In attendance

John Swinney MSP   Cabinet Secretary for Finance and Sustainable Growth
Robert Gordon      Director-General Justice and Communities, The Scottish Government
Paul Gray          Director General Environment, The Scottish Government
John McClelland    Author of the Report ‘Public Procurement in Scotland – Review and
Stella Manzie      Director General Finance and Corporate Services,
                   The Scottish Government
David Martin       Chief Executive, Renfrewshire Council
Alastair Merrill   Director, Scottish Procurement Directorate, The Scottish Government
Lindsay Montgomery Chief Executive, Scottish Legal Aid Board (Chair of CGCoPE
                   Supervisory Board / Chair of NDPB Chief Executives’ Forum)
Nigel Paul         Chair, APUC Ltd
John Waddell       Chief Executive, Archangel Informal Investment

Also attended
Russell Ellerby      Assistant Chief Executive, North Lanarkshire Council
                     Attending on behalf of Gavin Whitefield
John Matheson        Health Finance, The Scottish Government
                     Attending on behalf of Kevin Woods
Colin Sinclair       NHS: National Services Scotland
                     Attending on behalf of Ian Crichton
Paul McNulty         Scottish Procurement Directorate, The Scottish Government
Jennifer Smith       Scottish Procurement Directorate, The Scottish Government
Bill Watt            Scottish Procurement Directorate, The Scottish Government
                     (Board Secretary)

Ian Crichton         Chief Executive, NHS: National Services Scotland
Alex Linkston        Chief Executive, West Lothian Council
Colin Mair           Chief Executive, Improvement Service
Rory Mair            Chief Executive COSLA
Derek Watson         Quaestor and Factor, the University of St Andrews
Gavin Whitefield     Chief Executive, North Lanarkshire Council
Kevin Woods          Director-General Health & Chief Executive, NHS Scotland

Item 1 Welcome and Apologies

1.    John Swinney MSP, Cabinet Secretary for Finance and Sustainable Growth
welcomed everyone to the meeting.

2.     Apologies were received from Ian Crichton, Alex Linkston, Colin Mair, Rory Mair,
Derek Watson, Gavin Whitefield and Kevin Woods. Russell Ellerbey, John Matheson and
Colin Sinclair deputised at the meeting for respective colleagues.

3.     Mr Swinney welcomed Alastair Merrill to his first Board meeting as Director of the
Scottish Procurement Directorate (SPD) and Paul Gray in his new role as Director-General
Environment. He paid tribute to the work of Nick Bowd in driving forward the procurement
reform agenda.

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Item 2 Minute of the last meeting

4.     The minute of the last Board meeting held on 20 April 2009 was agreed as an
accurate record.

Update on actions from the last meeting

5.       Both actions from the last meeting had been progressed.

        The summary participation and performance report had been developed further and
         was tabled at today’s meeting.
        Public sector organisations should have received a letter from Mr Swinney dated 8
         May 2009 entitled effective public procurement.

Item 3 Progress, Participation and Performance

Participation and Performance

6.     Jennifer Smith presented the Participation and Performance Report, which is
intended to augment the sectoral progress reports by tracking sectoral engagement in
reform projects and analysing high-level trends from available data. As data mature the
Report would pick out trends and emerging challenges for Board discussion.

7.     Some errors had been deliberately retained within the Report to highlight the errors
that could be made when entering data, and to underline the need for those in sectors
entering data to ensure that the data are accurate and checked.

8.       Ms Smith highlighted that:

        Public Contracts Scotland continued to be warmly welcomed by suppliers. The
         project was proceeding well with supplier registration continuing to increase and
         public sector profile and usage also increasing.
        MI Data was being provided by all sectors. Awareness of the need to provide data,
         and the usefulness of the analysis, had improved since the 06/07 data was collected.
        Participation levels in the BPI project were still increasing, but the rate of completion
         had slowed in the last 3 months.

