London Borough of
Procurement Strategy 2010 – 2015
LBWF Procurement strategy
Version 0.4 Consultation version
Page 1 of 19
29th September 2010
Contents
Executive Summary
Objectives
Introduction
Strategy
Resources
Governance, Compliance and accountability
Value for Money
Category Management
Responsible procurement
E Commerce
Management information
Appendix 1 - Action plan
Appendix 2 – Reference documents
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Executive Summary
‘Local Authorities should develop a corporate procurement function to collect management
information, oversee devolved buying, coordinate training and act as an internal source of
expertise’
‘Delivering Better Services for Citizens’ (The Byatt report)
1. This Strategy sets out proposals for the continued development of procurement at the
London Borough of Waltham Forest over the next five years to meet the following vision:
“To procure goods, services and works by the most efficient and sustainable means,
ensuring accountability, achieving value for money and deriving maximum benefit to meet
the needs and aspirations of the community“.
2. The Council is aware of the need for improvement and has received guidance and advice
from an Independent Panel report and several other reports and action plans recommending
changes to the way that procurement is delivered in LBWF.
3. To deliver this vision we have identified ten main objectives which are set out below and
these will form the basis against which all future activities will be planned.
4. We recognise opportunities to improve service provision through better commercial
contracting arrangements whilst upholding the Core values of the Council, to help local
regeneration, to procure from sustainable sources and to ensure that equality and diversity
are fully considered in our evaluation of options.
5.Governance arrangements and reporting structures need to be clarified with the involvement
of Members, Cabinet, corporate procurement and associated directorate based procurement
groups. A strategic Procurement Board is recommended. A clear assignment of
responsibilities for decision making, approvals, monitoring and reporting must be defined.
Major projects (say value £5m+) may require their own project boards at which corporate
procurement must be represented and will be subjected to business planning and review
methods. (eg: ‘Gateway’ type reviews).
6. A review of all existing major contracts is essential to form an up to date contracts register.
Conducting the review would be an opportunity to discuss performance with existing
suppliers and contract managers and could reveal opportunities to examine the
competitiveness of each agreement.
7. The existing resources available should be reviewed and a flexible management structure
developed that will be able to provide support for all major contract subjects. The
restructuring of central capability will be based on the introduction of category management
responsibilities closely linked to Directorate based expertise to offer the most effective
solution.
8. Achieving best practice in procurement is subjective and we are already involved in a range
of initiatives that require further detailed development to contribute to the quality of our
service. The way we balance resources between directorates and the centre dealing with
the strategic and operational requirements needs to be considered and once a remit and a
structure has been agreed with Directorates we can plan how to apply appropriate
techniques and use the skills and experience of procurement professionals across LBWF.
9. The policies and procedures for contracting must be simplified, applied consistently and
mandated across the Council. Contract procedure rules are basic and need to be
supplemented by better guidance that provides templates and examples to assist staff.
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10. It is necessary to introduce an electronic system to capture essential contract details in
common record files that can be used to drive compliance and provide a full audit trail.
Investing in suitable software, configuration and training will give LBWF better control and
visibility. The system should give access to all the key stages throughout the procurement
cycle and provide evidence of the approval and completion of each stage leaving a full audit
trail. Tendering and contract management processes would also be better regulated through
the use of an electronic system.
11. Procurement guidance and early involvement in projects above the threshold values should
be mandatory to reduce the burden of chasing compliance at a later date. Involving
professional procurement staff in all the stages of letting and renewing contracts (eg: market
warming exercises, preparing tender documentation, advertising, evaluations, awards,
debriefing etc) will help to reduce irregular practices and minimise the risk of challenge.
Corporate procurement will be focused on supporting directorates by adopting category
management to ensure that they receive adequate guidance throughout these processes.
12. The existing SAP computer system provides automated ordering for the whole Council and
this is an important feature of control although it is inflexible and does not readily offer some
of the more advanced features of e procurement. LBWF needs an upgrade to improve
functionality but this requires investment and also considerable staff time, effort and training.
The whole system is more comprehensive than just procurement use as it is the basic
platform on which all financials (and other users) are running. Better knowledge of reporting
options and staff training may reveal more useful information.
