A NEW European directive on public procurement should be used to drive local economic growth in Scotland, business campaigners have said.

The UK Government has "ambitious plans" to respond quickly to the directive, in force since April 17, which encourages public bodies to consider "economic advantage" as well as cost savings when procuring goods and services.

Business groups believe it is a European note of caution over "big is better" procurement which has squeezed out SMEs and undermined the potential of Scotland's £10billion-a-year public spend to drive local economies.

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The Herald earlier this month launched a campaign to highlight how SMEs need rescuing from procurement and other roadblocks which are preventing them from making a bigger contribution to economic growth in Scotland.

Liz Cameron, chief executive of Scottish Chambers of Commerce, has said the Scottish Government needs to make clear "their interpretation of what they regard as the most advantageous tender".

Tavish Scott, LibDem MSP for Shetland and a member of the committee which examined the new procurement reform bill piloted by Nicola Sturgeon, says a wider interpretation was always possible. "When you meet colleagues from other parts of Europe, they say you can be entirely compliant with European rules but set up procurement systems to reflect the circumstances you want."

Stewart Nicol, chief executive at Inverness Chamber of Commerce, agrees, and says in Spain and Italy, construction contracts appear to stay within not just the country but the region, yet they are "obviously interpreting the same legislation".

The new EU directive states it is of "utmost importance" to exploit the potential of public procurement to achieve "smart, sustainable and inclusive growth".

Argyll and Bute Council is keen to make it easier for local producers to supply fresh food to its schools, hostels and social care units by consulting potential suppliers in advance of issuing a tender worth at least £60,000 a year.

The tender was split into two product lots - fresh meat and fresh fish - and into nine geographical lots, allowing suppliers to bid for one, several or all areas of the region. That builds on the Bute Fresh Food project, where suppliers of meat, eggs and cheese to schools were asked to involve pupils in production and sourcing through visits and tours.

Reeni Kennedy-Boyle, manager at Fyne Futures, which runs the project, said: "We are hopeful of being able to take advantage of being next to the school and be part of the Argyll and Bute project producing fresh fruit and veg."

Councillor Dick Walsh, council leader, said: "We have to abide by EU procurement rules and can't discriminate in favour of local suppliers - but they are well placed to meet tender criteria."

The Scottish Green Party last year discovered Scotland's five big city councils "buy mass-produced chicken products from Thailand" but commended Stirling Council, which sources 90 per cent of its chicken from Scotland and the rest through the Soil Association's Food for Life scheme. Ann Smith, facilities management officer at Stirling Council, said: "Before Stirling last went out to tender for provisions we looked at ways of encouraging local business in participating."

The council's economic development team staged meetings and worked with interested businesses, while the tender was split into commodity groups and offered over a longer period than in the past.

Conservative MSP Alex Fergusson said the Scottish Prison Service was using Glasgow catering butcher McLays, and there is "absolutely no reason" why local authorities should not be following its example and that of Stirling.

A Scottish Government spokeswoman said it recognised the work done on the new directives and added: "We fully support changes which will simplify the rules, make the award of contracts more flexible and increase the efficiency of public spending."