MEATH COUNTY COUNCIL
CORPORATE PROCUREMENT PLAN
1.Introduction
In July 2005 the Department of Finance issued the National Public Procurement
Policy Framework requiring all bodies to produce Corporate Procurement Plans. The
information contained in this report is based on information obtained following
discussions with staff of other departments, other local authorities, extracting
information from Agresso and the analysis of same. The data is in respect of the 2008
financial year, and as the AFS has not yet been done, the data is in draft form.
The review included:(a) An analysis of the purchasing processes and procedures as they currently
operate
(b) An assessment of systems and structures relating to these functions
(c) An analysis of purchasing spends through Supplier and Transaction Analysis
The main focus of the analysis and recommendations is in the area of supplies and
services procurement on the Revenue side. Capital Procurement is project based and
cannot easily be considered in isolation from project management and contract
management elements.
While the plan makes recommendations for improvements, it must be pointed out that
procurement policy and procedures do exist and are adhered to.
1.1 Objectives of the Corporate Procurement Plan
The objectives of the CPP are to achieve greater value for money by:
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Ensuring that purchasing in Meath County Council is done in a strategic and
co-ordinated manner.
Reviewing existing purchasing processes
Making best use of the Council’s purchasing power in the market place.
While price is a determining factor in value for money outcomes in procurement, it is
not the only variable to be considered. There are other issue which should be taken
into account, i.e. goods fit for the purpose for which they were intended, delivery
time, quality and the level of service from the supplier.
The review has highlighted areas for improvement and the recommendations listed
throughout the document should be prioritised,and further and additional analysis
needs to be carried out. These can then be incorporated in the main Meath County
Council Corporate Plan.
1.2 Profile of the County
The county is located on the North East Coast of Ireland and comprises 2,342 sq.
kms. It is bordered by Dublin, Monaghan, Cavan, Louth, Westmeath, Offaly, and
Kildare. The census at 2006 indicated a population of 162,831, comprising 53,938
households. A total of 5,414 properties were vacant on census night.
There are three Town Councils, Trim, Navan and Kells, 6 Area Offices and 7 Fire
Stations in the County. A total of 850 staff, permanent/temporary and indoor and
outdoor staff are employed by Meath County Council, making it one of the biggest
employers in the County.
2. Current Procurement Position
Meath County Council has policies and procedures for the purchase of goods and
services and is available on the old Intranet site under Auxillary Services, Finance,
and in line with training provided when the Agresso system was introduced in 2001.
Limits are set for the various Grades within the Council as to the amount they can
purchase and the people who ultimately sign off on payments.
It is recommended that these policies and procedures be reviewed and amended to
reflect the value of purchases of goods and services currently being sourced.
It is also recommended that a person(s) be identified in each department at Grade
V1 level and similar at engineering level to be responsible for procurement within
their department in conjunction with the newly formed Corporate Review Unit and
appropriate procurement training provided.
Currently there are 5 main methods of procurement within the Council through the
following media:
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EU Journal (OJEU) limits works >5,150,000, Services>206,000, Supplies
>206,000 all excluding VAT
National e-tenders website > 50,000 excluding VAT
LA Quotes for annual plant and machinery hire
On-line requests for Quotations
Day to day requests for quotations in line with procedures and processes on
the intranet.
Consideration is being given to purchasing bitumen materials on a regional
basis as the NRA have ceased sourcing this material on a country wide basis.
2.1 Structures
The following is a brief outline of the structures surrounding the various purchasing
areas of the Council:-
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An annual tender is published for plant and machinery through the LAQuotes
system by the Infrastructure Section.
Stationery, office supplies, advertising , security and cleaning services is
centralised in Corporate Services Section
The IT Department purchases all computer software and hardware and all
associated equipment.
Up to the middle of 2008, the Council ran a Stores Section which operated out
of the Machinery Yard – this was closed down and any surplus stock sold off.
Items which used to be held in Stores are now being sourced by the Area
Offices.
All vehicles, with the exception of Library and Environment vehicles, are
purchased through the Machinery Yard. However, there is a root and branch
review currently being undertaken of operations at the Machinery Yard which
may change these processes. This will also effect the purchase of fuel which
is done by getting prices locally on a regular basis.
Fuel for heating all the offices, libraries, and the one remaining swimming
pool is procured through the Infrastructure Section.
Fuel for the Council fleet is procured by seeking quotations locally through the
Infrastructure Section.
While there is an element of centralisation in purchasing within the Council,
substantial purchases are made from Section to Section, in the Areas and the Fire
Service
It is recommended that, with the exception of emergencies, all procurement should be
centralised and managed by the newly formed Corporate Review Unit in order to
achieve better value for money, source goods and services strategically, maximise
buying power and ensure more competition amongst suppliers.
3. Expenditure and Analysis
3.1 Revenue Expenditure
Total Revenue Expenditure for 2008 was 120,000,000. This covers the everyday
expenses of the Council such as maintenance of roads, housing, water services
administration and support costs and the repayment of loan charges and payments to
other statutory bodies and local authorities for services provided. In order to establish
the actual procured amount of the total spend, it was necessary to omit the following
as non-procured outlay:
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Salaries , Wages and Overtime
PRSI
Pensions
Grants, Disabled/Essential Higher Education and amenity
Payments to other local authorities and outside agencies
Transfers from Machinery Yard
Members expenses and payments
This is not a full list of the all matters omitted, but gives a good idea of the nonprocured element of spend.
The final total procured spend for 2008 was reduced to 41,721,832.88.
It was established that the breakdown of transactions on this amount was as
follows:Amount of Transaction
01 500 euros
501 - 1000
1001 – 5000
5001 - +
Total
No.