13. The analysis of management information will identify further aspects of the service that
require improvement to achieve closer monitoring and control. Better visibility of decisionmaking backed by the provision of suitable evidence is needed in all cases and a set of
performance indicators should be developed for the team to assess the added value of their
activities.
14. Benchmarking against other organisations will be encouraged. A system providing the basic
details would be very helpful when considering the potential for shared services. Ongoing
collaboration and the use of shared services may provide cost effective options but these
arrangements typically require long lead times as there are complications to overcome.
Where these opportunities are considered LBWF needs to develop a method of choosing
which arrangements are the most beneficial.
15. This strategy needs to be discussed, defined and publicised and all key stakeholders will be
involved in determining the objectives and understanding their responsibilities. Once
established, progress against the strategy will be reported against an action plan
(details/priorities are to be determined by the Strategic Procurement Board). Measurement
should include the assessment of savings and efficiencies but this must be carefully
positioned so that it does not become the sole reason for the team to exercise its many
functions.
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Objectives
1. Provide a corporate led focus on strategic procurement, coordinating all procurement activity
through category management to achieve optimum resource allocation.
2. Ensure that procurement strategy, planning and practice supports the Council’s core values,
corporate aims and objectives.
3. Support the delivery of services to end users, ensuring stakeholder involvement and
customer satisfaction are fully reflected in all contracts.
4. Ensure all procurement and contract management activity is governed and complies with
contract procedure rules and statutory regulations.
5. Achieve and evidence value for money in all procurement arrangements, capture and record
the benefits achieved, benchmark against peers.
6. Develop procurement skills and provide support and training for all staff involved in
procurement activities across the Council.
7. Take account of sustainability, local economic development and equality and diversity
priorities throughout procurement activities.
8. Utilise e-commerce to achieve transactional efficiency for all contracts and provide accurate
and up to date management information.
9. Develop procurement collaboration with other public bodies, sharing services where
appropriate and encouraging partnering arrangements.
10. Use procurement performance analysis to drive continuous improvement of procurement
activity across the Council.
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Introduction
“Procurement is not an end in itself. It should be undertaken to further the strategic objectives of
the authority. Developing a procurement strategy, covering a three to five year period, will
enable an authority to develop a longer-term vision of how procurement can help deliver
strategic objectives.”
Procurement Essentials – I&DeA 2003
1.1. The purpose of this Procurement Strategy is to refresh our approach to procurement in the
light of the Independent Panel review, to improve the coordination and control of the function
and to make significant improvements. Taking a more strategic approach through the
adoption of category management will provide opportunities to further develop efficiencies
and generate savings. The whole Council will contribute to and benefit from the
improvements obtained.
1.2. Increasing pressures on budgets and the search for future efficiencies makes the
procurement activity a vital factor in the successful delivery of services and the Council
recognises that it should adopt best practice to maximise the benefits available from all its
commercial arrangements. Improvements are expected to lead to cashable financial savings
as well as operational efficiency gains.
1.3. National initiatives and guidance on developing procurement have been provided in many
forms and the Council needs to be able to respond positively so that it can demonstrate
value for money and an appropriate ‘use of resources’.
1.4. The procurement service needs to be responsive to accommodate local and national
initiatives and must be capable of dealing with change to continually research markets and
obtain the most favourable arrangements. Examples include the 2012 Olympics, Total Place
and the personalisation agenda for care.
1.5. The structure of the various commissioning and procurement groups is fragmented and
needs to be revised to enhance the profile, influence and capability to deliver a coherent
service. Coordination is required to implement a strategic approach.
1.6. This Procurement Strategy will be updated annually on the basis of stakeholder feedback
and development in the policies, objectives and key deliverables of the Council as well as
wider government initiatives.
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Procurement Strategy
‘Procurement is the process of acquiring goods, services and works, covering both the
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 options appraisal and the critical ‘make or buy’ decision which may result
in the provision of services in-house in appropriate circumstances’.
