Agenda
Item No.
13
CABINET
DATE
-
14th February 2005
REPORT OF
-
Executive Director of
Services
SUBJECT
-
Towards a Procurement Strategy –
a consultation document on the
future of procurement.
STATUS
-
Open
FORWARD PLAN REF NO.
-
CS 02/05/4
Corporate
EXECUTIVE SUMMARY
All of the Council’s £180M budget is subject to procurement. Improving services and
delivering efficiencies requires the Council to consider alternative ways of delivering
its services. This is not just buildings, resources, goods and services but also
collaboration and partnerships with other public sector agencies and private sector
businesses. This is known as strategic procurement. It is a big change from when
procurement was simply about ‘buying things’.
To make the most of the potential for service improvement and efficiencies, whilst
avoiding entering into contracts that are poorly structured and potentially expensive
in the long term, requires the Council to take a considered strategic approach.
Proposals in the report set out an approach to strategic procurement and implement
the National Procurement Strategy to delivery efficiency improvements in local
services through procurement, partnering and collaboration (Gershon).
RECOMMENDATIONS
STRATEGIC PROCUREMENT
1.
That the approach to strategic procurement is approved (paragraphs 4.3, 4.4,
Appendix 1 and Appendix 2)
2.
That the response to the RCE strategic procurement mapping exercise is
noted (Appendix 3)
3.
That a moratorium on starting new procurements likely to be influenced by the
outcomes of the service review (paragraph 4.9) is implemented subject to any
exemptions agreed with the Executive Director Corporate Services and the
Chief Executive.
4.
That all Elected Members receive training on the National Procurement
Strategy and the implications of the Gershon Review.
NATIONAL PROCUREMENT STRATEGY
5.
The actions responding to the fitness check are approved (Paragraph 5.27)
6.
The role and terms of reference of the Efficiency Board is approved
(Appendix 5);
RESOURCES
7.
Funding the development of the strategic review and outline business case
from the ODPM capacity building funding allocated to procurement
(£135,000) is approved (Paragraph 6.2)
8.
The approach to demonstrating that the Procurement Consultancy provides
value for money is approved (paragraph 6.5)
9.
That the intention to conduct a future review of the Council’s procurement
capacity and other resources involved in procurement is approved
(paragraphs 6.6 and 1.19)
GERSHON
10.
That a further report with a corporate approach incorporating the remaining
different strands of Gershon be presented to Cabinet. (Target date 4th April
2005).
REASONS FOR DECISION
The Council has a requirement by the ODPM to implement the National Procurement
Strategy and achieve 2½ % annual efficiency savings.
1.
BACKGROUND AND CONTEXT
1.1
During 2004 Sir Peter Gershon concluded his review into Public Sector
Efficiency. In doing so he sought to establish that local government could be
more efficient. Savings realised through greater efficiency in the four key
areas of procurement, corporate services (back office functions) productive
time and transactions would save local Government £6.45 billion or 2.5% per
annum. This money could (in part) be released to support front line services.
1.2
In particular he felt that the quality of services ought to be a feature of service
improvements, not overly simplistic baseline costs. HM Government has now
issued guidance to Council Leaders and Chief Executives entitled ‘Delivering
Efficiency in Local Services’ and an ‘Efficiency Technical Note’ (ETN) to
establish ways in which efficiency will be measured and accounted for within
local authorities. These efficiencies will be split into 2 categories, cashable
and non-cashable.
1.3
Council Leaders and Chief Executives will have to sign an Annual Efficiency
Statement on how they will achieve the gains. Additionally, they will have to
submit an annual return stating whether the gains were in fact achieved and
audited as such.
1.4
The efficiency gains will be manifested in:

Reduced prices (procurement, labour costs, etc) for same outputs;

Additional outputs or improved quality (extra service, productivity, etc)
for same inputs;

Improved ratios of costs / output (unit costs etc.)
1.5
Gershon asserts that these gains will only be achieved through aggregation
(economy of scales) and collaborative arrangements between local authorities
and a range of public/private sector partners.
1.6
Running in parallel to Gershon, is the National Procurement Strategy (NPS).
This Strategy seeks to achieve improved services through reducing
procurement costs and improving procurement standards and processes.
1.7
The milestones for the NPS are spread over 3 years, with full compliance
being required by the end of 2006. The milestones for the 3 years of the NPS
are based on the following main elements:

Providing Leadership and Building Capacity;

Partnering & Collaboration;

Doing Business Electronically (e-procurement);

Stimulating Markets & Achieving Community Benefits;

Analysis and Performance Targets;

Procurement Policy and Processes.
1.8
It is most important to recognise that the development and implementation of
the NPS and strategic procurement is not merely a “bolt-on” which is done in
isolation from the rest of the Authority.
1.9
The NPS and strategic procurement will together be the effective mechanism
to help define the future style and delivery of services for the Authority. In
order to succeed, it must be owned by the political and officer executives, and
incorporated into the Council's business and service planning processes.
1.10 Nine centres of procurement excellence were established by the ODPM/LGA
to co-ordinate NPS activities on a regional basis
1.11 The Gershon and Strategy Initiatives have their discrete elements, but
substantially coincide in respect of delivering efficiency gains through
partnership working.
1.12 The centres of procurement excellence have been redesignated as Regional
Centres of Excellence (RCE) and their remit widened in order to co-ordinate
activity on Gershon and not just procurement. This Council falls under the
Yorkshire and Humber Centre, which is based at Leeds City Council.
1.13 In order to establish a base line position, the RCE is undertaking a mapping
exercise to identify the potential for collaboration and joint delivery of services
across the area.
1.14 During September 2004, the IDeA undertook a “fitness check” of the Council’s
preparedness for compliance with the National Procurement Strategy.
Following on from a draft report, a meeting was held with the IDeA and the
RCE in respect of incorporating elements of Gershon into a revised report.
1.15 The Council established a corporate procurement function in 1997 to identify
and effect opportunities for corporate contracts, to assist in high value one-off
procurement exercises and to advise the Authority on purchasing issues and
good practice.
1.16 During late 2000, a Corporate Working Group was established with the
objective of devising a new Procurement Strategy. The Strategy was adopted
by the Council in October 2001. This Strategy has achieved tactical control of
purchasing and procurement operations within the Authority, but now needs
to be refocused in order to deliver strategic procurement.
1.17 The Procurement Consultancy has established and maintains a Corporate
Contracts Catalogue (CCC) of 34 individual contracts representing a spend of
£6 million pa. Additionally, and more significantly, the Consultancy has
supported a number of procurement exercises over the past 8 years, which
has further increased the mixed economy of providers. This has included the
outsourcing of Leisure Services, the Auditorium, Heating Maintenance
Services and a project team approach to a number of other services and
supply contracts. The Consultancy has an ongoing and substantial work
programme for 2005/06.
1.18 The Consultancy has undertaken a significant amount of project work over its
lifetime, including 60 OJEU European tendering exercises, including 6 by way
of the Negotiated Procedure. It handles over 100 individual requests for
service annually. Additionally, it maintains an Intranet and Internet facility,
and has held 3 market development events in 2004. The Consultancy
undertakes regular customer satisfaction monitoring and is currently achieving
satisfaction levels of 93%.
1.19 The dedicated procurement/commissioner establishment for the Authority
currently includes:
 Procurement Consultancy – Corporate Services;
6 FTE
 Business Development Unit – Community Care;
4 FTE
 Business Support – Learning & Child Care;
2 FTE
 Supporting People – Community Care.
2 FTE
 Additionally, there are purchasing/contracting elements within Engineering,
Architects and I.T.
2.
DRIVERS FOR CHANGE
2.1
There are many drivers for change in how goods and services are procured.
These include; Local Strategic Partnerships, CPA outcomes, Government
Modernisation, capital investment, cost reductions, Gershon, Risk Transfer,
Best Value, failing services and systems. Many of these may lead to more
partnering and private sector involvement in Council services.
2.2
The Council has to decide how the services it provides will be delivered and
procured. Potential service delivery options, include:

Partnership and partnering, with public, private and voluntary sectors

Mixed service provision (with other providers delivering part of the
service under contract)

