Procurement in Bassetlaw - Policy and Strategy

 Contents

• Foreward
• Executive Summary
• Strategic Procurement in Context
• Sustainable Procurement
• Social Value
• Value for Money
• Performance Management in Procurement 
• Partnerships and Collaboration
• e-Procurement
• Code of Conduct for Procurement
• Procurement Legislation and Guidance
• Appendix 1
• Appendix 2
• Appendix 3
• Appendix 4

Foreword

It is with great pleasure that I am able to provide a foreword for the Corporate Procurement Policy and Strategy.

The Corporate Procurement Policy and Strategy provides a cohesive framework for Councils to obtain value in all their procurement activities. The Strategy addresses all elements of procurement activity, from identifying the need, considering options, procuring the appropriate goods, services or works, effective supplier and contract management, through to the disposal of assets. The Strategy also addresses the many solutions available to the Partner authorities, from establishing joint corporate contracts, using collaborative and consortia arrangements, through to developing long-term strategic partnerships.

This Strategy continues to provide a clear focus on balancing two priorities: 

• Identifying and delivering efficiencies, but not at the expense of quality;
• Developing and embracing sustainable procurement.

Public sector finance is under significant pressure and procurement has a considerable role to play in reducing the Council’s expenditure. Even in the current climate, I still firmly believe that the above two priorities can continue to be reconciled through adopting a mixed economy approach and evaluating on the basis of whole life costs with due regard to risk. The new EU Procurement Directives also provide us with a new option whereby we can now consider Social and Environmental aspects to the tender analysis, where appropriate.

Despite the current economic climate, the Council maintains its commitment to supporting Parent authorities local economy and improving opportunities for businesses to engage with the Council.

Each Council Contract Procedure Rules (CPR) is currently being reviewed and revised in line with the new UK Procurement Regulations which are due for publication by the UK Government during 2015. They not only reflect current best practice and legislative changes, but also provide a framework to enable all of the Council’s buyers to demonstrate value for money whilst taking account of sustainability issues.

This Corporate Procurement Policy and Strategy is supported by corporate systems in each authority that provides guidance and support for all officers of the Council who procure goods, services and works.

Neil Taylor, Chief Executive.

Executive Summary

This document sets out the Council’s strategic approach to procurement. It is not intended to be a procurement instruction manual, however, the principles contained within the Strategy are not optional, and it should be read in conjunction with the Contract Procedure Rules (CPR).

The Local government Act 1999 places a duty of Best Value on all authorities to secure continuous improvement in the way that functions are carried out, having regard to a combination of efficiency, economy and effectiveness. Effective procurement is crucial in securing high quality, best value public services and the Government has highlighted that the development of a clear Procurement Strategy is a key step towards achieving Best Value and delivering demanding efficiency targets. This is also supported through the clear strategic objectives of the new National Procurement Strategy (NPS) and the recent DCLG report on Local Government procurement.

This Procurement Policy and Strategy also emphasises the increasing importance of Sustainable Procurement: using procurement to support wider social, economic and environmental objectives, in ways that offer real long-term benefits.

Best Value and efficiency targets will not be achieved if the authority fails to approach competition positively, taking full account of the opportunities for innovation and genuine partnerships which are available from working with others in the public, private and voluntary sectors. Importantly, this Strategy seeks to balance two priorities:

• Delivering efficiencies and quality;
• Sustainable procurement, by engaging with local and regional suppliers to promote the local economy and taking account of the social and environmental impact of spending decisions.

A mixed economy and sustainable approach to procurement also relies on developing a collaborative approach to procurement with other Councils and organisations such as the Pro5 Buying Consortia Organisation and Crown Commercial Services (CCS) to achieve improved economies of scale where appropriate.

This Strategy provides a corporate focus for procurement. It embraces each Councils' commitment to strategic procurement and sets out the Councils' aspirations. It is not a ‘user manual’, and more detail on procurement processes and issues can be found in the CPR and the Councils' Procurement website.

Strategic Procurement in Context

Strategic procurement is a series of activities and processes that sits at the heart of the Council, providing the framework by which the Council obtains value for money in all of the goods, services and works that it requires.

The term ‘procurement’ relates to the process of acquiring goods, services and works, for example from basic pens, paper and other stationery items to more complex service delivery partnerships, or from bricks to new IT systems, and from the initial concept through to the end of the useful life of the asset or service contract.

It can also range from the negotiation of corporate contracts for the supply of routine goods and services through to the more complex partnership arrangements such as public/private partnerships (PPP), joint commissioning with other public sector organisations, and construction projects.

The Council Plan

Effective procurement is crucial to achieving continuous improvement and to securing value for money in public services. The partner authorities are one of the largest purchasers of goods and services in the region, and have both legal and moral responsibilities when making procurement decisions. It is important to ensure that procurement decisions are legal, ethical, in accordance with the policies and procedures of each Council, and that consideration is given to the impact on the economic, social and environmental well-being of each district. They should also be achieved in a manner that is open, fair, transparent and auditable.

The Council’s vision is made up of two parts. The first is the outward facing Council and its many partners’ vision, and the second is the internal vision for the Council.

Sustainable Procurement

The Council, along with their policies, is committed to ensuring that services are delivered in a way that protects the quality of the environment and minimises any adverse impact on community well-being. The Council recognises that procurement can be integral in delivering more sustainable outcomes for each District. To achieve this, it is necessary to ensure that environmental and broader sustainability considerations are taken into account throughout the procurement process, where practicable.

“Sustainable Procurement is a process whereby organisations meet their needs for goods, services, works and utilities in a way that achieves value for money on a whole life basis in terms of generating benefits not only to the organisation, but also to society and the economy, whilst minimising damage, or indeed improves the environment”.

Put simply, sustainable procurement is good procurement.

The Council is working regionally and nationally to develop and promote models of sustainable procurement, and engage with local partners, other public sector organisations, the business community, agencies and the voluntary sector to test these models.

It is important to build internal capacity and local knowledge for implementing sustainable procurement, and the host Council will seek to address this by providing training to increase awareness and build skills, through current resources.

Specific guidance and good practice on sustainability issues in procurement is included in the Sustainable Procurement Policy and Flexible Framework (Appendix 2).

Economic Regeneration

Councils are one of the largest spending organisations in the Region, and the more money that is spent locally, the greater the positive impact this will have on the local economy, particularly for small and medium sized businesses (SME).

EU Procurement legislation limits Councils’ ability to favour local businesses, but there are numerous ways in which it can legitimately support local businesses, including;

• Working proactively with partners to support local businesses through media and workshops to help explain how to do business with Councils’, and to obtain their feedback in order to improve documentation, policies, procedures and processes;
• Providing information about forthcoming procurement activity through advertising tenders on the East Midland procurement portals, Source Nottinghamshire, Source Derbyshire and the Councils e-Tendering portal (East Midlands Procurement Portal).
• Running supplier engagement events;
• Packaging contracts in a manner, wherever possible, that does not preclude the following from tendering:
  1. Local and regional companies;
  2. Small and medium sized enterprises;
  3. Newly formed businesses;
  4. The voluntary and community sector.