9.       The following points were noted in the subsequent discussion:

        The data were helpful also to those within the Centres of Expertise, in particular
         allowing them to monitor the use of collaborative contracts.
        Although good progress has been made with the procurement community in raising
         awareness of the Procurement Reform agenda, there was a need to do more to
         engage with those at Chief Executive level, who did not always recognise the key
         importance of procurement.
        The procurement process should be reflected in the annual assurance framework
         and the links in the Procurement Capability Assessment to Audit Scotland Best Value
         criteria provided a means to achieve this.
        The single biggest challenge remains ‘maverick buying’, and as the data matured, it
         should be possible to measure the extent of coverage of the Procurement Reform
         programme, and identify areas where there is a lack of participation...
        Information being generated through the Technology for Reform projects should be
         helpful in determining the impact of Procurement Reform on Scottish SMEs, including
         spend levels across the public sector, the volume and value of contract opportunities,
         and the role of SMEs as subcontractors.

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Progress Reports

10.    Alastair Merrill introduced the latest collective Progress Report and highlighted the
ongoing performance issue with ePS, particularly in relation to the impact within Health. The
Board noted that steps had been taken to strengthen contract management arrangements
and to address the performance issues. Members were advised that the Scottish
Government was awaiting a proposal from the Contractor and colleagues would receive an
update in due course on progress. In discussion, the Board
        Noted the significant increase in uptake of ePS across various sectors, which was
           a significant achievement;
        Expressed concern about possible disengagement if an urgent solution to the
           performance issues was not found; and
        Welcomed the introduction of more robust contract management arrangements;

11.      The Board noted the progress within individual sectors and the respective top
priorities for the coming period.

12.     Summing up, Mr Swinney welcomed the progress that had been made over the last
12 months and said that future progress Reports should focus on challenges that lie ahead.
In relation to ePS, he urged SPD to push for a way forward within the obligations of the
existing contract.

Item 4 Mid-Programme Review

13.     Paul McNulty gave an update on the Mid-Programme Review, which assessed
progress against recommendations contained within the McClelland Report. The Review
began last year and had been conducted in parallel with Audit Scotland’s study of progress
within the Public Procurement Reform programme. The main finding from the Review
suggests that significant progress had been made towards delivering large elements of the
work proposed in the McClelland Report.

14.    John McClelland said that the Review confirmed much of what he had included in his
recent Reports to the Board, with good progress having been made in a number of areas.
The next phase of procurement reform should be very focussed, and look forward rather
than simply referring back to the original McClelland Report. The Mid-Programme Review
and the Audit Scotland Report provided a new baseline from which to move forward and the
remaining critical success factors should be the starting point for a new Strategy.

15.       In the subsequent discussion the following points were made:

         The Strategy needed to be high level, directional and ambitious, and should avoid
          creating new infrastructures.
         The development of the Strategy should not be a time consuming process.
         The Centres of Expertise and others should be consulted in the production of the
         The issue of construction procurement needed to be addressed and the
          establishment of the new Capital and Risk Division in the Scottish Government
          Finance Directorate and the role of the Scottish Futures Trust were relevant in this
         The Strategy needed to take account of the resourcing situation, but the future
          resourcing environment would serve to increase the importance of driving forward
          Procurement Reform.
         SPD is reviewing how its own resources are best deployed to maximise efficiency.
         The enablers for Advanced Procurement are largely in place, and the focus now
          should be on delivery.

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         The emphasis going forward must be on ensuring that public bodies are fully
          engaged with the wider procurement reform agenda and are making best use of
          facilities and mechanisms which have been put in place.
         Key elements of the Strategy should include tracking more consistently the savings
          made across the public sector; improving the quality of purchasing activity; and
          systematically addressing sustainability issues.

16.     Summing up, Mr Swinney thanked members for their comments. There was a clear
direction for the next phase of Procurement Reform. The Strategy should set as testing and
stretching an agenda as possible, and should convey the sense of impetus and permanency
that had built up around Procurement Reform. The top priorities were to maximise
efficiencies and collaboration; to deliver and demonstrate real cash savings across the public
sector; to improve access to public sector contracts, particularly for SMEs; and to embed
sustainable procurement at the heart of the Reform agenda.

17.   Mr Swinney asked that a draft Strategy for the next phase of the Procurement
Reform agenda be submitted to the Board in October for discussion and endorsement.

