Hampshire County Council

Policy & Resources Select Committee

Review of Hampshire County Council's procurement, replacement and disposal of furniture and fitments

Final Draft

8 April 2008

Table of contents

Foreword 3

Executive Summary and Recommendations 4

Introduction 8

Terms of Reference 10

Method and approach 10

Findings of the review:

Conclusions & Recommendations:

Recommendations 29

References 31

Appendices:

For further information about this report, please contact:

Emma Gordon, Scrutiny Officer

Tel: 01962 847567

emma.gordon@hants.gov.uk

Review of Hampshire County Council's procurement, replacement and disposal of furniture and fitments

Report of the Review Group

6 May 2008

Foreword by Cllr Carol Leversha

Chairman, Furniture Scrutiny Review Group

This review arose out of  Members' desire to understand the decision process affecting the selection of furniture for the County Council's Ashburton Court refurbishment project. 

 

Hampshire County Council has a duty to spend council taxpayers' money to deliver services in the most efficient and effective way for the benefit of its residents.  It was with this in mind that the review group began its scrutiny.

 

It was with pleasure that Members found that there is much good practice within the Authority and an understanding that sustainability and value for money should be an important consideration in all that we undertake. 

 

Members believe that this report accurately reflects all the evidence collected and commend its findings to the Policy and Resources Select Committee.

 

Members would also wish to record their thanks to the individuals from external organisations who provided evidence to the review - Nicole Fletcher of the London Centre of Excellence, David Bloomfield of Green Works and Peter Storey of the London Borough of Croydon - the County Council officers who shared with us all the information we asked for to inform our knowledge, and our scrutiny officer, Emma Gordon.

Review of Hampshire County Council's procurement, replacement and disposal of furniture and fitments

Executive Summary and Recommendations

1. Introduction

1.1 Overall, HCC demonstrates excellent practice in its approach to the procurement of furniture and fitments. The ongoing Strategic Property Review will have a significant impact on HCC's procurement activity over the coming years as HCC modernises and rationalises its office accommodation. The SPR should provide good opportunities to investigate more innovative approaches to the procurement, replacement and disposal of furniture and fitments as the furnishing of buildings will be less ad hoc than under current arrangements.

1.2 In responding to the questions set out in the initial terms of reference to the review, Members concluded that that further rationalisation of furniture product ranges and supplier relationships would probably not provide significant gains in terms of value for money, efficiency and impact on social and environmental factors for routine, individual purchases outside the scope of the Strategic Property Review. The case for developing specific policies for the procurement and recycling of furniture was therefore not sufficiently strong to endorse such an approach. However, whilst the review group commends the good practice in evidence at HCC, the following observations and recommendations are suggested for ongoing improvement.

2. Conclusions and Recommendations relating to financial issues

2.1 Furniture and fitments are low value, low risk items within HCC's procurement portfolio, meaning that the development of any policy and processes relating to this area of procurement need to be proportionate to the value of items being purchased.

    1. That stronger messages about the need to consider whole-life approaches to procurement, examples of how this can be undertaken with indications of associated costs, and information on where to get further assistance, are communicated throughout Hampshire County Council.

    2. That a standard approach to coding purchases of furniture and fitments in HCC's SAP system - advised by the model currently used in the County Treasurer's Department - is agreed and used by all HCC departments.

3. Conclusions and Recommendations relating to environmental and social issues

3.1 Furniture is a commodity which presents some good opportunities to realise social and environmental benefits from reuse and recycling.

3.2 HCC addresses value for money and most environmental issues in procurement effectively, but evidence shows that greater emphasis could be given to social factors.

3.3 Evidence from HCC's departments shows a good commitment to reusing and recycling furniture, but HCC's overall approach to reuse, recycling and disposal of furniture is fairly ad hoc and would benefit from being more joined-up in order to achieve greater environmental and social benefits.

3.4 Major office move and refurbishment projects provide the best opportunities to realise environmental and social benefits in furniture procurement. The Strategic Property Review presents opportunities in this respect and will lead to further rationalising and centralising of arrangements for procurement, replacement and disposal of furniture and fitments.

3.5 Sustainability Impact Assessments are not currently undertaken for all of HCC's major projects. This is not in the interests of promoting sustainable procurement and disposal practices and may be seen as a weakness in the Use of Resources assessment under Comprehensive Performance Assessment.

3.6 When procuring new furniture, consideration of the full range of options available for disposal of that furniture at the end of its life is not always made. This does not allow `whole life' costing to be undertaken.

3.7 HCC's procurement processes for furniture and fitments follow good practice, although more could be done to improve the level of community benefit realised in considering options for disposal , and to assist small and medium sized enterprises (SMEs) and third sector organisations to tender.

3.8 In order to maximise the opportunities to realise social and environmental benefit in the procurement and disposal of furniture, advanced planning is required - the earlier the better. Without advance planning in identifying when furniture will become available for reuse or recycling, the need for expensive storage can arise.

3.9 HCC has not undertaken any cost-benefit analysis of different disposal options for furniture and fitments, but always selects sustainable options when these represent good value for money.

3.10 It is vital to keep full audit trails to show the `chain of custody' for furniture and fitments in order to ensure that furniture is disposed of in environmentally and socially responsible ways. The evidence shows that some reuse and recycling organisations do not necessarily have the capacity to reuse or recycle all items they take. This affects cost-benefit ratio considerations.

3.11 In relation to environmental and social issues it is therefore recommended that the Executive Member for Policy and Resources considers the following:

    3. That guidance for HCC departments is developed outlining the various options for socially and environmentally responsible disposal of furniture and fitments in order to rationalise the various departmental approaches to disposing of furniture and fitments.

    4. That the full range of options for reuse, recycling and disposal of furniture are considered within the Strategic Property Review to ensure that maximum social and environmental benefits are achieved in all office moves, refurbishments and reorganisations, with due consideration of cost-efficient planning, management and use of space.

    5. That Gateway Reviews, which include the requirement to undertake Sustainability Impact Assessments, and allow for full consideration of environmental and social factors on a whole-life basis, are undertaken for all HCC's future major procurement projects and evidence be made available to show how this consideration has been made.

