Archived decisions
HAMPSHIRE COUNTY COUNCIL
Decision Report
Decision Maker: |
Buildings, Land and Procurement Panel | ||||
Date of Decision: |
12 January 2010 | ||||
Decision Title: |
Corporate Procurement Update | ||||
Decision Reference: |
928 | ||||
Report From: |
Director of Property, Business and Regulatory Services | ||||
Contact name: |
Neil Jones and Shaun le Picq | ||||
Tel: |
01962 846180 01962 826967 |
Email: |
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1. Executive Summary
1.1 Progress reports on corporate procurement initiatives are made regularly to the Panel. This report provides an overview of the work undertaken over the last twelve months and includes the key improvement themes contained within the County Council's revised Corporate Procurement Strategy which was approved by Cabinet on 23 November 2009.
2. Background
2.1 Members will be aware that historically most procurement activity has been devolved to departments and service managers with the small Corporate Procurement team in PBRS sponsoring the Corporate Procurement Strategy. The team lead on electronic procurement, advice on best practice, identify opportunities for further aggregation of spend into corporate contracts and assist departments with procurement reviews and ad-hoc procurement projects.
2.2 The Corporate Services Review (CSR) of Procurement recommended that a more strategic and consistent approach to procurement should be undertaken with greater corporate leadership, performance improvement and a centre-led category management approach being provided by the Corporate Procurement team. Although the procurement improvement programme is still in its early stages, this report reflects both the existing projects and achievements of the Corporate Procurement team and some of the new activities that the team has been undertaking to lead on the procurement improvement programme.
3. National Agenda
3.1 The national procurement agenda continues to focus on increasing collaboration across the whole public sector and on improving procurement arrangements to deliver efficiency savings as promoted in the Operational Efficiency Review. The County Council continues to be heavily involved in these discussions and developments, which are led by the Office of Government Commerce.
3.2 The County Council's lead role within the Central Buying Consortium and its greater collaboration with the other four main local government purchasing consortia (known collectively as `Pro5') puts the County Council in a strong position to both influence and benefit from local, regional and national collaborative opportunities.
3.3 To date, the wider collaborative agenda has tended to focus on commodities, rather than services, and the County Council is planning to be involved with over 70 new collaborative procurement arrangements over a three year period; some 30 arrangements are already in place. Current national discussions are looking to broaden the collaborative agenda into arrangements for services such as temporary agency staff and consultancy. However, effective collaborative procurement arrangements need to be tailored specifically to each market sector to ensure best value and suitable outcomes. For example, a large national framework contract for IT hardware may be the most effective option, whereas a more sub-regional approach for temporary agency staff may work best. Therefore, the County Council will ensure that it influences the national procurement strategies within this developing agenda to the benefit of both the County Council and the wider public sector.
4. Corporate Procurement Strategy and improvement plan:
4.1 The County Council has recently published its third Corporate Procurement Strategy, which was approved by Cabinet on 23 November 2009. Progress against the previous two procurement strategies and their associated action plans has been regularly reported to the Panel. There has been considerable progress and improvement in procurement arrangements and performance since publication of the County Council's first Corporate Procurement Strategy in September 2003. The revised Strategy focuses on the recommendations of the CSR of Procurement and will lead to a `step-change' in procurement performance and enable procurement to continue to make a major contribution to the County Council's efficiency agenda.
4.2 The revised Corporate Procurement Strategy is intended to deliver:
· a more strategic and systematic approach to procurement
· corporate management of procurement performance and improvement priorities
· enhanced compliance with relevant policies and procedures
· procurement efficiencies and cost reductions of around £10 million by the end of 2013/14
· improvement in sustainable procurement performance in accordance with the Sustainable Procurement Task Force's Flexible Framework and the Aalborg Commitments
· an increase in the proportion of spend that is recorded against contracted and approved suppliers.
4.3 The Strategy reflects the fact that improvement in procurement practice will be underpinned by the following principles:
· a centre-led approach to strategic sourcing and category management
· stronger central leadership and performance management
· focus procurement activity through procurement professionals and develop a `licensed practitioner' programme which continues to enhance skills and performance
· development of new strategies and approaches to deliver reductions in procurement and process costs
· further extend collaboration with other public bodies locally, regionally and nationally.
4.4 These changes and principles are being delivered through a `Procurement Improvement Programme', being led by the Corporate Procurement team, assisted by the Corporate Procurement Network and sponsored by the recently formed Efficiency Board. Proposals to set aside some initial funds to support the implementation of the agreed actions have been included within the business plan for Corporate Procurement and County Supplies. The programme is still in its early stages and progress on the improvement programme will be reported to the Panel over the coming year.