National Procurement Strategy for Local Government - October 2003
2.1 STRATEGY
2.1.1
Strategic procurement relies on the coordination and oversight of all procurement
activities being managed within a professional discipline. The Council requires sufficient
visibility and control of procurement to be able to take decisions based on expert advice
and guidance backed by extensive market intelligence. The corporate procurement team
needs to be influential and proactive so that it can coordinate all spending across the
whole Council.
2.1.2
Procurement strategy must be aligned with the Council's core values, corporate aims,
the manifesto and objectives. Recognising the priorities within these policies is
necessary to ensure that the strategy is relevant to local circumstances and accurately
reflects the key themes and priorities of the Council. All decision making processes
should encourage long-term thinking and commitment to strategic procurement issues.
2.1.3
Strategic procurement must include innovative ways of securing goods, works and
services that best meet the needs of users and the local community in its widest sense.
Strategic procurement is concerned with the end-to-end process, not simply the
transaction of buying. It involves understanding the Council as an integral part of the
supply chain, not just a buyer of goods and services. It involves an appraisal of all viable
supply options in order to assess the best value for money for citizens, identifying the
solution that offers the optimum combination of whole life costs and benefits to meet
customer requirements and manage the performance of contractors to deliver the
identified outcomes.
2.1.4
Procurement involves considering options and making informed choices. To be most
effective early engagement with end users is essential so that standards and service
requirements can be discussed and determined. The selection of compliant procurement
routes and relevant evaluation criteria will assist in making the most of market
opportunities and matching user requirements.
2.1.5
Significant projects will be progressed through business cases and review stages and
input from corporate procurement is essential to guide these processes. Option
appraisals should be provided for consideration/approval and supporting evidence on
service definition, risk assessment, shared services opportunities and market
intelligence is also required. A compliant procurement route will be selected as part of
the approval process and detailed planning and programmes will be developed.
2.1.6
There are likely to be debates about what constitutes ‘procurement’ and what is
‘commissioning’. For the purposes of this strategy procurement is regarded as any
contractual arrangement the Council enters into that involves spending money. There
should be reference made to grant funding which is allocated to third sector providers as
in many cases this will be ring fenced and not be subject to open competition.
2.1.7
The National Procurement Strategy defines procurement as follows: “Procurement is the
process of acquiring goods, works and services covering both acquisition from third
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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 options appraisal and the critical ‘make or buy’ decision which
may result in the provision of services in-house in appropriate circumstances.”
2.1.8
Commissioning is defined by the Cabinet Office in Partnership in Public Services (2006)
as “the cycle of assessing the needs of people in an area, designing and then securing
appropriate service.” The emphasis is on the importance of identifying the need and then
meeting it. Commissioning is a needs-led activity.
2.1.9
As can be seen above, at a strategic level, procurement is also concerned with
identifying needs and ensuring that they are properly met. The differences mainly are in
emphasis and coverage. Commissioning is heavily needs-focused and procurement is
more commercially focused. In terms of coverage, commissioning is aimed at public care
services such as health, education, social care and housing; whereas procurement is
aimed at all categories of expenditure.
2.1.10
These synergies have been addressed through the recent Independent Panel Review
with the recent appointment of a new Assistant Director Procurement & Commissioning.
2.2 RESOURCES
2.2.1
To implement this strategy the Council will need to establish a corporate team with the
responsibility of leading commissioning and procurement activities and setting policies
and standards. The scope and remit of procurement must be defined within the Council
so that the responsibilities are clearly defined and a consistent approach can be taken.
2.2.2
A procurement network will be developed to link the corporate procurement team to
directorate based resources. Initially identification of existing procurement resources and
a skills audit will map the capability and capacity of procurement resources to support
cross cutting projects and accommodate the individual requirements of host directorates.
2.2.3
Delivering strategic procurement requires skilled and experienced officers who are able
to provide advice and guidance on all aspects of procurement and who have knowledge
and expertise of how to apply best practice in obtaining value for money.
2.2.4
Training requirements are extensive and a basic programme of compliance training
(knowledge and understanding of CPRs) should be a priority. Category managers will be
required to achieve accreditation in several aspects of procurement and the Council will
conduct a competence based assessment before finalising the appropriate support
structures.
