The Scottish Government's Procurement Report 2020-2021

For some time now, Scotland has been known as a haven for SMEs and social enterprises. This has been the result of supportive government policy, the innovation of social entrepreneurs, and a consumer culture which prioritises community value. Indeed, this year’s report on the Scottish Government’s annual procurement, which explores the government’s own activity as a contracting authority and measures how well it performs against the Procurement Reform Act (2014), bears this out. Over the past three years, government spend on SME goods and services has increased year on year, and there has been a steady increase in the total number of SME suppliers used by the Scottish government. However, over the last financial year, the number of SME goods and services used dropped for the first time. This could be a one-off, and is likely due, at least in part, to the effects of the pandemic. But regardless, it raises the question of how Scotland’s SMEs, including its 6,000 social enterprises, can better prepare themselves to win contracts.

Over the past two years, the Covid-19 pandemic has impacted almost every area of the economy in one way or another. Shortages of certain goods due to demand surges led to rushed procurement processes in many instances, and these short timescales had a major impact on procurement outcomes. Suppliers need sufficient time to develop and price solutions, and to respond adequately to complex tender documentation. These challenges impact SMEs in different ways. Where larger organisations often have the economies of scale, infrastructure, capital reserves, and staff to absorb the shock, procedures and organisational structure can mean they are not always able to be as agile as a small company. That said, with often less in reserves and a greater reliance on key staff SMEs can struggle and risk is often attributed to smaller organisations because of this. There are no easy solutions here but perhaps the key is to avoid looking predominantly at turnover and seeing company scale as a measure of future risk.

There are also ways SMEs can ensure that they are better prepared for bidding for future contracts. For public sector contracts they should ensure that they are registered on Public Contracts Scotland, the national advertising portal for public sector contracts. Their Supplier Finder Profiles should be up-to-date, including as much information as possible about their business and products or services. SMEs can also take advantage of the Quick Quote facility on the website, which allows buyers to request quotes online from registered suppliers for low value or low risk procurement. In North Ayrshire, the Quick Quote procurement process was implemented by the Council, which has helped even the playing field for local enterprise, because registered businesses can win contracts quickly and directly. Building relationships and understanding key potential buyers across the private sector before contracts are published can also be a valuable investment.

Crucially, awareness of the supply chain opportunities, as well as available contracts that SMEs can bid for, must be raised amongst social enterprises and small business owners. Work must therefore continue to be done by local authorities and regulatory bodies to improve the visibility of opportunities, so that SMEs are first in line for bids. Fortunately, there is plenty of support available for SMEs and social enterprises when it comes to bidding for contracts, and these businesses should make the most of what’s on offer. The Supplier Development Programme offers free tender training, events and workshops to help SMEs and third sector organisations win bids and grow their businesses. Also, the Partnership for Procurement (P4P) programme offers support for third sector organisations who wish to form joint bids for public contracts, and the Just Enterprise programme is designed to support Scottish social enterprises and charities to grow and develop. Most councils also offer some form of support to local businesses to help them navigate the bidding process.

Other initiatives should also have an impact on the number of SME suppliers to the Scottish Government in the future. Just last year, the Buy Social Scotland campaign was launched, helping private, public, and third sector buyers find B2B services and goods from social enterprises. In turn, this helps purchasers to deliver social and environmental impact, to meet their CSR and ESG goals, and to make a difference in Scottish communities. Although the initiative primarily targets private buyers, the push to expand supply from social enterprises to private firms should lead to more social enterprises supplying government agencies, either indirectly as subcontractors, or directly, as the campaign helps to strengthen the market share and presence of these SMEs.

The well-established position of social enterprises in Scotland, and the setbacks they have faced during the COVID pandemic, presents an opportunity to entrepreneurs and legislators to further strengthen the sector. The social value of these businesses is already well understood, and the government has shown willingness to advocate for their position within the economy. While the government must play a role through implementing and expanding supportive industrial policies, entrepreneurs themselves can work with one another, and with advocacy bodies, to compete more assertively for government contracts. This means taking advantage of existing opportunities and support options, and working more strategically to win bids and to prepare for changes in the market.