Some 25 per cent of public sector contracts awarded each year go to companies registered outside Scotland, the government said, as it embarked on a consultation over a bill to increase transparency and make it easier for small businesses to win contracts.
“The time and cost of participating in the tendering process is the most common barrier,” the consultation says. “While EU law does not allow us to discriminate in favour of indigenous businesses, removing the remaining barriers to their participation in public procurement markets could contribute significantly to Scotland’s economic growth.”
The move could see the government standardise procurement procedures across the public sector, from higher education to health, schools and local authorities. It could also force public sector bodies to advertise all contracts worth more than £150m on a single website ensuring a “one-stop shop for suppliers”.
“Different public bodes have different ways of conducting procurement process and although you can never find one size that fits all, certain parts of the process can be standardised and that is what we are looking at,” a spokesperson said.
The bill is out for a three-month consultation, with the expectation that it will be introduced to parliament next year. A government spokesperson said it was the first time that a part of the UK had used primary legislation to improve local procurement processes across the board, rather than just implementing EU directives.
A requirement for companies to introduce training, apprenticeships or other opportunities for the disabled and the long-term unemployed could also be written into contracts, as the government seeks to address youth unemployment that is running as high as 56 per cent for 16- to 24-year-olds.
Although the government already advises public sector contractors to consider training and employment opportunities for the local community, the measures are voluntary. The Procurement Reform Bill as it stands would turn this into law. Contracts for the replacement of the Forth Road Bridge as well as the Commonwealth Games in 2014 have included the provision of training and jobs for local people as a requirement for contractors.
Other measures being considered would forbid public bodies from charging for tender documents, in an attempt to make it cheaper for smaller companies to compete.
Jonathan Brook, senior associate at Freshfields Bruckhaus Deringer, a law firm, said the government needed to strike “a sound balance between political rhetoric and legal reality”.
“There are clear constraints on the degree to which Scottish business can be favoured over foreign firms,” he said. “Applications for the contracts from Poland, Greece or Portugal, for example, need to be given equal consideration alongside those from the Highlands or Shetland Isles.”
A government spokesperson said: “This is not about protectionism; it is about spending money wisely to help Scottish business be more competitive.”
Written by Gill Plimmer on FT.com