Official Report 391KB pdf
Good morning, everyone. I welcome you to the 22nd meeting in 2013 of the Infrastructure and Capital Investment Committee. I remind everybody to switch off their mobile phones and other devices, as they affect the broadcasting system. Some members of the committee will be looking at their papers on tablets, which is why they are allowed to access them.
I am the director of procurement at the University of Edinburgh, and I have worked in public procurement in Scotland for 30 years.
I am a member of the committee.
I am the chief executive of Advanced Procurement for Universities and Colleges, which is a centre of procurement expertise and the representative body for procurement for the higher and further education sectors across Scotland.
I am a member of the committee.
I am the director of Scotland Excel, which is the centre of expertise for all 32 local councils.
I am another member of the committee.
I represent the Convention of Scottish Local Authorities.
I am the sustainability and energy officer at East Dunbartonshire Council and chair of the sustainable Scotland network, which I represent here today.
I am a member of the committee.
I am the policy manager of the Scottish Federation of Housing Associations. I am representing our members, which range from 20-unit Abbeyfields to Glasgow Housing Association. There is a wide range of size and type of organisation, but they are all housing associations.
I am the MSP for Edinburgh Southern and a member of the committee.
I am director of national procurement, which is the centre of expertise for procurement in NHS Scotland, and I am representing the 22 health boards.
And this is Adam Ingram, the deputy convener of the committee.
Sorry I am late, convener.
We will try to go through the bill section by section, but I will ask a first question of all the witnesses. What do you think the overall impact of the bill will be on your organisation?
A number of our members are extremely concerned about the bill. We had sounding-board meetings throughout October. Obviously, the bill was published in good time for us to talk through some of its implications. Although we are still wrestling with the idea of being included within the European Union thresholds, we now suddenly find that we will have another set of thresholds and another set of duties and obligations. People are finding it difficult to understand what that will mean in terms of costs and how they organise their businesses. There is a great feeling of things being imposed on them, rather than their seeing that some of the measures will assist their procurement efficiencies.
Do any of them use the portal at the moment?
Yes, they use the public contracts Scotland portal, but they choose to do so because it assists their businesses. However, they do not like the idea that they are to be swept up or, indeed, remain swept up with other organisations. There is quite a complicated legal reason why housing associations are deemed to be public contracting authorities. Measures that are applicable to the national health service, NHS trusts, universities and local authorities will be imposed on very small housing associations, many of which are charities working in the third sector that use every penny that they have to assist tenants and move forward their social and community objectives. They regard some of the procurement measures as being bureaucratic, bringing extra cost and causing them difficulties.
Okay. Anyone else?
We were very appreciative of the original consultation on the bill. A lot of the areas that we had concerns about were taken into account in the bill. Angus Warren can speak on behalf of the whole sector, but our university still has concerns about a couple of key issues. Our concerns are primarily about the impact on our academic research community’s ability to compete for funding in the current year. In the most recent full year, we received £300 million of research funding. However, our competitors in the rest of the United Kingdom are currently being advised that they will not need to apply the European rules, never mind any rules at lower thresholds. Moreover, although we have not seen the final text, we know that the European Union is simplifying and opening up some of the procedures at the higher level of EU thresholds.
From the health service perspective at national level, I think that everything in the bill would be regarded as good practice and what we would expect to do. In terms of a direct impact on my organisation, we hope that we do the vast majority of what is in the bill.
Are you saying that the thresholds are too low?
No. I can give an example. Health boards will receive a large number of tenders for a relatively small value of contract. Under the bill, they will be asked to do a significant amount of additional administration and, potentially, hold a significant number of additional meetings. They could end up with threats of remedies and court action. In practice, that might put SMEs off because they might consider the option of going to court if they are unhappy as unaffordable, which would inhibit their ability to get involved. What we had hoped for was a kind of ombudsman approach, and support for SMEs to get better access to contracts and to be able to win contracts.
But SMEs would not go to court unless they were unhappy with the award of the contract; they would not go if they won the contract.
No, but there are a couple of issues. One is that an incumbent supplier could go to court for a relatively small amount of money simply to retain the business until any court action issue was resolved.
