Scottish public service spending freeze – What does it mean for bidders?

On 31st May, the Scottish Government’s Resource Spending Review warned of cuts to be made across a range of public services in the country over the next four years. This will likely raise some eyebrows amongst organisations who regularly bid for contracts in the Scottish public sector.

Although the Spending Review is not a Budget, it does set out the overarching plans (and limitations) for resource allocation and expenditure within future Scottish Budgets during the current term of Parliament. It is also seen to set the tone for budgetary planning for all public bodies in Scotland during this timeframe.

In her statement to the Scottish Parliament, Kate Forbes, Finance and Economy Secretary, warned that that “after years of growth in the public sector – due to Brexit and the pandemic – we need to reset.”

So, what will this “reset” mean for companies bidding for work in the Scottish public sector?

A range of procurement is likely to be affected by these cuts, from large framework contracts with Scottish Government and other national public bodies, to individual contracts with Councils and other local public sector organisations.

Of course, a key concern for bidders will be that an increased squeeze on the public purse will result in even more commercially competitive procurement processes. This would mean an increased focus on bidders’ pricing and cost proposals, and a proportionate decrease in the evaluation weighting placed on the technical solutions and quality offerings within bidders’ proposals. On the face of it, not good news – particularly as many commercial organisations already feel that public procurement often drives a ‘race to the bottom’ on price.

Opportunities for bidders

However, the Finance Secretary also confirmed that the ongoing growth in public sector staffing (on the rise since the Covid-19 pandemic outbreak) was unsustainable and that the country’s public sector needed to “re-shape and re-focus” in the coming years. This will be a cause of concern for public sector workers, but the proposed reshaping may provide greater opportunities for commercial organisations to deliver contracted public service solutions.

Whilst the proposed cuts will be unwelcome news for many, there will inevitably be opportunities for providers of innovative solutions to position themselves to deliver work in an increasingly competitive environment.

Indeed, Ms Forbes specifically highlighted digitalisation and innovation amongst the key areas in which she felt the public sector should reform to become more efficient, as well as improving public procurement.

Of course, we know that public procurement across the whole of the UK is already in line for some significant reforms, through the forthcoming changes driven by the Public Procurement Reform Bill, which follows the UK Government’s Green Paper and consultation on Transforming Public Procurement.

All of this makes for an interesting time ahead for those bidding to the public sector in Scotland. Now would be a good time for affected bidders to consider how their delivery model can be ‘future-proofed’. For example, can you harness the power of new and emerging technologies to do things differently? How can you optimise your delivery model to offer efficient, value for money solutions that are both cost-effective and reliable? It is likely that the organisations who do this will be best placed to win work in a new era of public sector procurement.