Transport Scotland Procurement Strategy 2012 - 2015

Transport Scotland's Procurement Policy

Transport Scotland is responsible for the delivery of a number of major projects, the majority of which are high value/high risk. Procurement is an integral part of the project management process. Consequently, this activity is not undertaken by a central procurement department but carried out in a devolved manner by staff with appropriate skills and expertise who are members of specific project teams as part of the wider project management role.

Transport Scotland's procurement policy ensures that all staff involved in the procurement process take account of:

Key stages of the Procurement Journey in Transport Scotland

Key stages of the Procurement Journey in Transport Scotland

Scale of Procurement Activity

Transport Scotland has a wide range of procurement needs and spends in excess of £700 million each year through contracts with suppliers for works, goods and services. There are currently more than 200 contracts in place. These range from large-scale construction contracts such as the Forth Replacement Crossing, to the purchase of goods and services through collaborative arrangements for supplies needed to keep our staff and offices supported and in operation.

The diagram below shows the breakdown by transport mode of total procurement spend in Transport Scotland in 2011-2012. The rail segment includes spend on the ScotRail Franchise ( 39%), which is the most valuable contract let by the Scottish Ministers with a value over its duration of around £2.5 billion.

Spend through Contracts awarded by TS (% £700+)*

This represents a substantial proportion of Transport Scotland budget with most of the remainder being expended as grant funding and other forms of support. Details of how the budget is allocated can be found in the agency's most recently published annual report and accounts.

Procurement by Other Organisations

Transport Scotland sponsors four public corporations - Highlands and Islands Airports Ltd, Caledonian Maritime Assets Ltd, David MacBrayne Ltd and Scottish Canals - who may also undertake the procurement of works, goods and services required to improve transport infrastructure and public transport services.

Ministerial objectives for improving the Scottish Rail Network are taken forward in conjunction with the rail infrastructure owner, Network Rail. Arrangements are in place which enables Network Rail to maintain the infrastructure required to facilitate the train services and also deliver the agreed rail programmes, including the procurement of works and services for projects such as the construction of the Borders Railway and the Edinburgh Glasgow Improvements Programme.

Different Types of Contract

Transport Scotland procures and manages a number of different types of contract for the delivery of transport projects, including:

Non-Profit Distributing (NPD) model - Private finance models such as NPD are created for the provision of an operating service and not specifically for the exclusive provision of capital assets such as roads. The NPD form of design, build, finance and operate contract was developed and introduced as an alternative to and has since superseded the traditional Private Finance Initiative (PFI) model in Scotland and is considered for high-value, strategic infrastructure projects. Key NPD projects announced within the current programme include the M8 M73 M74 Motorway Improvement Project and the Aberdeen Western Peripheral Route/Balmedie to Tipperty Project.

Design & Build (D&B) - This is used for major infrastructure projects and a single supplier is responsible for both the design and construction of the works. The rationale behind this type of contract is to encourage the supplier to deliver the greatest performance benefits to Scottish Ministers in terms of potential savings in time, cost and/or quality through innovation and standardisation, where appropriate output specifications are used.

Employer's Design - With this type of contract, the designer is employed directly by Transport Scotland to fully develop the design before the project goes out to competitive tender and work starts on site. This is used for lower-value new works and improvement projects where D&B would not be appropriate.

Operating Company - Transport Scotland is responsible for overseeing the management and maintenance of the trunk road network. To undertake this work, it employs Operating Companies through term contracts that run for an initial period of five years with the option to extend by up to a further five years dependent on performance.

Public Service - Passenger transport services by air, ferry and rail are procured through this type of contract with Scottish Ministers granting the operator an exclusive right and /or compensation in exchange for discharging public service obligations. The ScotRail Franchise is the largest single contract of this type, which is worth more than £2.5 billion over its duration. Other contracts are in place for ferry services and lifeline air services.

Frameworks - These are used to procure particular works, goods or services required over a period of time. They are generally used where there are either repeat requirements in developed competitive markets or there are variable demands and requirements that are best managed under a flexible arrangement. As well as initiating its own frameworks, Transport Scotland utilises collaborative arrangements of this type put in place by other areas of Government such as Scottish Procurement and Commercial Directorate.

Individual (discrete) contracts - These will be used to procure requirements which are beyond the scope of the above types of contracts and are specific to a particular requirement.

