Please consider Strategic and Public Social Partnerships; further information is provided below.

Additional guidance on determining the type and duration of the contract, and on transitional arrangements can be found in the Care and Support Services Contract Type, Duration and Transitional Arrangements.

As with other stages of a procurement exercise, you must consider conflicts of interest and fraud as part of the Commodity/service strategy stage. This must be in line with relevant procurement legislation and your Organisation’s own governance procedures. 

You must ensure that you take all appropriate measures to prevent, identify and remedy conflicts of interest. You must include measures to combat fraud throughout your procurement exercise. 

Your Organisation may seek a long-term strategic partner or partners  e.g. for a period of 10 or 20 years.  This may be to redesign and achieve major changes in service delivery and/or the use of resources.

For example, your Organisation may work with a supplier(s) to determine what range of services could be provided within available resources.  This would be instead of tendering for particular services. In this situation, the choice of strategic partner(s) should be transparent and through a competitive process in accordance with the public procurement rules.

PSPs are strategic partnering arrangements.  These are based on a co-planning approach where the public sector can work with third sector organisations.  In such cases you would share responsibility for designing services based around service user needs.

The Scottish Government has published guidance on developing and running Public-Social Partnerships..

A PSP typically comprises three stages:

• third sector organisations work with public purchasers to design a service;
• a consortium of third sector organisations(which may also involve the public sector) conduct a short-term pilot.  This helps to refine service delivery limits and maximise community benefits; and
• if the service is deemed successful, commissioners then consider the most appropriate approach to sustaining the PSP. This could involve a competitive tendering process but other methods of securing service delivery should also be considered.

You should also consider the current and possible future relationships between the Public Body and the Supplier. You should demonstrate how you intend to develop any relationship with a potential supplier going forward.

If you are entering a joint procurement exercise with one or more public sector organisations, you must agree the legal status  and requirements of such an exercise at this stage. 

You Organisation may either:

• agree a “lead” authority at this stage.  Legally, this lead authority will be the organisation responsible for forming the contract with the successful supplier(s), or
• enter a truly “joint” exercise.  This is where the conduct of the procurement is carried out in the joint name(s) of the participating organisations. 

In either of the above cases, the organisations are jointly responsible for ensuring they comply with all relevant procurement legislation.

Sometimes you could consider having only part of the procurement operating as a joint exercise.  In such cases the organisations would be equally responsible for any joint  areas. and retain sole responsibility for their own areas.

Having considered the previous points you can identify the position of your commodity/service as either Leverage, Strategic, Routine or Bottleneck. The Strategic Positioning Action Plan provides guidance as to the procurement approach you should adopt in each of these circumstances.

These suggested approaches  provide a starting point on how to proceed with your commodity/service. You must define these further still by looking at your specific commodity/service and the opportunities already identified using the Best Value Triangle.

In line with Statutory Guidance before starting your procurement you should consider whether Fair Work Practices are relevant and proportionate.  If so, you should  include a question on Fair Work, to be evaluated along with other relevant criteria. Your question(s) should be informed by an your organisation's policy statement on Living Wage, including Fair Work, and the results of your pre-market engagement.

In relation to Fair Work Practices and in line with the Statutory Guidance, an organisation should consider, before undertaking a procurement exercise, whether it is relevant and proportionate to include a question on Fair Work, to be evaluated along with other relevant criteria. This will be informed by an organisation's policy statement on Living Wage, including Fair Work and the results of pre-market engagement.

Organisations must determine if data processing activities are relevant to the commodity/service which is the subject of the procurement exercise.

Organisations must ensure that current and future procurement exercises (including contracts entered into before the legislation came into force) are compliant with GDPR and all relevant procurement documents make reference to the new legislation.

More detailed information on GDPR can found in Leadership & Governance.

Cyber Risks

If the contract will involve, support or rely on the digital processing of information, organisations should ensure that appropriate consideration is given to potential cyber risks and their management.

Further information on how to assess and manage cyber risks as part of the procurement process can be found in the Scottish public sector Guidance Note on Supplier Cyber Security. Buyers should assess cyber risks and develop minimum cyber security requirements as part of award criteria, if necessary. 

You should consider how you will ensure compliance to the contract.

Compliance is required from all parties throughout the whole Procurement Journey. Governance arrangements, management and budget holder behaviours  are key to ensuring compliance.

The Components of a Compliance Strategy document should encourage maximum uptake of a new contract. Members of the User Intelligence Group (UIG) should champion the contract.  Commitment from users should be obtained for the proposed strategy options.

There will be a number of potential options which are applicable to any commodity/service. These will vary with the type, size and complexity of the requirement.

In all cases, you should consider a 'Do Nothing' option as a benchmark.

The Commodity/Service strategy should include a summary of options that clearly details the:

• benefits,
• costs and
• risks

associated with each option.  These should demonstrate compliance with any legal obligations. This should help the selection of the required Commodity/Service Strategy option to be pursued in the short, medium and long term.

Estimated benefits within a commodity/service area can be obtained from sources such as:

• benchmarking,
• market testing,
• market trends,
• past discounts and 
• previous experience. 

Identification and assessment of “softer” benefits should be undertaken at this stage. 

Costs to implement sourcing strategies include:

• contract switching costs,
• supplier switching costs,
• resource investment,
• communications and roll out and
• cost of going to tender

The Options Appraisal summarises the various delivery options, considering the benefits and risks of each before selecting an option for recommendation.

The recommended option must satisfactorily meet the requirements, be affordable, viable and agreed with the UIG.

You must consider awarding your contract in separate lots. Division into lots can increase SME participation. 

Where you decide not to award a contract in the form of lots, you must indicate the main reasons for not doing so.  These reasons must be included in the relevant Procurement Documents, or in the procurement exercise written report.

Potential reasons for not subdividing contracts into lots may be:

• that it would risk restricting competition,
• it would make contract execution  excessively technically difficult or expensive, or
• the need to coordinate the different contractors for the lots could seriously risk undermining the proper execution of the contract.

