Council procurement from the third sector

A research report on council procurement with the third sector, highlights some interesting developments in local authority spending in Scotland.

The study was based on a representative sample of five councils in Scotland. This means there should be some caution when extrapolating the data, although there are not dramatic differences between councils.

On average 47% of revenue and capital spending goes externally through procurement, demonstrating that Scottish public spending is not quite the in-house monolith it is often portrayed as. Councils make up half of all public procurement in Scotland.

The research has shown that:

• The purchasing power of local authorities in Scotland is substantial; between £110m and £453m annually in the councils examined.
• The Third Sector is now a key supplier to councils. It was found to account for on average 10% of all suppliers in 2012/13 and almost £1 in every £5 spent externally by councils.
• Third Sector suppliers are more likely than other suppliers to be locally based (and therefore generate local impacts) and more likely to fulfil larger service requirements.

While this is not a longitudinal study, it appears that third sector procurement is increasing. One council had increased the value of purchasing from the sector by 25% over the preceding six years, compared with an overall uplift in its purchasing of 16% over the same period. Interestingly, these third sector suppliers are mostly classified as medium to large organisations, with average payments being just over £100k. Again, not the picture normally portrayed of the sector.

By total value, social care remains the largest category of purchasing from the sector by some margin. For example, the largest of the five councils examined purchased 74% of commissioned social care services from the Third Sector in 2012/13 to a value of £41.2m. Housing management, arts and leisure are also high, but perhaps less obviously so is human resources and clothing.

While this is a limited study, restricted to councils, it does highlight the growing role of the third sector in delivering goods and services to the public sector in Scotland.

 

 

Posted with Blogsy