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Public Procurement (Iraq Free Trade Agreement) (Miscellaneous Amendment) (Scotland) Regulations 2025 [Draft]
Good morning, and welcome to the 32nd meeting in 2025 of the Economy and Fair Work Committee.
This morning, we will be considering two Scottish statutory instruments before taking further evidence as part of our work on artificial intelligence. To begin, I note apologies from Sarah Boyack, Lorna Slater and Stephen Kerr.
I welcome Ivan McKee, Minister for Public Finance, and—online—I welcome Alasdair Hamilton, procurement policy portfolio manager, and Jess Gray, lawyer, from the Scottish Government. They will present on the SSI, and I invite Ivan McKee to make a short opening statement.
As committee members know, while the negotiation of international agreements is a reserved matter, implementation can occur in devolved areas. In particular, agreements often include provisions providing for reciprocal access to public procurement. Accordingly, Scottish procurement regulations set out that bidders from countries to which a relevant agreement applies are entitled to equal treatment when bidding for contracts in Scotland.
The instrument updates the list of relevant agreements by inserting a reference to a new agreement between the United Kingdom and Iraq. The effect will be to ensure that suppliers from Iraq will be entitled to the same treatment as Scottish or other UK suppliers when bidding for contracts that are covered by the agreement. Under the terms of the agreement, Scottish bidders will be entitled to equal treatment when bidding for contracts in Iraq.
It is worth noting that the agreement is based on the agreement between the European Union and Iraq, which ceased to apply to the UK after Brexit. In that sense, the instrument can be largely regarded as a restoration of rights and obligations that existed until that point.
I have a question for the minister. For clarity, does the instrument mean that Iraqi firms need to be given equal consideration when bidding for public work, and vice versa for Scottish firms in Iraq? In practical terms, looking at the balance of trade and the industrial and economic base of both countries, are there likely to be Iraqi firms that bid? Has there been any analysis of that?
Likewise, what might the opportunities be for Scottish firms to bid for public contracts in Iraq?
In both directions, the trade is currently pretty minimal. We would hope that that will grow over time, although Iraq is not one of the priority countries in our export plan.
Data that we have—this is from His Majesty’s Revenue and Customs regional trade statistics—show that £45 million of goods were exported from Scotland to Iraq in 2024, but the data shows only £1 million of goods coming in the other way. Both of those are about 8 per cent of the UK total.
I thank the minister for that answer about the economic value. Are there any practical or other considerations?
Officials can correct me if I am wrong, but I do not think that there are any instances of Iraqi firms bidding into Scottish public procurement as yet. This instrument is just to add them on to the list of countries that can do so.
As members have no questions, we move to agenda item 2, which is the formal consideration of the motion. I remind everyone that only members and the minister may take part in this part of our proceedings. I invite the minister to speak to and move motion S6M-19302.
Motion moved,
That the Economy and Fair Work Committee recommends that the Public Procurement (Iraq Free Trade Agreement) (Miscellaneous Amendment) (Scotland) Regulations 2025 [draft] be approved.—[Ivan McKee]
Motion agreed to.
Cross-border Public Procurement (Miscellaneous Amendment) (Scotland) Regulations 2025 [Draft]
We move now to agenda item 3, which is hearing evidence on cross-border public procurement regulations. I invite the minister to make a short opening statement.
It has become commonplace over recent years for contracting authorities, bound by public procurement legislation, to co-operate where it makes sense to do so. Until recently, it was a fairly straightforward exercise as the procedural rules on awarding contracts—on such matters as minimum timescales and the type of notice that must be published—were substantially the same across the whole of the UK.
Earlier this year, however, the UK Government commenced the Procurement Act 2023, which had the effect of changing the procedural rules that are applicable elsewhere in the UK. That meant that new provisions were needed to cater for the scenario in which a devolved Scottish contracting authority is awarding a contract under an arrangement that is put in place elsewhere in the UK, or vice versa.