You must  state in the relevant Procurement Documents, whether bids may be submitted for one, for several or for  all lots. Where more than one lot may be awarded to the same bidder contracts may be awarded that combine several or all lots. You must have specified this can happen and include the groups of lots that may be combined.  If you use this approach, you must think carefully about how the relevant evaluation matrices will assess all possible scenarios.

You can limit the number of lots that any one bidder can win.  To do so you must state the maximum number of lots per bidder in the relevant Procurement Documents. 

Where the application of the award criteria would result in one bidder being awarded more lots than the maximum number of lots per bidder, the Organisation would then apply the objective and non-discriminatory criteria or rules which must be indicated in the relevant Procurement Documents.

During the Profiling the Commodity stage of your procurement exercise, you should have considered whether bidders may sub-contract any of the awarded works or services. If so, question 4.C.4 from the SPD should be included to be evaluated alongside other criteria at selection stage.

Confirmation of how bidders will ensure payment of sub-contractors at all stages of the supply chain pertaining to the contract, within the standard 30 day payment terms and how this will be managed should be evaluated at award stage.

There are separate stops on the Procurement Journey on Contract Mobilisation and Implementation and Contract and Supplier Management (C&SM).Your approach must be considered during this 'Develop Commodity/Service Strategy' phase.

You must consider how the proposed options will operate throughout the life of the requirement. For example, if you decide to use an existing contract or framework agreement the contract implementation and management will be covered in the framework terms and conditions.  These must be complied with in full.

You must think about how the new goods or services will be introduced into your organisation.  Also how will  you move from your existing arrangements to the new arrangements?

You should also consider your transition or exit strategy for when this new contract or framework agreement comes to an end.

Once fully operational you should manage and develop the contract and supplier(s) to ensure  the contract requirements are met now, and in the future.

You must consider the resources required to implement and manage the contract or framework agreement. A designated contract manager should be identified. Additional guidance can be found in the Planning & Governance station.

You should detail the CSM requirements in the contract or framework agreement terms and conditions.  This will ensure both parties are clear on their contractual obligations. The contract should then be managed in accordance with these terms and conditions.

The level of CSM required depends on the risk, value and complexity of the contract. You will find guidance to help assess the potential level management of CSM required in the Contract and Supplier Management / Planning and Governance station.

Generally, "Routine" contracts will require a lower level of management than "Leverage" and "Bottleneck" (medium level), and "Strategic" which will require the highest level.

There may be opportunities for your organisation to make its own internal processes more efficient. Some of the key areas to consider during the procurement process are:

• Use of PCS-Tender
• The transactional procurement process: requisitioning, authorising, raising and sending purchase orders, goods receipting, invoicing and payment

Further guidance can be found in the Planning & Governance station.  

For additional guidance for Care and Support Services see Benefits and Risks to People who use Services and Service Delivery below.

Particularly for Care and Support Services, the outcome of the Supply Market Analysis should inform the organisations appraisal of the options for service delivery, including:

• in-house provision
• shared services
• procurement.Further guidance can be found in the Options Appraisal document at the foot of the page.

Once you have completed your Commodity Tree or Options Appraisal and Supply Market Analysis, this information will support grouping your requirements into suitable lots.  For example for a waste equipment disposal  category you may choose to procure plastic and metal bins through separate lots.

You should give consideration to the potential for third sector involvement and supported businesses and SMEs.

If you are not using lots in your procurement exercise you must provide the main reasons for this in:

• the procurement documents, or
• in your individual report and indicated in the procurement documents, or
•  your procurement exercise written report.

You should consider:

• Whether Transfer of Undertakings Protection of Employment Rights(TUPE) applies;
• Whether to allow potential service providers to set out different TUPE scenarios within their bids. If so, you must provide clear directions to tenderers to ensure bids can be compared on a like-for-like basis.

The public sector equality duty is set out in the Equality Act 2010.  It requires organisations to assess the impacts of new or revised policies and practices on people with different protected characteristics. To do so you need to consider the three needs of the public sector equality duty i.e.:

• To eliminate discrimination;
• to advance equality of opportunity; 
• to foster good relations between people with different protected characteristics.

The protected characteristics are:

 An organisation must also consider the need to undertake and publish an Equality impact Assessment (EQIA). Depending on your particular procurement, an EQIA may be an integral part of the procurement process.  It should help identify and mitigate negative impacts and identify opportunities to promote equality.  This can be done by looking at how your procurement might impact on people with a protected characteristic. For example for the service industry, which relies heavily on its labour force, an EQIA may help to identify new or improved ways or working.

The supply market sources document at the bottom of this page is a list of suggested external sources for supply market data.  This  may provide you with  useful information required to develop your commodity/service strategies.

Please note that you may require a licence or there may be a fee to use some of these sources.

For future reference, make a note of the sources consulted in a external data sources template. Your use of external data should be appropriately referenced throughout the process.

Although we have detailed external websites or publications, this is not a Scottish Government endorsement.

The overarching theme of early engagement is to identify the desired outcomes, risks and issues and permit potential suppliers to provide feedback on how the outcomes might be achieved, the risks and issues as they see them, along with feedback on timescales, feasibility and affordability. All discussions should flow from this theme.

Any cost discussions you have at this stage should be indicative only.  You should make this clear to potential bidders. 

Care should be taken to preserve transparency and equal treatment.

Frequently it is more appropriate to ask the market what solutions are currently or potentially available prior to advertising a contract.  This is explained further in the ‘Stakeholder Identification’ and Preliminary Market Consultation stations). The Public Contracts (Scotland) Regulations 2015 (Regulation 41) now include provision for Organisations to engage in market consultation. 

Any such market consultation must be carried out in a carefully managed manner. This must comply with the Principles of Procurement.

Market consultation can encourage bidders' creativity in their potential solutions. This can inform your decisions  on when and how to procure the best available solution(s).

Market sounding can be beneficial as a long-term strategy, even when you do not intend to carry out your procurement exercise soon. As a matter of courtesy you should be  transparent with suppliers about  this.

There is no formal process for market sounding.  Activities typically include researching and analysing the whole market  and meeting selected potential suppliers for discussion. Your Organisation must ensure that it takes appropriate measures to ensure that competition is not distorted by the participation of potential suppliers.