The challenge for procurement is to balance the following conflicting priorities:

• Obtaining value for money and the required quality;
• Sourcing locally wherever possible within the legislative framework;
• Procuring in a sustainable way with regard to environmental, social and economic factors; and
• Reducing the number of low value creditors (especially those where annual spend is less than £1,000).
• Reducing the number of invoices processed through the use of Purchasing Cards to procure low value, high volume goods.

Specific guidance and good practice on what small and medium sized enterprises can do for Procurement to local Council’s is included in Appendix 5.

Social Development

Councils have a role to play in addressing social impact and cohesion across the Region. Social benefits range from the creation of employment and training opportunities to the reduction and where possible elimination of issues of Corporate Social Responsibility (CSR) in the supply chain.

The Council will encourage ‘supported businesses’ i.e. organisations where 50% or more of their workforce are disabled, through its procurement processes by reserving contracts to supported businesses, where appropriate.

Where relevant to the subject of the contract, the suppliers/contractors approach to tackling unemployment and creating training and apprenticeship opportunities should be incorporated into the procurement process.

Furthermore, the Council is continuing to work with the supply chain to continually seek improvement and to address ethical issues, e.g. adopting the use of the Fair Trade products and supporting local suppliers.

Environmental Management

The approach to sustainable procurement reflects the corporate approach to sustainability. Specific guidance on sustainability issues in procurement is available on the Council’s procurement website.

The host Council has worked with other Councils and agencies to establish and promote minimum recycled content standards for products used in construction, highways maintenance, estates management and all printed matter.

The authority is aware that public perception of sustainability issues has grown immensely through focused media attention on climate change, flood defences, waste and recycling, and have targets to deliver outcomes that support sustainable development.

Procurement plays a key role in contributing to sustainable development, through the buildings, goods and services they choose to purchase. With this in mind the Council recognises it has a vital role in furthering sustainable development and is endeavouring to take into account the wider issues of sustainable procurement by:

• Reducing CO2 emissions produced through Council operations, recycling and reducing domestic waste;
• Achieving savings for the Council through spend to save and energy efficiency projects that deliver long term value for money for the Council and the public sector as a whole;
• The installation of renewables and the creation of green energy;
• Making more efficient use of resources e.g. the re-use and recycling of materials in capital projects giving rise to reduced energy consumption;
• Leading by example and continuing to demonstrate our commitment to sustainable development;
• Considering the costs and benefits of environmentally-preferable goods and services as alternatives;
• Ensuring that vehicles purchased have low emissions of greenhouse gases (GHGs), and take into consideration the need to reduce emissions and air pollution

The authority recognises that further work is to be done on sustainable procurement and are endeavouring to raise awareness throughout the Council and the public. The authority also intend to promote awareness with contractors by embedding sustainability into engineering contracts and optimising use of resources. The authority are building good relationships with other Councils, in order to seek shared opportunities and benefits. The authority have adopted mechanisms and indicators to monitor and review energy reductions and savings, and to monitor progress in a clear and transparent manner.

Equally important, the authority will apply procedures for the proper management and disposal of assets to ensure both value for money, and to minimise any adverse impact on the environment.

Equality and Cohesion

Sustainable procurement also includes the duty to ensure that equality and cohesion is addressed in all procurement activity, irrespective of whether provided from within the authority or indirectly through another organisation.

The authority is addressing this through:

• Where appropriate building equality and diversity terms and conditions into standard procurement documents;
• Providing workshops and written guidance for potential and existing bidders that include demonstrating the business case for equality and diversity;
• Providing workshops to assist authority officers in addressing equality and cohesion in procurement activity;
• Monitoring compliance against equality and diversity requirements in contracts;
• Raising awareness and making plans to address the requirements of the Equality Act 2010.

Social Value

What does the Act apply to?

The Public Services (Social Value) Act 2012 applies to public service contracts and those public services contracts with only an element of goods or works over the EU threshold. This currently stands at £181,302 for the supply of services in local government. This includes all public service markets, from health and housing to transport and waste.

There is an important role for Commissioners of care for vulnerable people, including children, adults in the provision of Social care where they will be required to factor social value in at the pre-procurement phase, allowing them to embed social value in the design of the various services from the outset.

The Act does not require contracts for public works or public supply (goods), or contracts for services under the EU threshold, to consider social value. Whilst this means it will not be compulsory under the terms of this Act to apply social value below the threshold, or to goods and works contracts, this does not mean that commissioners cannot apply social value in these contracts.

Defining Social Value

Social value has been defined as “‘the additional benefit to the community from a commissioning/procurement process over and above the direct purchasing of goods, services and outcomes”.

Whilst there are many examples of providers delivering social value available to illustrate this, there is no authoritative list of what these benefits may be. The reason for this flexible approach is that social value is best approached by considering what is most beneficial in the context of local needs or the particular strategic objectives of a public body. In one area, for example, youth unemployment might be a serious concern, whilst in another, health inequalities might be a more pressing need. In recognition of this, the Public Services (Social Value) Act does not take a prescriptive approach to social value. It simply says that a procuring authority must consider:

• How what is proposed to be procured might improve the economic, social and environmental well-being of the relevant area.
• How, in conducting the process of procurement, it might act with a view to securing that improvement.

In doing this, the Act aims to give commissioners and procurement officials the freedom to determine what kind of additional social or environmental value would best serve the needs of the local community as well as giving providers the opportunity to innovate.

There are examples to draw upon for guidance. A number of public bodies around the UK have pioneered social value led approaches to commissioning and procurement, as well as social enterprises that have been delivering added value across many public services markets for years.

What are the benefits?

There are a number of reasons why social value is being taken increasingly seriously by policymakers. Not only does this approach seek to create maximum benefit for the community and drive up service quality, but it can also lead to cross-departmental savings and support community organisations to enter the market.

Supporting the social economy

The Government has said it would like to see a much greater role for social enterprises and voluntary organisations in delivering public services, because it believes organisations rooted in the communities they’re working with - and for - are often best placed to understand local needs, deliver personalised services and reach those most in need of support. However, the reality is that all too often public sector markets are created in such a way that only a small number of large providers are able to compete.

One of the obstacles social enterprises and other community organisations face is that commissioning and procurement activity often does not seek out the wider social, environmental and economic benefits that these providers bring to service delivery. This means they often miss out on contracts, even though they deliver a higher value return for communities. There is a very small pool of suppliers in many areas of public services such as waste and welfare, which inevitably limits competition, choice, innovation and value for money, making it difficult for commissioners to always best meet the needs of their communities.

The Act aims to change this and encourage civil society organisations to enter public services markets. As well as helping to organisations to win contracts directly, this could also stimulate a role for social enterprises as part of a wider supply chain, fostering greater partnerships between private companies and social enterprises as contracts require providers to draw on their combined skills and resources.

Specific guidance and good practice on what small and medium sized enterprises can do for Procurement to local Council’s is included in Appendix 5.

