Contacts: Neil Jones, HPSN 8 200 6180 e-mail: [email protected]

Shaun Le Picq, HPSN 8 345 6967 e-mail: [email protected]

BL&PP0606A

Section 100D - Local Government Act 1972 - Background Papers:

The following documents disclose facts or matters on which this report, or an important part of it, is based and has been relied upon to a material extent in the preparation of this report.

NB the list excludes:

1. Published works.

2. Documents which disclose exempt or confidential information as defined in the Act.

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Appendix 1

Corporate Procurement Strategy

2006 to 2008

Foreword

The County Council published its first Corporate Procurement Strategy in September 2003. Since that time, we have fulfilled most of the key actions outlined in our original Strategy, which has helped to improve procurement practice and raised awareness of the impact that procurement can have on the cost and quality of services. This revised Corporate Procurement Strategy takes greater account of the National Procurement Strategy for Local Government (NPSLG), our independent external health check of procurement, the Annual Efficiency Statement requirements and the Hampshire Community Strategy¹.

Our Procurement Strategy sets the framework in which the County Council will work to ensure that purchasing delivers value for money across all services and directly contributes to the achievement of the County Council's corporate aims and objectives in support of the Hampshire Community Strategy. We continue to recognise that the procurement of goods, works and services has a major impact on many aspects of life in Hampshire, including the environment, social factors and economic development, which is reflected in our procurement policy, practice and improvement outcomes.

This Strategy has been endorsed by CMT and the key principles agreed by the Cabinet. We will monitor progress on the key outcomes using the Council's performance management arrangements through the Corporate Management Team and the Buildings, Land and Procurement Panel.

We are also pleased to be leading on the Buildings Construction work stream on behalf of the South East Centre of Excellence (SECE) and promoting the collaborative opportunities that can produce greater efficiencies and quality outcomes than working alone.

This Procurement Strategy continues to be an ambitious programme, which sets high standards for the County Council and is one that will require action by, and commitment from, all County Councillors, managers and staff in all departments.

1. Introduction

1.1 We recognise that effective procurement arrangements are fundamental to achieving organisational success for the County Council and in delivering our corporate aims and objectives and contributing to the priorities of the Hampshire Community Strategy.

1.2 Procurement is defined as `the process of acquiring goods, works and services, covering both acquisition from third parties and from in-house providers. The process spans the whole cycle from identification of needs, through to the end of a services contract or the end of the useful life of an asset. It involves option appraisal and the critical "make or buy" decision which may result in the provision of services in-house in appropriate circumstances.'²

2. Vision and Aims of the Strategy

2.1 In recognition of the wider impact that procurement strategy, policy and practice can have on the outcomes achieved by the County Council, our vision for procurement is:

To support the delivery of innovative, cost-effective and quality services in fulfilment of the County Council's aims and priorities within its Corporate Strategy and the Hampshire Community Strategy.

2.2 The aims of this strategy are to:

· Ensure that procurement policy, planning and practice supports the County Council's Corporate Strategy and it's priorities within the Hampshire Community Strategy.

· Secure commitment to effective, consistent and co-ordinated procurement from members and officers to achieve the delivery of high quality, innovative and cost-effective services.

· Encourage long-term thinking and commitment to a strategic approach to procurement issues.

· Establish a mechanism to measure procurement performance and promote the continuous improvement of procurement activity across the County Council.

· Provide greater visibility and understanding of the role of the procurement function.

· Develop skills and provide support for staff involved in procurement across the County Council.

· Promote and deliver sustainability, local economic development and equality and diversity objectives through procurement activities.

· Continue to use and further develop procurement collaboration with other public bodies and partnering arrangements with suppliers.

· Recognise the contribution of procurement to achieving our community, corporate, departmental and service objectives.

· Ensure that procurement practice contributes to the effective use of resources as set out in the Annual Efficiency Statement and the Comprehensive Performance Assessment.

· Raise awareness of the complex regulatory framework in which procurement operates and that it is potentially high risk; with financial, legal and reputation impacts.

3. Scale of Procurement Activity

3.1 We spend in excess of £550 million per annum (both revenue and capital) on external provision of goods, works and services. The current portfolio of procurement activity within the County Council is given below.

3.2 Over 1,000 contracts are currently in place across the County Council and the current contracts register and forthcoming tendering opportunities is publicly available on our Procurement - Business Opportunities³ web pages.