You can generate supplier interest by publishing advance notice of your likely requirements, for example through a Prior Information Notice (PIN) in Public Contracts Scotland (PCS).

Organisations should engage with a cross-section of potential suppliers.  This will  inform your strategic options i.e. the views of a Small and Medium sized Enterprise (SME) compared with a large or multi-national supplier may differ.

Market sounding improves public sector knowledge that is useful in a broader sense. For example UIGs greater understanding of relevant markets helps to develop their commodity/service strategy.  This could be in terms of how they currently operate  and how they may operate in the future i.e. changing technology, market entrants etc..

Early engagement with potential suppliers can be critical to success. It is vital to understand  key issues before starting the procurement process.   You should determine your desired outcomes, risks and issues and allow potential bidders to provide feedback.  For example on how the outcomes might be achieved, along with feedback on timescales, feasibility and affordability.

You should always be present at meetings with potential bidders. A bidder who understands your requirements and can offer innovative solutions and constructive advice should be present. The right attitudes must be adopted: respecting confidentiality, maintaining flexibility and openness.

The UIG should:

• Be open to new ways of shaping your requirement based on what the market may be able to provide;
• Consider the options for shaping the market: encouraging the market to develop in such a way that it can meet your requirements in the future;
• Engage the market - this provides an opportunity to ensure that the services provided are at the forefront of those available.

When procuring a service, you should also consider your organisation’s policy and approach to delivering services in-house.

In respect of the above questions and the following areas of guidance, you should consider specific stakeholder engagement activity and management.  For example:

• Will consultation with an economic development team member be necessary? 
• Can we identify what guidance we will need from the climate change team in terms of supply chain carbon assessments?

It is important to tie this into your stakeholder mapping exercises. 

In regards to the procurement of innovative goods and services, the UIG can facilitate improvements in the quality and delivery of public services and contribute to growth in the economy by encouraging potential suppliers to invest in and deliver pioneering solutions to support current and future public service needs.  Throughout this process, are should be taken to avoid distorting the market.

You must document the measures taken to ensure competition is not distorted during any prior involvement of candidates or bidders.

Talking to potential suppliers is at the core of market sounding. It is crucial to talk to the relevant potential suppliers - ideally, those who have achieved outcomes of a similar nature and scale.

Care must be taken to ensure those contacted are not given an advantage over other potential suppliers. It is equally important to ensure specifications are not written in such a way as to favour any particular potential supplier(s). If either of these approaches is not adhered to you could breach the Public Contracts (Scotland) Regulations 2015 and the procurement itself could be challenged. 

Measures to ensure competition is not distorted must include:

• Communicating to all potential suppliers the dates of any relevant information exchanged between parties in the market sounding;
• When tendering, giving adequate time limits for the receipt of tenders from interested parties.

Organisations are required to consider including community benefit requirements for all procurements. Where the estimated value of the contract is equal to or greater than £4 million (excluding VAT). For regulated procurements, Community Benefits may also be considered as part of Sustainable Procurement Duty requirements.

Community benefit requirements may not always be appropriate to your contract. You must consider their use by taking into account the nature of the contract, its duration and other factors. 

Care should be taken to ensure the requirements would not place a disproportionate burden on potential suppliers or have a wider negative unintended effect. This could be the case, for example, where training and recruitment requirements are included. Here, care needs to be taken to avoid displacement of existing trainees and employees in order to meet community benefit commitments. It should also be noted that training and employment opportunities require adequate contract length for these activities to be undertaken.

What Dimensions of Fair Work Practices can be Targeted?

• Engaging early with the market can help you gather information about the nature of Fair Work practices in the sector.  It  can provide information on what opportunities there are to address in your procurement exercise.  These should be relevant, proportionate and treat bidders equally;
• It can help you establish whether the supply chain is susceptible to exploitative practices.  For example, in contracts where the workforce can typically be made up of sole traders or self-employed workers, you should consider is appropriate or a form of bogus self-employment?
• You can seek input from other areas of your own organisation.  For example stakeholders, industry bodies or trade unions.  This can establish which dimensions of Fair Work could be addressed in a particular commodity / service area and to shape commodity / service strategies.

Sustainability: can potential suppliers provide solutions to sustainability issues?

• The UIG should always be open to new ways of shaping their requirement. They should look for opportunities to shape the market. There should be an assessment of future demand of any particular commodity/service or category.  This should be based upon the knowledge and expertise within the team and on information obtained from non-team members. Engaging with potential suppliers provides an opportunity to ensure the services provided are at the forefront of those available. This should also take account of the knowledge held by other buying organisations, trade bodies and business support organisations e.g. Federation of Small Businesses and Chambers of Commerce etc.  Care should be taken to maintain competition, transparency and equal treatment of potential suppliers.

The purpose of analysing the market, is to take into account in more detail the external and internal factors affecting the commodity/service and supply. The various tools below can help you in this activity. The results should lead to the identification of opportunities and risks which will inform strategic options to consider.

Not every template listed in 1-7 below requires completion. You should consider the complexity of your commodity/service and procurement exercise to help you decide which template(s) to use.  Once your analysis is complete, consider how to use this information to inform strategic options.

All templates listed can be found under "Any documents you need are listed below" at the bottom of this page.

1. Supplier profile analysis

The supplier profile analysis tool can be used to paint a picture of the main players in the market.

2. Competitive advantage - Porter's 5 forces

Porter's 5 forces constitutes a framework which demonstrates buyers/suppliers' relative power in the market place. 

3. SWOT analysis

The SWOT Analysis examines environmental factors internal to the organisation (usually classified as Strengths or Weaknesses), and those external to the organisation (classified as Opportunities or Threats). 

4. PESTLEE analysis

The PESTLEE analysis assesses the external environment which may have an impact on your requirement.  

5. Supplier market share

The supplier market share provides an insight into the positioning of the main players within the market.  Factors such as  industry attractiveness, competitive pressure and degree of market concentration/fragmentation.

6. Understanding supplier cost drivers

The supplier cost drivers document provides:

• A checklist containing cost drivers;
• Guidance on how to complete a typical supplier cost driver example;
• Sources of information includes tips on how to obtain cost drivers.