But what remedy does a supplier have now?
At the moment, they have a remedy through the single point of inquiry. We have suggested—as have others, I think—an ombudsman approach and a more proactive strategy in which the public sector goes out to support SMEs on how to complete contract tender documentation and how to have the best chance of being successful in what is ultimately a competitive situation. In such a proactive approach to our suppliers, rather than leaving it so that, if they are unhappy, they potentially go to a court solution—which, for reasons of cost, may be prohibitive—we would build a relationship with them and help them to fill in tender forms and understand the issues that they have.
If there are more bidders for the contracts, does that not mean better use of public money because you are likely to get a wider range of bidders and possibly a more competitive situation on price?
There is a practicality issue here. If a procurement organisation has 40, 50 or 60 bids coming in for a relatively small contract, it has to go through each offer, understand it and do all the administration that goes with it. A number of companies may not be capable of doing that in the first place, so the risk is that it adds to administration and frustration rather than taking it away. It would not necessarily give a more competitive situation.
Is that not what the pre-qualification questionnaire is all about?
The PQQ will endeavour to do that. The standard PQQ will ask a range of standard questions, but in most procurements you then have to ask some specific questions. If there is too much focus on the standard questions, everybody will get through the PQQ, which is a risk that we need to consider. It is another issue of proportionality.
I echo Colin Sinclair’s comments in relation to the impact on my organisation, Scotland Excel, given the nature and high value of the contracts that we do. The implication is not significant but, just as Colin Sinclair said, concerns have been raised about the impact on local councils. The Scottish local government procurement forum, which is the forum for all the heads of procurement, has submitted some evidence. Those concerns mirror the points that Colin Sinclair has just made.
I will explain where we think some of the challenges are around the remedies. Although going to a full court case can take a lot of money, a process can be stopped very quickly in the sheriff court for a few hundred pounds. One of the challenges there is that, if an incumbent supplier was going to lose £50,000 of business, it could delay the process for a couple of years for an investment of £500, and it could continue to receive the income for a further period of time, even if it knows that it has no grounds.
On that point, you were involved in discussions with the Government prior to the bill being published. Have you been given any commitment that an exemption for contracts in pursuit of research or experimental development will be given?
We have not had a commitment as such. The Government has said that it has given serious consideration to exemption.
Because of its nature, the bill will be pretty high level and a lot of the detail will be left to the regulations. If the Government commits to giving that exemption, will that cover it?
It depends on what the exemption says and how widely we can interpret it. We would be very grateful if we could get an exemption for research, because it presents the biggest risk area, but there are other areas that are also a risk because of the additional bureaucracy that will be required.
A lot of the competition on research and development is not just between single universities; indeed, universities in Scotland, England, the EU or across the world may be working together. Will they not all be covered by the same EU regulations?
England will not be covered, so the English universities will be able to come out of the regulations. Many European countries do not apply the EU procurement rules to their university sector, but Britain has done so from the beginning. I have yet to meet anyone from the university sector in other countries such as France, Spain and Portugal who must comply with EU rules even now. A lot of the universities in northern Europe are state owned, so I think that the scenario there might be slightly different.
I am sorry, but I am confused. Are you saying that that is happening now?
Perhaps I can come in on that point.
We can raise that issue with the cabinet secretary when she comes before us.
I have a question in the same vein, convener. You said that research is very competitive, but how much of it is awarded on the basis of the wealth of experience that an organisation, university or centre of excellence has? How much weighting is given purely to price in assessments of where research should go?
I would like to answer that not only on behalf of Edinburgh university but in light of my 15 years’ experience of working in the university sector. Research is very competitive and is assessed on two main factors, the first of which is the research excellence and track record of the principal investigator and his or her team in the academic area in question. In other words, the assessment is based on a peer review of the quality of research. More and more, however, our research funding bodies, particularly with regard to Government funding through research councils, European Union funding and charity funding, are looking for value for money when funding research. As a result, the full economic costs of research have to be bid for and if the University of Edinburgh proved expensive as a place to carry out research because we were less efficient in our use of resources, that would be to our detriment. The weighting in individual cases depends on the specific kind of research involved. Obviously an institution’s reputation plays a big part in that and we have been very successful in that respect.