    6. That further work is undertaken to realise community benefits in HCC's procurement activity. To include:

      i. Inviting suppliers to propose additional community benefits for major contracts.

      ii. Simplification of procurement documentation and processes in order to facilitate tenders from small and medium sized enterprises and third sector organisations.

      iii. Ensuring that tendering processes are proportionate to the value of the contract and the risks associated with it.

    7. That HCC reviews the findings of the cost-benefit exercise undertaken by the London Centre of Procurement Excellence in their Sustainable Furniture Project and advises the P&R Select Committee of any learning points which can be taken forward within HCC.

4. Conclusions and Recommendations relating to policy and coordination

4.1 HCC is able to demonstrate robust policies and procedures underpinning its procurement activity across the board. However, the evidence collected by the review group points to several areas where improvement could be made, particularly in raising awareness of the principle of `whole-life' approaches to procurement.

4.2 Evidence received by the review group shows strong support amongst stakeholders for the introduction of corporate policies and processes, and increased rationalisation and centralising of departmental arrangements, for the procurement, replacement and disposal of furniture and fitments. Whilst the review group considers this important, evidence shows that the Strategic Property Review stands to address many of these issues in terms of improved processes (although recommendation 4 above needs to be considered alongside this conclusion in order for the best outcomes to be achieved).

4.3 Staff training in procurement is good and departmental budget holders are satisfied that they have sufficient procurement expertise in their teams. However, there is general consensus amongst all stakeholders that it would be beneficial to bring together information on options for recycling, reuse and disposal of furniture in order to provide more `visible' guidance for building users and budget holders, thus helping them achieve the aims of the Corporate Procurement Strategy more effectively. This issue is addressed in recommendation 3 above.

4.4 In relation to policies and procedures it is therefore recommended that the Executive Member for Policy and Resources considers the following:

    8. That awareness of the aims of the Corporate Procurement Strategy, and ways of achieving these aims, are improved in all parts of the County Council, particularly in relation to the concept of `whole-life' costs of procurement.

5. Other Conclusions and Recommendations

5.1 In considering evidence submitted to the review group, Members were interested to hear how the choice of furniture and fitments in HCC's offices affected the wellbeing of staff. Evidence from the Ashburton Court Project Team alluded to staff surveys relating to office conditions which had been undertaken prior to the Ashburton Court refurbishment. The same surveys were due to be run again once staff had settled into their new environment and Members were keen to receive the results of these surveys in order to assess whether the choice of furniture and fitments had any impact on levels of staff absence and wellbeing.

5.2 It is therefore recommended that the Executive Member for Policy and Resources considers the following:

    9. That the results of staff wellbeing and productivity surveys relating to the office environment pre and post the Ashburton Court refurbishment are made available to the P&R Select Committee in October 2008 for consideration in the light of this review.

Review of Hampshire County Council's procurement, replacement and disposal of furniture and fitments

Report of the Review Group

1. Introduction

1.1 At a meeting of the Policy and Resources Select Committee on 1 February 2007 it was agreed that a scrutiny working group be appointed to examine Hampshire County Council's (HCC) furniture procurement costs together with the Council's furniture purchasing and recycling policies. The decision to pursue this piece of work came about following two reports to the Committee from the Director of Property Business and Regulatory Services (PBRS) regarding the refurbishment project for the Council's Ashburton Court building.

1.2 At the time of receiving these reports, Members had noted that HCC did not have any specific policies relating to the selection and purchase of furniture and fitments and questioned whether the introduction of policies to support this type of procurement would be of benefit to the organisation in order to achieve more joined-up ways of working, value for money and regard for environmental and social issues.

1.3 The issue of sustainable procurement is currently very high on the Government's agenda. Members of the Policy and Resources Select Committee therefore have an interest in ensuring that HCC's policy and practice respond to this agenda.

1.4 Local Government procurement is estimated to be worth approximately £40 billion per annum and plays a major role in delivering public services and priorities. Recent policy developments at a national level have placed a heavy emphasis on the requirement for government procurement (both at national and local level) to ensure low carbon, low waste, water efficient and sustainable practices. The UK government's ambition is for the UK to be among the European Leaders in sustainable procurement by 2009, therefore increasing the urgency for public sector organisations to address any current practices not currently contributing to this goal.

1.5 Furniture is cited as a key focus area in the UK Sustainable Procurement Task Force's Procurement Policy Framework.1

1.6 Financial considerations: Public sector procurement faces some considerable challenges in delivering high quality public services at good value for money and with regard to sustainability. Good procurement is often considered in terms of getting value for money. This means buying a product that is fit for purpose, taking account of the `whole-life' cost - the real cost incurred from purchase to disposal of an item. Effective procurement should deliver benefits to the public, the taxpayer and to the businesses supplying government.

1.7 Environmental and social factors: According to the Department for Environment, Food and Rural Affairs (DEFRA) and Office of Government Commerce (OGC) Joint Note of Environmental Issues in Purchasing, environmental procurement is a vital component in ensuring sustainable development, which is described as follows:

· Effective protection of the environment

· Prudent use of natural resources

· Social progress which recognises the needs of everyone

· Maintenance of high and stable levels of economic growth and employment

1.8 The OGC's Sustainable Procurement Action Plan states that sustainable operations targets in government are most likely to be met through construction and refurbishment contracts, closely followed by contracts in energy, fuels, IT hardware and services, telecoms, facilities management and office solutions. Major refurbishment projects - such as Ashburton Court - are therefore of some significance in this respect.

1.9 Policy and processes: The 1999 Gershon review of civil procurement in central government found that a lack of consistency in approach and systems supporting procurement across government departments to be a barrier to effective procurement. Having responsibility for procurement delegated to departments meant that government procurement was not operating within a common framework. This situation led to departments paying significantly different prices for the same items and allowed for pockets of poor procurement practice to exist. There were no common systems across government for recording what was being purchased, at what price and from whom and no way of rating the performance of suppliers or targeting and measuring value for money year on year. This fragmentation and lack of coordination of procurement activity was not helped by the fact that the overall skill levels of government officers involved in procurement were inadequate. In response to the Gershon review, the OGC was set-up to centralise good practice in procurement in central government. The remit of the OGC has now been extended to the wider public sector to ensure that public sector organisations spend in a way that supports the achievement of the sustainable development goals in the UK Government Sustainable Procurement Action Plan (2007).