Long term contracts and major joint ventures such as PPP/PFI and
outsourcing

Delivering services in-house
2.3
Partnering, collaboration and private sector involvement to deliver
improvement can have a profound impact on how the Council is structured.
The options range from a ‘thin’ Council that is effectively a strategic, policy
and commissioning body with services delivered by other partners and a ‘fat’
Council that delivers everything in-house.
2.4
The fat council is probably not a viable option taking into account the
Council’s financial position and the requirement to continually improve
performance and efficiency. In practice; a mixed economy is most likely to
deliver better and more efficient services. This approach plays to the
Council’s strengths and applies investment, capacity and expertise that
Councils may not be able to apply themselves.
2.5
The Council already operates a mixed market. However it is important to
corporately review all services and contracts and take a strategic approach to
considering partnerships and collaboration. This will maximise the potential to
improve services and ensure the resultant changes and improvements are
achievable, can be delivered and managed effectively.
2.6
Implementing partnership arrangements is a lengthy and expensive process.
In the short term we can continue to trim away at budgets. However, the
efficiencies required by Gershon will become difficult to achieve in years 3, 4
and 5 if action is not taken now to consider and begin to implement new
delivery arrangements.
2.7
Currently there is a significant amount of partnering activity between the
public and private sector driven by Government. The Council needs to
recognise this is not necessarily a buyer’s market. This means the Authority’s
approach, packaging and timing of partnering options is important. An early
start will give the Council the most freedom in developing options with
partners.
2.8
If the Council takes no action, the opportunity to influence and set the
direction of partnerships will reduce. As time elapses and partnerships and
collaborations develop, the Council may be obliged to join other existing
partnerships whose direction is already set. It is also vital that the Council
recognises the importance of being a good client and partner. This involves
making decisions rapidly, avoiding bureaucracy, responding positively to
innovation, and having realistic commercial awareness.
3.
PRIORITIES
3.1
The priorities in dealing with these issues are;
a)
Develop and implement a strategic procurement strategy
b)
Implement the National Procurement Strategy
c)
Secure resources to deliver the strategies
The report considers these priorities in turn.
4.
STRATEGIC PROCUREMENT
4.1
The RCE is undertaking a mapping exercise in order to identify the potential
for collaboration and joint delivery of services across the Yorkshire and
Humberside. The mapping exercise asks authorities to consider whether it
wishes to:

provide services in whole or in part for another Council;

transfer the services in whole or in part to another Council;

collaborate or jointly providing the services;

not take up any of the above.
4.2
The Council has been asked to submit its response by the end of January
2005. The Council’s response is included at Appendix 3. This exercise is
merely an early indication of the potential areas for collaboration, etc but
much more detailed work and analysis needs to be undertaken before the
Council is in an informed position.
4.3
To achieve this informed position, the Council needs a more “scientific”
approach. The objectives of the approach must be to;

Determine how services should be delivered given the Council’s
present performance, its capacity to improve and its aspirations for the
future.

Produce a robust business case that demonstrates the viability of the
proposed options and ensure decision making is based on a business
case and risk analysis.

Quantify and identify the performance improvements and efficiencies
that that will be realised as a result of implementing the proposed
options.

Prepare procurement, project and change management plans.

Secure the necessary resources to implement the proposed options.

Seek a decision to implement the preferred options.
4.4
An outline approach which develops from the RCE mapping exercise is
proposed. The proposed approach is made up of the following key stages:

A process to assess all Council services against pre-determined criteria
to identify appropriate service delivery options, assess risk and select
the option(s) most likely to deliver improvement and efficiencies. This
will populate the matrix shown at Appendix 1.

Engage in a dialogue with potential private and public sector partners
to ensure the options are based on facts and are achievable.

Develop a programme to facilitate and deliver the early phases of the
programme using external resources. Transfer skills from the early
phases to develop in house capacity to deliver later phases of the
programme and to act as an intelligent client.

Where the Council retains control over the delivery of services, an
Efficiency and Innovation partner could be engaged to share the risk of
delivering performance improvement and efficiency gains.