3.3 The County Council recognises that school governing bodies are able to determine their own arrangements for the purchase of goods, works and services and therefore this strategy concentrates on meeting the requirements of the County Council's departments. However, corporate procurement arrangements for educational supplies and services are already in place and well supported and schools are able to engage with, and benefit from, our continually improving approach to procurement.

4. Structures and Accountabilities

4.1 Service and Budget Managers are responsible for managing the delivery of the County Council's objectives through their own service plans. They have devolved responsibility for service planning, budget management and procurement activities. Service and budget managers are therefore key to ensuring the effective adoption and delivery of this procurement strategy.

4.2 Members have a key role to play in aligning procurement decisions with the County Council's corporate objectives and in monitoring procurement performance. We achieve these roles through the nominated Member Champion for Efficiency and Procurement and the Buildings, Land and Procurement Panel.

4.3 Property, Business and Regulatory Services (PBRS): The Director of PBRS is the Corporate Management Team's Procurement Champion and within PBRS the Corporate Procurement and County Supplies Unit undertakes the role of a corporate procurement team and is responsible for:

· putting in place corporate arrangements for the purchase of common use goods and services (indirect supplies) on behalf of all departments and schools.

· providing a procurement support and review service to departments and individual contracts

· developing procurement strategy, policies and procedures

· co-ordination and consistency within the procurement process

· delivering appropriate e-procurement solutions

· fostering collaboration with other public bodies

· supporting the activities of the Central Buying Consortium (the largest such organisation in local government)

· providing the link to the South-East Centre of Excellence, other councils and central government on all procurement related matters

· overseeing the Procurement Gateway Review process.

4.4 The Corporate Procurement Network (CPN) represents all departments and is responsible for corporate leadership of procurement activity and performance. In particular to:

· develop procurement practice across all departments

· report and improve on performance

· build more corporate procurement arrangements.

· support knowledge and information sharing.

4.5 Specialist Departmental Procurement Teams are responsible for assisting with specialist procurement arrangements for direct expenditure incurred in the provision of services and for ensuring that these arrangements meet the Corporate Procurement Strategy . The Departmental Procurement Teams are:

· Social Care (Adult Services and Children's Services Departments)

· Property Construction and Maintenance (Property, Business and Regulatory Services)

· Highways Construction and Maintenance (Environment Department)

· Waste Management (Environment Department)

· Passenger Transport (Environment Department).

5. Key Procurement Objectives

We have set five key procurement objectives to develop further our procurement policy and practice in line with the National Procurement Strategy:

· providing leadership and building capacity

· partnering in construction and service delivery

· promoting collaboration and use of trading powers

· stimulating markets and achieving community benefits, including efficiencies, sustainability, equality and diversity

· doing business electronically.

5.1 Providing Leadership and Building Capacity

Principles

Members and staff actively promote the strategic importance of good procurement practice. We have a clear structure and accountability for procurement strategy, development and practice (see section 4 above) and we plan to build further on the good foundations already in place to improve our capacity and performance.

Current Status

We operate a number of policies and practices to promote, develop and deliver best procurement practice, including:

· regular monitoring and reporting of progress against our procurement action plan and the National Procurement Strategy for Local Government (NPSLG)

· contract award based on `most economically advantageous offer'

· relevant, up-to-date and accessible Best Practice Procurement Guide, Contract Standing Orders and Financial Regulations

· a Corporate Risk Management Board to assess and manage risk consistently

· a procurement competency framework to be used as part of our Individual Performance Planning Scheme for staff

· a corporately funded suite of procurement training courses is available for staff

· publishing our contracts register, forthcoming tendering opportunities and Selling to the County Council Guide on our Procurement - Business Opportunities⁴ web pages.

· working closely with the South East Centre of Excellence, particularly on leading the Buildings workstream and actively contributing to the Equipment and Supplies, Adult Social Care and e-Procurement workstreams.

· an independent review of our approach to procurement concluded that we are `currently achieving good results' and are the `highest performing County Council' reviewed by the consultants.

Key Outcome

Our capacity and performance in procurement is improved by:

· Operating effective Corporate and Departmental Gateway Review processes for appropriate projects.

· Measuring performance through the development of Key Performance Indicators (KPIs) for procurement.

· Using a standard corporate contracts register in all departments.

5.2 Partnering in Construction and Service Delivery

Principles

Our drive to ensure value for money has been an important catalyst for improving the delivery of local services and, where appropriate, this has promoted a change to some procurement practices. We are committed to developing partnering arrangements with contractors and suppliers where this is appropriate and where it provides the best outcomes. This partnering approach applies to both construction (particularly through our adoption of the `Constructing Excellence' ⁵ principles) and service delivery.