1.10 Good practice in procurement: In order to achieve value for money and environmental and social benefits in procurement, the Treasury has published a set of good practice principles2 which it encourages public sector organisations to adhere to in every procurement exercise. These include:

1.11 National policy and guidance shows that, in testing whether HCC's approach to the procurement, replacement and disposal of furniture and fitments is appropriate, the following factors needed to be addressed as part of this review:

1.12 The evidence collected during this review is presented in section 4 of this report under the headings described in 1.11 above.

2. Terms of Reference

2.1 The review group established the following as desired outcomes of its review:

2.2 The scope of the review was limited to HCC's departmental policies and practice relating to budgeting for and procurement of furniture and to corporate policy and practice relating to procurement, reuse and recycling. External involvement in the review was limited to the investigation of examples of `best practice' in the fields of procurement, reuse and recycling of furniture and fitments.

3. Method and approach

3.1 In order to take the review forward, a small sub-group (the `review group') of the Policy and Resources Select Committee was assembled under the chairmanship of Cllr Carol Leversha. The full group membership was as follows:

3.2 During the course of the review, Cllrs Baulk and McIntosh were obliged to withdraw from the review group due to increased work commitments. The Chairman would like to thank both Councillors for their input to this piece of work.

3.3 In order to gather evidence for the review, the review group decided to adopt a small-scale `select committee' style approach. This method involved an initial period of desk research covering national and local policy followed by the collection of written evidence from a range of internal and external stakeholders. Using the written evidence as a guide, the review group then invited a smaller pool of witnesses to provide oral evidence to the review. In addition to the written and oral evidence collected, Members also visited a storage facility at Bar End and the newly refurbished Ashburton Court building.

4. Findings of the Review

4.1 Financial factors

4.1.1 Evidence from HCC's Corporate Procurement Team demonstrated the Council's success in achieving value for money through its procurement activity. Whilst the Procurement Team recognised the importance of constantly improving procurement performance across all areas of the County Council, it also stressed the practicalities of focusing improvement activity on those areas which can provide the greatest benefit and added value. For HCC, the procurement portfolios with the highest value and risk are as follows:

4.1.2 The full procurement portfolio for HCC can be seen at Annexe A. The review group noted that furniture and fittings account for just 1% of total procurement spend and appear as `low risk, low value' items within this framework. It is therefore important that HCC's approach to procuring furniture and fitments is proportionate to the value of items being purchased.

4.1.3 HCC's Building, Land and Procurement Panel (BLaPP) has identified priorities for procurement efficiencies, improvement and development in the following areas:

4.1.4 Evidence received by the review group from HCC departments showed a strong commitment by officers to avoid waste and extend the life of furniture and fitments as far as possible. All departments cited the same rationale for purchasing new furniture: to replace broken items and pieces no longer fit for purpose (items not compatible with advances in information technology for example), or to adhere to health and safety requirements. In the case of some major projects, the purchasing of new items which allow for the most advantageous and economical use of office space was also mentioned. Whilst more detail on current approaches taken to achieve value for money through reuse and recycling can be found in section 4.2.6 of this report, Members of the review group were particularly impressed by the proactive approach taken by officers within the Treasurer's and Property, Business and Regulatory Departments to reuse and recycle items of furniture.

4.1.5 Evidence from HCC's departments showed widespread support for the development of a corporate policy for the procurement of furniture and fitments. Most stakeholders felt that such a policy would help to achieve greater value for money and consistency in applying the principle of whole-life costs. Stakeholders were keen to highlight the fact that value for money is already achieved through the use of approved contractors accessed through the County Council's central buying arrangements, although several stakeholders observed that these contracts could be more robust in ensuring that suppliers meet environmental and social criteria. Caution was expressed in some quarters that, whilst centralised policy and practice for the procurement of furniture and fitments would achieve savings on furniture purchases, the actual overall savings would be small given the relatively low spend on furniture within departments.

4.1.6 Government guidance makes clear that outcome-based and whole-life approaches to procurement should be the norm to encourage more innovative solutions to problems and to increase value for money and sustainable procurement practices. Whole-life costing includes acquisition, operating and disposal costs, meaning that consideration of the methods and costs of disposal, reuse or recycling of items should be made at the outset of a procurement exercise. This is discussed in more depth in section 4.2 of this report.

4.1.7 Evidence from departmental stakeholders showed a fairly limited knowledge of the principles of whole-life costing and several stakeholders acknowledged that the implementation of a corporate policy for the procurement of furniture and fitments would help to improve understanding of this principle.

4.1.8 Evidence from HCC's Environment Department showed the significant impact furniture procurement and disposal has on HCC's use of material resources - a Priority Action Area in the 2006-9 Local Area Agreement. This evidence highlighted the fact that used or remanufactured office furniture usually costs between 30 % and 50% less than items bought new and that increased demand for these products could reduce costs even further.

4.1.9 The Treasury's publication Transforming Government Procurement highlights potential barriers to sustainable procurement in organisations' budgeting and performance management frameworks. Whilst these barriers mainly relate to specific issues such as those posed by having split capital and revenue budgets,3 evidence submitted to the review showed that HCC's current methods for recording departmental expenditure on furniture and fitments are inconsistent at times. Whilst all departments were able to provide details of their own budgets and actual spend on furniture and fitments from 2004-5 to 2006-7, the amounts provided did not correlate precisely with those held in the central SAP system, therefore making it difficult to build a corporate picture of spending on furniture and fitments. Whilst Members were satisfied that departments managed their budgets effectively, they expressed concern about the lack of consistency in the way furniture purchases are coded in SAP, therefore making it difficult to gain a corporate view of furniture held across the organisation. A more clearly defined corporate `audit trail' could improve opportunities for reusing and recycling furniture within the organisation - as discussed in greater depth in section 4.2 of this report. Evidence from the County Treasurer's Department showed how applying strict rules to the coding of furniture in SAP helped to maintain a clear picture of expenditure. In Treasurer's only two SAP codes are used against furniture purchases and this helps in maintaining this clarity.