Having worked in a university, I know that when researchers thought about going to a particular institution they would ask about agility in managing research budgets and that one of their criteria was having the maximum freedom to make maximum use of a research grant as quickly as possible and in the most agile way possible. This has a knock-on effect far beyond the simple financial impacts; it has an impact on actually attracting and retaining people.
Yes, but if a university has been looking at a particular area of research over many years, it will have in place the facilities and infrastructure, albeit not the particular individual to carry out the work, so it will already be fleet of foot, as opposed to what you are trying to suggest—that the research would go to another institution that would have to start from scratch or perhaps from a lower base than the university that is a centre of excellence would start from. It is therefore a matter of balance, is it not?
By its nature, research is normally leading edge, so it often requires new purchases of equipment, services and knowledge. A lot of very expensive, specialist equipment very often has to be bought for research projects. That is where the bigger research projects are. The knowledge and quality of the research team tend to sell the university’s research, and the team is mobile. It could be there for a long time, but it can disappear overnight and take its research with it.
What should the appropriate threshold be to ensure that we do not make the environment in Scotland less competitive than that in the rest of the UK?
My opinion is that the European threshold is low enough, but obviously that does not help as far as the bill is concerned. I think that the bill’s threshold for transparency, adequate advertising and ensuring that we invite competition is fine, but, as Angus Warren has explained, when it comes to the procedures around debriefing and the remedies, it would be very easy for somebody who lost an infrastructure equipment contract to cause difficulties for their competitor who won it. That is the worry. It is a matter of the behaviour of the market as well as the nature of the threshold. We are not concerned about increasing competition at lower thresholds; we are concerned only about the statutory extra obligations beyond those of our competitors in the rest of the UK and the EU.
That is interesting. Others will say that the bill does not go far enough on regulation. We have heard that already, and I have no doubt that we will hear it again. Universities are very much in the forefront in discussions about things such as the living wage and zero-hours contracts. It will be interesting to see how the evidence goes as we take the bill forward.
I would like to come back on the particular point about wages and contracts. The University of Edinburgh now has no zero-hours contracts. Our policy is to have no zero-hours contracts, and we are working through that.
That must be quite new. Is it quite new?
Yes, it is very recent. The university has also signed up to the Worker Rights Consortium, which is an American university-led organisation, and is working with Angus Warren, the students association and the National Union of Students Scotland to try to improve a code of conduct for workers globally. That is not just for our own staff but for suppliers. In the university, the 56 per cent of procurement spend that we manage goes to SMEs, and 80 per cent of our suppliers are SMEs. Therefore, we are encouraging competition all the time.
Sylvia Gray has been waiting for a while.
On your original question about the impact that the bill could have, my first point is about the significance of procurement to the sustainability agenda. Procurement covers a broad range of issues—climate change, fair trade and the circular economy, for example. Given the amounts of money that are involved in public procurement, sustainable procurement offers a real opportunity to make a difference on such big issues, and a bill that encourages sustainable procurement is to be welcomed. Obviously, the bill does that, especially through the sustainable development duty and the related community benefit requirement. We are encouraged by that and think that that is a good start.
Leaders and senior elected members in the convention were broadly supportive of the bill. The political discussions between my political boss and spokesperson and the Deputy First Minister have been very positive. Previously, the convention’s president has made representation on the need for a degree of consistency between the duty of best value on local government as it stands and the duties that will come in via the bill.
Does Alex Johnstone want to dig deeper, or does he want to ask his questions?
They have almost been answered, but I would like clarification on a couple of things. Susan Torrance touched on something earlier and I would like to ask the question in a simpler form. Section 1 includes an overtly prescriptive list of who the bill applies to and who it does not apply to. Do you have any comments on the list of organisations that are included? Do you feel that any have been excluded inappropriately?
I do not see registered social landlords or housing associations in that list, although the Scottish Housing Regulator is there. We are caught under regulation 3(bb) of the Public Contracts (Scotland) Regulations 2012, which gives four tests to do with control and funding—those are the two main things that are used to consider RSLs.