%
8,643
53%
2498
15%
3812
23%
1469
9%
16,422
100%
%value
3%
4%
17%
76%
100%
It is clear from the above table that very substantial numbers of transactions are in the
range of 1 to 500 euros which involves significant amounts of time being spent in
processing payments through from ordering to final payment, resulting in higher than
necessary bank fees. This could be addressed by the introduction of Low Value
Purchase cards which could be issued to the Housing Squad, Overseers, the
Corporate Services section etc.
From discussions held with Monaghan County
Council who have been using the cards for the past 4 years, they have achieved
considerable savings in staff time resulting in people being deployed to other more
important duties. Some of the benefits to be derived by the use of the cards is as
follows:
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Reduction in bureaucracy and associated costs
Simplified and faster administration with an associated reduction in paperwork
Reduction in the number of transactions/payments
Better management information
Some issues regarding the use of the cards are as follows:
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Supplier recruitment – may take time to persuade suppliers of the value of
using the cards
Ad hoc suppliers would not be interested
Average transaction charged a fee of 2%, which has to be negotiated with the
bank – this takes some considerable time.
Training and support for both buyer and supplier
3.2 Communications and Power
In the past number of years communication and power costs have soared. Eircom
provide all Meath County Council landlines with Vodafone providing the very
significant numbers of mobile phones and other communication equipment such as
Blackberry’s etc. A number of years back the Council moved away from the ESB to
Airtricity for some of its operations at Water and Sewerage Schemes. For various
reasons the venture did not work out. The presence of the monopoly like situation
the Council finds itself in with regard to power costs leaves no room to negotiate
costs. Similarly, where power lines or other ESB equipment have to be moved to
facilitate council works, the Council is exposed to very high charges from the ESB,
which again leave little room for negotiation. The same situation arises with Eircom
works.
It is recommended that the Council seek an alternate source of power to establish
what savings can be achieved.
Negotiations with Vodafone with regard mobile to mobile calls has resulted in some
significant savings on bills and it is recommended that further reductions be sought.
3.3 Printing and associated equipment
In August 2008, the Co. Manager approved a policy regarding printing and print
devices, the main objectives of which were to:
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Significantly reduce the amount of paper used
Reduce power consumption associated with printing
Increase the numbers of users per printer
Make the most efficient use of toner
A rationalisation of print devices is to be carried out in 2009.
4.0 Capital Expenditure
Total Capital spend in 2008 in Meath County Council was 194,033,178 including a
sum of 6,218,637 which covered wages salaries etc. Of the total spend 166,261,888
was spent on Roads, Housing and Water Supply and Sewerage. All of these contracts
would have been procured through e-tendering and the EU Journal. Capital
expenditure is generally described as that which is incurred on the creation of an asset
having a life extending beyond the year in which it is provided such as the purchase of
land, house building, major road improvements, provision of fire stations etc.
5.0 Suppliers
At date of writing Meath County Council have 11,999 open suppliers on the Agresso
system with a further 20,000 dormant suppliers – these cover all areas including
Disabled/Essential/Higher education grants etc. Details of the suppliers and amounts
paid were extracted from Agresso for the purpose of this review and it was noted that
in the main, road contracts suppliers , consultants, legal fees and payments to other
local authority figured high in the top 15 highest paid suppliers. Further and more
detailed analysis of the supplier profile needs to be carried out.
Supplier management has not been a feature of procedures in Meath County Council
in the past. Because there are so many sections/areas ordering goods from the same
suppliers, no one department has the responsibility for managing the performance of
any supplier on a consistent basis.
As indicated previously, the newly formed
Corporate Review Unit could best monitor suppliers in an effort to achieve the
following:
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Rigorous application of contractual agreements
Evaluate performance, quality , delivery, flexibility
6 Risk Management and Assessment
Risk Management and Assessment should be incorporated into the management
process of all departments and done in accordance with the SUPREM model and the
document issued in March 2004 entitled ‘Risk Management Guidance for Government
Departments and Offices’
Risk management and assessment in procurement should be carried out where:
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The value of the purchase is high
The procurement process is complex, ie the new style Contracts for Civil and
other works
The delivery of core services could be effected.
Considerations could include:
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The nature of the supply market
Probability of supply failure
7. Sustainable/Green Procurement
Local Authorities are becoming increasingly conscious of
taking social,
environmental and economic factors into consideration when assessing procurement
choices. Best Value or Most Economically Advantageous Tender (MEAT) is not
about securing the lowest initial price but a combination of factors such as running
and disposal costs, depreciation, delivery and fit for purpose.
Regulations
introduced in 2006 allowed for environmental characteristics to be considered when
assessing tenders.
The aim of sustainable procurement is to shift spending from
goods, services and public works that negatively impact on the environment to more
environmentally sound and socially beneficial outcomes. Some of the benefits arising
from sustainable procurement can be:
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Reduction in consumption of power/fuel
Reduction in waste disposal costs
Healthy environment
Positive PR
8. Conclusion and key recommendations:
The Corporate Procurement process has provided the Council with an opportunity to
review current procedures and practices and identify improvements to be made and
will need buy-in from all employees of the council at every level.
The following are the various recommendations made throughout the plan:
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Current procurement procedures and levels of approval to be reviewed
Person/s at least Grade V1 and similar engineering level be identified within
each department to handle procurement
Appropriate procurement training to be provided for these people
With the exception of emergencies, all procurement to be centralised and
managed by the newly formed Corporate Review Unit in conjunction with
Department heads
Investigate the use of Low Value Purchase cards in an effort to reduce the
amount of bureaucracy
Source, if possible, an alternative supplier of power
Carry out more detailed analysis of suppliers through the Corporate Review
Unit
Carry our a Risk Management and Assessment process in all departments