Current Status

In our experience, `partnering' with contractors and suppliers takes on several subtle guises which, although often based on more traditional contractual arrangements and not necessarily set up as formal `strategic partnerships', actually result in benefits in service delivery to both the County Council and suppliers of services.

The current ethos regarding partnering in construction has evolved over several years, from a traditional tender award and construct process, to a more cohesive and collaborative relationship with contractors and we have adopted similar arrangements for the engagement of consultants. This approach is a significant change and has required a cultural shift in working practices for both our staff and the construction industry. Encouragingly, we have achieved a major shift towards partnering approaches in different forms and the momentum is continuing.

Our PBRS and Environment departments have been championing the partnering and collaborative process in construction, which is fully supported by the County Council. Both departments have adopted partnering-type relationships with several contractors and consultants, which has produced efficiencies in contract administration and the effective delivery of construction related projects.

PBRS has developed term and framework arrangements with contractors and consultants, which now form 70% of the building construction and maintenance activity. This allows a streamlined process for employing contractors and the delivery of projects within the required timescale and budget, which we benchmark against designated joint KPIs.

Our Environment department has also formed procurement arrangements with contractors and consultants, which embrace the partnering concept. These include early contractor involvement and joint working, with shared resources on major projects and term contracts. Joint KPIs are an important basis for the measurement of the service delivery. These services include highway and bridge construction and maintenance, waste management and civil engineering design.

More formal strategic partnerships in service delivery have been successfully established for waste management and voice and data networks, however, we recognise that partnering takes more subtle forms particularly within social care, where most of Adult Services and Children's Services social care contracts are, de facto, relational ones.

Research has consistently shown that the basis of a successful contract in the social care field is the relationship between care staff and those for whom they are providing care. The people for whom care is provided are generally very vulnerable in terms of physical or mental frailty or social isolation. One of our primary considerations is therefore continuity of service, although providers still have to demonstrate value for money, user satisfaction and delivery to the quality standards in our contracts. In addition, many social care providers are not-for-profit, operate very locally and generally provide niche services. Generally, there is little real competition for specialist mental health service and physical disability services. The market is only slightly larger for services for people with a learning disability. Whilst ostensibly for older persons' services there is a very large residential, nursing and personal domiciliary care services market, the number of potential providers in any locality for day care, information and advice, and domestic services is actually very restricted.

Our Adult Services and Children's Services Departments, with the approval of the County Council, has therefore developed ten single tender criteria for the purposes of maintaining continuity of service for vulnerable service users. We also have an Elderly Mentally Infirm (EMI) strategy in which homes across the County are equal partners (there are no barriers to entry). This strategy is designed to work with homes to enable them to reconfigure their services and change registration categories so that they are able to assist us in meeting one of our major commissioning priorities. We also work very closely, if requested, with homes wishing to extend their properties and providers wishing to build new establishments. We share commissioning priorities with them, which will help shape the services to be provided in the new accommodation, support planning applications and pursue block contract opportunities to enable us to secure provision at an affordable price and give providers a guaranteed income stream.

Key Outcome

The number of procurement partnering arrangements is increased to maximise the benefits of this approach, where appropriate, through:

· Publication of revised partnering guidance.

· Identification of further partnering opportunities in construction related procurement and service delivery.

· Provision of appropriate training for staff involved with developing partnerships and managing term arrangements.

5.3 Promoting Collaboration and Use of Trading Powers

Principles

We recognise the value that appropriate collaboration with our public sector partners has in maximising economies of scale and buying power and we will work actively to exploit the benefits from continued, and new, collaborative opportunities. We will continue to review whether the use of `Trading Powers' ⁶ will provide any realisable benefits for the County Council and the people of Hampshire.

Current Status

We are actively engaged in a number of well-established collaborative procurement arrangements with the Central Buying Consortium (covering over £20m of our procurement activity), the Hampshire and Isle of Wight Local Authority Supplies Group (£8m of joint purchasing), Portsmouth City Council, Southampton City Council, Hampshire Fire and Rescue Service and West Berkshire Council.

We are leading the highly collaborative Building workstream on behalf of the South East Centre of Excellence and are providing support and advice to the Equipment and Supplies workstream.

We are exploring further collaboration with the Hampshire and Isle of Wight Efficiency Group in developing business cases for shared services in some areas across a number of Hampshire local authorities and in implementing the Hampshire Marketplace with Hampshire District Councils.