Does anyone else have any comments about inclusion on that list, or exclusion from it?
Perhaps we could bring in training, too, because it has already been highlighted to us that there is not enough training in the field of procurement.
Our team is training all the procurement staff of Scottish Borders Council—they are doing the national vocational qualifications. As well as doing the University of Edinburgh’s procurement, we do all the procurement for Queen Margaret University on a collaborative basis.
Are you content with the thresholds that are provided in part 1?
In the initial dialogue, it was proposed that the thresholds would be aligned with the EU thresholds and that they would be 50 per cent of them. For most public bodies, that would have meant a threshold that was half of £174,000, but the threshold in the bill is slightly less than half of the central Government threshold, which brings much more procurement activity within the scope of the bill.
What would you do differently if the thresholds were different? We all want greater openness and transparency, and we all want to give local firms a better chance to bid for contracts.
The challenge in the bill is that, under section 32, the visibility and right to challenge will be extended to all firms across the EU and other places that are not in the EU but are listed in the bill. At present, in Scotland, we can contain that type of business in a local supply market—we can invite local suppliers to bid—but under the bill we will be required by law to advertise such business publicly across the EU, as if it was an EU tender, and in the countries that are listed in the bill, and there will be a right to challenge. The amount of business that will be competing with Scottish business will increase enormously as a result of the bill.
When we first looked at the bill, we saw that the spirit was about how to encourage SMEs and ensure equality of access for them, and about how the Government and tendering authorities can work with our supply base so that they have a good opportunity to win business. I am slightly concerned, however, that the bill has a lot of administrative, bureaucratic and, ultimately, legal measures that are negative in that they are about what to do if the process goes wrong, rather than there being a focus on how we can make it go right in the first place.
When the council leaders considered a paper on the thresholds at a COSLA meeting last month, no issues were raised. There was concern about slight unintended consequences that would have to be tidied up. For example, supported bus services might be handed back to the contracting authority and might need to be retendered at short notice for a long period, which could take the contract over the threshold. The proposed changes on bus registration might shorten the timescale for doing that.
Witnesses have touched on the sustainable procurement duty. Could you give specific examples of the impact that introduction of the sustainable procurement duty will have on procurement practice in your organisations? How will your organisations ensure that the sustainable procurement duty does not conflict with the general procurement duties?
I am pleased to say that Edinburgh university is very strong on sustainability and social responsibility. We have had a policy on that for 10 years and procurement is represented on the steering group. We are therefore keen to ensure that procurement is sustainable in all its senses. The university has been around for 400 years and we want to be here for another 400 years, so we are looking at things such as environmental, social and economic sustainability. We do that in all our procurement anyway.
Do you think that the wording in the bill should be changed?
In my opinion—I will submit it in a written response—the requirement should be related to the authority’s purpose. The university’s purpose is research, education and knowledge exchange, and our strategy references our view of how we can do that sustainably. Our procurement would therefore support that aim as opposed to covering a physical area, which we would have difficulty in defining. Edinburgh university is in four local authority areas and has premises in five continents, so it would be quite difficult for us to know what our “area” is. I do not know whether that answers your question.
I would like to pick up on Karen Bowman’s point about the word “area”. That is one of the key points that we want to make about the bill. Obviously it is important to think locally as a starting point, but being sustainable really means thinking holistically across time and space. In other words, we need to think beyond our own back yard and beyond the here and now.
All housing associations in Scotland have sustainability objectives, such as building sustainable homes, sustaining people in their tenancies, sustaining communities and putting as much financial impact into local businesses as possible.
The health service is fully committed to the sustainability agenda as part of the triple aim of the 2020 vision for health, which includes the innovation agenda. From that perspective, I have no issues with the bill.
I will not go over the same ground, but I share Colin Sinclair’s concerns and agree with the points that Sylvia Gray made.
Can you perhaps take a few minutes to explain what Scotland Excel is, how it came about and why it is based in Renfrewshire?
