Alastair Merrill speaks – Scotland take on England in the government procurement match

We wrote yesterday about the new Scottish Government Procurement Reform Bill, which  puts considerable emphasis on the social and economic benefits that (they hope) public procurement can bring the nation. For instance:

"The Bill proposes that contracting authorities will now have a 'sustainable procurement duty'; meaning that they must consider how their procurement can benefit the social, economic or environmental wellbeing of that area, or how that procurement would benefit SMEs or support innovation”.

This is very different from the English approach, where the Cabinet Office in their lead role for public procurement have been resolutely focused on cost savings, with a fairly minor nod to helping smaller businesses. So it was good to catch up with Alastair Merrill, who leads public procurement in Scotland, and put a few tricky questions to him.

This is a very different approach to that taken by the Cabinet Office…. you can’t both be right, can you?

“What both we and the Cabinet Office are seeking to achieve is fundamentally the same thing – ensuring that Government spends its money wisely, and delivers maximum value for the taxpayer.  That means being clear about what you’re spending, whom you’re spending with, and what you’re getting in return.  All of these are fundamental tenets of the UK Government’s procurement reform programme just as they are of the Scottish Government’s”.

But you’re emphasising social value - Francis Maude doesn’t believe in that!  

“Of course there are differences of emphasis – as a smaller country, our contracts are smaller, and we can have a credible public procurement reform programme that is owned by the whole public sector, for example.  And we place more emphasis on the broader economic benefits of procurement decisions.  But we’re both clear about the fundamental importance of procurement and commercial management as a strategic enabler both of policy development and service delivery”.

Do you discuss these issues with Whitehall?”

We have good and close relations with the Cabinet Office.  John Collington spoke at the 2010 and 2011 Scottish Procurement Conferences, and we’re looking forward to welcoming Sally Collier to this autumn’s Conference.  We also work closely with the GPS, for instance our partnership with them on the recent liquid fuels framework.

They could be right of course – there’s not much objective evidence in either direction.  Do you worry that your “social stuff” will add to costs? 

You’ve always got to strike a balance.  Good procurement after all is about competition, and delivering goods and services efficiently and effectively.  We see value for money in procurement as being the right balance of cost, quality and sustainability.  And the Scottish Model of procurement seeks to put the social, economic and environmental aspects of sustainability at the heart of all we do.  Done well, that should save rather than add to costs, by maximising the broader economic benefits of public sector purchasing decisions: whether through creating job and training opportunities, as in many of our infrastructure projects, or using public sector demand as a catalyst to create a whole new area of the economy, as in our biomass heating framework”.

Merrill makes some good points there – and he is right that in the sense that it is easier for Scotland or Wales to take innovative steps in a co-ordinated manner because the scale of public procurement is more manageable than in England. I remember someone saying to me that Wales had made good progress because “you can get 12 people in a room together who represent 90% of all public procurement spend”. That is literally true. And it doesn’t work like that in England, clearly.

As this progresses, it would be really useful if we could somehow compare the outcomes from the very different Scottish and English strategies. I’m not sure how we could do that, but an interesting experiment is in effect taking place here. Thanks for his time and good luck to Merrill and his colleagues, and we look forward to seeing what happens next.

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  1. Innovation Dojo:

    I would certainly like to hear more on this debate over local procurement. How should a government engage with its supply market. The economic theory that one pound spent locally can generate up to ten pounds in local economic activity – the Local Multiplier Effect (LME) – certainly seems to be getting more traction around the world. This also seems true of large local businesses. And by the same theory the global chains of stores negatively impact our communities locally by withdrawing money from the local economy.

    This counter intuitive argument goes against the mantra of decreasing the number of suppliers. It would be really interesting to follow these two different approaches and understand the wider benefits.

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