Agenda item

The Board was invited to note the Procurement Service Strategy 2019 – 2021 and covering update report regarding procurement at the Council, its importance and the planned approach going forward.  The report highlighted the need for an effective commissioning, procurement and contract management function.

A supporting presentation was given by the Procurement Manager which explained that commissioning was a process of identifying the needs of a business area and assessing how those needs could be met and services provided, procurement was a system of buying goods, services or works and contract management was an ongoing oversight of a contract to ensure that it was delivered and that risks and opportunities were identified and managed.  The presentation outlined the procurement cycle; addressed procurement history to date at the Council; identified key drivers for savings, efficiencies, alternative models for delivery and legal compliance; and covered social value and small to medium enterprises (SMEs).

The procurement cycle consisted of defining requirements, specifications, make or buy options, source identification and selection, contracting, receipt and payment, contract management, and de-commissioning and disposal.

In terms of history, the Council’s approximate annual spend was £50 million.  Procurement had progressed since the appointment of the first Procurement Officer in 2015 and was transforming from an autonomous devolved model into a centralised commercial team with a work programme with 50 plus live projects.  In addition to a Procurement Service Strategy, the service benefited from a Corporate Procurement Board which fulfilled the governance of the service.  The dedicated Procurement Manager was assisted by an experienced Procurement Team (currently resourced by interim staff) who were working towards the delivery of a centralised category management model identifying savings under the Future Guildford programme.

The key drivers were effective procurement to deliver substantial savings and efficiencies and maximise commercial opportunities for the Council.  Commissioning examined how services could be provided in different ways such as working collaboratively with neighbouring authorities (or other bodies) and alternative / innovative delivery models for goods and services.  Compliance with legislation, mainly the Public Contract Regulations 2015 and the Local Government Transparency Code 2015, was a further key driver.  Effective procurement would mitigate the likelihood of legal challenges due to lack of procurement compliance and procurement challenge was avoided through the systematic, equal opportunities treatment of suppliers at every stage of procurement.  There were many forms of challenge, namely, legal challenge, the Cabinet Office Mystery Shopping Scheme, the Council’s Corporate Complaints process and the Ombudsman.  Receipt of a formal challenge could lead to severe consequences for reputation and meeting timelines.

Procurement could ensure that there was a commercial focus on Social Value and SMEs, assisting local suppliers to be more competitive.  The Public Services (Social Value) Act 2012 required social value to be considered when procuring goods and services for the Council.  Focus in local government was on building skills and employment opportunities in the local area such as the number of apprenticeships per £ million contract value.  A strong procurement function within the Council could help to ensure that this focus was central to procurement activity across the organisation.

The Board was advised of the current top four procurement projects live in terms of spend and noted that the service area fell within Phase A of the Future Guildford programme and proposals around the new staffing structure were being considered.  All contracts procured in excess of £5,000 were published onto the Council’s website on a quarterly basis under the Transparency Agenda.  Unsuccessful contractors could challenge the tender process.  The Council had not been challenged to date and the team engaged with the Economic Development team to reach SMEs.

Arising from related discussion and questions, the following points were made:

·             Environmental considerations formed part of the specification and the invitation to tender and therefore informed the procurement decision-making process although these were not specifically identified in the Procurement Service Strategy.  The Strategy would be reviewed and amended to prioritise environmental issues.

·             Final decisions relating to procuring goods, services or works rested with the Council following exploration of needs by service areas and the Procurement Team and the receipt of related tender estimates.

·             The systemic category management approach to procurement was welcomed.

·             Six to seven full time equivalent employees would be needed to make the Procurement Team fully effective.

·             The Modern Slavery Act 2015 and numerous procedures ensured that contractors utilised ethical supply chains and paid employees a living wage.

·             An organisational culture change would be required to embrace the move from a devolved to a central approach to procurement and this would be achieved through clear messages from management, governance changes and the Procurement Procedure Rules.

·             There was a procurement work programme and a register of contracts which were available for Councillors to inspect.

·             There were examples of successful joint procuring which could bring efficiencies of scale.

·             Procurement featured in the terms of reference of the Climate Change and Innovation Board which would invite the Procurement Team to attend one of its meetings to discuss sustainable development and encouraging suppliers to disclose their environmental credentials.  A balance between contract value for money and environmental considerations would need to be identified when awarding contracts.