Principles for Effective Procurement 

The following principles will form the basis of all procurement activity in order to achieve value for money:

• Strategic procurement will support improved service delivery through the freeing up of resources through lower costs and improving the quality of goods, services and works;
• Strategic procurement will ensure that the partner authorities obtain value for money in the acquisition and management of its resources, balancing both quality and cost;
• The authority will undertake all procurement activity within a corporate framework to enable all officers to obtain goods, services and works to the required quality in the most efficient manner;
• All procurement activity will be sustainable, supporting and promoting partner authorities policies and priorities, including equal rights, sustainability, social cohesion and economic regeneration;
• The authority will ensure that procurement activity is undertaken in the most effective and appropriate manner. This should consider, amongst others, the following:
  • Develop, promote and enforce the use of all corporate contracts;
  • Use Buying Consortia Framework Agreements where practicable (e.g. PRO5 and Crown Commercial Services {CCS});
  • Use approved nationally negotiated contracts and Framework Agreements (e.g. those arranged by PRO 5 or CCS);
  • Use approved e-procurement solutions (e.g. e-Tendering systems, e-Catalogues and purchasing cards etc.);
  • Collaborative procurement with other Councils and organisations;
  • Develop strategic partnerships, particularly where these will deliver significant service improvement and/or efficiencies with other East Midlands Authorities.
• All procurement activity will be assessed on a whole-life costing and benefits basis with due regard to risk.
• Procurement activity will be transparent (and fully compliant with the Freedom of Information Act), fair and consistent, and be undertaken to the highest standards of probity and accountability. Procurement decisions must be evidence based.

It will be a corporate resource which leads on letting corporate contracts and supporting projects. It will provide support wherever required to departmental purchasing and contracting officers, and monitor procurement activity across the Council.

It is important that procurement is seen and managed as a component of the commissioning cycle.

Strategic Framework and Corporate Priorities: Procurement activity will operate within a strategic framework consisting of this Corporate Procurement Policy and Strategy, the CPR and the authorities Constitution. Procurement activity must be carried out in a manner which supports the authority’s strategic Corporate Plan priorities.

Prioritise and Plan: Strategic procurement activity will be planned over a three-year cycle with detailed annual plans. It will be undertaken in a performance management environment and will prioritise areas of activity that will generate significant savings or improved quality, and/or contribute to corporate priorities and service improvements. Localised service procurement activity should also be planned in order to avoid ‘panic’ buying and ensure that the service optimises its supply of all necessary goods and services. Effective forward planning will allow common areas of spend across the authority to be aggregated in order to obtain economies of scale and secure value for money.

Options Appraisal: Best Value requires the Partnership authorities to demonstrate economy, efficiency and effectiveness of service delivery. Procurement decisions need to be taken, such as whether it is necessary to obtain good service or works, and whether they should be obtained internally or externally. Decisions also need to be made as to the most appropriate route to procure goods, services and works to ensure that the authority achieve value for money. Option appraisals will include alternative models of service delivery, including shared services with other public sector organisations, outsourcing of services and collaborative opportunities.

Procure Solutions: The actual procurement process will depend upon the required outcomes, but a typical process is illustrated in the diagram below. In all cases the process must comply with the authorities Contract Procurement Rules and the Council’s Constitution.

Monitor and Review: The monitoring and management of contracts is a critical factor, and can make the difference between a successful contract and a failed one. Contractual arrangements should be effectively managed and monitored throughout the contract duration. Where appropriate, contracts should include quality and performance standards which are monitored and reviewed. Contracts will be subject to continual review and supplier/contractor appraisal exercises. Benchmarking can be undertaken on a planned basis in liaison with both public and private sector organisations to measure the effectiveness of procurement decisions. A good working relationship should be developed with suppliers, and liaison meetings with major suppliers will be held at suitable intervals. Plans should be made well in advance of the expiry of a contract for re-letting it, based on a review of previous and current arrangements and performance.

Typical Procurement Process

• Identify requirements and associated risks with key stakeholders
  • Specify goods/services / works required
    
    • Market analysis / review potential procurement options
      
      • Undertake selected procurement method
        
        • Contract / relationship management

Procurement Analysis

The choice of procurement method will be dependent on the strategic importance, the value of the goods, services or works, and the potential risk associated with each procurement option. Different procurement options will be suitable for different goods and services and will involve undertaking different practical steps to achieve the desired outcome. The authority will develop the overall management of procurement by modelling the requirement on a risk/value matrix, illustrated below.

Equally, individual procurement decisions should also be considered on their own merits following an appraisal of the suitable procurement options. It is important that the option selected is the one most likely to deliver optimum value for money for the authority and its citizens, and tenders should thus be evaluated using a balanced scorecard evaluation model.

Value for Money

The Authority remains committed to achieving Value for Money in order to demonstrate economy, efficiency and effectiveness of service delivery. Procurement decisions such as whether to continue to provide the goods, services or works, and whether to provide them internally or externally (Make or Buy) are central to this requirement.

It is essential that the authority not only adopt processes to secure best value, but can evidence the efficiencies obtained to demonstrate delivery of national efficiency targets.

The ability to radically re-think and re-shape the way the authority undertakes procurement and secure continuous improvement is key.

Achieving procurement efficiency savings requires a combination of: 

• Reducing the number of suppliers used;
• Reducing prices;
• Reducing purchasing transaction time for contracts and major projects;
• Eliminating / automating processes;
• Managing risks better;
• Improved contract management post award;
• Improving supplier performance.

Our approach for procurement efficiencies is therefore: -

• Driven by optimising outputs and results;
• Driving down the cost of goods and services procured by the Council balancing quality and cost;
• Responding promptly and effectively to service and citizen requirements;
• Minimising administrative processes and unnecessary bureaucracy;
• Ensuring simple or routine transactions can be carried out in the most efficient manner;
• Considering all options in obtaining the most appropriate solution;
• Valuing innovation and creativity;
• Using competition to obtain best value;
• Proactively supporting the Council’s policies and priorities;
• Complying with legislation;
• Being transparent and accountable;
• Working in collaboration with other public sector organisations and government frameworks (e.g. CCS) in order to achieve value for money and maximise economies of scale for routine supplies.

In order to demonstrate value for money, the following is built into procurement activity:

• Performance indicators and targets (based on both quality and cost) are established as part of procurement processes;
• Procedures to manage contractual arrangements are established with performance measured and reported, including benchmarking arrangements;
• Procurement procedures and processes are regularly reviewed;
• The management of risk is an integral part of the procurement process;
• The authority invests in procurement training and systems to support the procurement process.

The authority values in-house service providers that demonstrate quality and value for money. Unless otherwise approved by the relevant Chief Officer, external businesses will not be used where the authority have their own in-house services. Should the authority take a decision that an in-house service be exposed to competition, they will undertake this in an open and fair manner, and ensure that:

• Staff and their representatives are fully and properly consulted;
• Appropriate outcomes, performance standards and monitoring processes are developed;
• All information required for a due diligence process is identified and collected;
• Innovation is encouraged;
• Relevant Council policies and priorities are incorporated into any specification;
• Probity, accountability and competitive neutrality is ensured and conflict of interest is avoided or managed;

The responsibilities and accountabilities of all parties are explicit.