4.1.10 Guidance from government also stresses the importance of organisations acting collectively, rather than through departmental action, in order to achieve value for money. Common policies and approaches towards procurement are considered to be important drivers of value for money, particularly for goods and services which are purchased by all departments. Evidence from the Corporate Procurement Team demonstrated good practice in this area, as outlined in section 5 of this report. However, evidence from stakeholders showed support for further centralising and rationalising of departmental procurement arrangements.

4.2 Environmental and Social factors (reuse and recycling):

4.2.1 The UK Government's Sustainable Procurement Action Plan defines sustainable procurement as `...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 to the environment.' Furniture is listed in the Action Plan as one of the broad categories of expenditure on which public sector procurers need to focus attention in this respect.

4.2.2 In promoting environmentally sustainable procurement, DEFRA and the OGC have published a checklist which is supplied at Annexe B. Key messages in this checklist include the importance of considering the environment at the outset of any procurement project. DEFRA and OGC have also produced guidance relating to the full sustainable procurement cycle which is attached at Annexe C. This guidance highlights the need to consider environmental factors at all stages of procurement activity, from identifying a need and developing a business case, to contract management and monitoring to ensure desired outcomes have been achieved. An OGC checklist for the consideration of social factors in procurement is at Annexe D.

4.2.3 Evidence from HCC's Environment Department showed the significant impact furniture procurement and disposal has on HCC's use of material resources - a Priority Action Area in the 2006-9 Local Area Agreement. This evidence highlighted the fact that used or remanufactured office furniture not only costs less (see paragraph 4.1.8 for details) but also results in significant CO2 savings through the reduced requirements for steel and aluminium production. The Environment Department supported the idea of a corporate policy for procurement of furniture and fittings, to include a clear whole-life objective to use material resources more effectively. The Department asserted that the key objectives of any such policy should be:

4.2.4 In line with central government guidance, Environment Department evidence also supported the creation of a hierarchy of best practice along with greater encouragement for innovative approaches to procurement at HCC. In particular, the evidence pointed to the increased environmental and social benefits that can be achieved at the following key points in the procurement cycle:

4.2.5 Evidence from HCC's Sustainability Team reinforced that provided by the Environment Department and added that a corporate policy for the procurement, reuse and recycling of furniture would be particularly helpful if it included the need to undertake Sustainability Impact Assessments (SIAs) where appropriate. SIAs are a requirement of the 2008 Comprehensive Performance Assessment (CPA) under Use of Resources. This requirement calls for SIAs to be undertaken for all strategic policy decisions and major projects: this is not currently the standard approach across all parts of HCC. The HCC Sustainability Team also pointed out that HCC's is a signatory to the Aalborg Commitments, most notably Commitments 2.4 and 4.4 which have been identified as priority areas for improvement within the County Council's sustainability improvement work:

4.2.6 HCC departments were all able to demonstrate in their evidence a variety of approaches taken to reuse or recycle furniture, from advertising on `small ads' on the internal HCC web pages, to selling directly to staff in their own or other HCC departments. In some departments - notably PBRS - furniture is sometimes sold on to third parties for reuse, therefore ensuring that very few items end up in the waste stream. When asked how much of their furniture and fitments was reused or recycled over the past three years, no department was able to quantify amounts precisely. Estimates varied between 10% and 80%, although all departments stressed that items were replaced only if broken or when they had no useful purpose. Where items are committed to the waste stream, evidence from the County Treasurer's Department shows that they are taken to a waste transfer station in Fareham for recycling. The proportions of furniture actually recycled were not available however.

4.2.7 Departmental evidence indicated that reuse and recycling of furniture was generally seen to be `fragmented' within HCC and the need for greater awareness of the options available to departments when replacing or disposing of furniture was raised by most stakeholders. Stakeholders felt that improved communication between departments regarding items available for reuse would help, as would an increased knowledge of the `rules' for passing items on to other departments or to external organisations. Concern was also raised that the administration time and cost associated with finding new homes for items of furniture on an ad hoc basis could not be justified against the value of items being passed on. More centralised policy and processes for reusing and recycling furniture were therefore deemed to be helpful.

4.2.8 Several barriers to reusing and recycling items of furniture were cited by departmental stakeholders. These included a culture amongst officers of wanting new furniture rather than second hand equipment. Whilst Members were concerned by the potential waste resulting from this culture, they were also reassured by evidence from PBRS which showed how complaints relating to the use of Display Screen Equipment (DSE assessments) had dropped considerably since the introduction of new furniture in the department. In the light of this, Members were particularly interested to hear the results of staff satisfaction surveys relating to the Ashburton Court project in order to measure the impact of new furniture and fitments on staff wellbeing.

4.2.9 A key message arising from evidence submitted to the review was the need to consider whole-life costing in terms of the following:

4.2.10 HCC's Corporate Procurement Strategy clearly outlines its commitment to whole life costs, sustainability, value for money and community benefit in HCC's procurement activity. The Strategy is clear that these factors should be considered at all stages of the procurement process - from assessing needs, to supplier selection, to monitoring performance.

4.2.11 Progress against the aims of the Corporate Procurement Strategy's objectives has been demonstrated in, for example, the recently awarded contract for the supply of Office Furniture to HCC. In line with the DEFRA/OGC Procurement Policy Framework, procurement professionals were involved in the process from the start, ensuring that potential suppliers could provide products which would match with existing ranges, so as to keep replacement costs to a minimum. Suppliers of desks and pedestals confirmed that their products were Forest Stewardship Council approved, ISO14001 compliant and able to demonstrate stringent Environmental Management Systems. Potential suppliers were selected on their ability to provide products which blended with existing ranges so as to keep replacement costs to a minimum. Added to this, suppliers were also asked to confirm that all MDF and chipboard products originated from recycled, sustainable or replaceable sources, had a low or zero formaldehyde content and carried an environmental accreditation such as Eco markings. All waste products were required to be reused within the furniture manufacturing plants using processes which ensure that no toxic fumes enter the environment. Suppliers were able to offer a minimum ten year guarantee on their products and agreed to ensure the continuity of furniture for five years following the contract period to allow for repairs and replacements. Tenders also stipulated that products used in furniture must be recyclable at the end of their useful life. This process is very much in-line with good practice guidance issued by DEFRA and OGC.