7. Total cost of ownership

Total Cost of Ownership (TCO) is the initial acquisition cost plus ownership/operation and disposal costs. Understanding this will help in identifying areas for improvement internally within the organisation and externally with potential suppliers. The following guidance document will help you to consider the wider costs associated with the procurement of the requirement.

It is possible that the potential supplier for a contract may be another  public sector organisation.  A contract between two or more such organisations may be exempt from the Public Contracts (Scotland) Regulations 2015 and the Procurement Reform (Scotland) Act 2014.  This exemption is in place if the “buying organisation” and the “supplying organisation” are jointly controlled or if all of the following conditions are met:

• The “buying organisation” exerts control over the “supplying organisation ” similar to that which it has over its own departments;
• Where more than 80% of the activities of the “supplying organisation ” are undertaken for the “buying organisation” or other bodies controlled by it;
• Where no other organisation or person has invested direct capital in the “supplying organisation” subject to limited exceptions. See the Public Contracts (Scotland) Regulations 2015 13(2)(b) for more detail.

You should consider whether or not the commodity/service you are buying is capable of being catalogued or not.

This simple Guide to Making Content Decisions at the bottom of the Pecos Content Management page will guide the buyer in the right direction. 

If the commodity/service you are buying is to be catalogued, this electronic content must be provided for in the contract via Pecos Content Management (PCM) . 

Sometimes it is appropriate to build the ITT documents in a format where the evaluation is based on catalogue submission.  If this is the case, the Contract Notice or the invitation to confirm interest as a result of a Prior Information Notice (PIN) should detail this clearly. Further guidance is provided at the notification of contract award decision and at the develop documents stages.

The key characteristics for each sub-commodity/service can now be identified and agreed by using the Key Commodity/Service Characteristics template.

Example of Care and Support Services Service Tree (Residential Care).

If your procurement is of a Digital or ICT nature, consideration must be given to the Digital Public Services Scotland Programme. This strategy sets out the collective ambitions and national level actions at sector, cluster or organisational level.  Since this strategy was published more Current Standards, Guidelines and Recommendations have been developed as outlined within the ICT High Level Operating Model.

Further information on how to assess and manage cyber risks as part of the procurement process, including Guidance Note on Supplier Cyber Security.

The Scottish Government has developed a number of tools to help you:

• identify and work on how to increase social, environmental and economic benefits from your contract.
• to agree your sustainable procurement priorities and policies.

You can use the following tools when developing your commodity/service strategies:

• The Prioritisation Tool: an early stage tool
• The Sustainability Test: used at category/commodity/service level to identify potential scope of benefits;
• Life Cycle Impact Mapping: assesses environmental impacts throughout the life cycle
• The Flexible Framework Assessment Tool: assess current performance and actions required

The above tools can be accessed by registering on the Sustainable Procurement Tools platform.  Accompanying Sustainable Procurement Guidance can also be accessed on the Sustainable Procurement Tools and is available for both registered and unregistered users.

By assessing and scoring the socio-economic criteria on these tools you can:

• identify what risks and opportunities can be targeted  for each commodity
• how to influence the management of those risks
• include recommendations in your Commodity Strategy to be addressed as part of the procurement process.

As a matter of good practice, you should have completed the Sustainable Public Procurement Prioritisation Tool (to prioritise Sustainable Procurement aims) at a category or organisation level prior to working on your commodity/service strategy.   If you are unsure, please speak to your manager to ask if this has been done.

Sustainable Procurement is successful where its importance is made equal to other areas of commodity/service profiling e.g. quality, technical specifications and commercial objectives. 

There are always different options available to you when examining how to achieve this balance. You may wish to visit the Case Studies section of the Sustainable Procurement Tools platform to read process-focused examples of how sustainability benefits have been embedded in public procurement exercises. 

While many options will be commodity/service specific, the primary considerations of the Sustainable Procurement Duty (when Profiling the Commodity/Service) are:

• Identify the opportunities to improve the economic, social and environmental wellbeing of the area(s) in which your organisation operates
• Facilitate the involvement of small and medium enterprises, third sector and supported businesses
• Promote innovation

There are a number of areas procurement can influence to improve environmental, social and/or economic factors.  These are listed below and more information can be found in the Sustainable Procurement Duty Index.

To meet your obligations under the Sustainable Procurement Duty you must consider how to facilitate the involvement of:

• Small and Medium Enterprises (SMEs) and
• Third Sector Bodies and
• Supported Businesses

in all procurement exercises. 

To do so there are some specific actions you must take.

• Develop transparent, detailed organisation Procurement Strategies and Annual Procurement Reports.  This helps prospective tenderers identify opportunities  ahead of the advertisement stage and plan resources. Procurement Strategies and Annual Procurement Reports are mandatory for Organisations who expect the value of their regulated contracts in that year to be £5m or over (excluding VAT).

• Advertise regulated contracts and award notices through Public Contracts Scotland (PCS).  PCS allows free and unlimited access to all  potential bidders and smaller suppliers are more able to find opportunities.

• Increase the use of debriefing.  This supports the development and improvement of bidders, benefiting both the bidders and the organisation for future procurement exercises.

Supported Business

A Supported Business is a supplier:

•  whose main aim is the social and professional integration of disabled or disadvantaged persons,
•  where at least 30% of their employees are disabled or disadvantaged workers.

Reserving Contracts

Your Organisation can “reserve” a competition  so that only supported businesses can bid.  In these cases, this must have been assessed as appropriate as there are specific rules around the reservation of competitions.

SPPN 4/2017 provides further information and guidance on Reserving Contracts For Supported Businesses, including:

• Determining whether an organisation meets the definition of a supported business for the purposes of public procurement legislation;
• Identifying supported businesses; and
• Monitoring and reporting.

SME’s

The majority of businesses are SME’s. By doing everything you can to make it easy for SME’s to bid for your exercise then you are reaching the broader market and this will benefit your organisation as well as the broader economy.