A key objective of this Procurement Strategy is to provide a means to improve quality and efficiency by harnessing competition. This can be through either:

• Indirect competition e.g. via benchmarking, market testing or external challenge. The authority will assess the competitiveness of different functions by reference to other Councils and organisations. In addition to comparing performance, this provides a vehicle for individual and organisational development, learning from experience and good practice.
• Direct competition i.e. alternative means of procurement. The Best Value review process will enable the authority to consider whether alternative means of procurement or service delivery is appropriate.
• Consultants: The authority will have an ad-hoc requirement to use external consultants and advisors to provide specialist advice and services not available within the authority and to provide support and challenge for major projects. The procurement, utilisation and management of consultants (and assessment of the resulting required outcomes) should be managed in accordance with the guidance issued in this Policy, the Contract Procedure Rules, and the Constitution.

Performance Management in Procurement

Procurement activity, like all other Council activities, should be undertaken in a performance management environment. Procurement influences the attainment of some national performance indicators. The partner authorities use a range of national and local indicators to measure their performance in procurement activity, and the Chief Finance Officer (CFO) is required to report progress against performance indicators on a quarterly basis. Key issues to consider in respect of performance management include:

Efficiency: Ensuring that we are driving down the cost of the goods, services and works we procure without compromising quality. Contracts approaching an optional extension period are an ideal opportunity to reduce costs with existing suppliers. A contracted supplier can often suggest ways for the Partnership authorities to make savings so Contract Officers should be in constant dialogue with their suppliers to ensure costs are kept to a minimum.

Planning: Planning annual procurement activity in advance is essential to enable officers to undertake procurement in a more structured manner, identify options and prepare properly for a timely solution to be put in place.

Specifications: Where possible, specifications should include measurable outputs or outcomes, performance standards or other appropriate measures by which the contract can be assessed.

Contract Management: This is a major factor in the success or failure of a contract. All contracts should have an associated officer with responsibility for monitoring and managing the contract, including the development of relationship management and the delivery of required outcomes and commercial benefits.

Risk Based Approach to Procurement: Risk will be managed throughout the procurement cycle to ensure that risks are identified and managed by the most appropriate stakeholder. Risk Registers shall be prepared for all major procurement processes in accordance with the Contract Procedure Rules and project management best practice. They will be revisited on the achievement of each key milestone in the procurement process, and throughout the life of the contract.

Review: It is important that lessons are learned (what went well, what didn’t go well), in order to inform future procurement decisions. Problems encountered in a project should be fed into risk analysis models for future projects.

Training and Development: The key to delivery of effective public sector procurement requires people who are suitably trained and qualified to provide the necessary ‘professional’ input. This ranges from a formal procurement qualification and wide experience, to knowledge of basic procurement techniques. The level of expertise required depends on the frequency and complexity of the procurement activity.

Project Management: Any project which involves significant risk will be managed in an appropriate manner using project management best practice, and regular progress reports will be provided to the Corporate Management Team at key milestones.

Partnerships and Collaboration

The authority acknowledges the importance of partnerships in delivering services. It already benefits form a range of partnerships with private, public and voluntary organisations.

The process of carrying out fundamental performance reviews will foster an open and constructive dialogue with all those involved or who may have something to contribute, be it from within the Council itself, or through partnership arrangements with the private and/or voluntary sectors. The Partnership authorities will encourage the development of new methods or approaches to procurement that will deliver services more efficiently, effectively and economically.

The authority currently deliver a limited range of services via the Voluntary and Community Sector. This is an area of potential growth that requires further support and development, and the partner authorities will implement the good practice guidance published by the Home Office of Government Commence ‘think smart…think voluntary sector’ (2004), and support social enterprises.

In specific instances (subject to the evidence of a robust business case), a properly procured and managed strategic service delivery partnership can deliver ways in which the authority can realistically achieve step-changes in service quality. Strategic Partnering can provide access to new skills, resources and ways of doing things and allow for innovation and the pursuit of difficult or long-term goals. The authority can provide access to investment, skills and new opportunities that the authority is unable to acquire alone.

The authority is committed to exploring all options in order to provide the quality services required for now and in the future.

E-Procurement

E-Procurement is ‘doing business’ electronically. All purchase orders should be placed using centralised purchasing ‘procure to pay’ where available. The benefits of e-procurement include:

• Deliver savings through streamlining the internal procurement procedures and processes;
• Provide a framework to ease the ordering of goods, services and works whilst maintaining compliance with legislation;
• Improve services (e.g. the use of purchasing cards can speed up the process of obtaining materials for maintenance work).
• e-Tendering
• e-invoicing

The authority will adopt a comprehensive set of e-procurement solutions that include:

• The introduction of a centralised purchasing ‘procure to pay’ solution across the Council to streamline the process from initial requisition through to the payment of the invoice;
• The e-Tendering & Contract Management System (Proactis) for the full tender and quotation process;
• Purchasing Cards for low value spot purchases;
• e-Auctions (reverse) where appropriate in conjunction with other East Midlands authorities.

Advancements in technology are eliminating unnecessary costs from the procurement process, and releasing resources to be utilised more efficiently elsewhere. An integrated procure-to-pay process across the partner authorities will deliver real savings and improved management information.

E-Procurement also allows authorities to work collaboratively to achieve economies of scale and shared expertise and knowledge. The authority is an active partner in the East Midlands project for the regional web-based e-Tendering and Contract Management System to manage contracts, i.e. Proactis (including performance information). It will identify collaborative opportunities, streamline the procurement process, and further enhance the use of e-tendering.

Code of Conduct for Procurement

All procurement activity must be undertaken to their highest standards of ethics and probity. The authority insist on ethical standards from the suppliers, and in turn they must exhibit the highest ethical standards themselves. Officers and Members must not only be fair and above board in all business dealings, but should also avoid any conduct that is capable of having an adverse interpretation put on it.

All employees must adhere to the Bribery Act 2010, the Officers’ Code of Conduct, and the Protocol for Employees on Gifts and Hospitality. In addition, employees undertaking any purchasing activity should consider themselves bound by the Code of Ethics of the Chartered Institute of Purchasing & Supply (CIPS).

Risk and Maintaining the Strategy

Risks

The main risks that could prevent the authority from achieving the benefits from effective procurement include:

• Maverick buying;
• Not producing and reviewing relevant spend analysis;
• Using unreliable data as the basis for procurement decisions;
• Lack of support from managers for corporate buying and non-adoption of standard documents and processes;
• Non-compliance with corporate contracts resulting in not achieving potential savings;
• New procurement processes, documents and standards are unworkable and noncompliant;
• Procurements have an adverse effect on local suppliers.

It is anticipated that the actions identified in this Strategy will mitigate against the impacts of these main risks. Specific risks to individual procurements will be identified as part of the procurement project.