2.2.5
The corporate procurement team will be setting and maintaining standards and providing
a range of training opportunities that lead to an accredited status for all procurement
officers in the Council. A structured training programme with capability assessments
and continuing professional development will provide a career path and help with
recruitment and retention.
2.2.6
The new Joint Commissioning Unit for Childrens and Adults will consult with AD
Procurement and Commissioning and they will adhere to the professional standards
established practice established to ensure consistency of approach across the
organisation.
2.3 GOVERNANCE, COMPLIANCE AND ACCOUNTABILITY
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2.3.1
All procurement activities must be conducted in compliance with the Councils procedural
rules and the relevant EU procurement legislation. Additional guidance is provided in the
‘Procurement handbook’ and this guidance will be simplified and rewritten. Effective
application of procurement across the Council will be delivered through the active
participation and strict compliance of all those who control budgets and authorise
expenditure as well as those with appropriate technical expertise/service experience.
2.3.2
A Strategic Procurement Board has been established to act as the senior multidisciplinary officer group tasked with ensuring that all major acquisitions over £156k in
value are correctly procured in accordance with the CPRs and the terms of reference for
this Board will be defined. The Board are responsible for overseeing the delivery of this
strategy and will also provide constructive internal challenge for colleagues to ensure
that priorities, ideas or opportunities have not been overlooked.
2.3.3
The Strategic Procurement Board will oversee a body comprising the leading
practitioners from all the main spending areas (known as the Procurement Improvement
Forum) led by the Assistant Director of procurement and Commissioning. This group will
report on all procurement activities, requests for approval and contract management
reports (benefits realisation) and provide a platform for the major value and high risk
contracts to be discussed. Directorate based procurement review groups will be used to
mirror the forum for lesser contracts.
2.3.4
The approval routes and scheme of delegation will be determined within CPRs and the
financial regulations. Reporting arrangements to ensure accountability will be set in
accordance with the constitution and appropriate committees.
2.3.5
Once contracts or other procurement arrangements are in place, the Council needs to
ensure ongoing compliance and for this purpose contract management responsibility
should be clearly defined so that each contract has an ‘owner’. Performance monitoring
against key performance indicators (preferably on an automated system) is an essential
function to ensure that value for money evidence is being captured. The ongoing
working relationship between procurement officers and contract managers is vital to
ensure successful delivery of the contract and also to revise specifications as necessary.
2.3.6
In most circumstances the evidence required to prove value for money is obtained
through competition. The regulations surrounding procurement are intended to promote
‘open and fair’ competitions and the way in which the Council is obliged to advertise it’s
requirements and conduct procurement is prescribed by law. The Council has a duty to
ensure that all such procurement activities are properly managed and should have
appropriate measures in place to meet this obligation. Advice and guidance on
compliance is available from corporate procurement and an appropriate level of support
should be provided for all forms of expenditure.
2.4 VALUE FOR MONEY
2.4.1
The Council’s drive for value for money will be linked to the Government’s efficiency
agenda and the Council’s Medium Term Financial Strategy. These initiatives call for ongoing cashable savings to be achieved in part through better procurement leading to
overall cost reductions. The Council will analyse its expenditure and target opportunities
to save money, rationalise the supplier base, increase competition, enter joint contracts
with other public bodies and contract more effectively.
2.4.2
Obtaining “best value for money” means choosing the bid that offers “the optimum
combination of whole life costs and benefits to meet the customer’s requirement”. This
does not necessarily mean selecting the lowest initial price option and the assessment of
quality and the ongoing revenue/resource costs require thorough assessment as well as
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the initial capital investment. The Council needs to apply value for money principles in
making all procurement decisions. Best Value is often confused with lowest price,
however, throughout the contracting process, best value requires a balance of quality
and price to be considered. In this context price should take into account the whole life
cost of the provision so far as is practicable.
2.4.3
The procurement process covers a full lifecycle of activities starting with the identification
of needs, through sourcing, evaluation, selection, award, mobilisation and ongoing
performance monitoring. This is sometimes referred to as ‘cradle to grave’ and the
extent to which this process is managed/influenced by procurement staff varies in
different organisations. If any of these stages become disjointed the integrity of the
process is at risk and the chances of a successful outcome are reduced.
