Procurement Policy and Strategy
2008 - 2011
August 2008
Procurement Strategy 2008 Update
CEP
August 2008
1
Procurement Strategy 2008 Update
CEP
August 2008
Preface
This is an update to the Council’s existing procurement policy and strategy, which has served the Council well since it was published in 2005.
However, the procurement landscape in which the Council operates has changed,
‘The Comprehensive Spending Review 2007 (CSR07) challenges councils to up their game in a tight fiscal environment. Local government is facing rising public expectations and increasing demand for many local services. This calls for strong and innovative approaches to achieving efficiency, including through strategic commissioning and procurement…’ (emphasis added)
Extract from the Foreword to: The National Procurement Strategy for Local Government – Final Report (2008)
CSR07 requires Councils to ensure that spending is aligned to appropriate priorities and that better value for money is achieved from every pound spent during financial years 2008/09 to 2010/11.
The Council does not possess all the resources to deliver its objectives by itself and is therefore required to collaborate and create partnerships or shared services with others. The Council has made good progress with this already but the Council will need to go further to meet the challenges of CSR07 and the new local performance framework.
The Council will also will also need to develop relationships with suppliers in the public, private, social enterprise and voluntary sectors to deliver services, carry out works or acquire supplies and equipment.
The Government has an ambition to make the UK a leader in the EU for sustainable procurement. To this end, the Sustainable Procurement Task Force has developed a national action plan to deliver sustainable procurement. The action plan requires local authorities to build sustainability into procurement decisions to a much greater extent then before. The local government contribution to the aims of the national plan is set out in the Local Government Sustainable Procurement Strategy (2007).
It is therefore appropriate to review and refresh our procurement policy and strategy in the light of these developments so that it remains fit for purpose and able to contribute to the Council’s mission of:
Making Wellingborough a place to be proud of
This update therefore reflects:
- Lessons learned since the first issue of the Policy and Strategy
- Changes in the legal framework governing procurement
- Changes in the procurement landscape in which the Council operates brought about by CSR07, the new local performance framework and the national action plan to deliver sustainable procurement
- Lessons learned nationally as articulated in: The National Procurement Strategy for Local Government – Final Report (2008)
This document comprises
- The Council’s Procurement Policy setting out the overall approach to procurement and details the Council’s local objectives.
- The Procurement Strategy indicates how the objectives in the Procurement Policy, along with the objectives in the National Procurement Strategy will be delivered.
Other guidance documents are available as follows:
Contract Procedure Rules}
Financial Procedure Rules} detailed in the Constitution
Delegations to officers}
Code of Procurement Practice} available on the Intranet
Standard contract terms & conditions}
1
Procurement Strategy 2008 Update
CEP
August 2008
Preface
Table of Contents
Introduction
- Procurement Policy
- Purpose
- Policy statement
- Definitions
- Scope
- Principles
- Common factors
- Strategic procurement
- Large-scale works procurement and community benefits
- Operational procurement
- Improvement and Efficiency Strategy
- Equalities
- Sustainability in procurement
- Procurement rules and guidance
- Competition
- Probity and integrity
- Electronic procurement
- Service and procurement expertise
- Project and contract management
- Contract conditions
- Workforce issues
- Health and safety and risk management
- Community safety
- Procurement Strategy
- Purpose
- Introduction
- Summary
- Strategic themes
- Theme 1: Responsible procurement
- Sustainability and environmental management
- Equality and diversity
- Ethical procurement
- Theme 2: Well-organised and effective procurement
- Value for money
- Controls and standards
- Staff training and development
- E-Procurement
- Performance management
- Collaborative procurement
- Theme 3: Supplier management
- Partnering and collaborative contracting
- Economic regeneration
Appendix 1: Delivery Plan 2008-09
Appendix 2: Status and review
Appendix 3: Small Business Concordat
Appendix 4:Freedom of information
Appendix 5:Procurement options
Appendix 6: Tendering for contracts
Equalities Impact Assessment
1.Procurement Policy
1.1 Purpose
Procurement has the power to transform public services, to improve outcomes and to make life better for the people we serve.
