are also seeing a rapid increase in the use of the quick quote system as a means of delivering low-value procurements, which also facilitates better engagement with local suppliers. We need the system to work for jobs, too, which is why a major priority for the bill will be the acceleration and promotion of the use of community benefit clauses in major contracts.
At the outset of my remarks I mentioned supported businesses, which are an important issue in this context. We know how difficult recent times have been for our supported businesses, with changes in funding for Remploy. That is why the national framework for supported businesses that was announced last year is so important and has the full support of Government.
Last but not least, we also need to expect companies that bid for public contracts to demonstrate high standards of ethical conduct or know that they risk being excluded from the market. The practice of blacklisting, failure to comply with tax obligations and other acts of professional misconduct may—and should—in future result in a company being judged as unsuitable to bid.
The Government regards blacklisting as wholly unacceptable. My officials have invited trade union representatives, including the Scottish Trades Union Congress, to work with us to develop guidelines for purchasers on how to address that issue when awarding contracts.
Although EU law suggests that we cannot make it a specific legal requirement that companies pay their staff the living wage, we are looking at how to further promote and encourage them to do so as a matter of good and, indeed, expected business practice.
As I said in my introduction, we can be proud of progress, but there is much more to do. I look forward to hearing members’ speeches.
15:01
In the same item of business
The Deputy Presiding Officer (John Scott)
Con
The next item of business is a debate on motion S4M-06153, in the name of Maureen Watt, on behalf of the Infrastructure and Capital Investment Committee, on ...
Gordon MacDonald (Edinburgh Pentlands) (SNP)
SNP
It is a pleasure to open this debate on public procurement on behalf of the Infrastructure and Capital Investment Committee. As members know, the Scottish Go...
John Mason (Glasgow Shettleston) (SNP)
SNP
We sometimes hear criticism of the EU, for a variety of reasons. Will the member confirm what I think that he just said, which is that the EU gives Scottish ...
Gordon MacDonald
SNP
I agree on that point. The EU-wide framework opens up opportunities for Scottish companies, because the scale of procurement by the public sector across the ...
The Deputy Presiding Officer
Con
We are extraordinarily tight for time today. I call on Nicola Sturgeon, who has up to 10 minutes.14:50
The Deputy First Minister and Cabinet Secretary for Infrastructure, Investment and Cities (Nicola Sturgeon)
SNP
As Gordon MacDonald has just said, Scottish public bodies spend more than £9 billion of taxpayers’ money every year, so it stands to reason that the decision...
Patrick Harvie (Glasgow) (Green)
Green
On a question of timing, does the minister intend to wait until the EU process of reform is further down the line before introducing a bill here, or does she...
Nicola Sturgeon
SNP
We hope to introduce the procurement reform bill before the summer recess. We require to give ourselves comfort that what we propose in that bill will be wit...
Elaine Murray (Dumfriesshire) (Lab)
Lab
I suspect that procurement as a topic for debate may not have set many members’ pulses racing, but I am encouraged to hear that the debate is tightly subscri...
John Mason
SNP
Will Elaine Murray give way on that point?
Elaine Murray
Lab
Sorry, I have only 10 seconds.We should not subsidise low pay in other sectors. I know that my colleague Kezia Dugdale is considering taking forward John Par...
The Deputy Presiding Officer
Con
You must close, please.
Elaine Murray
Lab
Workers’ rights must be respected. The cabinet secretary also made some good points about the use of community benefit clauses.I look forward to the introduc...
Mary Scanlon (Highlands and Islands) (Con)
Con
The Conservatives, too, welcome today’s debate, which provides an opportunity to bring forward some ideas.The motion in the name of Maureen Watt states that ...
John Mason
SNP
Does Mary Scanlon accept that one reason why we have limited resources is that we have tied up funds in private finance initiative projects, which have ended...
Mary Scanlon
Con
I am not sure that that was a positive contribution, which I am hoping to make.More recently, we received the report “Improving community planning in Scotlan...
The Deputy Presiding Officer
Con
That is much appreciated. We move to the open debate.15:13
Chic Brodie (South Scotland) (SNP)
SNP
I am delighted to speak in the debate, and my speech is built on the foundations that were laid by the Christie commission report to which Mary Scanlon has j...
Kevin Stewart (Aberdeen Central) (SNP)
SNP
I agree that there should be encouragement, but currently, the European Union legislation and a test case—Dirk Rüffert v Land Niedersachsen—show that we cann...
Chic Brodie
SNP
Of course, I agree with the latter point. I will come to the former in a minute.On the living wage and public sector contracts, it is anathema to me that we ...
The Deputy Presiding Officer
Con
The member’s keeping to time is much appreciated.15:19
Margaret McCulloch (Central Scotland) (Lab)
Lab
I welcome the opportunity to debate the proposed procurement reform bill and the wider procurement agenda, which is—I am glad to say—at last being given the ...
Linda Fabiani (East Kilbride) (SNP)
SNP
I thank the Infrastructure and Capital Investment Committee for holding this debate. It is an excellent idea to ask—as the motion states—for“members’ views o...
The Deputy Presiding Officer (Elaine Smith)
Lab
Thank you. Before I call John Mason, I just want to say that the building work is not supposed to be taking place while Parliament is sitting, so we are havi...
John Mason (Glasgow Shettleston) (SNP)
SNP
Thank you for that reassurance, Presiding Officer.I welcome the fact that procurement is on the agenda. Although we all accept that there is definitely room ...
The Deputy Presiding Officer
Lab
We are very tight for time.15:37
Tavish Scott (Shetland Islands) (LD)
LD
I, too, declare an interest as an honorary fellow of RIAS. I very much agree with Linda Fabiani’s point that the Deputy First Minister’s bill should not be s...
Kevin Stewart (Aberdeen Central) (SNP)
SNP
I thank the Infrastructure and Capital Investment Committee for giving us this opportunity to debate this important issue today. For many, this issue is not ...
Anne McTaggart (Glasgow) (Lab)
Lab
In these tough economic circumstances, it is right that the Parliament takes time to scrutinise how Scotland uses its buying power to promote social and econ...
Nicola Sturgeon
SNP
In the interests of fairness, will the member acknowledge that it is not that we do not support legislation for a living wage but that EU legislation does no...