I would be delighted to do so. We came about as a result of John McClelland’s review of procurement in the public sector in 2006. One of his recommendations was that each of the various functions in the public sector should have a centre of expertise, because procurement was being done in a very fragmented way. That was the basis on which Scotland Excel was set up. When we launched in 2008, we had about 25 or 26 councils that were members and we worked hard over the next couple of years to get the remaining councils on board.
Do you specialise in any particular areas of procurement to help councils?
We work across the range. We undertake a vast range of contracts; we have about 40 contracts in place at the moment, including very operational contracts that involve all the materials that are used in schools, including musical instruments, mats and wheelie bins. That was the kind of contract portfolio that Scotland Excel started with.
We have heard in evidence and prior to the bill’s introduction that Scotland Excel does not encourage sustainability and localism, and that you actually work against local residential care providers or local charities in providing care for vulnerable children because the contract is done by Scotland Excel and not by local councils. What would you say to that?
I disagree with that. Scotland Excel must work hard with its stakeholders to manage such perceptions.
It is not just perception. If the contract for all the local authorities in Scotland is awarded to a UK-wide charity and it cannot provide the services in, let us say, Aberdeen, the people who suffer are the vulnerable children or adults who are supposed to be covered by the contract. The local charity that has provided the service for X number of years at a very slightly higher cost has to lay people off, breaking the link with the people whom it was looking after. The contract is not working for the people for whom it should work.
I am not sure whether you have a specific contract in mind. To take the example of the residential schools contract on which we are currently working, there has been a huge amount of consultation with key stakeholders to ensure that we understand all those issues and take them into account in how we draft the strategy in future. I am not aware of us having displaced any charities in any of the contracts that we have developed to date.
A couple of small companies spoke to me about the Procurement Reform (Scotland) Bill. Their comments were in a similar vein to those that the convener has made. A number of companies that had contracts to advise a large number of individual local authorities on flooding suddenly found themselves excluded as soon as that service was rolled up into Scotland Excel and presented as one contract. The level of expertise that they had gathered over a long number of years was therefore lost.
I am very aware of the circumstance that you mention. A lot of detail sits behind that, and I am not sure that this is the appropriate forum to go into it. Our responsibility is to ensure that we provide SMEs with an opportunity to tender. There is then an obligation on them to ensure that they submit competitive bids. I am happy to give you some information on the background to that particular case, if that would be helpful, because it is a well-rehearsed example.
On what local authorities are doing to stimulate sustainable procurement, COSLA and Scotland Excel had detailed discussions over the summer about how we can support the emergence of the circular economy within Scotland and further the zero waste agenda through how we procure our waste services. Those discussions also concerned how we offer opportunities for SMEs in Scotland to access the agenda that Mr Lochhead and Mr Swinney seek to promote, which is about trying to make use of a greater amount of our resources within Scotland, treat them within Scotland, keep our waste, turn it into resource and offer economic opportunity. Councils are trying to work through procurement on that.
I want to pick up on Dorothy Cowie’s point and also to reflect what George Eckton has said. On Scotland Excel collaborating with the sustainable Scotland network, I confirm that Scotland Excel has had long-term involvement in the sustainable procurement working group, which sits within the SSN. We have had some fruitful discussions and events over the years on both training and contract development and monitoring, and recently we have been working on the personal and protective equipment contract.
We very much welcome the drive to support innovation. A key thing is to make maximum use of the increased ability under the new directives to use a formal process for developing innovation in the supply chain. There would be value in putting something into the bill to allow a degree of discretion around advertising where people are dealing with innovations, because that would allow contracting bodies in Scotland to work with local companies that have great innovations without putting the business out to a European competition. That would allow incubation at least for the first run of the contract. If there was something in the bill that mirrored the new concession in the European legislation, that would be useful in supporting SME development.
That is in the bill, is it not? There is the sustainable procurement duty.
Yes, but it does not give people the ability not to advertise their requirement in the public domain. At the moment, if an SME comes—
But that would mean that you would be deciding which people might be innovators. You would not open it up to other people who might be innovators.