4.2.12 Details of HCC's principal furniture suppliers, along with indications of spending with these organisations, were provided to the review group. This information showed that 83% of HCC's office furniture suppliers are based in Hampshire. In addition to this, HCC's Corporate Procurement Team considers itself particularly effective at engaging early with suppliers in order to facilitate access to the market of a variety of suppliers. The Corporate Procurement Strategy provides the following breakdown of spending on procurement activities which provide a community benefit:

4.2.13 However, the Corporate Procurement Strategy also notes that performance in ensuring community benefits through procurement could be improved in the following ways:

4.2.14 Whilst some good practice exists in HCC's departments with initiatives to reuse and recycle furniture on an ad hoc basis, the evidence clearly points to major refurbishment or office move projects as having the greatest potential to achieve social and environmental benefits with regards to furniture replacement. Evidence from the Ashburton Court Project Team and the London Centre of Excellence project with the London Fire and Emergency Planning Authority (LFEPA) shows a strong business case for buying new furniture in many cases - particularly for large office refurbishments where new ways of working (flexible and home working for example) and the need to use office space economically create new demands on the style of office furniture required. In such situations, substantial volumes of unwanted furniture can become available. In these circumstances, consideration needs to be made of how to dispose of furniture in socially and environmentally responsible ways.

4.2.15 The review group received evidence from Green Works - a charity and social enterprise which claims to protect the environment, create jobs and training whilst providing `green' office solutions. Green Works collects unwanted office furniture from organisations and passes it on to schools, charities and small businesses throughout the UK, therefore diverting unwanted furniture from landfill. Green Works believes that reuse is the most environmentally, socially and financially effective method to dispose of, or replace, furniture. Whilst the organisation acknowledges that basic recycling is often the cheapest option for `reusing' furniture, no social benefit is derived from this process, as is achieved through Green Works providing work opportunities in renovating furniture for reuse to unemployed people.

4.2.16 Green Works identified several barriers to working with local authorities. Firstly, local authorities often provide inadequate notice of furniture coming available. Green Works depends on matching supply with demand and this can be difficult to reconcile without having reasonable advance warning of stock becoming available. This comes into conflict with evidence from HCC's Corporate Procurement Team which showed that the de facto policy for ongoing purchases of furniture within the County Council's departments is that `staff and their managers are expected to ensure that the furniture in use is in a safe condition and is `fit for purpose' and if it does not meet these requirements then it should be replaced.' As many items of furniture last indefinitely it is considered impossible to implement stringent rules about replacement cycles and expenditure. However, where bulk furniture replacement is driven by office reorganisation or the needs arising from new technology or new working methods such as flexible and home working, it is arguable that more advanced planning could be undertaken in order to find the most sustainable methods of disposal for unwanted items.

4.2.17 Green Works highlighted particular difficulties in working with central and local government due to stringent requirements such as compliance with ISO9000, Investors in People accreditations (both of which can cost too much for small companies to obtain), and insistence on guarantees for the lifetime of products (which Green Works cannot offer on second-hand items). Most notably, Green Works finds that the complexity of government tendering processes means that tenders are often won by large well-resourced companies which can afford to see the process through to the end. Evidence from HCC's Ashburton Court Project Team corroborated this view in stating that, in order to meet ISO requirements, some SMEs may have found it difficult to tender. Due to the scale of the project, any risk of non-delivery had to be avoided. HCC's Corporate Procurement Strategy acknowledges that more could be done to develop greater consistency (and simplification where appropriate) in procurement documentation for suppliers, particularly at pre-qualification stage, in order to assist SMEs and third sector organisations in working with HCC.

4.2.18 Green Works' evidence showed that ad hoc furniture replacement was not conducive to delivering environmental and social benefit. More centralised and holistic approaches to furniture replacement allow companies to undertake audits of their entire furniture range and decide how items can be reused, recycled or, as a last resort, purchased new. In relation to auditing furniture stock, Green Works expressed concern that decisions about reusing furniture are often made by people with insufficient expertise to make sound judgements as to the reusability of an item. Evidence from HCC project teams showed that design and procurement experts were engaged from the start in major projects and that initial audits of existing furniture are undertaken to identify items of furniture fit for reuse or recycling. However, acknowledgement was also made that further centralising and rationalising of departmental arrangements could be of benefit in this respect.

4.2.19 The County Council's Strategic Property Review (SPR) aims to address some of these issues. The SPR is a major corporate project which has significant implications on the way in which the County Council operates within its property portfolio. Linked to the flexible working agenda and HCC's Transforming Through Technology strategy, the SPR team is considering the County Council's use of office accommodation with a view to identifying efficiencies and putting in place mechanisms to improve overall utilisation of space. Evidence from the Ashburton Court project team showed how the SPR will lead to more centralised corporate procurement of furniture, with all purchases conforming to centrally prescribed criteria. By procuring fully adaptable chairs and desks, staff will be able to move offices without the need to move furniture with them. This will reduce wear and tear on furniture and will consequently increase the lifespan of items, therefore reducing costs over time. The SPR will be fully implemented by 2011-12.

4.2.20 In the light of the SPR, Members were interested to know how advance consideration of socially and environmentally responsible disposal of unwanted furniture was being made. Evidence from the Corporate Procurement Team acknowledged that current disposal arrangements are relatively ad hoc, with three different companies being contracted to dispose of furniture and fitments. However, HCC's removals company, Locksheath, has agreed to adopt sustainable methods when disposing of the County Council's furniture and fitments and HCC is also working increasingly with Green Standards which passes unwanted items of furniture to schools in Africa for reuse. On this latter point, Members were supportive of the community benefit being realised in supporting schools in Africa, but also questioned the increased impact on HCC's carbon footprint. Members were therefore mindful of the need to encourage a range of approaches to achieving community benefit in the disposal of unwanted furniture.