Establish robust change and project management arrangements.
4.5
An outline action plan for implementing the approach is shown in Appendix 2
and incorporates the 4Ps gateway review process. The action plan also
identifies internal and external resources required to deliver the methodology
and subsequent programme.
4.6
The most significant external resource required is that of a strategic
procurement project manager. The Council needs to engage a suitably
skilled and experienced manager in order to further develop the methodology
and devise the programme. It is envisaged that an initial strategic review will
take up to three months and the development of an outline business case a
further three months.
4.7
Initial discussions have been held with the RCE and OGC in respect of
potential candidates. It is likely that such a consultant may be available on 1
of the OGC framework arrangements, therefore negating the need for a
formal procurement exercise. This is set out in more detail in Section 5 Resources.
4.8
Notwithstanding this initial work, the subsequent programme for establishing
the collaborative partnerships is likely to be 3 years. Therefore, capacity for
implementation and contract management of a corporate strategic
procurement programme needs to be established. Options for this will be
developed as part of the scope of the initial programme development work.
4.9
Although the Annual Procurement Plan for 2005/06 has not as yet been
established, a number of tactical procurement exercises have been advised to
the Procurement Consultancy Manager. It is proposed that there is a
moratorium on all procurement exercises, which may be affected by the
outcome to this strategic procurement review. This is to ensure that a
strategic approach is used to package potential partnership and collaboration
projects.
5.
NATIONAL PROCUREMENT STRATEGY (NPS)
5.1
This section of the report summarises the actions proposed to implement the
National Procurement Strategy milestones and summarises the priorities
identified by the IDeA fitness check report.
5.2
Providing Leadership and Building Capacity; One of the key leadership
tasks is to build the capacity and capability of the Council for a modern,
strategic approach to procurement. This means ensuring that a corporate
procurement strategy and the necessary people, processes and technology
are in place and are making a difference.
5.3
The IDeA have highlighted in their publication “Procurement Best Practice
Guidance”, the need for Member involvement. However, it recogniss the need
to balance executive decision making and scrutiny roles, with the concern that
Members should not be involved in detailed procurement activities.
5.4
The Council has developed “Common Standards for the Involvement of
Members within the Procurement Process”. The standards have also been
incorporated into the Council’s CPRs. These standards need to be revised in
order to incorporate a gateway review process. This is particularly relating to
the role of scrutiny in ensuring projects deliver against business cases and
through to contract/contractor performance
5.5
It is important that Members have a level of skill and competency
commensurate with their role within the procurement process. The 4P's and
IDeA are offering a training module in their Member development package,
which the Council will pursue in this regard. This is in addition to the internal
and external training that Members have already undertaken. Additional
training will be devised and delivered in respect of key Portfolio Holders and
Chairs of Scrutiny equally, as will the Member Champion, currently Councillor
Brookes.
5.6
The CMT Procurement Champion is John Harrison. A role of CMT is to
recognise the strategic importance of procurement and ensure that the
Corporate Procurement Strategy is incorporated in to strategic and corporate
planning processes. This means that effective procurement is a corporate
responsibility.
5.7
The Efficiency Board, already approved by CMT, will provide significant input
into supporting CMT with the strategic direction and implementation of
procurement and other efficiency issues. The draft terms of reference for the
Efficiency Board are attached as appendix 5. The first meeting is arranged for
February 4th.
5.8
Partnering & Collaboration; The strategic procurement approach in section
4 will identify opportunities for services to partner and collaborate. The IDeA
report notes that NELC already includes a number of regional and national
contracts within its own Corporate Contracts Catalogue (CCC). The report
goes on to encourage the Council to check that such arrangements continue
to provide best value for money.
5.9
In addition to this, the Leaders of the 4 unitary Councils comprising this subregion have agreed to explore the potential for efficiencies, with the initial
focus being on the CCC and a joint/collaborative procurement function. The
East Riding of Yorkshire Council has put itself forward to take the operational
lead in respect of this work. An initial meeting to develop possible options is
scheduled for January 28th 2005.
5.10 It is likely that only a limited catalogue of goods and services could best be
achieved on a sub-regional basis. There are a number of purchasing
consortia (such as YPO, ESPO, OGC) already operating both at a regional
and national level, which recognise substantially more “buying power” and
“leverage”. The RCE will also identify other collaboration opportunities and
there may be merit in considering collaboration with Lincolnshire County
Council, its associated District Councils, and the East Midlands RCE.
5.11 Before any future collaborative arrangements are agreed, it is essential that
the full range of options is taken into account. A business case should be
developed to quantify the potential benefits of such an arrangement and set
out how the benefits would be achieved and accounted for. It will also be
essential to obtain clarity on how a collaboration would be resourced and
managed. An impact analysis will assess the implications on the capacity to
manage and deliver strategic and operational procurement needs if
capacity/capability were to be ‘transferred’.
5.12 Doing Business Electronically (e-procurement); The Council has not
engaged with this agenda as yet. The National e-Procurement Project (NEPP)
and Pathfinder Projects, will give a substantial short cut to the Council’s
ultimate decisions as to which e-procurement solution it chooses.
5.13 The NPS identifies the benefits of e-Procurement solutions in the pursuit of
business efficiency through such tools as:

Purchase to Pay

e-auction

e-tendering

Marketplace & e-procurement software

Purchasing Cards
5.14 The pursuit of e-procurement forms part of the IDeA action plan, but is
complementary to work already being undertaken in respect of the
Consultancy Commission into IT and e-government, and also the work being
undertaken by Finance in respect of Purchase Order Processing (POP). The
Council has requested support from the IDeA e-government Implementation
Support Unit to assist developing a strategy and business case for egovernment.
5.15 Stimulating Markets & Achieving Community Benefits; Under the Local
Government Act 2000, Councils are required to prepare a community plan
(Community Strategy as defined in the Act) and have powers to promote the
economic, social and environmental well-being of their communities.
Provided that there is compliance with EC public procurement regulations and
Best Value, Councils can work with suppliers to realise “community benefits”
of this kind through their procurement activities.
5.16 Councils need to encourage a mixed range of suppliers to help stimulate a
varied and competitive market place. This includes understanding the
supplier’s perspective and marketing the Council to suppliers. Councils also
need a diverse and competitive supply base to help improve value for money
and to develop suppliers to meet new or emerging requirements.
5.17 Collectively, Council’s have significant buying power. They can use that
buying power creatively to stimulate innovation. By working with suppliers,
Councils can encourage the best to gear their business planning and
research and development efforts to the needs of local government.
5.18 The Procurement Strategy will take into account the social, economic and
environmental impact on the region. It may not be desirable to see a
configuration of partnerships that leads to a net export of jobs out of the area.
The Council leading a partnership or collaboration, regardless of whether it be
public or private, could result in a net import of jobs with the consequent
benefits.
5.19 Analysis and Performance Targets; The Council is currently undertaking an
analysis of its purchasing spend. This information will fundamentally set out
on a Council and individual Directorate basis, how much the Council spends,
with whom and on what.
5.20 This information will allow the Council to understand its procurement spend, in
order to identify opportunities for targeted savings and for the achievement of
economies of scale, through collaboration. The information also allows for
the tracking of spend with local and SME businesses.
5.21 Currently there are no national performance Indicators in respect of
procurement. However the IDeA, in conjunction with the Audit Commission,
have devised 34 local performance indicators (LPIs).
5.22 The RCE are in the process of selecting 10 of these LPIs by which the 22
Local Authorities in the area can measure and compare their performance.
5.23 The Council has proposed the following 10 indicators for consideration by the
RCE.
No.
LIB/P1
Title
Strategy
Implementation
LIB/P3
Best Practice
LIB/P4
Aggregation 1
LIB/P5
Aggregation 2
LIB/P6
Project Management
LIB/P7
Gateway Reviews
LIB/P12
Satisfaction with
corporate
procurement function
Predictability – time
to procure
LIB/P14
LIB/P20
LIB/P22
Commodity goods
price comparison
Average Invoice
Value
Description
Percentage of milestones activities
completed in the National Procurement
Strategy for Local Government
Percentage of the value of contracts
awarded that commence in the financial
year in accordance with standing orders
aligned with procurement best practice
Percentage of corporate spend
aggregated through corporate framework
arrangements and corporate contracts
Percentage of corporate spend
aggregated through collaboration with
other public sector organisations
Percentage of medium and high-risk
projects managed under a structured
project management method
Percentage of medium and high-risk
projects to which the 4P's Gateway
Review Process is applied
Average time from publication of Official
Journal of the European Union (OJEU)
notice (Gate 2) to contract signature
(Gate 3) as percentage of time allotted in
any approved business case
A “shopping basket” of 10 commodity
goods
Corporate spend divided by total number
of invoices
5.24 The purchasing analysis and performance indicators will provide a baseline of
information against which future performance can be compared. Additionally,
the baseline information will allow for target setting both in terms of savings
and increased performance.
5.25 Procurement Policy and Processes. The Council has a number of existing
Policies and Procedures in respect of procurement. They are as follows;
Procurement Strategy, Contract Procure Rules, Common Standards for the
involvement of Members and Unions and Procurement Consultancy
Procedures Manual. These documents recognise the need for accountability,
but also take account of commercial reality.
5.26 The processes and policies are substantially modern and already incorporate
good procurement practice. However, all of them will need to be revised to
