Scottish Government announces "root and branch" construction contract review

Deputy First Minister Nicola Sturgeon said that the "root and branch" review would look at streamlining procurement practices and delivering value for money for taxpayers. It would also address the use of cutting-edge design and technology, energy efficient techniques, materials and eco-friendly construction methods.

The announcement comes as part of a wider review of public procurement in Scotland, announced by Cabinet Secretary for Infrastructure Alex Neil in February, and follows findings by the Scottish Building Federation (SBF) indicating that almost two thirds of small construction firms have opted out of bidding for public contracts over the past three years due to prohibitive costs and because they feel they have little chance of success.

Michael Levack, chief executive of the SBF, told the BBC that the review was "long overdue".

"I hope the review can reach some rapid conclusions so the measures needed to streamline procurement can be implemented as quickly as possible," he said. "From bitter experience, our members know how much unnecessary cost and inefficiency currently exists in the public procurement system. It cannot be right for so much public money to be swallowed up by burdensome bureaucracy when it ought to be putting shovels in the ground."

Construction is the largest single area of procurement spending by public bodies in Scotland, accounting for more than £2 billion of the £9bn spent each year. Sturgeon said that the review would examine how the impact of this spending could be used to improve Scotland's economic growth.

"In spite of Westminster's significant cuts to our capital budget, we are working flat out to maximise investment in infrastructure projects and to improve the way the procurement system operates," she said. "This review will play a fundamental role in paving the way forward for our construction sector, helping to support jobs, to promote sustainable working practices and, most importantly, reaping maximum gains for Scotland's economy."

The Scottish Government is currently consulting on the creation of a new national legislative framework to underpin the way in which the public sector buys goods, work services. The new system will, it has said, ensure a "transparent, streamlines and standardised" framework that is "friendly to Scottish businesses", and could create a duty for Scottish public sector bodies to consider ways to make it easier for small and newer businesses to access contract opportunities.

As part of the consultation, the Scottish Government is also considering the introduction of a "single online portal" to advertise all contract opportunities. Public Contracts Scotland (PCS), the national procurement portal established in 2008, has not been universally adopted by public bodies according to the consultation, although existing policy is that all contracts for £50,000 and above should be advertised on the database.

Robin Crawford, a non-executive director with KPMG, will lead the review alongside Ken Lewandowski, formerly of Clydesdale Bank Financial Solution Centres. He said that it was "essential" for both the construction industry and its clients that the procurement system operated "as efficiently as it can" in the current economic climate.

"We will draw on the best examples of good practice in procurement in both the public and private sectors and will take account of earlier relevant reports on aspects of this issue," he said. "I am determined that the review will both identify what needs to change and will put in place measures that ensure that the necessary improvements are delivered."