Maintaining the Strategy

The Corporate Procurement Policy and Strategy (2014–2018) will be owned by and updated through the Joint Procurement Board.

The Action Plan will be updated annually to reflect changing priorities and developments in procurement legislation and best practice.

Procurement and the Corporate Plan

Coordinated and forward procurement activity enables the Council to proactively contribute to the Corporate Plan in arrange of areas including;

Bassetlaw District Council’s Corporate Plan

Our four corporate priorities for 2014/17 are:

Strategic Priority	Procurement Actions
A Viable Co-operative Council We need to work in different ways to survive the annual Government funding cuts Bassetlaw faces	Addressing and promoting equality and diversity in procurement activity. Providing information about future procurement activity, and advertising tenders on the Council and local Trade Associations’ websites. Ensure that the Council obtains value for money in the procurement and management of resources, balancing quality and cost. Procurement activity will be transparent, fair, and consistent, and be undertaken to the highest standards of probity and accountability.
Local Growth Jobs are at the heart of any local recovery and we want to encourage the local economy with the work that we do with local businesses.	Working pro-actively with local business via Trade Associations to explain how to do business with the Council. Engagement with local and regional suppliers from all business sectors e.g. the voluntary and community sector, and Black and Minority Ethnic suppliers. Carrying out Supply Chain work including Meet the Buyer and Meet the Supplier events. Implementing electronic procurement processes to reduce business costs.
Quality Housing and Decent Neighbourhoods We will increase the supply of affordable homes in the District and reduce the number of empty homes. We will ensure that our local neighbourhoods are clean, safe and welcoming.	Working pro-actively with local housing providers and local businesses to ensure that there is a supply of quality mixed accommodation that meets the District’s needs.
Local Living Standards Meeting the challenge of Welfare Reform and standing up or local people with our work through Bassetlaw Community Partnerships.	Minimising the environmental impact of the Council’s procurement activity and addressing quality of life issues. Introducing processes which identify the social, environmental, and economic benefits that Council contracts bring to the District. Deliver quality services through well planned commissioning which achieves value for money outcomes for the community.

 

Procurement Legislation and Guidance

The Government in conjunction with the Local Government Association (LGA) recently set out a new strategic procurement document titled the National Procurement Strategy (NPS) 2014. This document sets out a plan of what Procurement outcomes and milestones are necessary at each level of the hierarchy, i.e. County, Unitary, Districts.

The authorities’ response to this requirement is as set out in Appendix 3.

Local government procurement – DCLG Select Committee

In May 2014 the Communities and Local Government Select Committee published a report on local government procurement (“Local government procurement”).

The Committee called on the sector to invest to ensure procurement skills are embedded across councils and all staff involved in the design, commissioning and management of services and not just procurement officers.

It believed that an £1.8 billion of additional savings could be made per year if councils improved their collaborative procurement arrangements. But they rejected any moves towards centralisation and/or compulsion to collaborate.

They also called on councils to exploit the potential of procurement to deliver local priorities by letting contracts not just on the basis of price but also wider social value; and to resist an overzealous culture in the application of EU procurement rules to cut unnecessary costs to small businesses.

The Committee focuses its recommendations on the Local Government Association and individual councils around: increasing collaboration across councils; spreading best practice on maximising social value; streamlining procurement processes; managing complex contracts; and skills development.

But the Committee also calls on central government to review the effectiveness of the statutory framework, including on social value and on the Community Right to Challenge.

This briefing will be of particular interest to cabinet portfolio members for finance and efficiency and officers with responsibilities for commissioning and procurement and those in related finance and legal functions.

A more complete summary of the report can be found in Appendix 4.

Equality

When conducting their procurement activities, central Government departments and their agencies must ensure that they meet their legal obligations under the Equality Act 2010 and its associated Public Sector Equality Duty in a way that is consistent with the Government’s value for money policy and relevant public procurement law.

What is the Public Sector Equality Duty (PSED)?

The PSED is contained within section 149 of the Equality Act 2010. It requires those public bodies which are subject to the duty, to have due regard to the three aims of the duty:

• Eliminate unlawful discrimination, harassment, victimisation and any other conduct prohibited by the Act;
• Advanced equality of opportunity between people who share a protected characteristic and people who do not share it; and
• Foster good relations between people who share a protected characteristic and people who do not share it;

The PSED should help ensure that public goods and services are acceptable to, and meet the diverse needs of all users to ensure that no one group is disadvantaged in accessing public goods and services.

Appendix 1

Action Title	Action Description	Due Date	Managed By	Assigned To
To refresh the Corporate Procurement Policy and Strategy	To produce an updated Strategy that meets modern requirements	Nov 14	Joint Procurement Group	Procurement
Update "How to do Business" guide	Councils update their "Selling to" guide and publish it on their web pages	Dec 14	Joint Procurement Group	Procurement
To improve the website in relation to procurement documentation	To provide external suppliers with a unified approach to procurement activity for Bassetlaw Council	Jan 15	Joint Procurement Group	Procurement
To update and publish the contracts register for each of the four authorities	To have a complete list of contracts and relevant expiry dates to enable further work programmes to be developed	Mar 15	Joint Procurement Group	Procurement
To examine current contracts against sped to identify new procurement opportunities	To identify opportunities for negotiating new contracts and save money	Apr 15	Joint procurement group	Procurement
To produce a consolidated Contracts Register for the four authorities	To identify where we can harmonise contract start and end dates in order to process fewer high value tenders, thereby achieving improved economic scale.	Jul 15	Joint procurement group	Procurement

Appendix 2

Sustainable Procurement Policy

The authority will therefore strive to:

People, Education and Awareness

• Educate, train and encourage internal procurers and commissioners to review their consumption of goods/services, reduce usage and adopt more environmentally friendly alternative products;
• Communicate the Sustainable Procurement Policy to all staff, suppliers/contractors, Members and other stakeholders

Policy, Strategy and Communications

•  Consider the costs and benefits of environmentally preferable goods/services as alternatives;
• Investigate the impact of the Partnership authorities expenditure on goods and services, via purchase spend analysis, to identify potential environmental impacts;
• Investigate opportunities for the recycling and re-use of materials where appropriate;
• Assess the environmental and corporate risks to the authority with a commitment to continually improve sustainable performance that relates to the supply chain;
• Work in partnership with other organisations, such as buying consortia to improve sustainable procurement.

Procurement Process

• Promote best practice for sustainable procurement;
• Ensure that where appropriate, suppliers’ environmental credentials are, as far as legally practicable, considered in the supplier evaluation process and that environmental criteria are used in the award of contracts;
• Ensure that consideration is given to inclusion, within all specifications, of a facility for suppliers/contractors to submit offers for environmentally friendly alternatives;
• Specify, wherever possible and practicable, the use of environmentally friendly goods.