Some things you can do to help SME’s access your process include:

• Make sure your procurement exercise is advertised properly;
• Use Lot to enable smaller companies to identify potential opportunities;
• Make sure to include SME’s in pre-tender market engagement;
• Check that your tender and any pre-qualification are proportionate and will not exclude SME’s - e.g.  do you really need such high levels of insurance for this process?
• Using a Dynamic Purchasing System (DPS) can offer benefits to SME’s in that, on qualifying they can access the contract at any time through it’s life and have access to smaller competitions within larger frameworks. 

There are many more things that you can do (or indeed not do) and you should take time to explore these as part of your strategy development.  Speaking to colleagues, your UIG and contacting organisations such as the Federation of Small Businesses and the Supplier Development Programme can be very helpful.

Third Sector

The third sector, which includes charities, social enterprises and voluntary groups, delivers essential services, helps to improve people’s wellbeing and contributes to economic growth.  It plays a vital role in supporting communities at a local level.  The economic contribution of third sector organisations is steadily increasing and we expect this to continue in the coming years.  Some things you should do to help Third Sector suppliers access your process include:

• Identify and engage with any relevant Third Sector suppliers as early as possible in the process;
• Examine the market to identify any potential “blockers” to entry – e.g.  are their providers for some of the requirement but not all?  Would using lots help open up the opportunities ?

Many of the actions that you can take to make sure SME’s are engaged can also support the inclusion of Third Sector organisations.  Each council in Scotland has a “Third Sector Interface”  (TSI) and further information can be obtained from these if you need help in identifying local Third Sector organisations.

Fair Work practices are actions an employer adopts for the benefit of its workers.  They are above the minimum legal requirements and reflect the five dimensions of the Fair Work Framework.

When developing any procurement exercise, you must do so in line with Statutory Guidance.  This requires you to consider how to address Fair Work practices in all procurement exercises before you start your procurement.

To support this Best Practice Guidance and a Toolkit have been developed to offer additional guidance and practical tools for public bodies and suppliers.  Guidance has been embedded throughout the Procurement Journey.

The Scottish Government believes that contractors who go beyond minimum legal requirements by adopting Fair Work practices will:

• increase innovation,
• improve workplace outcomes and business performance,

positively impact on the delivery of a public contract. The payment of the real Living Wage is considered by the Scottish Government to be a significant indicator of an employer’s commitment to Fair Work practices. The payment of the real Living Wage is one of the clearest ways an employer can demonstrate a positive approach to its workforce.

- the real Living Wage should not be confused with the National Minimum Wage (including the ‘national living wage’), which is the legal minimum wage set in law by the UK Government.

The Scottish Government expects:

• Organisations to promote Fair Work practices in all relevant procurement exercises.  At the same time ensuring  a balance between contract quality and cost.  This will  include the impact of  working conditions costs, and
• Suppliers delivering public contracts to adopt and demonstrate appropriate Fair Work practices., They should ensure these are delivered for all workers engaged on public contract delivery.

In addition to the Sustainable Procurement tools, a Fair Work practices commodity/service strategy: checklist and flowchart is available to help identify how to address fair Work in relevant procurement exercises with an example  - Fair Work commodity/service strategy: checklist - home support services.

The Toolkit also includes Information Sheets on:

• Frequently asked questions
• What is Fair Work?
• What is the real Living Wage?
• What are Fair Work practices?
• Useful resources

You must make sure the performance of the contract by suppliers complies with their obligations in environmental, social and labour law.  It is essential that robust requirements are built into your strategy, procurement documents and contract management processes.

For example, when considering how to address Fair Work practices in a procurement exercise, you must assess whether you should exclude supplier(s)  if they do not meet their legal obligations as a diligent employer. 

SPPN 09/2016 includes guidance and contract conditions an organisation can adapt for use in its contracts.

You must consider how you can promote innovation through your procurement exercise.

Some methods you can use to achieve this are:

• using outcome specifications,
• identifying options to innovate through the procurement process
• directly procure research and development to inform your requirements

You can apply life cycle costing as part of the specification and subsequent evaluation. 

Life Cycle Costing may be used where additional environmental costs result from the products or services being purchased e.g. carbon emission costs from purchased machinery  and the environmental disposal cost at end of life.

Life cycle costing takes into account all identifiable  product or service costs i.e.:

• from its acquisition
• through use,
• maintenance and
• end of life (recycling / disposal). 

These can be direct costs like scheduled maintenance and energy used through the life of a road sweeping vehicle.   Also included are less apparent external environmental costs.  Such as the cost of emissions of greenhouse gas based on the energy use of the road sweeper.

These costs can only be assessed when:

• They are based on objective criteria that don’t favour or disadvantage any potential bidders
• The assessment method is accessible to all interested parties
• The data required can be provided with reasonable effort from all interested parties.  This includes those from other EU states and states party to international agreements by which the EU is bound e.g. the World Trade Organisation Government Procurement Agreement ( USA).

If using a life-cycle costing approach, the Procurement Documents must state:

• The data to be provided by bidders
• The method used to determine the life-cycle cost on that basis

It is important to differentiate between Whole Life Costing, Lifecycle Costing and Lifecycle Impact Mapping:

Whole Life Costing:  Focuses solely on cost(£) of a product or service from cradle to grave. It takes into account:

• acquisition,
• operation,
• ownership and
• disposal costs.

It does not include any environmental or social costs.

Lifecycle Costing:  Life-cycle costing covers part or all of the following costs over the life cycle of a product or service:

a) costs produced by the Organisation or other users, such as:

 (i) acquisition costs;

(ii) usage costs such as energy consumption and other resources;

(iii) maintenance costs;

iv) end of life costs, such as collection and recycling costs; and

(b) external environmental costs linked to the product or service during its life cycle.  These costs must be able to be determined and verified. This may include the cost of emissions of greenhouse gases,  other pollutant emissions and other climate change mitigation costs.

Lifecycle Impact Mapping:  Focuses on social and environmental impact rather than cost. Life cycle impacts help the user identify and assess impacts. For example, it may help to focus attention on the disposal phase before the procurement is carried out.  This  allows you to build end-of-life management requirements into performance clauses for successful contractors and your  own internal management procedures.