4.5 As well as assisting with the CSR of Procurement, developing the revised Corporate Procurement Strategy and initiating the Procurement Improvement Programme, the Corporate Procurement team has led on a number of other development and improvement initiatives since January 2009. These initiatives include performance management arrangements, electronic procurement initiatives, procurement reviews and support to specialist departmental procurement arrangements.
5. Procurement reviews and support to Departments:
Adult Services
5.1 Support continues to be given to a number of major procurement projects in Adult Services. Particular support has been given to the Procurement team in Adult Services in developing sourcing strategies and options appraisal, further developing their commercial skills, tender evaluation approaches and experience of competitive tender processes and increasing the number of aggregated or County-wide procurement arrangements where appropriate.
5.2 The projects with Adult Services have included:
· Welcome Home from Hospital
· Extra Care Sheltered Housing
· Learning Disability Services projects
· Telecare Services
· Adult Substance Misuse Treatment Services
· Young People Substance Misuse Treatment Service
· Contract Management System
5.3 |
In addition, the team is currently assisting Adult Services with the procurement approach and subsequent implementation of the `pre-loaded cards' pilot for direct payments and self-directed support. This facility enables service users receiving funding for services through direct payments or self-directed support to pay for services using a debit card with funds loaded by the County Council. This will enable greater transparency of the services being purchased and will streamline the process for both the County Council and service users. The national Government Procurement Card contract is being used to facilitate the procurement of the pre-loaded card supplier. |
Children's Services | |
5.4 |
Support has been provided to recruit two new Commissioning and Contracts Managers for the Commissioning Co-ordination Unit in Children's Services. These staff will strengthen the procurement support available to specialist procurement arrangements in Children's Services. |
5.5 |
The Corporate Procurement team has led on a number of procurement initiatives in Children's Services over the last year. In particular, the team has assisted the Unit's staff with developing their commercial skills and to promote good procurement practice across the whole of Children's Services. |
5.6 |
The projects for Children's Services have included the procurement arrangements for: · Information and Participation Service for Disabled Children and their Families · After School, Saturday and Summer Holiday Schemes for Disabled Children · Learning Development and Support Services for Children, Young People and those who care for them (NVQ Level 4) · Recruitment, Training and Supervision Services of Independent Parental Supporters (saving £25,000 a year against the budget) · Recruitment, Training and Supervision Services for Appropriate Adults for the Wessex Youth Offending Team, which saved £24,000 a year against the previous contract. |
5.7 |
The major project undertaken this year for Children's Services has been the Phase 3 Children's Centre tender. The Corporate Procurement team advised on revising the initial tender approach and agreed to take on the overall procurement lead for the project to ensure it was delivered on time and to budget. Contracts for 19 centres have recently been successfully awarded to four different service providers, achieving a £472,700 (4%) saving against the budget over the life of the contract. |
5.8 |
Planning is currently underway with the Children's Centres Management Team on new procurement arrangements which need to be put in place to meet the requirements of all existing Children's Centres. It is expected that this programme will span the next few years and will include a range of commodities and services specifically tailored to the needs of Children's Centres. |
5.9 |
Following some concerns expressed by the local voluntary and community sectors on the approaches being adopted to the increased tendering activity in Children's Services, a workshop was undertaken with voluntary sector representatives to address areas of concern. An action plan is currently being developed to improve County Council processes with the voluntary sector and ensure increased voluntary sector awareness of tendering requirements through training and briefing sessions. |
Environment Department | |
5.10 |
The Corporate Procurement team assisted the County Treasurer's Consultancy team in a review of procurement arrangements in the Environment Department. The key recommendations included the creation and investment in a departmental procurement team, from existing and new resources, to support specialist departmental arrangements for waste, highways, transport and planning. The team assisted with the recruitment of the Head of Procurement and a Procurement Officer for this new departmental team. It has also been asked to assist with some further recruitment planned in the coming months. |
5.11 |
A number of joint procurement initiatives with the new Environment Departmental Procurement team are planned or underway. These include: · Supplier Relationship management for long-term strategic suppliers · Procurement awareness and training · Application and interpretation of EU Procurement regulations · Sourcing strategy for consultancy · Procurement cards for low value spend. |
5.12 |
As part of the Procurement Improvement Programme, the Environment procurement team are planning to put in place a County-wide procurement framework for home to school taxi services which will start from autumn 2010. This will be based on the pilot which the Corporate Procurement team implemented in the north east of the County. This is a major procurement exercise replacing many individual route contracts with a total contract value of £15 million a year. |
Other projects | |
5.13 |
