Scotland stands at a pivotal moment in harnessing its homegrown technology sector to reshape public service delivery, yet the region’s procurement practices currently limit the full potential of this opportunity. Karen Meechan, chief executive of ScotlandIS, underlines that local technology providers do more than simply offer services—they bring a nuanced understanding of Scotland’s public sector needs that international companies cannot match. Their innovations promise to make public services smarter, more accessible, and more cost-efficient. However, the way procurement is structured often sidelines these agile local firms, especially small and medium-sized enterprises (SMEs), in favour of larger or overseas suppliers.
The Scottish Government has signalled clear intent to boost the tech sector through national digital strategies and targeted support for skills and startups. Yet Meechan argues the transformative effect of such innovations can only be fully realised if public sector organisations embed engagement with local tech companies from the earliest stages of commissioning and delivery. Rather than being an administrative hurdle, procurement should function as a strategic bridge that fosters economic growth and public value simultaneously.
Local SMEs currently face structural obstacles in public procurement, partly due to legacy EU legislation that mandates giving continental firms equal consideration. While this ensures competition, it also limits opportunities for Scottish firms to scale and reinvest locally. Meechan points to contract sizes, liability requirements, and narrow tender scopes as barriers that often misalign with how SMEs operate. Relatively modest reforms in these areas could substantially improve inclusivity and innovation outcomes.
Encouragingly, this challenge is increasingly recognised within both government and industry. The Scottish Government’s SME and Third Sector Procurement Action Plan for 2024-2026 reflects this by outlining measures to reduce barriers, promote innovation, and harmonise procurement practices across departments. Specific actions include improving the accessibility of procurement guidance, promoting practical support resources, and reviewing processes for lower value contracts to facilitate SME participation. Such initiatives aim to create a procurement environment where contracts function not only as transactions but as platforms for market validation and growth.
Data underscores the critical role of SMEs in Scotland’s public procurement landscape and wider economy. In the 2022-23 financial year, public sector procurement generated an estimated £13.7 billion in economic activity, supporting around 120,000 full-time equivalent jobs and contributing £7.5 billion to the Scottish GDP. Notably, 61 pence of every public pound spent flowed to SMEs, up from 55 pence the previous year, reflecting increasing engagement with these businesses. Public Finance Minister Ivan McKee highlighted SMEs as vital engines of innovation and economic growth, reinforcing the importance of inclusive procurement policies.
Several local authorities have demonstrated the benefits of working with homegrown tech firms. Trials involving AI-powered citizen services have delivered significant cost savings and enhanced user experiences without job losses feared by many. However, successes often remain siloed, limiting cross-departmental learning and scalability. Meechan emphasises the importance of visibility and consistency in sharing innovations across public sector bodies to maximise impact.
Improved communication between public buyers and the tech community is crucial. SMEs frequently report missing opportunities, not because they lack capability, but due to insufficient early insights into upcoming contracts. Establishing open, ongoing dialogues would help shape tenders to better reflect actual needs and industry strengths, fostering services that are resilient, scalable, and impactful over the long term. While short-term funding can seed innovation, lasting success requires steady engagement and predictable partnerships.
The overarching message from ScotlandIS is clear: procurement should be a bridge—not a barrier—to local SMEs. Supporting indigenous businesses creates a virtuous economic cycle through job creation, talent retention, and profit reinvestment in Scotland. This approach does not aim to lower standards or favour firms based on geography but to ensure capable, innovative companies are not inadvertently excluded.
As Scotland prepares for the ScotSoft conference this September, where these issues will be front and centre, the call is for wider adoption of a shared procurement framework that aligns the ambitions of public institutions with the capabilities of local tech firms. This would not only enhance public service outcomes but position Scotland as a leader in public sector digital innovation, demonstrating a genuine belief in investing in its own entrepreneurial ecosystem. Through such commitment, Scotland can prove that innovation is not just rhetoric but a practical tool for economic and social progress.
Source: Noah Wire Services