It is a balance. Do we help to incubate local organisations that are developing things that might be new technologies, or do we put the information in the public domain and allow anyone to bid? We need to consider what is best for the local SME community. I argue that having a degree of protection, at least for the first let of an agreement, would help. Obviously, people would have to be able to justify that in a court of law if it was challenged, so they would have to be careful not to use it as a reason not to publicly tender things. However, organisations in Scotland are definitely developing innovations that the public sector could help to incubate, at least for the first let of the agreement.
I agree in principle, but the challenge for our sector is that we are the place where a lot of these innovations begin. In some cases, the university might have some of the intellectual property rights or have partnered with an investment angel to set up a company. If that company’s opportunity is opened to competition, the concerns that Angus Warren has mentioned could come into play. That said, there are of course legal exemptions for such things.
That discussion was very useful.
Very much so. We need to be very open and transparent about the issue; indeed, we have recently developed a strategy for procurement as a function in health instead of the 22 health boards—as well as ourselves—putting together their own strategies. We need to provide contract registers, and contract plans should help suppliers to see what is coming along the chain, to make forecasts and to consider what they might be interested in. That said, people should understand that strategies and contract registers can change and contract plans can vary slightly. The issue is covered in the bill.
I agree. One of the benefits of such an approach is that it will help to dispel some of the urban myths that I have mentioned. Because of our structure, most of our information is in the public forum but it would help if it and everyone else’s information were in one place.
Can I take it, then, that everyone agrees that annual reports are a good thing?
My only comment is that, because of the size and diverse nature of our organisations and because this is part of a procurement regime that we have not adopted in the way that local authorities and health boards have, our members would find it extremely difficult to write some standard procurement plan or strategy that every member could adopt. As a result, it would impose an additional burden on us. However, we have no problem with publishing information.
I agree that annual strategies and reports would encourage transparency and accountability and that such a move would be a good thing. However, as has been mentioned, there are measures that impact on people’s procurement activities, including reporting and monitoring. Dorothy Cowie mentioned the procurement capability assessment, and it is important that the bill acknowledges the PCA as a way of already holding local authorities to account with regard to sustainable procurement. Moreover, we should use the PCA’s flexible framework mechanism as a starting point. I should also mention the climate change declaration monitoring that all local authorities carry out and which we are considering building procurement monitoring into. From that point of view, some flexibility would be welcome.
We are already doing some of that work. For example, we publish our overall procurement strategy at the highest level as well as our sustainable procurement risk assessment, which complies with the flexible framework; the outcomes are reported as part of our sustainability strategy.
We strongly support that. Publishing strategies is important and we strongly encourage it. That is widely done across our sector, so it is not so much a change, although the timing might change. That is a good aspect of the bill.
We have covered a lot of the issues that I wanted to raise, but I will clarify some points in relation to the specific duties on contracting authorities that are set out in part 3. Witnesses have mentioned that potential additional burdens of bureaucracy and cost might be placed on contracting authorities, and I would like to understand where those challenges lie.
That is a relatively minor aspect—putting on a contract is the simple bit. There are knock-on impacts on resources from some of the work before that, such as the duty to undertake local economic impact assessments before going to market and placing an advert.
You feel that we have covered that.
I have taken legal advice on the issue. My concern is that that figure is above the European goods and services threshold. The committee will need to consider with its legal advisers what it will mean if we bring in a community benefit requirement for goods and services contracts that does not quite fit with current European law, although European law is expected to change.
From what people are saying, I am not quite clear whether the requirement to comply with community benefit requirements for contracts above £4 million presents a challenge.
It is fine for works contracts, but my opinion is that it would be better for goods and services to be linked to a goods and services threshold. There is a little confusion, but perhaps it can be sorted out in the final drafting.
The fundamental principle is that the bill intends the threshold to apply to works contracts, but that needs to be made clear.
There is such a body—it is called the Construction Industry Training Board.
A large number of our students already go to graduate placements and are employed in all sorts of industries. We would not worry about community benefits, but if the provisions relate to works contracts, that needs to be clarified. As Angus Warren said, how the industry manages the requirement is an issue, but it is a positive measure.
We would support the measure.
Just to be clear, you think that the potential additional burdens arising from the bill are the fact that the thresholds will bring procurement activity that is not currently within the scope of regulations into the scope of the bill; the requirement to provide debriefing information; and additional burdens that will flow from putting information on all contracts on the public contracts Scotland portal. Those are the main issues for you.