A number of new procurement arrangements for the County Council are being put in place by the Contracts Team within Corporate Procurement and County Supplies. These include specialist IT training, Box Office System, Psychometric Testing and Health and Safety training. These new arrangements are in addition to the normal re-tendering cycle associated with the existing portfolio of common use service contracts. |
5.14 |
Revised procurement arrangements, based on framework contracts, have been put in place for window cleaning and internal building cleaning. This is a more efficient process for both the County Council and its suppliers. These revised approaches also enable better aggregation of requirements on a geographical basis. For example recent clustering of window cleaning requirements for a number of different library buildings has led to price savings compared to the original local single site arrangements. |
5.15 |
The procurement approach to catering contracts is also being revised in order to streamline the process and achieve improved service outcomes. A variety of different requirements for security services, previously procured separately or locally, are being brought together into one multi-supplier framework for a range of security-related services. This will make it easier to procure security services in a compliant and quicker way and should lead to improved prices as requirements are aggregated and opportunities become more visible to suppliers. |
5.16 |
A review of the approach to the procurement of vehicles is reaching its conclusion and is subject to final approval. The review has considered the options of leasing, purchase and other arrangements, whilst also addressing compliance. The outcome of this review will be reported to a future meeting of the Panel. In addition the team has recently put in place a framework contract for vehicle spares on behalf of Hampshire Transport Management (HTM) and Hampshire Fire and Rescue Service. This framework contract is also available to District Councils in Hampshire. This new contract will generate an average annual cashable saving of at least £50,000 (15%) and additional non-cashable efficiency improvements in the ordering and invoice payment processes for HTM. |
5.17 |
The team is also assisting Property Services with the accelerated roll out of `smart' utility meters across the County Council's estate, including the procurement of IT systems to support carbon measurement and reduction. |
5.18 |
The team represented the County Council at the South Hampshire `Meet the Buyer' event in March 2009 and discussed the County Council's procurement arrangements and opportunities with 42 local businesses and organisations. A similar event will also be attended in 2010. |
6. E-Procurement Initiatives:
6.1 Electronic Tendering: the electronic tendering system is now being used for the majority of tenders in PBRS (both within Property Services and Corporate Procurement and County Supplies). The team have recently provided training on the e-tendering system to the procurement teams in Environment and Children's Services, who will start using the system shortly.
6.2 Government Procurement Cards in Schools: following a successful small scale pilot of purchasing cards in 16 schools since September 2008, the County Treasurer and the Primary and Secondary Heads Resources Groups have agreed that the pilot can be extended to at least another 50 schools from January 2010. The team are currently carrying out a lot of preparation to support this extended programme. The County Governor Forum supports the purchasing card pilot, as Governing Bodies have ultimate accountability for the effective and compliant use of the purchasing cards in schools.
6.3 Corporate Contracts Register: all procurement teams are now recording their contracts in their own databases or systems. However, this is still a dispersed and disaggregated approach, due to different requirements in each team. An evaluation is being undertaken to identify the most cost-effective approach to the implementation of a corporate contracts register for the County Council, and this remains a key priority for the team.
7. Hampshire and Isle of Wight Procurement Partnership (HIOWPP):
7.1 The team are continuing to support and sponsor the HIOWPP, which is particularly focused on providing benefits for the District Councils. The partnership has a number of workstreams and in recent months has provided access to existing contracts and put in place new collaborative arrangements. The partnership has generated a good level of cashable savings in 2009 with the latest reports showing approximately £660,000 in total across the eleven district and borough councils. Around 45% of the total relates to work by two authorities on insurance costs.
7.2 The HIOWPP programme has so far included the following areas:
· Street signage
· Insurance
· Housing conditions surveys
· Personal protective equipment
· Temporary agency staff
· Energy (including fuel)
· Playground equipment
· Mail services
· Cash collection service.
7.3 It is planned to put in place a new collaborative procurement arrangement for tree maintenance and to promote opportunities for the district councils to maximise the benefits of the recently concluded contract for the Hampshire Public Services Network for voice and data (HPSN2).
8. Key Performance Indicators (KPI's) for Procurement:
8.1 The team are continuing to develop KPI's for procurement and have joined the CIPFA Corporate Services VfM benchmarking club for procurement. Collation of the second set of annual indicators for the benchmarking club is in process and the results of this exercise, and comparisons with other similar local authorities will be reported to a future meeting of the Panel. There were no similar comparator local authorities in the benchmarking club last year, but it is understood that a large number of additional local authorities have joined the club in recent months. Hopefully, this will provide useful data to facilitate comparisons of performance with similar local authorities and the County Council's own performance over two years.