take account of this new strategic procurement strategy. They need to be
reinforced in the areas of business case, gateway review, sustainable
procurement and incorporation of the guidance of the commission for racial
equality.
5.27 IDeA Fitness Check The Council’s preparedness for compliance with the
NPS was evaluated by the IDeA. The report, attached at Appendix 4,
assesses where the Council has achieved the milestones of the NPS and sets
out recommendations where the Council has still to achieve them. The
Fitness Check Team concluded that the priorities for action are:
a)
Develop an efficiency strategy based on a baseline assessment of
current service provision in terms of cost and performance, prioritise
the number of strategic procurement projects based on the capacity of
the Council and then project manage each of the projects using a
project management methodology such as Prince 2;.
Delivered by the strategic procurement approach (Recommendation
1)
b)
Adopt a strategic procurement management approach including
clarifying further the respective roles and responsibilities of executive,
scrutiny and officers in the procurement process (including, for
example, definition of outcomes, robust options appraisal, scrutiny of
business cases, contract management and gateway reviews);
Delivered by the strategic procurement approach (Recommendation
1)
c)
Review systems to ensure compliance with internal and external
procurement rules and regulations e.g. EC Procurement Directives;
Delivered by the Procurement Consultancy Business Plan 2005/2006
(paragraph 7.2).
d)
Develop an appropriate organisational structure to reflect the Council’s
procurement needs and create a method of sharing procurement
know-how throughout the Council with a centre of expertise and also
sharing of knowledge and best practice;
Delivered by the approach to reviewing the organisation structure as
set out in paragraph 6.6 (Recommendation 3)
e)
Develop the Procurement Strategy to align with corporate objectives
and the National Procurement Strategy. In addition, develop an e-
f)
g)
h)
i)
procurement business case and strategy and consider the full range of
options;
Delivered by the Procurement Consultancy Business Plan 2005/2006
(paragraph 7.2). Support to develop an e-procurement strategy has
been requested from IDeA e-government Implementation Support Unit.
Update the current review guidance in order that there is a more
rigorous and robust approach to options appraisal during strategic
reviews;
Delivered by the Procurement Consultancy Business Plan 2005/2006
(paragraph 7.2) and delivered by strategic procurement approach
(Recommendation 1)
Explore further options for collaboration with other councils, other
public sector bodies, and the Regional Centre of Excellence in order to
benefit from economies of scale;
Delivered by the strategic procurement approach and sub regional
procurement initiative in paragraph 5.9 (Recommendations 1 and 5)
Undertake a procurement skills analysis for Members and officers and
develop appropriate procurement training programmes;
Delivered by the Procurement Consultancy Business Plan 2005/2006
(paragraph 7.2).
Develop a performance measurement system for procurement.
Delivered by the approach to performance management proposed in
paragraph 5.23 (Recommendation 5)
6.
RESOURCES
6.1
As set out above, the Council’s future procurement strategy is a combination
of achieving strategic procurement and compliance with the National
Procurement Strategy.
6.2
Strategic procurement it is proposed that the strategic options review and
development of the outline business case is funded from the ODPM Capacity
Building Grant allocated to procurement.
Project Manager
£ 77,000
External legal advice
£ 25,000
External Financial advice
£ 20,000
Other costs
£ 13,000
Total
£135,000
6.3
Procurement Consultancy The existing capacity of the procurement
consultancy will
 Support the development and delivery of a strategic procurement
programme;
 Lead and support the implementation of the National Procurement
Strategy;
 Deliver the current workplan (including updating the Procurement Strategy
and developing the Annual Procurement Plan)
 Deliver the Annual Procurement Plan
6.4
It is vital that the procurement function delivers real and measurable
outcomes. The budget for 2005/2006 determined that the consultancy should
be self financing (i.e. the worth of the consultancy is greater than its cost.)
6.5
It is proposed that this self financing be accounted for on the following basis:
 That the Consultancy delivers accountable cashable and non cashable
efficiencies in accordance with the Audit Commission efficiency technical
note (due Jan/Feb 2005);
 That a cash value is given to the delivery of the National Procurement
Milestones funded from the savings identified from the introduction of eprocurement;
 That for any strategic partnering exercise in which the consultancy is
involved, a project fee included within the Business Case is agreed as a
part of the procurement costs payable by the commissioning Directorate.
6.6
The future role of the Procurement Consultancy and other resources involved