4.2.21 Whilst HCC showed commitment to increasing its work with social recycling and reuse networks such as Green Standards, the increased requirement for storage facilities when working with these organisations was raised as an issue in several responses to the review. Storage is expensive and, in the case of major projects, can cause project costs to escalate dramatically if items cannot be removed within strict timescales.

4.2.22 Whilst both the London Centre of Excellence and Green Works stressed that environmentally and socially responsible procurement requires considerable advance planning to achieve, evidence from HCC's major projects teams highlighted the necessity of working with organisations which can commit to removing unwanted items against specific deadlines - sometimes at short notice - in order to avoid unnecessary delays, and associated escalating project costs.

4.2.23 The London Borough of Croydon found that working with the Government Disposal Services Authority (part of the Ministry of Defence) avoided such delays. When Croydon commenced a major office refurbishment in 2007, they had no plans for the disposal of unwanted furniture and therefore consideration of environmentally and socially responsible disposal methods was made too late for certain approaches to be used. The DSA was able to offer Croydon a quote to clear all furniture and fitments from the building at short notice, along with a price at which they would sell on reusable furniture in order to generate income. Income was generated on approximately 20% of the furniture removed. The DSA provided full audit trails for each item of furniture, whether sold on to a third party, burned to produce power or recycled. Very little furniture was sent to landfill. Croydon now holds an annually negotiated contract with the DSA and is rolling the contract out to the entire Borough, including schools and colleges.

4.2.24 Croydon now asks all its officers to consider options for the responsible disposal of furniture and fitments at time of purchase. Officers are also expected to calculate the optimum moment at which furniture should be disposed of - for example, it is sometimes deemed appropriate to sell furniture before the end of its life in order to make a profit in the second hand market rather than wait until furniture is no longer fit for use.

4.2.25 Despite moving towards a more `whole-life' approach to procurement at Croydon, procurement officers still find that tensions exist with environmental teams as it is often extremely difficult to rationalise all environmental aspirations with cost.

4.2.26 In considering how value for money could be balanced with environmental and social factors in disposing of unwanted furniture, the review group sought evidence from the London Centre of Excellence Sustainable Procurement Project. This project - a joint initiative between the LCE and the London Fire and Emergency Planning Authority - sought to determine the most affordable sustainable method for large scale disposal of furniture as part of an office relocation. Echoing many of the views put forward by HCC's Corporate Procurement Team, the LCE found that, when moving into new or refurbished premises, it often makes more sense to buy new furniture than reuse items that were purchased to suit other premises. However, this means that the focus on environmental and social aspects of procurement need to shift to the responsible disposal of the items to be replaced.

4.2.27 The sustainability objectives of this project were stated as follows:

4.2.28 In order to ensure that sustainability principles relating to socially and environmentally responsible disposal were met, the LCE required a 12 month planning process. The importance of allowing sufficient time for social and environmental factors to be properly considered was a key message in evidence from several stakeholders to the review and is backed up in government guidance on sustainable procurement.

4.2.29 The LCE employed a specialist consultancy to perform a cost-benefit analysis of three disposal options for unwanted furniture: disposal to landfill, recycling and reuse internally or externally. Expected performance levels were built into the furniture disposal invitation to tender. These performance levels were based on the estimated percentage of furniture that could be reused or recycled through different disposal methods:

The predicted cost implications of different disposal options were calculated as follows:

4.2.30 As at March 2008, actual costs against these predictions were not available, although the LCE project manager was confident that the project was on target to reuse 70% of furniture. In terms of cost, the most sustainable disposal option offered at tender was 50% cheaper than the least sustainable option. These figures are corroborated by the experience of the Ashburton Court project team who found that the costs of various disposal options for furniture do not vary markedly between sustainable and non-sustainable options. HCC therefore selects sustainable options as standard.

4.2.31 Lessons learned from the Sustainable Furniture Disposal Project included the need for robust audit processes throughout the project. Holding records of the complete `chain of custody' of items of furniture is vital in order to fully evidence disposal methods. The LCE tender document therefore contained requirements for a full audit of any furniture being sent to landfill and receipts for any recycling activity.

4.2.32 The LCE investigated the benefits of using social reuse and recycling schemes, such as Green Works and Green Standards, within its study. Whilst acknowledgement was given to these organisations' ability to reuse and recycle large volumes of furniture effectively, the scale of the LCE project meant that these organisations could only reuse approximately 10% of the unwanted furniture, whereas the inventory of furniture available for reuse drawn up by the LCE showed that 60% would be fit for reuse. Evidence from the LCE also showed that many social reuse and recycling organisations charge a flat rate fee per tonne to collect unwanted furniture and fitments, but only recycle as much as their capacity allows. This means the ratio of cost to benefit to the environment is decreased.

4.2.33 In the light of the evidence received from the LCE and Green Works, Members were particularly interested in reviewing the decisions relating to furniture replacement for the major refurbishment project of the Council's Ashburton Court building. Evidence from the refurbishment team showed a rigorous process for identifying furniture requirements for the new building, starting with a complete audit of all existing furniture to identify items that could be reused in the new arrangements. The decision to purchase mainly new furniture was made against a clear business case which included the need to modernise facilities and accommodate new information technology, adapt to new ways of working, such as flexible working and, most importantly, to use space more efficiently. 600 staff were moved out of Ashburton Court and it was expected that 800 would move back in following refurbishment - this number rising to 1100 when flexible workers are included in the count.

4.2.34 Tendering documents for Ashburton Court's furniture outline a scoring system which was used to ensure that value for money was balanced against other factors, including sustainability. The contract was awarded to the tenderer scoring highest against these criteria. Price scoring was calculated as lowest cost gaining highest points, therefore making price the most important consideration in the procurement of furniture.

4.2.35 HCC was 18 months ahead of EU legislation in implementing scoring systems into its tendering documents to ensure that social and environmental factors were considered alongside value for money in contracts awarded.