Engaging Supplier

• Ensure that low value and OJEU contract opportunities are made available via local advertising, including Source East Midlands sites and the Proactis e-Tendering system;
• Address barriers to entry in order that Small and Medium Sized Enterprises (SMEs), local suppliers and the voluntary sector are encouraged to bid for the Council’s business through working with and in co-ordination with the Federation of Small Businesses (FSB);
• Work with the local economy to educate our suppliers in regard to the authority environmental and sustainability objectives and the requirements of their procurement process;
• Encourage and persuade suppliers/contractors to adopt environmentally friendly processes and supply environmentally friendly goods/services, where appropriate;
• Work with key suppliers/contractors to make changes and thereby extend sustainability improvements throughout the supply chain.

Measurements and Results

• Comply with all relevant environmental, health & safety, diversity, disability and employment legislation, including researching and understanding the potential impact on the supply chain.

Appendix 3

National Procurement Strategy (NPS) 2014 for District Councils 

Theme A: Making Savings and Addressing Financial Pressures 

Overview

Councils are dealing with significant reductions to finances and increasing demand. They recognise the need to use their spending power wisely and strategically and are therefore setting spend targets for procurement and contract management.

In order to demonstrate leadership of key spend categories to address financial pressures, drive market management and to develop new models of service delivery through procurement councils are increasingly adopting a ‘category management’ approach in some Council’s. Category Management in procurement can help to reduce the cost of buying goods and services, reduce risk in the supply chain, increase overall value from the supply base and gain access to more innovation from suppliers. It is a strategic approach that focuses on the vast majority of organisational spend and if applied effectively seeks to reduce demand, simplify the way we buy and aggregate spend across the entire organisation or multiple organisations. The results can be significantly greater than traditional transactional based purchasing negotiations.

As part of the work underpinning this approach National Advisory Group (NAG) is exploring a category management approach in three main categories of spend, Energy, ICT and Construction all of which will have their own category strategies underpinning this National Procurement Strategy (NPS).

Councils have been encouraged to establish partnering and collaboration arrangements for at least a decade and many have been doing just so for much longer. Indeed this element of work was an important part of the 2003 National Procurement Strategy. Much has been done since then, including a move to more joint and integrated commissioning but the increasing issues relating to budget cuts and the need to get more for less makes this even more important going forward.

Working with the wider public sector is becoming more and more normal practice, councils need to consider vertical (i.e. within their ‘place’) and horizontal (across geographies) integration of their demand and supply chains with their colleagues in health, police and other wider public sector organisations to appropriately aggregate spend, use wider experience and greater expertise and to reduce duplication of work. Through this arrangement the authority is striving to better achieve better economies of scale in buying, resulting from a smaller number of large value tender which are more attractive to the supply market. The authority will also have greater visibility of what we buy and when, leading to better planning and improved visibility of tenders.

Councils spend significant and increasing amounts via contracts with suppliers, often as part of their transformation to meet financial challenges. Councils need to be more effective in contract management to ensure they maximise both the opportunities and the potential savings these bring. Contract management is more than ensuring suppliers meet their contractual obligations, it Page 28 of 49 can also help councils to identify and manage their own and their suppliers’ risks, and achieve savings and continuous improvement throughout the life of the contract.

Councils should be engaging more with each other to benchmark costs and performance of suppliers as long as this is proportionate to the budget and level risk in the contract.

Local government is already one of the most transparent parts of the public sector, publishing information to inform citizens, communities and business about local authority democracy, accountability and finances, services and performance, and activities. Councils are working towards complying with the transparency code 2014.

 

Outcomes	Milestones	Position
Category management helps councils to make savings by maximising synergies from their spend	Councils recognise the benefits and tap into category management plans of other public sector organisations and through PBOs	For a number of years Bassetlaw DC has been working with Nottinghamshire and Derbyshire authorities to put frameworks in place which are open to interested authorities. The authority also use CCS and ESPO frameworks where appropriate.
Councils achieve savings through developing and using more standard specifications for appropriate goods and services	Councils review existing framework arrangements at early stages of procurement to reduce duplicated effort	The authority does consider using existing framework agreements, but one-size does not fit all. It is our policy to benchmark and assure that we achieve best value from such agreements.
A broad understanding of the local government supply market is gained through appropriate spend and supplier analyses	Councils recognise the benefits from engaging with a national approach and ensure timely publication of data to ensure a robust analysis can take place	The authority is engaged in publishing such procurement data through the transparency agenda and the use of Source East Midlands portals.
Contract management
A corporate approach to contract management means councils can demonstrate their effectiveness in gaining most value from contracts.	Contract management is part of the responsibilities of the councillor champion Councils measure contract outputs and key performance indicators to ensure competitiveness over the life of the contract.	The authority will consider appointing a councillor champion for each authority. The authority will consider establishing key performance indicators.
Local authorities obtain best value from supply chains through proper relationship management.	Councils have visibility of their supply chains. Councils expect main contractors to act fairly with supply chains and mandate timely payment to subcontractors through contract clauses.	Generally in local government opportunities the supply chain is not visible as part of the procurement process, apart from Construction projects where the authority does have some knowledge of the supply chain. In this area of work the authority does mandate fair payment terms through contract clauses.
Benchmarking and performance
Supplier performance on contracts increases, and costs decrease across the whole sector through effective monitoring and benchmarking.	Councils baseline and benchmark their contract spending and outcomes internally over time and with other councils Councils use this information to inform their contingency planning and recompetition strategies	The intention is to baseline and benchmark contract spending and outcomes through the authority. This should be facilitated through the common e-tendering system.
Councils share commercial data relating to price on common goods and services		This is a common feature of work through the various regional Procurement Forums
Innovation and transparency is improved because councils make their data more widely available to the supply markets.		This may become a specific area of activity in the future months, based upon workload priorities at the time.
Councils ensure all opportunities for collaboration are captured to maximise cost and efficiency savings	Councils join together with other councils to share information that makes prices and performance more open and transparent	This is one of the strategic priorities of the authority.
Fraudulent procurement practices are considered in the corporate risk register and mitigated against	Councils include whistleblowing policies as part of contract conditions	This is already in place across the authority
Transparency
Published data, under the transparency code opens new markets for local business, the voluntary and community sectors, and social enterprises to run services or manage public assets.	Councils publish data in relation to contracted-out services in accordance with the Transparency Code	This will be the responsibility of the authority to publish the required own specific data in a timely manner.

Theme B: Enabling to Develop Local economies and Creating Wealth and Economic Growth 

Overview

Councils, with their economic development role, take responsibility for generating economic, environmental and social growth in local communities. The Public Services (Social Value) Act of 2012 requires councils to consider social value in all services contracts with a value above the EU threshold. Social Value can mean many different things, for example the inclusion of targeted recruitment and training opportunities in public contracts that can make a contribution to addressing the issue of poverty and reduced social mobility.

The private and the voluntary sector organisations that are so important to local and regional economies need to view council contracts in a positive way and want to do business with their local authorities. Councils, too, should better use their purchasing power to create opportunities; for jobs and training, for regeneration and to maximise value for money.