Please note:  Life cycle impact mapping can be used alongside life cycle costing as part of the procurement process.

The Lifecycle impact Mapping tool can be accessed by registering on the Sustainable Procurement Tools platform.

When purchasing goods or services  you can specify labels as a means of proof that you meet certain requirements. 

For example, does the product or service required have specific social, environmental, or other characteristics that would be verified by a label such as Fairtrade?  

There is specific guidance around the use of labels within procurement.

To specify labels in your procurement exercise you need to meet the following criteria:

• The labels can only concern criteria that are linked to the subject matter of the contract
• They have to be based on objective and non-discriminatory criteria
• The label itself is established in an open and transparent procedure and accessible to all interested parties
• The label requirements are set by a third party over which no potential bidder has any decisive influence

Rather than apply a label on a broad basis, if it’s more proportionate you can detail which label requirements are to be met.  This will reduce the burden on bidders and could expand the number of capable bidders for your process.  

Labels must comply with the label requirements of the Public Contracts (Scotland) Regulations 2015 and equivalent labels must be accepted.  Where the bidder can demonstrate it has not been possible to obtain either the label or an equivalent, through no fault of its own, you must accept other appropriate means of proof e.g. manufacturers technical dossiers.

A detailed understanding of the current spend and future requirements, of participating organisations, are key to the commodity/service strategy development.

An organisation should determine what resources are available for delivery of the service.

Financial planning is essential to ensure that service specifications are realistic.  This ensures the specified requirements and outcomes are informed by the organisation’s analysis and benchmarking of costs.  This means delivery will be within the available budget.

An organisation should consider what funding it can commit to the delivery of a service and for what period of time.

For Care and Support Services in particular, consideration should be given to the anticipated size and shape of service contracts in light of the promotion of self-directed support and any growth in direct payments.

An organisation should assess whether the service has met specified key performance indicators and other contractual requirements previously. It should seek feedback from people who use services and their carers and review other information relating to the quality of the service, including information from contract management and service review and information from the regulatory bodies, including any complaints about the service.

It is important to consider the Specific Considerations for CSS Contracts.

To assist with spend analysis, many Scottish public sector organisations can access information on historical commodity/service spend via The Hub.  The Hub contains many pre-defined reports and data that can be exported into MS Excel format.

The Hub can be used to identify possible transactional savings and collaborative opportunities.

Some suggested areas for analysis are:

• total expenditure and volume
• expenditure by commodity/service and sub-commodity/service
• expenditure by division or department or geography
• expenditure by supplier
• future demand projections where possible
• collaborative opportunities
• benchmarking
• profile of suppliers (large, SME etc.)

The Spend Analysis Example, generated using information from The Hub can be found in the additional documents section below.

The data in The Hub is not at line-item level . This means that detailed spend information will still need to be obtained from suppliers, or where available, from purchase order systems. 

It is good practice to ensure suppliers are contractually required to provide line item spend details as part of the contract to support:

• benefits analysis
• contract and supplier management
• supplier development
• future procurement activities/renewals.

In addition to Spend Analysis, an organisation should review  existing delivery arrangements for a service with a view to:

• identifying if and how the service needs to change.  This may be  to meet individual needs and/or intended outcomes;
• consider a fresh application of any new laws or agreements as decided by applicable free trade agreements
• evaluate existing arrangements for delivering the service against best value principles.

Evaluating existing arrangements for delivering the service against best value principles will require an organisation to consider:

• whether the service is effective and of good quality;
• what it costs and whether it is cost-efficient;
• whether it promotes equal opportunities; and
• whether it contributes to sustainable development.

Organisations may access the Contracts Register for their organisation to assist in evaluating existing arrangements, including contract value.

The Public Contracts Scotland (PCS) Contracts Register module provides the facility for buying organisations to operate a private register of all contracts they have in place and a public register of these contracts to meet the obligations of Section 35 of the Procurement Reform Act (Scotland) 2014.

It is important to note that the contracts register will pull through the contract value from the contract award notice. You should always be as open and transparent as possible when completing this field. This field can be manually amended but please be aware that all relevant amendments have to be manually duplicated in The Hub as there is no integration between the two systems for manual amendments.

Regulation 51(6) allows a contracting authority to withhold publication of information in the contract award or the conclusion of the framework agreement.  This is where the release of the information:

(a) would affect  law enforcement or go against the public interest;

(b) would prejudice the commercial interests of any person;

(c) might prejudice fair competition between economic operators.

relying on (b) above you would need to be able to show the commercial interests of the company concerned would definitely be prejudiced by the release of this information.

Be aware that even if you withhold the contract value from a contract award notice, this does not exempt the information being subsequently disclosed under the Freedom Of Information (Scotland) Act 2002 (FOISA).  FOISA thresholds are higher i.e. - to withhold under FOISA, the information would have to, or be likely to cause substantial prejudice.  Also the public interest in withholding the information would have to outweigh the public interest in its release.

Detailed contracts register user guidance can be found in PCS.

PLEASE NOTE:  if you do not use PCS for producing a contract register, you still must produce a publicly available one.

Developing a Service Strategy

When developing a service strategy, an organisation must decide how the service will be put in place and develop the service specification.  An organisation should consider service characteristics and develop a procurement plan which describes:

