Peter Gallanagh calls for a fairer public sector bid process

FOR some time now, constructed-related procurement in the public sector has not been delivering value for money.

Therefore, the announcement by Nicola Sturgeon, Deputy First Minister and Cabinet secretary for infrastructure, investment and cities, of a review into the way Scotland’s public construction contracts are awarded is very welcome.

Scotland’s public bodies spend more than £9 billion a year on procurement with construction contracts accounting for £2bn of this. The process needs to be simplified to ensure a level playing field for all contractors.

I would like to see a more transparent and streamlined tendering process that involves less documentation and fewer people. Like many sectors, the construction industry is going through a difficult time with contractors increasingly having to quote at cost less a margin, as opposed to costs plus a margin, to win contracts. This is not good for business or the growth of the economy. 

It is not cost-effective as the levels of administration necessary and costs attached to the process preclude some contractors from even entering a bid.  

There is also a need for positive discrimination towards local contractors. In recent years, we’ve seen ridiculous situations such as a local contractor tendering for a job with a Scottish council losing out to a company in Wales. How can that be delivering value for money to the council or the taxpayer? 

Then there’s the contract for Glasgow’s new Southern General Hospital, which was awarded to an Australian firm. While it is using some Scottish subcontractors, it is also putting work out to non-Scottish companies that employ foreign staff. This takes a lot of money out of the Scottish economy.

Companies should be positively encouraged to apply for public sector work in their area and for the procurement process to take a more holistic approach when considering tenders. It is vital that we have a robust, streamlined procurement process that is fair and transparent, to allow the Scottish economy to thrive.

• Peter Gallanagh is partner and head of Property and Construction at independent chartered accountants Campbell Dallas