Collaboration the key to effective procurement

The March 2014 Communities and Local Government Committee Report called on councils and the Local Government Association to invest now to ensure procurement skills are embedded across councils, particularly to ensure the benefits of collaborative procurement practices. To report recognises the value in local authorities adopting a collaborative approach to procurement, as the number of shared procurement services doubled during 2011-12 with 75 councils now in 16 formal joint purchasing arrangements. This is set to increase.
    
Committee chair Clive Betts said: “Local government has a responsibility to show that it can put its own house in order. If it does not, we fear DCLG will opt for compulsion.”
    
“Procurement is too important to be viewed as a niche function conducted in back offices. It is central to delivering and managing the services that people rely on every day, from having their bins emptied to receiving social care. Without effective procurement local government will cease to operate.
    
“We need investment now so that staff right across councils gain the skills needed for effective procurement. At times staff, unsure of the needs of local residents and business – especially small local businesses – fall back on wasteful bureaucracy. This has to stop.”
    
“Significant additional savings can be made if collaboration on procurement between authorities becomes the default for certain purchases.
    
The inquiry looked at whether local government would benefit from using a centralised procurement system like central government’s Crown Commercial Service. The view was that local authorities needed to retain local control over procurement, in order to best meet local needs. Some national arrangements, such as for energy purchase, might be beneficial, but local authorities should be able to enter these if they choose, not to be forced to.

National Strategy
In July, following it’s Annual Conference in Bournemouth, The Local Government Association’s National Procurement Strategy Document was published. Among the recommendations, it states: “Councils should be engaging more with each other to manage performance and transparency of suppliers as long as this is proportionate to the budget and level risk in the contract. Councils should actively manage major/common suppliers and build higher volume of orders to reduce supplier prices. Councils should proactively discourage the use of long or inflexible contracts and single supplier arrangements.”
    
The strategy also recommends that authorities should “aggregate spend through effective collaboration or by sharing services on common goods and services without compromising the need for social value”, and that government procurement needs to “modernise in terms of scope, use of technology and practices and procedures”. To do this, councils need to ensure procurement staff are more commercially minded, encourage supplier innovation, adopt e-procurement and take advantage of the “opportunities presented by the new EU directives”.
    
Councillor Shirley Flint, Deputy Chair of the LGA’s Improvement and Innovation Board, says in the Strategy’s preface: “If we are going to manage our way through a further period of budget reductions and put life back into local economies, we must get better value from the £38 billion of revenue funding we spend each year with our suppliers.”

“Let’s be clear, we are not talking here about getting a better deal on paperclips. We are talking about how we commission major public services that affect the lives of millions of local people and how we commercially manage the suppliers with whom we contract.”
    
“In the past, there has been a poor perception across the whole public sector of the value that strategic procurement can bring, but now is the time for councils to recognise this and lead the drive to realise those benefits. It is time for councils to use procurement and commissioning to work together with a focus on developing strategic improvements that will help reduce costs and improve community benefits for our localities.

EU Procurement Directives
The 2014 EU Procurement Directives came into force on 17 April, and EU member states now have two years to implement them in national legislation. The Cabinet Office is preparing ambitious plans for early transposition, so that the UK can take advantage of the additional flexibilities in the new rules as soon as possible.
    
To help raise awareness of the new EU Procurement Directives, the Cabinet Office arranged more than 200 face-to-face training sessions on the main changes in the directives for people working in the public sector. Authorities and business will have earlier access to simpler and more flexible rules, freeing up markets and facilitating growth, in particular allowing shorter, less burdensome, procurement processes.

Collaboration
Commenting on the LGA strategy, Martin Reeves, chief executive at Coventry City Council and national procurement champion for local government, said: “All of the key participants in the local government sector have come together to speak with a single voice in this strategy and to support its delivery. It is also very encouraging that we have received input from private sector and VCSE umbrella organisations including the Federation of Small Businesses (FSB), National Federation of Builders (NFB), Confederation of British Industry (CBI), Federation of Master Builders (FMB), National Council for Voluntary Organisations (NCVO), National Association for Voluntary and Community Action (NAVCA) and Social Enterprise UK (SEUK).”
    
“Councils cannot work in isolation. We need to collaborate on procurement and wider commercial activities and to gain maximum benefit we need to work with partners from right across the public sector. Collaboration will be a major theme for me as procurement champion.”

Implementation is the key
Commenting on the Strategy, Peter Smith, managing director of Spend Matters, concludes that while there are plenty of good ideas contained in the document, there is little information on how the will be implemented.

Smith said: “This is not the first time we’ve had a strategy for local government procurement. We have had many over the years. TYhat is not in itself a reason to criticise this one, but it does raise the vital question – how will the decent ideas in here be implemented?. The problems have come in the implementation, and those issues are as relevant as ever now.”

Further information
Select Committee Report – March 2014
EU Procurement Directive Training Materials
National Audit Office Report – 
Transforming Government’s Contract Management
September 2014