2.4.4
Achieving Best Value also requires challenging the need for the procurement and the
way in which the service may be configured to achieve improvements in service delivery,
comparing service provision options against all those available, consulting with key
stakeholders and ensuring competition in the open market (known as the 4C’s).The
pursuit of best value requires an approach that embraces the 4Cs.
2.4.5
To determine value for money there often needs to be a balance between whole life
costs and matching customer requirements. In most instances, the Council will use ‘most
economically advantageous’ as the criteria which may include economy, efficiency,
effectiveness, equality and diversity, environment, health and safety, e-commerce,
sustainability and social impact.
2.5 CATEGORY MANAGEMENT
2.5.1
Category management can best be defined as a strategic approach used to understand
markets, analyse spend and implement new purchasing arrangements that dramatically
reduce cost and risk, and can increase innovation from the supply chain. By altering
how purchasing effort is directed to examine the entire organisational spend by groups
or 'categories' of goods and services according to the individual market places they are
sourced from it helps shift procurement to a strategic business function to drive
efficiency through the supply chain.
2.5.2
Category management represents a shift away from tactical/operational matters and to
enable Corporate Procurement to focus on high value strategic activities it will be
necessary to streamline the operational/transactional activities and continue to rollout
systems which will automate the process elements and ensure compliance with contract
procedures.
2.5.3
To introduce category management it will be necessary to realign Corporate
Procurement so that staff are proficient in the relevant supply markets and empowered
to manage cross functional teams of those spend categories. In effect this means
widening the scope of Corporate Procurement from one that is largely concerned with
managing process to one that delivers commercial advantage for LBWF. The diagram
below illustrates the scope of CPUs roles compared with local purchasing staff:
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Corporate Procurement
Strategic Sourcing
Demand Management
•Develop sourcing strategies to
meet demands
•Re-engineer supply chains/develop
new markets for maximum
responsiveness and lowest total
cost of ownership
•Identify and manage commercial
risks
•Let major contracts
•Challenge to demand volumes and
specs
•Work with services to assess
spend reduction opportunities
•Engage Business Improvement to
undertake business analysis
•Aggregation of spend and
rationalisation of supply base
Supplier Relationship
Management
•Improve supplier capability to make
service delivery better, faster and lower
cost
•Develop new capability to meet
emerging needs of SBC
•Deliver additional value from
relationships over and above contracts
•Measure and manage overall supplier
performance
Services
Let minor contracts
under CPU
governance
Manage contracts to
deliver contractual
obligations
Resolve contractual
disputes
Monitor KPIs
2.5.4
The key enablers to deliver this approach are staff. Our current structure is based upon
a traditional, generalist approach to procurement and focuses more on the letting of
contracts rather than the other disciplines above. An appropriate number of skilled staff
will be required to deliver this function, precise numbers are difficult to determine at this
stage until the initial categorisation work is complete. To enhance the current capabilities
of the team investment in further training will be required on Category Management.
2.5.5
The letting process for all major contracts will include development of sourcing strategies
and project management of implementation. Category managers will require detailed
understanding of supply market trends and structures, be able to monitor supply/demand
balances, liaise with services on demand forecasts and sponsors on supplier
performance issues. As part of continual assessment they will also manage continuous
improvement initiatives, the relationship with suppliers, overall performance reporting,
carry out risk assessments and account planning.
The following model of category management outlines the process:
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Kick off
Initiation – Data gathering
workshop
Spend
analysis
Scope
category
Opportunity
analysis
Chief
Officer
Sponsorshi
p
Analysis
Internal data
analysis
Supplier
Data
analysis
Options
workshop
Summarise
analysis
Strategic Sourcing
Option Generation
Market data
analysis
Project
planning
Quick wins
Cost v price
analysis
PESTEL
Supplier/
customer
positioning
Identify
cost
inefficiencie
s
Sourcing Strategy
Evaluation and
selection of
strategy
Implementation
Change Management
Business
Requirement
s
Analysis
workshop
Supplier
Conditioning
Establish
team
Risk and
contingency
planning
Implementation
plan and
performance
measures
Sponsor sign-off
Implementation
Contract letting/rationalisation
Negotiation
Improvement
Review
Supplier Relationship
Management
Ongoing alignment
with business
objectives
Ongoing market
analysis
Back to initiation
2.5.6
The Council will introduce effective demand management across the organisation.