4.2.36 20% of Ashburton Court's furniture was finally identified for reuse: the affordability of new furniture dictated the need to reuse this amount. The Ashburton Court Project Board determined that the furniture for the East Block should be new on the basis that this would assist with the occupation of the first phase of the refurbishment and provide an appropriate benchmark for future office development. The procurement of furniture for the project was fully compliant with the Corporate Procurement Strategy and was undertaken through a new Official Journal of the EU compliant tendered furniture framework. A Gateway Review was undertaken prior to tendering which ensured the following benefits:

5. Policy and coordination:

5.1 The 1999 Gershon review of civil procurement in central government found that the following key issues were a barrier to effective procurement:

5.2 Significant progress has been made on most aspects of this agenda both in central and local government. Evidence from HCC's Corporate Procurement Team shows how the majority of these issues have been addressed internally, although there is still room for improvement in some areas, as detailed in the following sections.

5.3 In terms of implementing common frameworks, policies and systems between departments, HCC generally performs well. The Corporate Procurement Strategy provides clear overarching policy advice to all departments, although evidence shows that greater awareness of the Strategy is needed in order to ensure that procurement practice is consistent in every part of the County Council. For example, knowledge of the principles of whole-life costing do not appear do be widely understood at present.

5.4 All departmental stakeholders showed a good awareness of the contracts available through County Supplies which ensure that value for money is achieved in procurement. Added to this, HCC is a member of the Central Buying Consortium which allows the County Council to benefit from aggregated and centralised buying arrangements with other members of the Consortium. This represents good practice against DEFRA/OGC guidance and provides value for money. The CBC has a Furniture Group which meets three times a year to review contracts and establish working groups for contracts which are to be retendered. The Corporate Procurement Team's evidence shows that further rationalisation and aggregation of departments' buying arrangements within centralised processes could provide the benefits of greater economies of scale, but that the extent of these benefits would be difficult to quantify without significant further research.

5.5 In addressing procurement for major projects, HCC exemplifies best practice in its use of Gateway Reviews (as undertaken on the Ashburton Court project). Gateway Reviews examine projects at key decision points in their lifecycle in order to provide assurance that the project can progress successfully to the next stage.

5.6 Finally, HCC makes every effort to ensure that trained personnel are involved at all stages of procurement. Aside from the professional expertise existing in the Corporate Procurement and County Supplies units, training is provided to departmental officers involved in procurement. Targets relating to staff training (as outlined in the Corporate Procurement Strategy) have been met for 2008 and evidence from departmental stakeholders showed that budget holders were satisfied with the levels of expertise in procurement within their teams.

5.7 Lack of knowledge of the Corporate Procurement Strategy was highlighted as a problem by many stakeholders. However, the Corporate Procurement Team emphasises work that has been undertaken to address this issue. Targets relating to staff training on procurement, as outlined in the Corporate Procurement Strategy, have been met for 2008 and policy messages on the need to reduce, reuse and recycle have been widely communicated within the County Council.

6.1 Conclusions and Recommendations

6.1.1 Overall, HCC demonstrates excellent practice in its approach to the procurement of furniture and fitments. The ongoing Strategic Property Review will have a significant impact on HCC's procurement activity over the coming years as HCC modernises and rationalises its office accommodation. The SPR should provide good opportunities to investigate more innovative approaches to the procurement, replacement and disposal of furniture and fitments as the furnishing of buildings will be less ad hoc than under current arrangements.

6.1.2 In responding to the questions set out in the initial terms of reference to the review, Members concluded that that further rationalisation of furniture product ranges and supplier relationships would probably not provide significant gains in terms of value for money, efficiency and impact on social and environmental factors for routine, individual purchases outside the scope of the Strategic Property Review. The case for developing specific policies for the procurement and recycling of furniture was therefore not sufficiently strong to endorse such an approach. However, whilst the review group commends the good practice in evidence at HCC, the following observations and recommendations are suggested for ongoing improvement.

6.2 Conclusions and Recommendations relating to financial issues

6.2.1 Furniture and fitments are low value, low risk items within HCC's procurement portfolio, meaning that the development of any policy and processes relating to this area of procurement need to be proportionate to the value of items being purchased.

    1. That stronger messages about the need to consider whole-life approaches to procurement, examples of how this can be undertaken with indications of associated costs, and information on where to get further assistance, are communicated throughout Hampshire County Council.

    2. That a standard approach to coding purchases of furniture and fitments in HCC's SAP system - advised by the model currently used in the County Treasurer's Department - is agreed and used by all HCC departments.

6.3 Conclusions and Recommendations relating to environmental and social issues

6.3.1 Furniture is a commodity which presents some good opportunities to realise social and environmental benefits from reuse and recycling.

6.3.2 HCC addresses value for money and most environmental issues in procurement effectively, but evidence shows that greater emphasis could be given to social factors.

6.3.3 Evidence from HCC's departments shows a good commitment to reusing and recycling furniture, but HCC's overall approach to reuse, recycling and disposal of furniture is fairly ad hoc and would benefit from being more joined-up in order to achieve greater environmental and social benefits.

6.3.4 Major office move and refurbishment projects provide the best opportunities to realise environmental and social benefits in furniture procurement. The Strategic Property Review presents opportunities in this respect and will lead to further rationalising and centralising of arrangements for procurement, replacement and disposal of furniture and fitments.

6.3.5 Sustainability Impact Assessments are not currently undertaken for all of HCC's major projects. This is not in the interests of promoting sustainable procurement and disposal practices and may be seen as a weakness in the Use of Resources assessment under Comprehensive Performance Assessment.

6.3.6 When procuring new furniture, consideration of the full range of options available for disposal of that furniture at the end of its life is not always made. This does not allow `whole life' costing to be undertaken.

6.3.7 HCC's procurement processes for furniture and fitments follow good practice, although more could be done to improve the level of community benefit realised in considering options for disposal , and to assist small and medium sized enterprises (SMEs) and third sector organisations to tender.

6.3.8 In order to maximise the opportunities to realise social and environmental benefit in the procurement and disposal of furniture, advanced planning is required - the earlier the better. Without advance planning in identifying when furniture will become available for reuse or recycling, the need for expensive storage can arise.

6.3.9 HCC has not undertaken any cost-benefit analysis of different disposal options for furniture and fitments, but always selects sustainable options when these represent good value for money.

6.3.10 It is vital to keep full audit trails to show the `chain of custody' for furniture and fitments in order to ensure that furniture is disposed of in environmentally and socially responsible ways. The evidence shows that some reuse and recycling organisations do not necessarily have the capacity to reuse or recycle all items they take. This affects cost-benefit ratio considerations.