Improving Procurement Capability

Underpinning the Scottish Government's procurement priorities are seven strategic objectives - known as the Seven Cs

Transport Scotland is fully committed to continual improvement of procurement processes and the use of the Seven Cs (as shown in the diagram below) to deliver Value for Money, promote best practice and contribute to sustainable economic growth.

1. Capability

The Scottish Procurement and Commercial Directorate undertakes Procurement Capability Assessments (PCA) of Central Government organisations. Transport Scotland has been assessed at Superior level in the exercises conducted to date.

Transport Scotland's objective in relation to PCA is to maintain this Superior rating through the continuing development of its delegated purchasing officers' skills, procurement processes and governance systems.

People

Transport Scotland is comprised of a wide variety of professionals with specialisms ranging over a number of disciplines including engineering, law, accountancy etc. The skills of staff cover numerous competencies such as planning, project management, procurement, stakeholder engagement, budgeting, policy making and staff management. Transport Scotland is well positioned to achieve the highest standards of innovation, professionalism and teamwork across all areas of the business.

Transport Scotland ensures it maintains its high level of professionals. It operates a graduate recruitment program and supports continuous professional development for all staff.

It recognises the importance of having the right team with the appropriate skills and experience throughout a project lifecycle, including the procurement process. It currently has 49 staff with Delegated Purchasing Authority and ensures that staff are kept up to date with legislation and training.

Staff on major projects also benefit from collaborating closely with external legal procurement specialists. Knowledge gained from this experience is fed back into the organisation via the Procurement Group and through other less formal routes.

Systems and Processes

Transport Scotland fully supports the drive to standardise e-Procurement systems and processes and looks to make use of these wherever possible. The Public Contracts Scotland (PCS) - Tender system is being developed for all public bodies following Route 2 and Route 3 procurements. A number of Transport Scotland's DPA holders will undertake the training being delivered by Scottish Procurement in conjunction with the sectoral Centres of Expertise, with a view to implementation where practical.

2. Competitiveness

Transport Scotland actively promotes the benefits of sustainable economics by engaging in a way that gives Scottish firms, particularly Small & Medium Enterprises (SMEs), as well as the Third Sector and Supported Businesses, a fair chance to compete. Transport Scotland also encourages its contractors to advertise sub-contracts on the Public Contracts Scotland portal.

In 2011-12, more than 57% of Transport Scotland's direct suppliers were SMEs.

SME Distribution 2011-2012

SME Distribution 2011-201

Small

132

39.00%

Medium

80

23.00%

Large

128

38.00%

Transport Scotland encourages its contractors to provide local suppliers, and in particular SMEs, a fair chance to win sub-contracts through advertising of such opportunities on the Public Contracts Scotland website.

Relationship with suppliers

Transport Scotland is committed to prompt payment of invoices for works, goods and services, and aims to settle all undisputed invoices within contract terms and also in line with the Scottish Government 10 day payment policy. In 2011 - 2012 Transport Scotland settled an average of 88% of invoices within this timescale.

Transport Scotland applies the key principles to procurement processes to ensure:

  • Equal treatment and non-discrimination - giving everyone the same chance to win a contract regardless of nationality or familiarity
  • Transparency - stating the requirements up front and adhering to them
  • Proportionality - setting the requirements in accordance with the needs of the contract in question
  • Mutual Recognition - giving equal validity to qualifications and standards from all Member States, where appropriate
  • Confidentiality - respecting the confidentiality of any information received regarding tenders and economic operators
  • Standardisation - making use of standardised procurement templates and tools where possible to ensure consistency, compatibility and efficiency
  • Business-friendly - making it easier for business, including SMEs and the third sector, to access contract opportunities and sub-contracting requirements

Transport Scotland welcomes the Scottish Government's plans to introduce a standard pre-qualification database (the sPQQ system) and responded to the

Consultation on the draft Scottish Standard Pre-Qualification Questionnaire.

3. Capturing Savings & Benefits

Effective procurement is measured by outcomes and not by completion of the process. Contracts must be managed effectively throughout their life to ensure that the benefits identified in the business case are delivered.

In addition to robust project governance measures and effective contract management, there are a number of methods used to measure delivery. Benefits Realisation is embedded within Transport Scotland's Project Management processes. Benefits Realisation allows the project manager to review the delivery outcomes of the contracts against the original business case and the Government's strategic objectives.

Where appropriate, Transport Scotland projects have Key Performance Indicators that are regularly reviewed throughout the Project Lifecycle, and depending on the size of the project, Lesson Learned and Gateway Reviews may be carried out. Aligned to these reviews, Supplier Feedback Reports are produced every six months and suppliers are informed of their ongoing performance.