We manage a portfolio of common use framework contracts on behalf of the County Council as a whole (including schools) with a value of over £88m a year. Plans are currently underway to increase further the scope of this activity. All appropriate framework contracts are available for use by other public bodies in and around Hampshire.

The National Procurement Strategy for Local Government states: "[Councils should]... consider uses of the new trading powers.  Councils in the top three CPA categories can establish companies for the purposes of trading under the Local Government Act 2003⁷  These companies can be a means by which stronger performing less well.  Service delivery models based on the new powers can also be a means if accessing wider markets."

Details of the powers can be viewed on the ODPM website⁸. We have reviewed the provisions of the Act and considered applicability at a workshop organised jointly with Hampshire District Councils and facilitated by IPF Ltd.  To date, we have not used these new powers and we have not firmly identified any areas where the powers could be applied beneficially.

We already make wide use of powers under the 1970 Goods and Services Act to procure on behalf of, and in partnership with, other public sector organisations in Hampshire and wider consortia.  The new trading powers do not add significant realistic opportunities to current arrangements.

The County Council has a number of internal business units; some of these have looked at setting themselves up as companies under the new trading powers, but no firm proposals have yet been developed.

The 2003 Act also confers a general power on Local Authorities to be able to charge for discretionary services.  This was also reviewed at the workshop referred to above and, again, no firm areas were identified for its application.  The County Council already makes wide use of existing powers to charge (e.g. under the Library Charges Regulations 1993).

Key Outcome

Better value for money is achieved through appropriate collaboration. Key collaborative actions include:

· Successful implementation of Hampshire Marketplace and realisation of benefits for District Council partners.

· Increase the corporate common use contract portfolio to over £100m by end of 2007/08.

5.4 Stimulating Markets and Achieving Community Benefits

Principles

Encouraging a Competitive and Varied Supply Market

We are committed to working effectively with a wide range of suppliers and to stimulating a competitive and varied supply market and supply chain. This includes the third sector⁹, small and ethnic minority businesses through our support of the Hampshire Compact¹⁰, the Small Business Friendly Concordat¹¹ and our contracts register, forthcoming tendering opportunities and Selling to the County Council Guide on our Procurement - Business Opportunities¹² web pages.

Identifying Efficiency Savings

We will actively seek opportunities for cashable and non-cashable efficiency savings and will maximise the efficient use of our resources through effective procurement arrangements. Annual targets will be discussed with members as part of the annual budget strategy and Annual Efficiency Statement.

Sustainable Procurement Strategy

We will promote the importance of sustainable procurement practice and whole life costing in both protecting the environment and assisting local suppliers. The County Council is a signatory to the Aalborg Commitments¹³ and Theme 4 (Responsible Consumption and Lifestyle Choices) is particularly relevant to procurement.

We are committed to adopting and facilitating the prudent and efficient use of resources and encouraging sustainable consumption and production in our procurement decisions, in particular we will work, throughout our community:

· to undertake sustainable procurement and

· to actively promote sustainable production and consumption, in particular of eco-labelled, organic, ethical and fair trade products.

The UK Government has developed a timber procurement policy which requires central government actively to seek to buy timber from legal and sustainable sources. We are committed to applying this procurement policy within the County Council to all timber and wood derived products¹⁴.

Promoting Equality and Diversity

We will ensure workforce equality and diversity through our procurement practice, suppliers and contractors and ensure compliance with the code of practice on handling workforce matters in contracts.

Achieving the Community and Corporate Strategies

Our vision for procurement clearly recognises that what and how we procure directly contributes to meeting our corporate aims and objectives:

· maximising life opportunities

· stewardship of the environment

· achieving economic prosperity

· building strong and safe communities

· improving services

· developing councillors and staff

· our priorities for children and young people and vulnerable adults and older people

· our shared priorities in the Hampshire Community Strategy.

The above principles will be taken into account, as appropriate, in all stages of the procurement process and in particular:

· assessing needs

· service design

· supplier short listing

· supplier selection

· assessing supplier performance / contract management.

We recognise the contribution that procurement makes to our corporate performance, efficiency and effective service delivery.

We envisage that the Social Care Green Paper `Independence, Wellbeing and Choice'¹⁵ will affect our procurement strategy, particularly within Adult Services, over the next few years. Whilst the full impact of the Green Paper remains speculative at this stage, we are working with the SECE to develop potential individualised purchasing approaches. We envisage opportunities for more innovative methods of service delivery and payment mechanisms (such as purchasing cards), some impact on how providers configure their businesses and the need to encourage further the development of small and third sector businesses.