Demand management focuses on the rationale for buying goods and services rather
than simply looking at the price paid. By analysing the Council’s spend data it will be
possible to target the rationale, quantity and specification of purchases rather than
simply assessing whether we are getting a good price. The aim of demand management
is to enable the Council to make the most efficient and effective use of resources
through eliminating unnecessary spend, using lower cost or more effective alternatives
or reducing the use of particular products. Opportunities to eliminate, replace or reduce
expenditure will be considered.
2.5.7
Procurement officers need knowledge of the markets they are dealing with and a
thorough understanding of the service requirements of the Council so that they can work
alongside commissioners, contract managers and service users when developing
agreements. Dealing with specialist expenditure requires the adoption of category
management and this can be provided either as part of a shared corporate resource or a
linked directorate based resource.
2.5.8
Evaluation can be a delicate process and needs to be controlled in accordance with
specific conditions so that an impartial result can be relied upon and if necessary (under
challenge) defended. A thorough evaluation is only possible when the tender documents
have been well written and the evaluation criteria stated clearly and applied correctly.
The controls necessary to conduct an evaluation should be explained as part of the
procurement guide so that all staff and stakeholders involved can be fully informed of
their responsibilities.
2.5.9
Effective supplier management addresses not just individual contracts a supplier may
have with the Council but the overall relationship. This requires a collaborative approach
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by both the supplier and the Council, with appropriately skilled resources to manage
those key relationships. Corporate Procurement will take the lead in managing strategic
relationships with the customer service areas to continually drive out costs and improve
services.
2.5.10
Contract management is vital after the contract has been let. The ongoing management
and interaction with the successful contractor is critical to the smooth running of the
contract and over time the way in which the agreement matures will be largely a result of
the interchange. The most successful contracts are regularly being revised and updated
showing that both parties are flexible in their approach and willing to work together to
continuously improve the service provided. This is often encapsulated as a ‘partnering’
type agreement where better understanding and closer working relations should lead to
greater emphasis on achieving service outcomes and more efficient delivery
mechanisms.
2.5.11
A natural consequence of adopting a focus on strategic spend areas, is that
transactional and tactical purchasing will be met by greater use of collaborative
frameworks, in line with HM Treasury’s Report ‘Operational Efficiency Programme:
collaborative procurement’ which recommends greater use of such arrangements.
Corporate Procurement will signpost such arrangements and make them available
through our e-procurement system.
2.6 RESPONSIBLE PROCUREMENT
2.6.1
Responsible procurement must be practiced as an integral part of the strategic approach
and will include the consideration and emphasis on factors other than cost in the
evaluation and assessment of value for money. The Council aims to maximise its
options for purchasing from a diverse and competitive range of local suppliers including
minority businesses, voluntary and community sector groups, small firms and social
enterprises. The Council recognises and supports the importance of engaging with and
doing business with local and regional companies where this is allowed within the
legislative framework.
2.6.2
Sustainability and quality will be taken into account when service delivery options are
being considered. Legislation allows factors such as carbon footprint, replacement
cycles and social benefits to be taken into consideration wherever it is appropriate to the
contract. An appropriate stage to address these issues is at the beginning of the
procurement process – during the formation of the business case and in the writing of
the outcome requirements. The way in which these requirements are expressed will
influence the procurement exercise and there is an increasing trend towards the use of
outcome based specifications which encourages more flexibility amongst providers to
consider alternative and innovative options.
2.6.3
The methods used to ‘source’ suppliers, contractors and providers are vital as they
become the first point of contact with the ‘market’ and will ultimately dictate which
companies are selected to work with the Council. The opportunities presented by
advertising requirements (for contracts) on the website should be fully explored and
there are many portals that can be used (eg: Supply 2 gov). The Council may also make
use of market warming and market testing exercises to inform businesses cases. There
is an extensive range of collaborative opportunities through consortia both regional and
national. Corporate procurement needs to be aware of these organisations and capable
of selecting the best fit for the Council.