Examples of the types of performance management regime in place include:

  • the Service Quality Incentive Regime (SQUIRE) monitors and measures the quality of customer services provided by the ScotRail Franchise operator, through regular inspections of its service quality of trains and its station facilities.
  • the Performance Audit Group (PAG) who audit, monitor and report on the financial, technical and performance aspects of the trunk road Operating Companies to an agreed strategy.

4. Coverage

Transport Scotland supports the Scottish Government's Public Procurement Reform Programme and ensures that fair and efficient procurement practices are carried out across all its procurement activity.

5. Collaboration

Transport Scotland utilises a wide range of collaboration, contracting opportunities and partnering across its procurements and actively looks to maximise the advantages of such approaches.

Transport Scotland makes use of over 90% of Scottish Procurement's collaborative contracts and frameworks. It contributes to the Scottish Government's efficiency savings targets, by delivering savings of £540k for 2011-2012, through expenditure of just over £2 million on these contracts.

Transport Scotland is supporting the drive for improved procurement capability across the Scottish Government by assisting and supporting other organisations through participation in the Clusters project.

6. Corporate and Social Responsibility

Sustainable procurement does not relate exclusively to environmental issues. Transport Scotland understands social issues such as equalities, diversity and fair and ethical trading need to be considered, alongside economic issues.

Transport Scotland promotes the use of Community Benefits. When developing any contract specification, consideration is given to the suitability of including community benefit clauses, such as targeted recruitment and training. This is done in conjunction with the Scottish Government's Guidance on the application of Community Benefits in Public Procurement.

Transport Scotland recognises the need to align investment in learning and skills with the needs of individuals, employers and the economy to provide a wider social benefit, while complying with EU procurement law.

Transport Scotland is committed to a transport system that respects Scotland's environment and contributes to health improvement. A range of transport measures have already been identified to counteract the growing trend in transport emissions and these are being taken forward.

7. Communication

Information about the progress of major projects will be supported by an appropriate communications strategy. This includes the use of the agency's website, specific project websites and press releases to provide progress reports and other information of interest to the public about major projects throughout their lifecycle. It also includes direct engagement with local communities via drop in centres, evening meetings or leaflet drops as appropriate during the project's lifecycle.

Transport Scotland advertises all up and coming tender opportunities through the Public Contracts Scotland Portal and, those valued at over the relevant EU threshold are also advertised through the Official Journal of the European Union (OJEU).

To promote interest in projects, Transport Scotland regularly holds Industry Days to inform contractors and potential providers of the business opportunities that an up and coming project may provide.

Transport Scotland's Procurement Group includes representation from all Transport Scotland's Directorates and is responsible for corporate leadership of procurement activity and performance. Its main objectives are to:

  • Improve and report on procurement capability and performance
  • Share best practice in procurement across Directorates
  • Encourage continuous improvement in procurement activities

Governance and Audit

Audit Services are provided to Transport Scotland by the Scottish Government's Internal Audit Service and externally by Audit Scotland.

To ensure proper accountability, the Chief Executive represents Scottish Ministers at Parliamentary Committee hearings on matters relating to Transport Scotland's delegated responsibilities. The Chief Executive is required to sign and present an annual report and accounts to Scottish Ministers, to be laid before the Scottish Parliament. This document includes a report on Transport Scotland's performance against its objectives and targets.

Advice on Procurement

The Procurement, Environment and Sustainability team in Major Transport Infrastructure Projects Directorate provides guidance on strategic and tactical procurement matters, and operates an online Procurement Query System for all staff.

Freedom of Information (FOI), Environmental Information (Scotland) Regulations (EIRs) and Data Protection

As an agency of the Scottish Executive, Transport Scotland is committed to the principle of open and transparent government. Transport Scotland complies with the Freedom of Information (FOI) (Scotland) Act 2002, as amended, which came into force on 1January 2005, the purpose of which is to make information held by Scottish public bodies more accessible to the public. FOI provides individuals with a right to request access to all recorded information held by Transport Scotland. Anyone can use this right, and information can only be withheld where FOI Scotland Act expressly permits it.

Transport Scotland considers requests for 'environmental information' under the Environmental Information (Scotland) Regulations 2004 and requests for personal information held by Transport Scotland, are treated as a 'subject access request' under the Data Protection Act 1998.

Further information can be found at the Scottish Information Commissioner.