Scottish procurement reform increases burden on public sector

A raft of new procurement rules are due to hit public bodies in Scotland.

Smaller providers, such as housing associations and co-operatives, with no dedicated procurement staff, will be particularly affected when in just over a year they must comply with new duties from the Procurement Reform (Scotland) Act, new EU procurement directives, plus recommendations from the 2013 Review of Scottish Public Sector Procurement in Construction.

Many small-scale public bodies, such as social landlords in remote areas with just a few hundred housing units, see these extra regulations as an added level of unnecessary bureaucracy at a time of financial pressure.

One of the new rules - lower tender thresholds - may lead to further work now that regulated procurement procedures will apply on goods and construction contracts of over £50,000 and £2 million respectively.

Other changes include a sustainable procurement duty forcing organisations to show the community impact of their purchasing. Providers will also have to prepare a corporate procurement strategy if their combined contracts equal £5 million or more.

While the Procurement Reform Act allows ministers to issue guidance defining what they want to see in procurement strategies, this may act as a double-edged sword by adding extra reporting requirements. There is also the potential that housing associations, now officially considered to be ‘public bodies’, may have to complete lengthy procurement capability assessments.

Overall, new regulations could mean a drain on staffing, bigger overheads and an increased threat of supplier challenge and reputational risk.

One way to prepare is by encouraging more collaborative procurement. I’m not talking about a one-size-fits all approach – that would never work for Scotland’s diverse public sector.

But if providers joined forces around key areas such as contract management and compliance then they could promote a wider understanding of new legal requirements. A wider range of collective agreements could provide greater access for SME suppliers and help public bodies to meet sustainability targets.

My organisation, PfH Scotland already works with housing associations and local authorities on shared procurement. Much of this is about growing skills and capacity so staff can confidently meet new procurement requirements. We’re also working with the sector to develop legally compliant frameworks, open to all.

This is an exciting time for procurement law in Scotland and although changes impose greater regulation and workload on public bodies, many of the duties are intended to have a positive social impact, and should bring greater clarity. The question is whether Scotland’s fragmented public sector has the time and desire to work collaboratively, sharing the costs and risks associated with implementing procurement reform.

Ian Taylor is head of operations at PfH Scotland

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