in procurement across the Council will be reviewed when the strategic options
review is complete. This will take into account the corporate and service
requirements for ‘intelligent client’ capacity.
6.7
Internal Resources The implementation of these proposals will require
substantial input from all directorates. This has not been quantified at this
early stage, but it can be anticipated that ;
 Policy, Performance & Development (PPD) would be involved early on
shaping the performance elements of the assessment criteria and the
provision of baselining data.
 PPD would be involved in the development of a change management
programme.
 Finance would be involved in the provision of baselining data and the
business case.
 Directorates will be required to provide information, engage in market
dialogue and lead projects at a later stage.
6.8
The philosophy behind the strategic procurement approach is to build the
options matrix where possible from existing data. However it is likely that the
input required will be difficult to deliver. It is important that the organisation
considers the priority it attaches to this project so that the resources and
timescales can be negotiated accordingly.
6.9
External resources The implementation of these proposals will be supported
where possible by relevant external support. This includes;
 IDeA – an initial 12 days procurement support
 RCE –Mentoring and access to capacity building resources and funds.
The RCE have expressed an interest in supporting the development of the
approach to strategic procurement.
 E-government Implementation Support Unit – for assistance with eprocurement
 4Ps - Member Development & Training (This training is provided at the
rate of £600 and can be met from existing budget)
7.
WHAT HAPPENS NEXT?
7.1
The approach will be developed into a more detailed programme setting out
roles and responsibilities, plans and draft criteria for assessing service
delivery options for consideration by CMT. A project manager will be
identified. (Target date 2nd March 2005)
7.2
Procurement Consultancy Business Plan developed to incorporate
performance management framework and targets, annual procurement plan
2005/6 (including a specific efficiency/savings and funding schedule), and
revised Procurement Strategy. (Target date; end of March 2005)
7.3
The Efficiency Board will report to CMT with a corporate approach that
incorporates the different strands of Gershon. A further Report will be
presented to Cabinet, via Overview and Scrutiny Board, setting out this
corporate approach and seeking approval for its implementation. (Target date
April 2005).
8.
OTHER OPTIONS CONSIDERED
8.1
The report considers the methodology and resources required to develop
options, as opposed to recommending a solution. The option of not
complying with either the NPS or Gershon is not open to the Authority. By
being an early adopter, the Council will have a great range of options and
choice, than were it to take a “wait and see approach.
9.
CONSULTATION WITH SCRUTINY
9.1
The Report emphasises, at paragraph 5.5, the importance of including
Scrutiny in the procurement process. The role of Scrutiny is at its most
influential level to scrutinise procurement strategy, and secondly to undertake
gateway reviews of the procurement programme consequent of the strategy.
10.
FINANCIAL IMPLICATIONS
10.1 The immediate external costs of £135,000 are as set out at paragraph 6.2.
These costs will be met by ODPM grant. There will also be significant in put
from other agencies without charge as set out at section 3 of appendix 2.
However, that same section also highlights the considerable input required
from across the Council in terms of as yet unquantifiable staff time.
10.2 These costs can be compared to the potential pay back. Including capital, the
Council's gross spending on services is some £300m per year. Achieving a
target of 2.5% efficiency saving equates to £7m per annum of cash and non
cash savings. These sums are well in excess of the future savings required by
the Medium Term Financial Strategy.
11.
LEGAL IMPLICATIONS
11.1 Decisions taken in respect of the Council's approach to procurement may
necessitate a review of the Contract Procedure Rules (or Contract Standing
Orders).
12.
HUMAN RESOURCES IMPLICATIONS
12.1
With some procurement projects there will be significant HR implications.
Strategic procurement may impact on skills (new technology), structures
(integrated services) and conditions of service (flexible delivery). The Council
must also ensure that we follow TUPE and ODPM guidance in terms of the
workforce’.
13.
WARD IMPLICATIONS
Impacts on all Wards.
14.
BACKGROUND PAPERS
Appendix 1
Appendix 2
Appendix 3
Appendix 4
Appendix 5
Appendix 6
15.
Service Delivery Options Matrix
Strategic procurement action plan
RCE strategic procurement mapping exercise
IDEA Fitness Check report
Efficiency Board – Terms of Reference (draft)
Procurement Consultancy Work Plan
CONTACT OFFICERS
Dave Shaw
Deputy Director Strategic Business Support
01472 373871
John Carr
Procurement Consultancy Manager
01472 324127
JOHN HARRISON
EXECUTIVE DIRECTOR CORPORATE SERVICES