Procurement therefore has an important role to play in assisting the Council to meet its aims and objectives by achieving value for money from the way in which it procures and delivers its services and also to ensure it uses its resources in an economic, efficient, effective and sustainable way. It is also essential if the Council is to makes its contribution to the efficiency target included in Comprehensive Spending Review 2007 (CSR07) for the LAA area.
The purpose of this procurement policy is to set out the Council’s overall approach to procurement in its various forms and the different levels at which it operates.
1.2 Policy statement
The Borough Council of Wellingborough endeavours to procure goods, works and services from third party and in-house suppliers to achieve the optimum combination of costs, benefit and the management of risk to meet the needs of all stakeholders and the objectives of the Council and the Community Strategy.
The Borough Council of Wellingborough aims to deliver a value for money service for all stakeholders through a procurement strategy that enables it to:
- confidently operate in a mixed economy with access to a diverse and competitive range of suppliers providing quality and value for money goods and services whilst encouraging small firms, social enterprises and voluntary and community sector suppliers
- select suppliers and contractors competitively on the basis of who offers Best Value
- adopt and promote sustainable procurement best practice in order to safeguard the local and global environment whilst achieving value for money and compliance with public procurement legislation.
1.3Definitions
Procurementis defined in the National Procurement Strategy for Local Government as:
“The process of acquiring goods, works and services, covering both acquisitions from third parties and from in-house providers.”
It is about making choices and choosing the option that offers the optimum combination of whole life costs and benefits to meet the customer’s requirements. These requirements can include social, economic, environmental and other strategic objectives, and by applying the criterion of best value at the award stage, the bid best meeting these requirements is selected.
The term ‘procurement’ therefore has a far broader meaning than that of purchasing, buying or commissioning. It is about securing goods, services and works that best meet the needs of users and the local community as set out in the Community Plan and the Council’s Business Plan. A significant proportion of the revenue budget is spent through procurements such as this.
The process spans the whole life 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 will determine whether the Council provides the services ‘in house’ or from an external provider or through a joint public/private or public/public partnership arrangement.
Getting procurement right is vital to the delivery and cost effectiveness of quality public services to citizens. It is also about finding effective and innovative procurement solutions to improve service delivery, including supplier relationship management, category plans, partnership working and project management.
Procurement operates at various levels. Strategic Procurement includes the major strategic decisions taken by the Council about achieving the most efficient arrangements for the delivery of its public and support services.
Operational procurement includes works schemes of various sizes such as construction and re-furbishment, ongoing contracts for regular services like utilities, insurance, ICT, premises repairs, individual contracts for specific professional services, and individual purchases of goods.
Amixed economy in relation to procurement means supplies, works and services are provided directly, in partnership with other service providers and contractually through external providers. The fundamental question is this: which procurement route will result in a high quality and flexible solution that provides value for money and meets the needs of service users and the community whilst contributing to achievement of the authority’s aims and goals?
Range of Suppliers - the Council wishes to utilise a broad range of procurement options from all sectors. This will include:
- Provision of in-house core services with top-up support from the private sector or through shared services;
- Provision of services in partnership with other public sector organisations or the voluntary and community sectors
- Contracted out services where the demand and/or business case supports this;
- Joint ventures and/or partnerships with private sector suppliers following a tendering process based on qualitative analysis;
- Competitively dispose of or sell off a service and its assets to an external service provider – where the demand and/or business case supports this or where the Council deems this not to be a priority service;
- Public/public, Public/private and Public/voluntary partnerships;
- Trusts/unincorporated associations/companies limited by shares;
- Consortium purchasing;
- A package of e-procurement solutions.