2.7 E COMMERCE
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2.7.1
The Council will use electronic trading software and systems to automate procurement
functions and provide a faster and more efficient service dealing with sourcing,
tendering, ordering, payment and reporting generally. Coordination of the information
that exists in different systems and the further development of features such as e
auctions, procurement cards, on line training and contract reporting will be encouraged
where they can be proven to offer greater efficiency and an overall reduction in costs to
the Council.
2.7.2
Systems have been reviewed and need to be implemented to facilitate electronic
tendering and contract management. The system adopted will require configuration and
training. Further enhancements to the SAP system are also required and these would
make it possible to reduce the amount of administrative effort required to raise
requisitions, clear orders and make payments.
2.7.3
The application of ‘electronic trading’ for many of the procurement activities is
recognised as being beneficial in improving efficiency and streamlining processes and
when used appropriately is considered to be best practice. The Council will use an e
tendering system and look to realise the operational efficiencies. Purchase orders are
already placed on a single electronic system. Using systems with preset templates and a
controlled supplier base should reduce the risk of off contract spending and help to
establish standard terms and conditions.
2.8 COLLABORATION
2.8.1
Opportunities to collaborate with other public bodies and within partnering arrangements
will make an essential contribution towards better strategic procurement. As well as the
economies of scale and added leverage that combined spending volume provides there
are advantages to the Council in avoiding duplication and costs associated with
tendering. There is an increasing choice of established frameworks that can be
accessed easily and used, either as a direct contract or as the basis for a mini
competition. In both circumstances the reduction in timescale (against tendering) and the
combined market influence could be attractive and will assist the Council in achieving it’s
objectives.
2.8.2
There are several sources from which frameworks can be obtained, collaborating with a
neighbouring authority or other public body (such as NHS, PCT, Police) as part of a
framework, there are five main local authority supplies groups (the Pro 5) and a host of
collaborative groups and consortia set up in service based interest groups. Relevant
networks for LBWF include East London Solutions, Captial Ambition, North London
Strategic Alliance, Office of Government Commerce, and others.
2.8.3
Selecting which groups to join and how best to participate is part of the procurement
function as the overriding responsibility of seeking value for money rests with the
strategic procurement team. The development of collaborative relationships requires
both give and take and the Council should be prepared to commit resources to joint
initiatives where necessary. Setting up shared arrangements is an option for category
managers to consider using their knowledge of the market opportunities.
2.9 MANAGEMENT INFORMATION
2.9.1
An effective procurement strategy must be continually informed by analysis of
management information (what, where and with whom money is being spent) and how
well service requirements are being met. Much can be learned from the historic
spending patterns of the Council and supplier/provider performance data.
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2.9.2
Access to accurate management information based on a single system would enable the
Council to produce a master contracts register (all contracts above an agreed value
would be listed) and individual directorate based contract registers. Visibility of these
details would allow better planning of procurement activities and contract management
to avoid any overrunning or unintended extension of contracts. The registers could
become a reporting tool against which LBWF could prioritise expenditure, choose
procurement routes, use risk assessment and make informed decisions without having
to continually search for records.
2.9.3
Using a standard corporate contracts register in all departments will help to ensure that
we are meeting requirements, assessing performance, consolidating learning and
maximising impact.
2.9.4
Collecting management information will be an essential feature of the corporate
procurement team and the analysis of the data and reporting process will become a
feature of future reports. Each directorate will maintain a contract register and there
should also be a corporate contract register for planning purposes.
2.9.5
Basic information such as the total non pay expenditure, broken down by supplier is a
starting point and then known contract arrangements and estimated values can be
compared. Impact assessments on budgets should become possible and the strategic
procurement team should be advising on market movements and following indexation of
key items and costs. This vital background information provides awareness of the
procurement footprint of the Council and should be used to help contract managers.
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Appendix 1 – Action Plan
Objective
1. Provide a corporate led focus on
strategic procurement, coordinating
all procurement activity through
category management to achieve
optimum resource allocation.