• The introduction and description of the purchase (considering the purpose, critical nature of it and any sensitivities etc.);
• Whether it is advertising the requirement and awarding the contract or framework agreement by competition, extending an existing contract or making a direct award without competition;
• The reasons for that decision;
• The procurement process (for example, open procedure) that will be followed and relevant timescales;
• How it can be demonstrated that the procurement exercise will be fair, transparent and non-discriminatory, i.e. compliant with procurement legislation;
• The roles and responsibilities of staff involved in the procurement process; 
• The applicable governance arrangements and approval process;
• How and when it will communicate its intentions to people who use the service and also their carers and proposals for their involvement in the procurement process;
• How it proposes to address Fair Work practices in order to impact on the quality of the service.  The Practical tools, Fair Work commodity / service strategy checklist and Flowchart,  have been developed to help identify relevant Fair Work practices when developing the service strategy.  An example completed service strategy checklist and example contract award criterion question is also available for home support services;
• Any cyber risks, with reference to the Scottish public sector Guidance Note on Supplier Cyber Security
• How the service specification will be developed with the involvement of people who use the services and also their carers and suppliers in its development (including any opportunities to contribute to economic, social and environmental wellbeing and to reduce inequality);
• The type and duration of the proposed contract of framework agreement, available budget and estimated contract value;
• Research of the supplier market to identify current suppliers providing the same or similar service and any spend analysis available;
• Risks identified that may impact on the progress of the procurement;
• Anticipated benefits and outcomes;
• What criteria will be used to select suppliers and award the contract or framework agreement (including whether award criteria or performance indicators should include equality considerations);
• What transitional arrangements will apply if an existing service transfers to a different supplier;
• How the contract or framework agreement will be managed;
• how the relationship between the organisation and supplier will be managed;
• Arrangements for reviewing the service;
• What action it proposes to take at the end of the contract term; and
• How the procurement exercise will be evaluated.

Establishing individual needs and intended outcomes

As a matter of best practice an organisation should have a local commissioning strategy and/or service(s) plan which establishes strategic and individual needs and determines what type of service should be put in place to meet those needs and deliver the intended outcomes.  An organisation should ensure that there is clarity about:

• The needs to be met and the outcomes to be delivered by the service taking into account requirements of the public sector equality duty;
• How people who use services and their carers will be involved in defining their needs, expressing their wishes and choices and influencing the design of the service;
• What choice and control the service will provide for the people who use the services;
• How the service will meet the National Care Standards; 
• How the service will contribute to the organisation's overall objectives.

Contract Renewal and Direct Award without Competition

An organisation should analyse the benefits and risks to people who use services, and also to service delivery, of advertising the requirement and awarding the contract or framework agreement by competition.  For existing services, this will require consideration, through consultation with people who use services and their carers, of the impact that any change in service provision of supplier will have on:

• People who use services and their carers;
• Continuity of care;
• The quality of the service and the outcomes delivered;
• The cost of the service;
• The market;
• The workforce.

This analysis may suggest that, where an organisation is satisfied with the quality of a service and that best value is being achieved, the existing supplier should continue to deliver the service.  If an organisation's contract with the existing supplier includes an extension option that is within scope, the contract may be extended for the specified period.  In the absence of an extension option, any decision by an organisation to renew (or "roll forward") its contract with the existing supplier must be compliant with public procurement legislation.  Legal advice should always be sought in respect of any procurement decisions.

Alternatively, the analysis may suggest that the requirement should not be advertised at the current time and that a staged approach should instead be adopted.  If an organisation decides to adopt a different timetable for advertising the requirement, it should describe this in relevant procurement documents and set out how it intends to move towards competition in the future.

Risk of legal challenge for breach of the procurement rules

An organisation should assess the risk of legal challenge if it decides not to advertise the requirement and proceeds to award the contract or framework agreement without competition.  A legal challenge may have serious implications for procurement activity and future service delivery.  For example, for a "light touch" contract with a value of at least £663,540 such a challenge would be pursued as a commercial action.

If your procurement is Digital or ICT in nature, consideration must be given to the Digital Public Services Scotland Programme. This strategy sets out the ambitions and actions at sector, cluster or organisational level.

Further standards and guidelines can be found in the ICT High Level Operating Model and the Digital First Service Standard.

All UIG’s (with the exception of Care and Support Services) should have a minimum of two members i.e. the Buyer and the end user

The benefits of establishing a UIG are:

• The ability to draw on the cross-functional expertise within the group
• Stakeholder views are considered in the decision making process
• Clear communication channels can be established
• Presents 'one face' to potential suppliers
• Formalises the governance arrangements and identifies the decision makers
• Clarifies roles and responsibilities
• Facilitates the generation of ideas
• Facilitates buy-in and compliance
• Stakeholders working together to understand and overcome any barriers to success
• Embed best practice
• Support the implementation of continuous improvement processes to safeguard the future of public service for future generations
• bring together the ideas and insights of groups to obtain a holistic view.

Stakeholders should work to:

• Embed best practice
• Encourage and sponsor continuous improvement
• Encourage innovation
• Understand and remove any potential barriers to success

Where there are a large number of stakeholders, for example a collaborative contract, it may not be possible to have all stakeholders represented on the UIG.

Stakeholder mapping is a useful tool to help identify who should be represented.  This is based upon their likely impact upon the success of the project.

You must also ensure you understand your Organisation's policy or requirements regarding engaging with end users/customers of the commodity or service and whether they should also be involved in the UIG.

Depending on the specifics of the procurement exercise, the Buyer may ask stakeholders the following questions prior to the starting their procurement: 

• Have alternatives to procuring been considered and discounted?
• Do you have a budget?
• Is there a robust documented business case supporting this procurement exercise?
• Will this expenditure stand up to public scrutiny?
• Are you aware of opportunities to buy your specific requirement through existing collaborative contracts. If so do you know how to access them?

Stakeholder Map & Degree of Engagement

For the procurement exercise to be effective, it must meet the reasonable expectations of stakeholders and end users.

A clear understanding of stakeholder and end users' views is essential. To obtain this understanding you must have effective stakeholder engagement,  taking into account all stakeholder views.

Many stakeholders will be positive and supportive however, it is also important to understand the reasons why stakeholders may not be supportive.

In order to manage this you may wish to consider some of the following:

• Ask your colleagues whether they know of any strong views stakeholders may hold.  This will help you gain an understanding of any issues that may arise and reasons for these
• Meet with stakeholders on a 1:1 basis in advance to understand their views and concerns
• Ensure stakeholders are encouraged to contribute fully
• Ensure a good governance structure is in place.  This  should include identifying and addressing any conflicts of interest

The stakeholder map is a useful tool for the UIG to plan communications to stakeholders who are not UIG members. 

You may wish to issue the attached UIG Welcome Pack which covers:

• Roles and Responsibilities,
• Core competencies,
• Business conduct,
• Gifts and hospitality and a
• Stakeholder Declaration of Interest.

A UIG charter should be agreed.

