Economist tells Scottish MPs of procurement failings

8 March 2012

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8 March 2012 | Angeline Albert

Scottish companies would have been able to compete for work to build the Forth Replacement Crossing (FRC) if the procurement process had been handled better, an economist has told Scottish MPs.

The Scottish Parliament's finance committee met yesterday [7 March] and listened as economist Margaret Cuthbert criticised the project’s purchasing process.

Cuthbert, co-author of Using our buying power to benefit Scotland – The case for change, said: “If we had broken these projects down into lots, which is completely allowed within the European directive, some of these jobs would have been fit for the Scottish firms we have got.”

She told MSPs major barriers existed for small- to medium-sized enterprises (SMEs) wanting to bid for the project and a large volume of public contracts were won by big firms that do not have headquarters in Scotland.

Cuthbert's report for the think tank The Jimmy Reid Foundation recommended a radical change in the culture of purchasing bodies, so that it is the norm to split contracts into relatively small blocks unless there are overriding reasons not to do so. 

Alex Neil, cabinet secretary for infrastructure and capital investments said: “The FRC is the first contract in Scotland to include a requirement for subcontracts to be advertised on the Public Contracts Scotland website to ensure Scottish firms have a fair opportunity to register an interest in available work.

"At its peak, the project will directly support 1,200 jobs. These figures don’t take into account the significant number of people who will be working for the 222 Scottish firms. There is clear evidence that Scottish firms are already benefiting from the construction of the FRC. But more needs to be done. Three-quarters of all contract awards recorded on Public Contracts Scotland go to SMEs. SMEs account for only 37 per cent of Scotland’s turnover but 45 per cent (£4 billion) of its £9 billion procurement spend.”

The Scottish Government has announced it will bring forward its Sustainable Procurement Bill in late 2012. The new legislation will “seek to ensure that the major public contracts deliver training and employment opportunities through the inclusion of community benefit clauses” and that “all public bodies in Scotland adopt transparent, streamlined and standardised procurement processes that are friendly to Scottish businesses”.    

Last month, SM reported on similar criticism of the replacement bridge procurement by a steelworkers’ union.

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