Yes.
Are there any others?
I think that there is a way round the problem. There is a positive action that could be taken. The procurement contracts portal could be amended to give a rapid debriefing to companies online whereby they could log in and see a quick checklist that could show whether they had failed on price, quality, service or whatever. That could be followed up with a freedom of information request on specifically what they want, and they would get the answer in 20 days instead of having to wait for a longer period. There are ways to make things simpler, more beneficial and less bureaucratic, instead of trying to fulfil a full EU-type analysis for every bidder.
I think that council leaders hugely welcome community benefit clauses. However, I think that their main concern was that the wording of the bill should not onerously prescribe what they do and that they should be able to reflect local circumstances. The council leaders supported community benefit clauses, but they expressed the wish that we lobby further on the retention of flexibility, given the range of circumstances that exist across councils.
Community benefit guidance has been in existence since about 2008. Providing apprenticeships and employment to local folk is at the core of what our members do. However, the confidence to do that and understand how that engages with EU treaty obligations is the biggest concern. Our members saw the bill as an opportunity to specify things in greater detail and give greater clarity and confidence so that they could then incorporate community benefit clauses, because that is what they would like to do.
Gordon, do you think that your question on recyclability has been answered? Do you want to take it further?
Well, we can give the witnesses a chance to answer it.
When our members considered the power previously, there was general support for it, given our support for the climate change declaration. I think that the support is qualified slightly depending on the type of goods and services concerned. For example, if we have to procure recycled computers, there is the question whether they will have the fastest processors and enable us to do the work that we want to do. In timber procurement, though, councils very much want to see recycled and reused materials coming forward.
We already recycle and reuse products in the university, so they stay in a sort of cycle economy. I cannot remember the exact percentage, but a large part of our furniture is reused, for example, and computers are cascaded within the university before they are offered for resale to charitable bodies or are dismantled in a way that allows the components to be reused. As part of addressing climate change, we are also very keen to ensure that we minimise waste, and we have been very successful in doing that.
A number of things that I was going to say have been said. The health sector would generally support the principle of recycling.
As long as the provision takes account of recycling categories and is done with expert advice on each category, it is welcome. It would also be useful to have a stepped set of targets so that it is clear where people should be aiming over a number of years so that they can start to plan and buy things now that can be recycled or refurbished at the end of their life.
Whole-life procurement.
Yes.
I agree with all the various good points that have been made, but I just want to pick up on Karen Bowman’s point about recyclability and the fact that recycling is at the bottom of the waste hierarchy. If we are talking about minimising the impact of waste, we should really reduce it first. In other words, we should try to not use items at all, but if we have to use them, which obviously we do in a lot of cases, we should think about reusability and keep recycling as the second-last option to landfill.
We have already discussed the remedies regime and the issues that the witnesses have with it. I would like to turn that around and ask how it can be fixed. How would you adjust the remedies regime for contracts that are below EU thresholds? Would you just take them out altogether? I think that Colin Sinclair said that there was a suggestion about an ombudsman being appointed for that role.
We have a single point of inquiry at the moment, which is a formal process that allows suppliers to raise a complaint without having to go down the route of legal recourse. That complaint will then be followed up and the centres of expertise are responsible for investigating the complaint and feeding back. That has worked well in some cases and not in others. Perhaps it needs more power and to be able to go to the authorities that are consistently complained about and start questioning their processes and what they are doing. Perhaps the way to deal with the problem is to tackle it with authorities that might not be contracting appropriately.
I support that view. The single point of inquiry, which predominantly focuses on activity that is above EU thresholds, although it does not necessarily have to do that, has been a well-respected solution that is run by the Scottish Government. It is trusted by the suppliers and contracting authorities, and it gives people a balanced outcome from their concerns. It must have avoided suppliers wasting tens of millions of pounds on cases that they would have lost. It is certainly a very good remedy process. Beyond that, the law already allows those who have genuinely been mistreated to seek damages and, obviously, that legal remedy would continue. Certainly the single point of inquiry has a valuable—indeed, essential—role to play with regard to remedies.