Action-1 (SPD): Develop a draft strategy – in consultation with the Centres of
Expertise and other key interests - for discussion by the Reform Board at its meeting
in October.

Item 5 Audit Scotland’s Report ‘Improving public sector purchasing in Scotlnd’

18.    Stella Manzie introduced the Audit Scotland report, which had been published as a
Report and Key Messages paper on 23 July. Board members had received copies of the
Report and Key messages paper direct from Audit Scotland.

19.    After a brief discussion, members agreed that a response from the Board to Audit
Scotland’s Report should be issued. Mr Swinney asked that the Scottish Procurement
Directorate provide a draft response for the Board’s consideration, which should be ready for
issue by the end of the Scottish Parliament’s Summer Recess. Action-2 (SPD: Prepare a
draft response to Audit Scotland’s Report ‘Improving public sector purchasing in
Scotland for consideration by the Board.

Item 6 Promoting the involvement of SMEs in public contracts; and economic impact
considerations of the work to date

20.     Jennifer Smith outlined the purpose of the paper, which was to provide information
on the work being done to improve access to public sector contracts and to ensure that work
within the Procurement Reform agenda benefits the economy as a whole.

21.     On 28 April the Scottish Government had issued a clear statement of its commitment
to fair SME access to public sector contracts in Scotland. The Government had asked all
Scottish public sector bodies to take “Six Simple Steps” to support greater SME involvement.
The Six Steps were based on cumulative work which had taken place to drive the agenda as
part of the Reform Programme, but with the individual strands of activity pulled together into
an overarching Policy Statement.

22.       In a wide-ranging discussion, the following points were made:
         Real and perceived inhibitors to access needed to be identified and addressed – for
          many SMEs the biggest issue is not getting to the tendering process.
         There was a need to explore the difficulties faced by smaller companies in relation to
          financial accounts when tendering for public sector contracts.

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      The importance of encouraging innovation through, for example, outcome based
       specifications and designing appropriate business cases.
      The use of standard terms and conditions as far as possible should be encouraged.
      Partnership models should be explored to give SMEs better access to national
       contracts, and the role of SMEs as potential subcontractors needed to be more
       clearly understood.
      Supplier Development needed to be an important aspect of the agenda, particularly
       in relation to SMEs.

23.      Summing up, Mr Swinney said that there was a consensus that improving purchasing
behaviour is at the core of the Procurement Reform agenda, and that there was a need to
look at what more could be done around the configuration of contracts and the decision
making process to nurture the efficiency of the SME sector. The Board agreed that further
work should be done to develop thinking on the potential economic impact of procurement
activity and on promoting the involvement of SMEs in public sector contracts.

Action-3 (SPD): Develop thinking on the potential economic impact of procurement
activity and on promoting the involvement of SMEs in public sector contracts.

Item 7 Scottish Sustainable Procurement Action Plan

24.   Mr McNulty confirmed that the draft Scottish Sustainable Procurement Action Plan
was being finalised and would be submitted to the Board by correspondence for its

25.    The Action Plan contained key elements which have already been shared, formally or
informally, with other areas of the public sector:

      10 steps ranging from “public commitment” to working with suppliers” and “sharing
      Emphasis on the “Buy sustainable – Quick Wins” specifications which were issued to
       the public sector by SPD in October 2008. These covered commonly bought
       commodities and are easily adapted into contract specifications.
      The “Flexible Framework” – a framework which allowed organisations to assess
       where their performance on sustainable procurement was at the moment and what
       would be needed to improve to the next level.

The Board noted the update.

Item 8 Capability Assessment

26.    Mr McNulty informed the Board that the Procurement Capability Assessment has
been published. The Board noted that this tool was key to implementing a consistent
approach across the wider public sector on scoring and measuring procurement

Item 9 Any other Business & Date of next meeting

27.   There was no other business. The next Public Procurement Reform Board was
scheduled to be held on Monday 19 October at 2.30pm in Edinburgh.

                                                      Scottish Procurement Directorate
                                                                         August 2009

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