Chamber and committees

The two new franchise contracts, Caledonian Sleeper and ScotRail, will include refinements of the current SQUIRE regime.

In the case of the Caledonian Sleeper Franchise, SQUIRE assessments of station and train quality will be undertaken. These will commence without any financial penalty or incentive payments, but the financial regime will be triggered if quality levels fall below the pre-agreed thresholds.

For the ScotRail Franchise, a refined SQUIRE regime with penalty and incentive payments will be in place from commencement.

Other aspects of service quality will not be subject to out-performance or bonus payments from the Scottish Government in either franchise.

Transport Scotland’s well established Service Quality Incentive Regime provides incentives to the franchisee (First ScotRail) for above “benchmark” performance and penalties for areas that fall below. This covers 36 different areas which affect rail passengers experience.

Over the period of the current franchise, ScotRail has never received an overall annual incentive payment for SQUIRE. Penalties have reduced year on year since the regime was rolled out to all Scottish stations and trains. Annual figures have reduced from £938,959 (before RPI) in 2009 to £133,126 (before RPI ) in 2013. This indicates that performance has improved without the Scottish Government providing additional payments.

The Service Quality Incentive Regime is a vital aspect of the Franchise Agreement as it encourages and incentivises investment by the Franchisee to actually surpass the benchmark level thus improving the performance of facilities and services for passengers. Failure to meet the benchmark level can result in penalties to the Franchisee.

The robust and thorough regime has received numerous positive comments within the rail industry and from Audit Scotland.

Scottish Ministers have asked Robin Crawford and Ken Lewandowski to carry out an independent review of the way in which the public sector in Scotland procures construction work, and they have consulted the Federation of Master Builders as part of their review.

That report is expected later this summer, and Scottish Ministers will respond to its recommendations then.

Improving speed of payment to sub-contractors is one of the key thrusts of the Federation of Master Builders’ report, and Mr Crawford and Mr Lewandowski have already made one early recommendation in this regard, to trial the use of project bank accounts in Scotland. I have accepted this recommendation, and a suitable trial is now being sought.

At the time of the framework award (March 2011) three of the ten successful suppliers were categorised as SMEs. These suppliers were,

Kainos Software Ltd, Maindec Computer Solutions Ltd and Prosource.it (UK) Ltd.

Kainos Software Ltd is now categorised as a large company.

Background on company ownership was provided by bidders as part of the IT Managed Services Framework Pre-Qualification process. Under EU procurement law it is not possible to specify company ownership requirements as a specific evaluation criterion.

The procurement strategy for the IT Managed Services framework included a full analysis of the Scottish market, and the approach to market adopted was designed specifically to maximise opportunities for small and medium sized enterprises to compete. Under EU procurement law it is not possible to specify employment in Scotland as a specific evaluation criterion.

The IT Managed Services framework agreement comprises of two lots:

Lot 1 for large projects (typically greater than £1 million) has four framework suppliers; and Lot 2 for small projects (typically less than £1 million) has ten framework suppliers.

It should be noted that all four suppliers within Lot 1 are also suppliers within Lot 2 which results in a total of ten framework suppliers.

Two of the ten framework suppliers, detailed below, have headquarters in Scotland and both of these suppliers are Scottish registered:

Amor Business Technology Solutions Ltd have headquarters in Renfrew and Prosource.it (UK) Ltd have headquarters in Aberdeen.

From the remaining eight suppliers, seven suppliers, named below, have staff and premises in Scotland:

Atos IT Services UK Ltd, British Telecommunications Plc, Capita Business Services Ltd, CGI IT UK Ltd (formerly Logica UK Ltd), Dell Corporation Ltd, Fujitsu Services Ltd and Maindec Computer Solutions Ltd.

Kainos Software Ltd are headquartered in Northern Ireland and is the only supplier that does not have staff or premises in Scotland.

From management information received from the suppliers, the IT Managed Services Framework has seen the creation of some 28 new jobs in Scotland. It is also likely that the business generated under the framework has also safeguarded a number of other jobs in Scotland.

When a contracting organisation is conducting a mini competition under the framework, they will invite all suppliers (on the appropriate Lot) to participate for their requirement.

However, there is no contractual obligation on suppliers to bid for at least 50% of all contracts.