Current Status

As we work with a large number of suppliers, across a very wide range of goods, services and works, it is difficult to provide a comprehensive summary of current practice. Some examples of our current performance are:

· £200m a year is spent with local suppliers

· £134m a year is spent with small and medium sized enterprises

· 87% of our 25,000 suppliers are small and medium sized enterprises

· £13m a year is spent with new businesses

· at least £50m a year is spent with third sector suppliers

· working with external trade bodies through seminars, training and roadshows

· holding meet the buyer events and supplier briefings

· early contractor involvement in large projects

· the County Council is a signatory to the Aalborg Commitments¹⁶

· procuring over 2,000 environmentally friendly products

· timber and timber based products procured from legal sources which meet the standards of the Forest Stewardship Council or equivalent certification schemes

· promoting use of the Forum for the Future's Sustainable Procurement Tool

· guidance issued on workforce matters in contracts

· standard notes of guidance for suppliers and contract terms and conditions for:

- sustainability

- equality and diversity

- health and safety

· regular supplier surveys

· use and promotion of:

- Hampshire Compact

- Hampshire Economic Partnership

- Hampshire Strategic Partnership

- Local Strategic Partnerships

- Community Action Hampshire

- Small Business Friendly Concordat

· Over £2.8m procurement savings achieved since 2004/05.

Key Outcome

All procurement projects meet identified needs and provide community benefits. Actions to achieve this outcome include:

· Operating a consistent corporate social responsibility strategy for equality and diversity, fair trade, ethical purchasing and sustainability in procurement as part of the Gateway Review process for major projects

· Inviting potential suppliers to propose additional community benefits for major contracts

· Developing greater consistency (and simplification where appropriate) in procurement documentation for suppliers, particularly at pre-qualification stage

· Improving contract management procedures in proportion to the level of risk and value

5.5 Doing Business Electronically

Principles

Doing Business Electronically within the procurement process is a fundamental element of the improvement and development of procurement as part of our e-government strategy. This is reflected in the fact that we have developed a specific Corporate e-Procurement Strategy ¹⁷ for the County Council.

Current Status

We are continually reviewing and developing our e-procurement approaches and to date we have currently achieved:

· all purchase orders raised and authorised electronically

· all invoices matched to purchase orders where appropriate

· 86% of invoices paid by BACS

· rollout and management of our electronic catalogue of goods and services

· rollout of virtual procurement cards for catering supplies

· pilot and purchase of an e-tendering system

· email of purchase orders and remittance advices.

Key Outcome

The efficiency of the procurement process is maximised through appropriate use of electronic procurement by:

· increasing the proportion of spend via virtual procurement cards

· implementing XML ordering and invoicing links with key suppliers

· rollout of e-tendering

· develop our strategy and business case for e-invoicing.

Appendix One

Consolidated Action Plan

Appendix Two

Sponsorship and Accountabilities for Corporate Procurement

Member Champion

The member champion for procurement is Cllr Colin Davidovitz, Executive Member for Performance, Efficiency and Communications

Member accountability for the work of the Corporate Procurement Network is through the Buildings, Land and Procurement Panel for Executive decision by the Executive Member for Policy & Resources.

Corporate Management Team Sponsor

The Corporate Management Team's sponsor for the Corporate Procurement Strategy is Andrew Smith, Director of Property, Business and Regulatory Services.

Corporate Procurement Network

The Corporate Procurement Network comprises the following representatives:

Neil Jones (Chair) Head of Business Services Property Business & Regulatory Services

Karen Murray Head of Resources Property Business & Regulatory Services

David Corcoran Head of Procurement Property Business & Regulatory Services

Shaun Le Picq Procurement Development Manager Property Business & Regulatory Services

Felicity Roe Assistant Director

(Performance and Resources) Children's Services

David Ward Assistant Director (Resources) Adult Services

Dave Jessop Head of Exchequer Services Environment

Stuart Reynolds Assistant Director

(Design & Implementation) Environment

Stuart Dorward Business Development Manager Recreation & Heritage

Bevis Ingram Assistant County Treasurer County Treasurer's

Rory Fitzgerald Finance & Admin Manager I.T. Services

Trevor Stabb Quality & Performance Manager Human Resources

David Edwards Special Projects Manager Chief Executive's

Jenny Heath Corporate Performance Manager Policy Unit, Chief Executive's

Frances Stokes Business Development Manager Economic Development, Chief Executive's

Appendix Three

Glossary of Terms and Abbreviations