Hampshire County Council

Buildings, Land and Procurement Panel Item

13 October 2005

Corporate Procurement Issues - Government Procurement Card and

Electronic Auctions

Report by the Director of Property, Business and Regulatory Services

How the conclusion in this report fits with the Corporate Strategy

This scheme will impact on the delivery of the following Corporate Aims

(delete as necessary).

Aim 5 - improving services - by increasing efficiency in the procurement process

1

Summary

1.1

This report highlights the benefits and seeks approval to the use of the Government Procurement Card (GPC) which will streamline the purchasing process for catering supplies. The report also seeks approval to run up to four electronic auctions on a pilot basis to assist with developing procedural guidance and to assess the impact on Contract Standing Orders.

2

Government Procurement Card

2.1

The County Council's Corporate Procurement Strategy includes the development of electronic transactions to increase efficiency in the procurement process. Members have already agreed a pilot electronic tendering programme, which is progressing well. As previously reported to the Panel, work has been ongoing to identify the best solution to reduce the volume of invoices manually processed for catering supplies, which accounts for the largest volume of procurement transactions with an individual supplier.

2.2

The Government Procurement Card is recommended as the best solution for automating the procurement of catering supplies. It does not affect the processes currently operated by catering staff, cards are not physically issued to staff, it is very low risk and it is a nil cost solution for the County Council. The GPC is a framework agreement with Visa set up by the Office of Government Commerce (OGC) and a mini competition has been run with three leading banks to select the Royal Bank of Scotland as the preferred banking partner to run the GPC scheme for catering supplies. The project is funded by merchant fees paid by suppliers to Visa. The outcome of the project will be to reduce the manual processing of over 30,000 invoices a year to twelve and will assist in meeting e-government targets for e-procurement.

3.

Electronic Auction

3.1

Research has also been undertaken on the use of electronic auctions to assist in achieving the best and final price in tendering exercises. As previously reported to Panel on 5 April 2005, the OGC has reported that 47 public sector contracts with a value of £155m have been subject to electronic auction over the last 18 months and achieved 20% savings over previous contracts. The County Council has just started using an IT consumables contract awarded by the Central Buying Consortium using an e-auction, which achieved 17% savings compared to the previous contract.

3.2

Whilst research into other organisations' use of electronic auctions has provided the County Council with some useful insights into the process and its benefits, it would be beneficial to run up to four electronic auctions on a pilot basis. This will enable the development of more detailed procedures and guidance, the assessment of any corporate governance and probity issues and recommend any required changes to Contract Standing Orders on the use of electronic auctions.

3.3

The OGC and Office of the Deputy Prime Minister are actively promoting the use of electronic auctions across the public sector. The new EU procurement directives, which are expected to be adopted in the UK early next year, also make provision for electronic auctions. The OGC has given the County Council an agreement in principle that it will fully fund the County Council's first electronic auction as part of its national procurement development programme. The average cost of an electronic auction is approximately £5,000 per event, depending on the level of service required.

Recommendation(s)

That the Buildings, Land and Contracts Panel advise the Executive Member for Policy and Resources that approval be given to:

1

The use of the Government Procurement Card scheme, operated by the Royal Bank of Scotland, to streamline the purchasing process for catering supplies.

2

The running of up to four electronic auctions on a pilot basis across a broad spectrum of contract types and values, to assist with developing procedural guidance and assessing the impact on Contract Standing Orders.