I support the comments that have been made. All I would say is that the investment that the Scottish Government and all the sectors have made in the reforms since 2006 with the introduction of centres of expertise has made it easier for suppliers to find out why they have been unsuccessful. They are now able to approach a central body—or, in the case of a procurement carried out by one of my team, me—and know that the information that they will be given can be used when bidding for future contracts. We are better at debriefing suppliers than we were many years ago because of the knowledge that we are in a procurement community. After all, if someone debriefs a supplier in a way that might not be accurate, they would be in a position to challenge that when they bid for something else. The procurement reforms have at least had that desired effect.
So one of our tasks is to roll back from the regime that the bill is seeking to establish.
I think so, and we need more open communications without necessarily having statutory detail.
We have already heard about particular sectors that you think should be excluded from certain parts of the bill. Are there any sectors that should be covered by it or any enhancements that might be made or further provisions that might be added?
I am tempted to answer that question myself but I will come back to it at a future meeting. [Laughter.]
One particular issue is whether the bill’s scope should include UK Government bodies based in Scotland and other publicly owned bodies such as the Royal Bank of Scotland. I know what the answer is but I think it worth while to ask the question.
I have a couple of suggestions that we will put in a written response about not necessarily bodies that should be covered but other issues that might be included. On training and skills, which have already been mentioned, we feel that Scotland’s business development communities should be required to invest in helping SMEs with public procurement. They already have an obligation in that respect, but I think that it could be made stronger.
It might not be described as an organisation, but the leaders of councils in COSLA were unanimous in their view that the living wage should apply to all procurement activity. Although they recognised the existing legal issues and frameworks, there was cross-party support for doing something and, at best, encouraging the payment of the living wage through the procurement of public services and works.
What are the implications of the proposed ability to exclude bidders from your organisations?
As the law stands, bidders cannot be excluded on those grounds. We must be careful to ensure that we do not make Scottish businesses uncompetitive in comparison with businesses south of the border. Even if we had the legal power to include such a provision, we would need to think about whether it would suddenly make a Scottish firm 15 to 20 per cent more expensive, with the result that a company in Carlisle would win the business. That would be a possible practical implication.
On the living wage, I reiterate that council leaders accepted the legal framework. They are looking at ways of encouraging its adoption through the drafting of the bill. I think that it seeks to say that account can be taken of levels of remuneration when that might affect the quality of goods or services that the company is likely to provide. We have had detailed discussions with the civil servants who drafted the bill over a number of months. Their clarification was that, legally, the living wage could not be insisted on under the EU treaty, because it would be above the minimum wage, which would not be legally permissible.
I would like to comment on the ethical dimension of the issue. It is probably not a procurement question. The concern is that, as Angus Warren indicated, we are competing in world markets, particularly in health. Many of the products that are provided to the health sector are made by multinationals and pharmaceuticals. We are talking about products such as health technology products. There is a risk that we might make Scotland uncompetitive. How would we manage and administer something that involved a minimum requirement when we buy from all across the globe? That is a practical consideration, rather than a comment on the living wage itself.
George Eckton said what needs to be said on the living wage. We comply with the political direction that we get.
I would like to comment on exclusions. In the procurement policy forum, we have discussed at length what information procurement officers and managers are expected to get from the likes of the police. If companies have been involved in criminal activities or blacklisting, how can we get hold of information that would enable us to exclude them if they have not been formally charged? We do not know whether that is relevant. It might be the case that we just cannot do that and that only companies that have broken the law can be excluded.
Housing associations support the payment of the living wage, but we would need to be careful to consult the many charities and voluntary organisations that supply services to us. They employ staff, whom we expect to be properly remunerated, but there is huge concern in the third sector about the impact that the bill and the thresholds will have on how housing associations and charities and support organisations will work together in the future. That is an additional issue on which we would need to consult those organisations closely.
As my colleagues have no further questions, I thank all of you very much for your evidence, which has been most helpful. We will take it into account when we write our stage 1 report. As I said at the beginning, if there is anything that you think that you missed, please write to us.
Previous
Attendance