Through the arrangements they make for procurement councils can develop essential local infrastructure. They enjoy wide powers in this area including the power to promote ‘community well-being’ and through the Localism Act 2011 have acquired a ‘general power of competence’. Through the Localism Act, councils - often working together and through Local Economic Partnerships - are able to take on new functions that help them in this task.

The Community Right to Challenge (CRtC) allows voluntary and community groups, charities, parish councils or council employees to bid to run a local authority service where they believe they can do so differently and better. The CRtC applies to the majority of services provided by or on behalf of councils and can be an entire service or part of a service. A number of barriers have been highlighted to its uptake, including cost to councils and would-be suppliers of entering into a full scale procurement.

Councils must focus on providing the maximum benefit into their communities from every taxpayer pound that is spent.

In order to encourage a mixed range of suppliers to deliver value for money services councils need to encourage suppliers to bid for new or emerging requirements, to be innovative and to work collaboratively with other providers in the economy.

Councils can help to remove barriers to effective working by improving access to council tendering opportunities, being open and transparent about what we have already procured and as far as possible identifying and publishing future requirements as early as possible.

 

Outcomes	Milestones	Position
Economic, Environmental and Social Value
Councils gain maximum value from procurement through inclusion of economic, environmental and social value criteria in contracts for good/services and works	Councils consider how they can obtain social value in all contracts over the EU threshold	Consideration should be given to such matters as environmental and social value criteria in contracts for good/services and works as required by the EU Procurement Directives 2014.
Living wage		Each Council will consider the use of Living wage requirements for sub-OJEU bids.
Councils reduce waste by making sustainable choices when procuring products and services - helping them to cut costs, and meet their social, economic and environmental objectives.	Sustainability is considered at the earliest stage of the procurement cycle (identify need)	This key element is embedded into the Corporate Procurement Strategy.
Improving access for SMEs and VCSEs
A wide range of suppliers are encouraged to do business with councils through use of Portals to advertise tender opportunities	All procurement opportunities over £10,000 are identified through regional portals Communication channels for SMEs and VCSEs are made available	The authority already advertise opportunities over £10,000 through regional portals. The visibility of these opportunities will also be improved through the use of the East Midlands e-Tendering portal. This will mean that suppliers register one only for all regional opportunities through this portal.
Barriers to doing business with the council are removed without compromising due process	Councils update their selling to guide and publish it on their web pages.	This was reviewed and updated in December ’14
	Councils engage with single, simplified PQQs such as PAS 91 for construction. Councils ensure their lotting strategies do not create unwanted barriers for smaller businesses	The authority currently use the former OGC PQQ template. This has recently been superseded by PPN 14-08 publication from DCLG. This is currently being reviewed. The authority already apply a lotting strategy to tenders, where appropriate and beneficial to the Council.
SMEs and VCSEs are able to identify potential ‘partners’ with whom to form consortia to bid for council contracts	Councils link into existing framework contracts which outline how consortia can be encouraged Engage with other councils at Market days etc	Existing frameworks in place through ESPO, CCS and empa do already identify improved opportunities for SMEs and VCSEs.

Theme C: Influencing / Influence and Impact

Overview

Councils, with their economic development role, take responsibility for generating economic, environmental and social growth in local communities. The Public Services (Social Value) Act of 2012 requires councils to consider social value in all services contracts with a value above the EU threshold. Social Value can mean many different things, for example the inclusion of targeted recruitment and training opportunities in public contracts that can make a contribution to addressing the issue of poverty and reduced social mobility.

The private and the voluntary sector organisations that are so important to local and regional economies need to view council contracts in a positive way and want to do business with their local authorities. Councils, too, should better use their purchasing power to create opportunities; for jobs and training, for regeneration and to maximise value for money.

Through the arrangements they make for procurement councils can develop essential local infrastructure. They enjoy wide powers in this area including the power to promote ‘community well-being’ and through the Localism Act 2011 have acquired a ‘general power of competence’. Through the Localism Act, councils - often working together and through Local.

Economic Partnerships - are able to take on new functions that help them in this task.

The Community Right to Challenge allows voluntary and community groups, charities, parish councils or council employees to bid to run a local authority service where they believe they can do so differently and better. The Community Right to Challenge applies to the majority of services provided by or on behalf of councils and can be an entire service or part of a service. A number of barriers have been highlighted to its uptake, including cost to councils and would-be suppliers of entering into a full scale procurement.

Councils must focus on providing the maximum benefit into their communities from every taxpayer pound that is spent.

In order to encourage a mixed range of suppliers to deliver value for money services councils need to encourage suppliers to bid for new or emerging requirements, to be innovative and to work collaboratively with other providers in the economy.

Councils can help to remove barriers to effective working by improving access to council tendering opportunities, being open and transparent about what we have already procured and as far as possible identifying and publishing future requirements as early as possible (check with BR)

 

Outcomes	Milestones	Position
Procurement at the Top Table
Central Government policy takes into account the needs and differences of local government because local government procurement speak with one cohesive voice	Council officers engage with procurement networks to ensure visibility of and input into policy	The authority already participate and contribute to the Nottinghamshire, Derbyshire and East Midlands District and Unitary Procurement forum meetings.
Procurement is recognised as strategically important by chief executives, members and senior officers within local authorities	At least one senior level annual discussion on implementation of good practice (set out in this NPS) and relevance to organisation	Refer to the role of the Board in the Legal agreement.
Best overall value has been considered in all council’s addressable third party spend	A senior level director takes overall responsibility for procurement and ensures full value is extracted from all procurement decisions	Refer to the role of the Group in the Legal agreement.
Procurement is a driver to implement council policy.	Council’s procurement strategy is linked to the corporate strategy Councils should adopt NPS good practice by 2014	This has been embedded into this Corporate Procurement Strategy refresh in a timely manner.
Procurement is supported in each authority through the appointment of a councillor champion	Should encourage an elected member champion for procurement	The Authority will be encouraged to formally nominate a Member champion.
Procurement Training
Councils build procurement competencies across the organisation by ensuring staff are equipped with the knowledge, training, and practical skills needed to derive maximum benefit from procurement practices.	Councils engage with single tier and county councils to ‘piggy back’ onto training and development programmes	Procurement training is an issue in all Councils at this particular time as a result of the impending changes to the EU Procurement Directives and the UK Procurement Regulations. At an East Midlands level this is being progressed through the various Page 36 of 49 Procurement Forums and close liaison with ESPO and CCS.
Councils are more influential with suppliers through taking a more commercial approach to procurement	Recruit consultants with these skills Staff training	The use of Consultant in this area of work does not always deliver the desired outcomes and often does not delivery Value for Money. The authority are focusing on a Mentor approach and shadowing for Procurement training.
Procurement processes are modernised because council officers understand and implement the flexibilities afforded by the new EU Procurement Directives	Councils engage with training on new EU Procurement Directives either through other councils or directly.	At an East Midlands level this is being progressed through the various Procurement Forums and close liaison with ESPO and CCS.
Commissioning
Councils identify strategic outcomes in relation to assessed user needs, and design and secure appropriate services to deliver these outcomes		Not applicable
Councils manage reductions in service activity or terminating contracts through a proper process of decommissioning		Not applicable.