6.3.11 In relation to environmental and social issues it is therefore recommended that the Executive Member for Policy and Resources considers the following:

    3. That guidance for HCC departments is developed outlining the various options for socially and environmentally responsible disposal of furniture and fitments in order to rationalise the various departmental approaches to disposing of furniture and fitments.

    4. That the full range of options for reuse, recycling and disposal of furniture are considered within the Strategic Property Review to ensure that maximum social and environmental benefits are achieved in all office moves, refurbishments and reorganisations, with due consideration of cost-efficient planning, management and use of space.

    5. That Gateway Reviews, which include the requirement to undertake Sustainability Impact Assessments, and allow for full consideration of environmental and social factors on a whole-life basis, are undertaken for all HCC's future major procurement projects and evidence be made available to show how this consideration has been made.

    6. That further work is undertaken to realise community benefits in HCC's procurement activity. To include:

      i. Inviting suppliers to propose additional community benefits for major contracts.

      ii. Simplification of procurement documentation and processes in order to facilitate tenders from small and medium sized enterprises and third sector organisations.

      iii. Ensuring that tendering processes are proportionate to the value of the contract and the risks associated with it.

    7. That HCC reviews the findings of the cost-benefit exercise undertaken by the London Centre of Procurement Excellence in their Sustainable Furniture Project and advises the P&R Select Committee of any learning points which can be taken forward within HCC.

6.4 Conclusions and Recommendations relating to policy and coordination

6.4.1 HCC is able to demonstrate robust policies and procedures underpinning its procurement activity across the board. However, the evidence collected by the review group points to several areas where improvement could be made, particularly in raising awareness of the principle of `whole-life' approaches to procurement.

6.4.2 Evidence received by the review group shows strong support amongst stakeholders for the introduction of corporate policies and processes, and increased rationalisation and centralising of departmental arrangements, for the procurement, replacement and disposal of furniture and fitments. Whilst the review group considers this important, evidence shows that the Strategic Property Review stands to address many of these issues in terms of improved processes (although recommendation 4 above needs to be considered alongside this conclusion in order for the best outcomes to be achieved).

6.4.3 Staff training in procurement is good and departmental budget holders are satisfied that they have sufficient procurement expertise in their teams. However, there is general consensus amongst all stakeholders that it would be beneficial to bring together information on options for recycling, reuse and disposal of furniture in order to provide more `visible' guidance for building users and budget holders, thus helping them achieve the aims of the Corporate Procurement Strategy more effectively. This issue is addressed in recommendation 3 above.

6.4.4 In relation to policies and procedures it is therefore recommended that the Executive Member for Policy and Resources considers the following:

    8. That awareness of the aims of the Corporate Procurement Strategy, and ways of achieving these aims, are improved in all parts of the County Council, particularly in relation to the concept of `whole-life' costs of procurement.

6.5 Other Conclusions and Recommendations

6.5.1 In considering evidence submitted to the review group, Members were interested to hear how the choice of furniture and fitments in HCC's offices affected the wellbeing of staff. Evidence from the Ashburton Court Project Team alluded to staff surveys relating to office conditions which had been undertaken prior to the Ashburton Court refurbishment. The same surveys were due to be run again once staff had settled into their new environment and Members were keen to receive the results of these surveys in order to assess whether the choice of furniture and fitments had any impact on levels of staff absence and wellbeing.

6.5.2 It is therefore recommended that the Executive Member for Policy and Resources considers the following:

    9. That the results of staff wellbeing and productivity surveys relating to the office environment pre and post the Ashburton Court refurbishment are made available to the P&R Select Committee in October 2008 for consideration in the light of this review.

Review of Hampshire County Council's procurement, replacement and disposal of furniture and fitments

Recommendations

Scrutiny Review of Furniture Procurement, Replacement and Disposal

References

Hampshire County Council Policies and strategies

National Policy and Guidance

Annexe A

HCC Procurement Portfolio Analysis

Evidence from HCC Corporate Procurement Team

PROCUREMENT PORTFOLIO ANALYSIS

Bottleneck

£m

Strategic

£m

High Risk / Low Value

High Risk / High Value

 

 

 

 

Raw Materials and Agricultural

1

Social Care

160

Education, Training and Information

4

Property Construction and Maintenance

130

Insurance, Medical, Research & Testing

2

Highways Construction and Maintenance

45

 

Waste Management

45

 

Housing Related Support (supporting people)

30

 

Passenger Transport

28

 

 

Total

7

 

Total

438

Routine

£m

Leverage

£m

Low Risk / Low Value

Low Risk / High Value

 

 

 

 

Stationery and Office Supplies

6

Consultancy & Specialist Services

15

Curriculum Supplies

5

Utilities and Fuels

14

Furniture and Fittings

4

IT Equipment and Services

12

Cleaning, Janitorial and Hardware

3

Telecommunications

10

Advertising

2

Agency Staff

8

Medical Equipment and Living Aids

1

Cleaning, Disposal and Recycling

5

Plant, Tools and Machinery

1

Printed and Pre-Recorded Media

4

Health & Safety, Security, Storage & Removals

1

Food and Drink

4

 

Catering and Hire of Facilities

4

 

Landscaping & Grounds Maintenance

3

 

Design, Print & Promotional Services

3

 

Vehicle Supplies & Services

2

 

Financial & Legal Services

2

 

 

Total

22

 

Total

86

TOTAL PORTFOLIO

 

 

£553

m

Strategic - Complex and specialist purchasing which is critical to the delivery of services to the public

Bottleneck - Failure of supply would cause significant disruption, source not easy to replicate

Routine/Leverage - Generic products and services, to be purchased under corporate framework agreements

Annexe B

DEFRA/OGC checklist

Annexe C

Annexe D

1 UK Government Sustainable Procurement Action Plan. Annexe A

2 Transforming Government Procurement, Treasury, January 2007

3 UK Government Sustainable Action Plan. 6.5: `The holder of the capital budget may resist paying more upfront for a solution with reduced running costs, as their budget may not benefit from the savings that would accrue to the revenue budget.'