8.2 A more detailed report on the corporate KPI's will be made to a future meeting of the Panel, but four of the current key KPIs are shown in Appendix 1. The team have now filled over 1,000 places on procurement training and briefings across the County Council since 2003/04. The percentage of orders sent electronically to suppliers has increased by more than 12% since 2005/06, but at just over 14% this is below the current target of 20%. This level reflects the reluctance of staff raising orders to take advantage of the electronic transmission of orders because of a perceived loss of control over the process. Steps to address this matter are underway. The number of payments made electronically by BACS continues to increase steadily and is now above 91% of all payments made. The level of spend through purchasing cards is still relatively low at less than 1% of total spend. This will be addressed as part of the review of the purchase-to-payment process to drive further efficiency as part of the implementation of the recommendations of the Corporate Services Review of Procurement. A further analysis of the Council's total expenditure by a specialist service provider is being considered in conjunction with HIOWPP, but at this point in time no update on expenditure within Hampshire and with SMEs is available.
9. Efficiency Savings for Corporate Common-Use Contracts:
9.1 The efficiency savings generated by new or re-tendered corporate common-use contracts is estimated to be over £200,000 for corporate departments and over £80,000 for schools in 2009/10. The contracts which have contributed to this saving includes:
· Office supplies and ICT consumables
· Batteries, torches, lamps, tubes and personal protective equipment
· Waste collection and recycling
· Temporary agency staff
· Recordable media.
9.2 These figures exclude the £2.3 million full year effect saving on the electricity contracts which started in November 2009. Although this saving is guaranteed for two years for many sites, the team are not certain that the saving will be recurring after the initial two-year period due to the changing energy market. Savings from the new HPSN2 contract are substantial, but have not been included as the full impact of the new contract is still being assessed. Departmental specific savings identified above are also excluded from saving figures to avoid double counting with savings claimed by departments.
9.3 The Procurement Improvement Programme has targeted savings of over £10 million by the end of 2013/14. The team are currently developing plans to deliver these savings both from corporate common-use contracts and from work within departments to revise and update procurement strategies.
9 Conclusions:
9.1 The revised Corporate Procurement Strategy has recently been approved and is intended to drive a significant change in procurement performance and efficiency across the County Council. The Corporate Procurement team, with the support of departmental procurement colleagues and the Corporate Procurement Network, is leading on the Procurement Improvement Programme which is focussed on the implementation of the recommendations of the CSR of Procurement.
9.2 The team has also continued to lead on a number of improvement projects during 2009 arising from the previous procurement strategy and continues to provide a large amount of support to departments on procurement issues and tenders, whilst running a substantial training and awareness programme and leading on the development and effective exploitation of the County Council's e-procurement systems.
9.3 Recurring savings achieved on corporate common-use contracts for 2009/10 amounts to over £280,000 for corporate departments and schools, excluding recent savings on electricity and specialist departmental arrangements.
11 Recommendations
That the Panel advises the Executive Member for Policy and Resources to endorse the progress on corporate procurement initiatives.
Appendix A
CORPORATE OR LEGAL INFORMATION:
Links to the Corporate Strategy
Hampshire safer and more secure for all: |
No |
Corporate Business plan link number (if appropriate): | |
Maximising well-being: |
No |
Corporate Business plan link number (if appropriate): | |
Enhancing our quality of place: |
No |
Corporate Business plan link number (if appropriate): This proposal does not link to the Corporate Strategy but, nevertheless, requires a decision because the decision has a positive impact on the management of the County Council's resources and on the local economy; by promoting a strategic approach to procurement; and by developing the procurement skills of staff and improving capacity. | |
Section 100 D - Local Government Act 1972 - background documents | |
The following documents discuss facts or matters on which this report, or an important part of it, is based and have been relied upon to a material extent in the preparation of this report. None | |
Document |
Location |
Appendix B
COMPREHENSIVE RISK & IMPACT ASSESSMENT:
1. Equalities Impact Assessment:
1.1. Equality impact assessment has been considered in the development of this report and no adverse impact has been identified. The revised Corporate Procurement Strategy aims to improve the equalities performance of external suppliers where appropriate.
2. Impact on Crime and Disorder:
2.1. The revised Corporate Procurement Strategy recognises that community cohesion, safety and security is a key part of the County Council's corporate priorities. The Strategy aims to continue to identify where procurement can ensure that appropriate contracts include provisions for crime and disorder reduction and that procurement arrangements do not have an adverse impact on community safety issues.
3. Climate Change:
a) How does what is being proposed impact on our carbon footprint / energy consumption?
The revised Corporate Procurement Strategy does not have a direct impact on our carbon footprint / energy consumption, but it aims to improve the County Council's performance on sustainable procurement.
b) How does what is being proposed consider the need to adapt to climate change, and be resilient to its longer term impacts?
No impact identified.
Appendix 1
Percentage of spend through electronic orders to suppliers
Percentage of invoices paid by BACS
Percentage of spend through purchasing cards