Theme D: Shaping Markets and Improving Processes or Procurement Innovation, including modernising Procurement.

Overview 

There is an increasing role for procurement in commercialisation and income generation. Renegotiation of existing contracts may be a useful source of further savings or income but procurement officers need to see each new contract they negotiate as an opportunity for a more commercial approach. This will include cost/benefit analysis, considering their appetite for risk and encouraging a ‘risk based’ not ‘risk averse’ approach, encouraging supplier innovation, realising maximum benefits from framework contracts and taking advantage of the new flexibilities afforded by the Public Contracts Regulations for England and Wales 2014.

A wide range of e-procurement tools exist, for example e-marketplaces, e-tendering and e-invoicing. Studies have concluded that the UK Public Sector falls behind our European counterparts, particularly the Scandinavian countries and particularly in the area of e-invoicing which is due to be adopted as a new EU Directive in 2016. Councils should be looking to realise the benefits from e-invoicing and should now be encouraging their suppliers to embrace this technology at the earliest opportunity.

Outcome	Milestones	Position
Commercialisation and income generation
Councils are more commercially minded when developing contracts, and consider how contracts can be developed to generate income		There are a number of areas whereby this aspect is being considered as an opportunity to generate additional income
Supplier Innovation
Suppliers demonstrate innovation through all stages of procurement cycle.		The authority will engage with appropriate suppliers in our quest to demonstrate innovation.

 

Appendix 4

Local Government Procurement 

Sixth Report of Session 2013–14

This report makes a wide range of recommendations for improving local authority culture and processes in recognition that procurement should not be seen as a niche function conducted in silos, rather as an activity central to delivering high value, cost-effective services to communities.

Evidence to this report demonstrates a drive by local government to improve its procurement practices. However, this is work in progress and requires sustained commitment to partnership working from local authorities, central government and from the third and private sectors in order to raise standards.

The report highlights that devoting resources to bringing the performance of all local authorities up to the levels of the best is more than a worthwhile investment. At a time of financial constraint, spend now will enable savings both now and in years to come which should pay back initial costs many times over.

Embedding effective approaches across all council functions will require leadership from the top and a focus on new commercial skills to manage the challenges of procuring in new ways and for different purposes. In keeping with our support for a localist approach, most of the action recommended in the report is for the sector itself to deliver, but it is recognised that this requires leadership and co-ordination, not least from the Local Government Association. Key areas for the sector to focus on are:

• improving collaboration across councils;
• spreading best practice on how to maximise the social, economic and environmental impact of procurement;
• developing streamlined processes to minimise costs to councils and suppliers and potential suppliers;
• managing complex contracts to secure better value, and to reduce risks to service delivery and the likelihood of fraud; and
• skills development, particularly of new commercial skills for an increasingly complex procurement landscape.

The report identifies that local government has a responsibility to show that it can put its own house in order. If it does not, the report highlights that DCLG may opt for compulsion, e.g. control and compliance.

Nonetheless, the report highlights that local government can learn from central government and vice-versa.

The report emphasises the need for effective partnership with, as well as support from, DCLG and other central government departments. Key areas for local government procurement to focus on are:

• maximising the effectiveness of current statutory measures, for example in enabling procurement to deliver strategic public sector objectives and reviewing the effectiveness of the Community Right to Challenge
• how new EU public procurement measures enable and require new council approaches to procurement;
• monitoring national patterns such as social care sector pay and conditions; providing councils with guidance, for example on how new EU public procurement measures enable and require new council approaches to procurement;
• with local government sector organisations, disseminating advice to councils, for example on tackling fraud.

Appendix 5

What small and medium sized enterprises can do for Procurement to local Council’s?

Opening up public procurement markets to small and medium sized enterprises (SMEs) can encourage greater competition in supply markets

Value for money

Opening up public procurement markets to SMEs can encourage greater competition in supply markets, thereby reducing the costs of procurement for Local Authorities.

SMEs may have lower administrative overheads and management costs than larger firms. Depending on the nature of the procurement, this can result in lower prices.

Quality of service

SMEs tend to have short management chains and approval routes, which enables them to respond quickly to changing requirements. SMEs may also be highly focused on particular markets, making them especially responsive to changes in those markets.

SMEs are often well placed to offer a more personalised level of service, developing bespoke products and services or tailoring existing ones to meet the specific needs of customers. They are often able to develop sound long-lasting relationships with their customers.

SMEs may also be better positioned to supply higher quality specialist products or services than their larger competitors, either because larger suppliers are discouraged by the limited demand, or because, by concentrating on niche markets, SMEs can retain skills, originality and commitment to their specialist field.

Innovation

SMEs can bring innovation through the early exploitation of new technology, providing products or services in new or underdeveloped markets, or by using innovation to differentiate themselves from established market players.

Identifying opportunities for small and medium-sized enterprises (‘SME flagging’)

Bassetlaw District Council has adopted a new practice of indicating those contract opportunities which are thought to be particularly suitable for small and medium enterprises (SMEs).

This practice is a result of the Glover Review commissioned by the Government. One of the recommendations made by the report was that the public sector should indicate or “flag” during the advertising process those contracts which are thought particularly appropriate for SMEs.

Flagging

Bassetlaw District Council use the following aspects to assess whether a contract may be of particular interest to SMEs and where flagging is appropriate.

 

SME positive	SME negative
Strong SME market presence	Weak SME market presence
Low contract value / volume	High contract value / volume
Innovation required	Routine required
Tailored product / service	Standardised product / service
Local delivery	National delivery
Limited scale economies	Major scale economies
Unregulated market	Regulated market

Once a contract seems particularly suitable for SMEs, we indicate this in the contract notice which is used to advertise the contract opportunity. Below is the wording we have adopted for those larger contracts which we are required to advertise in the Official Journal of European Union (OJEU):

“The contracting authority considers that this contract may be suitable for economic operators that are small or medium enterprises (SMEs). For avoidance of doubt, the contracting authority points out that no weight will be attached to whether or not an economic operator is an SME in selecting economic operators to [submit tenders, participate in dialogue or negotiate*] or in assessing the most economically advantageous tender.”

*Select whichever is appropriate

The wording we have adopted for non-OJEU advertisements is as follows: “The contracting authority considers that this contract may be suitable for economic operators that are small or medium enterprises (SMEs). However, any selection of tenderers will be based solely on the criteria set out for the procurement, and the contract will be awarded on the basis of the most economically advantageous tender.”

If SMEs see either of these statements, they should be particularly alert to the possibility of bidding for the contract. Flagging is a part of a wider initiative where the Government has recognised the need to better support SMEs during the procurement process and make it easier for them to supply to the public sector.

Bassetlaw District Council support usage of SMEs flagging as an example of good practice. SMEs are encouraged to bid for any contract which they believe they can Page 42 of 49 adequately compete for, however, flagging allows SMEs to prioritise the contract opportunities they pursue.

 

 

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Last Updated on Wednesday, May 8, 2024