Members of the UIG should not underestimate the amount of time and commitment involved in being a member. Although the UIG may meet only fortnightly or monthly there will be work to be completed in between meetings. Members should come to meetings fully prepared.

A UIG Membership Template an be used to record UIG membership and contact details.  Information can be found in the UIG Information and Templates below.

Stakeholders should:

• always be open to new ways of shaping the requirement by asking the market and identifying what the market can supply.
• give consideration to the options for shaping the market,
• encourage the market to develop in such a way that it can meet Organisations’ future requirements.
• assess future demand of the commodity/service.  This can be based on team knowledge and expertise, and upon information obtained from non-team members.

Engaging the market provides an opportunity to ensure the services provided are at the forefront of those available. Market sounding should also take into account the knowledge held by others buying Organisations, trade bodies and business support Organisations e.g. Federation of Small Businesses and Chambers of Commerce etc.

Care should be taken to uphold the principles of transparency and equal treatment during such discussions. It is strongly recommended that market sounding activity is documented so that, if challenged, there is a record on file of what took place.

Organisations should use the four quadrants of the balanced scorecard in a consistent manner. This will allow measurement of a supplier’s performance across all organisations and / or sectors using that supplier.

Contract and Supplier Management should:

• ensure that the service/contract is delivered to the required standards
• provides value for money;
• proactively identify and manage any risks which may impact on a supplier’s service delivery / fulfilment of the contract requirements;
• improve and develop contract and supplier performance across organisations, sectors and nationally. A consistent approach will maximise efficiencies and promote adding value across the supply base;
• appropriately influence supplier activity and decisions, improving value for money, over and above cost savings;
• ensure the contract is effectively administered, for example from a change management perspective.

You should frequently aim to improve your own and supply base performance by various techniques.

There are a number of formal and informal continuous improvement methods. These range from: full continuous improvement programmes; to organisational collaboration; and improved internal and external communication.

One of the key continuous improvement tools used in the Scottish Public Sector is the Procurement and Commercial Improvement Programme (PCIP).  This is designed to drive forward best practice and develop procurement activity.

Contract and Supplier Management can be considered successful when:

• the arrangements for service delivery continue to be satisfactory to both parties, and the expected business benefits and value for money are being achieved or exceeded;
• the supplier is efficient, co-operative and responsive;
• the Organisation understands its obligations under the contract;
• there are no surprises;
• there are no disputes;
• professional and objective discussions over changes and issues are straightforward and easily managed;
• efficiencies are being realised;
• the Organisation’s procurement department contract and market knowledge improves, and benefits future contracts.

Definition

Contract Management and Supplier Management differ.

Supplier Management refers to activities across a supplier’s whole portfolio of contracts. These activities are normally more strategic, longer term activities. Some examples could be:

• a project to move to reusable pallets for all products and contracts delivered by the supplier
• or for a stationery supplier, moving to a new on-line catalogue ordering system

Contract Management applies to the specific contract for the good(s) or service(s) being procured. For example:

• increasing the quality of refuse sacks to the UK requirements
• or amending the hours worked by staff on a security contract

However, although different, Contract Management and Supplier Management are linked. It is very difficult to perform effective Supplier Management if basic Contract Management disciplines are not in place. It would be difficult to discuss strategic partnerships, innovation or joint ventures if you do not understand the supplier's contract details. You need to understand how the supplier is performing day to day.

Effective Contract Management is therefore necessary for successful Supplier Management

Importance of Contract Management at Board/Senior Management Level

An effective Contract Management strategy should be a high priority for Chief Financial Officers (CFOs) or Chief Operating Officers (Accounting Officers) and Senior Management Teams.

Effective contract management is necessary for an efficient and compliant business. Contracts must be managed: especially those which deliver services, provide infrastructure or third-party essentials.

Central functions of an Organisation’s Contract Management strategy should include:

• complying with corporate governance regulations;
• managing risk;
• eliminating or reducing cost (not by impacting supply chain efficiency or profit);
• maximising revenue streams.

Managing the contract information, obligations and the contract life-cycle are critical to meeting compliance regulations. This means that the entire process needs to be sponsored at an executive level. This includes:

• contract creation;
• clarity of final agreement;
• electronic contract management system; and
• integration of contract data with back-end systems and contract performance reporting.

The above need to be rolled-out to your entire organisation (for at least the most critical/high impact contracts).

Robust Contract Management will reduce risk to your Organisation. This includes issues such as Conflicts of Interest and Fraud.

Your Organisation must consider these areas as a vital part of its governance. You must ensure all appropriate measures are taken to prevent, identify and remedy conflicts of interest and include measures to combat fraud, throughout the life of the contract.

If entering a joint procurement exercise with one or more public sector organisation, you must have already agreed the legal status and requirements of such an exercise.

A “lead” authority may have been agreed at strategy stage.  Legally they are responsible for forming the contract with the awarded supplier(s).

Alternatively a truly “joint” exercise may be initiated.  Here procurement conduct is  carried out in the joint name(s) of the participating organisations. 

In either case, the organisations each remain responsible for meeting their contractual obligations.

Where you have determined only part of the procurement will operate as a joint exercise, the organisations will be jointly responsible for those activity areas declared  as joint. Each organisation will retain sole responsibility for the activities carried out on its own behalf.

All of the above factors determine the subsequent approach to contract management. Although considered at Strategy Development stage, when deciding subsequent practical considerations these must remain a factor when determining the operational approach such as:

• who is responsible for contract management;
• how Key Performance Indicators (KPIs) will be managed and communicated; and
• the reporting / communication network  needed between your organisations and the supplier(s). 

Both you and the supplier should be motivated and enabled to deliver additional value. This should be done within legal limits and over and above that specified in the original contract, e.g. not simply extending the expenditure. The process should deliver benefits such as:

Organisations should build into their contract management activities sufficient checks.

This includes ensuring suppliers are meeting their Data Protection Legislation obligations. If these obligations are not being met, you should take urgent remedial action with the supplier to address issues and risks.

More detailed information can be found in Additional Resources.

Consideration must also be given to Planning, Sustainable Procurement and Risk Management throughout this stage of the Procurement Journey.