Action
Date
Review existing procurement and
commissioning resource and
restructure as necessary to align with
strategy
October
2010
Recruit and/or develop staff in
Category Management
Ongoing
Strengthen Contract Procedure Rules
to drive procurement activity via
Corporate Procurement
October
2010
Revise standard processes,
procedures and documentation,
simplifying where possible
Ongoing
April 2011
Implement e-tendering and contract
management system
Incorporate Terms of Reference for
Corporate Procurement Unit in
Procurement Strategy
September
2010
2. Ensure that procurement strategy,
planning and practice supports the
Council’s core values, corporate
aims and objectives.
Corporate Procurement Strategy to
be approved.
September
2010
Review and report on progress
against Strategy to Strategic
Procurement Board
Quarterly
3. Support the delivery of services to
end users, ensuring stakeholder
involvement and customer
satisfaction are fully reflected in all
contracts.
Engage stakeholders in specification
design, evaluation and contract
management.
Ongoing
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4. Ensure all procurement and
contract management activity is
governed and complies with contract
procedure rules and statutory
regulations.
Contract Procedure Rules to be
reviewed
October
2010
Now
All procurements which fall under the
UK Public Contracts Regs will be
managed by Corporate Procurement
Now
Major procurement activity and issues
monitored by Strategic Procurement
Board
Now
Cabinet approval for key decisions
Now
Governance and Audit Committee
scrutiny of waivers
5. Achieve and evidence value for
money in all procurement
arrangements, capture and record the
benefits achieved, benchmark against
peers.
Agree method for calculating and
extracting savings with Section 151
Officer
September
2010
Benchmarking of contract prices as
part of category management activity
Ongoing
6. Develop procurement skills and
provide support and training for all
staff involved in procurement activities
across the Council.
Introduce Career Progression
Scheme for staff in Corporate
Procurement Unit
April 2011
Develop and deliver basic
procurement training for wider
Council staff so they are accredited
by AD Procurement & Commissioning
for letting sub-OJEU contracts.
April 2011
Ongoing
Provide briefings for staff on new
procurement initiatives
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7. Take account of sustainability, local Develop responsible/sustainable
economic development and equality
procurement policy
and diversity priorities throughout
procurement activities.
Engage with FSB/Businesslink
Run seminars for businesses and
third sector on doing business with
LBWF
Redesign webpages so that
information and opportunities are
more accessible
8. Utilise e-commerce to achieve
transactional efficiency for all
contracts and provide accurate and up
to date management information.
March
2011
Ongoing
Twice
yearly
March
2011
Approval of business case for etendering and contract management
Sept 2010
Implement and roll-out system
April 2011
Reinstate Procuretrak analysis
software
September
2010
9. Develop procurement collaboration
with other public bodies, sharing
services where appropriate and
encouraging partnering arrangements.
Engage with NLSA, ELS and Capital
Ambition to identify collaborative
opportunities and participate where
appropriate
Ongoing
10. Measure procurement
performance and promote innovation
to achieve continuous improvement of
procurement activity across the
Council.
Develop performance indicators for
procurement
Oct 2010
Keep abreast of best practice and
ensure LBWF adopts where
beneficial to the organisation
Ongoing
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Appendix 2 - Reference reports
‘Delivering Better Services for Citizens’ (The Byatt report)
The Review of Public Sector Efficiency (The Gershon Report)
The National Procurement Strategy (NPS) – ODPM
Partnership in Public services – Cabinet Office 2006
The Implementing E- Government (IEG) agenda
The Comprehensive Performance Assessment - “use of resources”
‘Creating strong, safe and prosperous communities’ - CLG 2008
‘Comprehensive spending review’ - CLG
‘Sustainable procurement strategy for Local Government’ - Idea
‘Healthy competition’ - Audit Commission 2007
‘Hearts and minds’ commissioning from the voluntary sector
‘Greater Council savings possible with smarter procurement’ – the Roots review
The National Procurement Strategy for Local Government – Final Report – CLG
Operational efficiency programme – H.M. Treasury
Accelerating the SME economic engine; through transparent, simple and strategic procurement – The Glover review 2008
LBWF Procurement strategy
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