The Procurement Act 2023 gave both the UK and Scottish ministers powers to address the issue, and the Scottish Parliament agreed a legislative consent motion on the point. The UK Government exercised its power following engagement with us and, through public consultation, set out in legislation the elements of the 2023 act that will apply to devolved Scottish authorities when they are awarding a contract under UK arrangements.
This draft instrument seeks to mirror the provision made by the UK Government by setting out the provisions of the Scottish procurement legislation, which will apply to UK authorities when they are awarding a contract under devolved Scottish procurement arrangements.
Both the instrument and the UK equivalent legislation are drafted with the intention of applying only such of the provisions of the other regime as are necessary to allow the contract to be awarded. Those provisions can reasonably be described as procedural rules rather than policy-driven rules. The exception is where two or more authorities are conducting a joint procurement exercise and one is leading the exercise on behalf of the others. In that case, the applicable regime would be the home regime of the authority that is conducting the exercise.
This is a relatively technically complex instrument, but it is intended to allow co-operation on procurement to continue as appropriate.
Thank you very much, minister.
I begin again by asking what the instrument will mean in practical terms. My understanding is that it will essentially enable devolved bodies to use UK-wide procurement frameworks. Are there practical examples in which either that has happened or the Scottish Government or its agencies intend to use the provisions? Can you outline some examples?
I will ask officials to come in on the specifics.
If we look across the public sector landscape, a huge amount of work has been done over recent years to encourage the use of framework contracts in procurement. We have saved hundreds of millions of pounds by doing that in the Scottish context, with different public bodies co-operating on those frameworks. The same can apply across the whole of the UK, where it makes sense to do so.
That has been the case up to now, and all that the instrument does, given the new UK procurement legislation, is enable the process to continue. It dovetails in the different procedural requirements so that co-operation continues to be technically possible.
I will ask officials to come in if they have any specific examples. If there is any more detail that you need, convener, I am happy to come back.
I can provide some specific examples of co-operation. In the sense of Scottish contracting authorities using UK-wide frameworks, Crown Commercial Services is the biggest provider of the big national frameworks on the likes of information technology. Advanced Procurement for Universities and Colleges in the higher and further education sectors in Scotland is a prime example of where co-operation flows the other way. Some frameworks put in place by Scottish HE and FE institutions are used by their counterparts across the rest of the UK.
I have a subsequent question. Procurement is a topic that comes up regularly at this committee, and one of the regular points is about how open procurement processes are to the broadest range of firms, especially smaller firms. Will the instrument help, or is it largely to one side of that topic? I thought that it was important to raise that.
Absolutely—it is a very important topic.
Technically, the instrument is a continuation of what we have been doing. It puts in place the regulations that allow us to continue to do what we have done up to now, which opens up procurement more broadly. What does that mean in practical terms? Obviously, if we are putting out bigger contracts—which is what happens when they are amalgamated across a wider geography—we run the risk of there being bigger suppliers bidding for them.
There is a separate but very important focus of the Scottish procurement policy on supporting small and medium-sized enterprises to access public sector contracts. That is thoroughly embedded in the process—and I think with some success. We are now at the stage where 47 per cent of Scottish public sector procurement spend went to SMEs in the last published data. That compares with a number of around 20 per cent across the whole of the UK.
We have made some significant progress, but there is always more work to do.
As members have no questions, we will move on to agenda item 4, which is formal consideration of the SSI. I remind members that only members and the minister may take part in this section. I invite the minister to speak to and move motion S6M-19428.
Motion moved,
That the Economy and Fair Work Committee recommends that the Cross-Border Public Procurement (Miscellaneous Amendment) (Scotland) Regulations 2025 [draft] be approved.—[Ivan McKee]
Motion agreed to.
A short report will be prepared and published, and I invite the committee to delegate report clearance to me as convener. Is that acceptable to the committee?
Members indicated agreement.
I suspend the committee briefly in order to change witnesses.
09:12 Meeting suspended.Air ais
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Artificial Intelligence (Economic Potential)