Competitiveness- the Council will strive to manage a fair, transparent and pragmatic approach to procurement as reinforced by the Audit Commission paper “Healthy competition” to achieve competitively priced goods and services that improve productivity, achieve whole life value for money, are sustainable and introduce innovative service delivery.
Best Value - in the context of a procurement process, obtaining "Best Value" means choosing the provider that offers "the optimum combination of whole life costs and benefits to meet the Council’s requirements". Best Value is not necessarily the lowest initial price option as it requires an assessment of qualitative factors and ongoing revenue/resource costs as well as initial capital ‘investment’.
A mixed economy and sustainable approach to procurement also relies on developing a collaborative approach to procurement with other authorities and organisations to achieve economies of scale.
1.4Scope
The Procurement Policy deals with Strategic Procurement, large-scale works and outlines the approach to Operational procurement activity.
1.5Principles
The principles underpinning this policy are:
- Seeking opportunities for collaboration/partnerships with other public sector organisations in order tomaximise procurement leverage, reduce duplication of effort, share information andexplore alternative ways of procuring goods, works and services
- Encouraging the involvement of voluntary and community sector organisations in procurements
- Achieving the Council’s wider corporate aims through procurement
- Developing procurement in line with the National Strategy
- Supporting the Council’s Improvement and Efficiency Strategy
- Sustainable procurement
- Ensuring that the Council gets value for money
- Managing risks associated with procurement
- Compliance with the rules on procurement
…balanced with innovation
1.6Common factors
All procurement options and decisions will have regard to the following matters:
a)Contract Procedure Rules and Financial Procedure Rules and Procurement code of practice
b)Wider benefits – the local economy, equalities, health & safety and environmental stewardship
c)Employment issues
d)Contract management and continuous improvement of contracts
e)Probity and high ethical standards
f)Positive engagement with the market place including the third sector and local businesses
g)Use of electronic procurement
1.7Strategic procurement
Although the Council already procures a number of services in diverse and innovative ways, there has to be a new strategic approach to procurement that ensures all goods, works and services across the whole organisation are sourced on terms which support the Council’s strategic objectives and which deliver efficiencies.
Strategic procurement is about a fresh and vital approach to 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. This change in approach will reposition strategic procurement as one of the primary enablers for the Council to deliver the vast majority of its own and its LAA partners’ objectives.
‘To prosper, local authorities must collaborate in innovative ways and not just with other councils but with other pubic bodies to procure and deliver citizen-focused services at a cost the public purse can afford.’
Extract from the Preface to: The National Procurement Strategy for Local Government – Final Report (2008)
The Council is a member of the Northamptonshire Area Procurement Service which has been established to co-ordinate and organise cross-authority procurements of commonly used goods, services and supplies.
It is already the Council’s policy to consider and progress service delivery partnership with other local authorities wherever the opportunity arises and where this course can be shown to be more efficient and effective in delivering the Council’s objectives.
The Council’s Personnel policies and national guidance on staffing changes and transfers are important factors where procurement of a service the Council already employs people to deliver is being considered.
1.8Large-scale works procurement and community benefits
The Council recognises the potential for procurement activity to have a positive effect on its community plan objectives, environmental and equalities agendas. Much of the Council’s spend is dispersed across a wide range of areas; community benefits arising from procurement are most likely to become noticeable in projects involving works, (e.g. to provide a new facility) or where the policy of aggregating spend is effective.
It is also recognised that procurement plays a key role in supporting and developing the local economy. Through ‘buying local’ the Council can provide work for local companies and local people; this in itself has a knock on effect on the economy. Research carried out by the New Economics Foundation describes the ‘Local Multiplier Effect’, which shows how money spent within a geographical area creates additional income for that area. It is claimed that every £1 spent within a particular borough generates a further £0.67 - £1.15 for that borough.
The desire to support the local economy, however, cannot take precedence over the need to both comply with the principles of the EU Treaty; non discrimination on grounds of nationality, equal treatment, transparency and free movement of goods and services, and ensure the provision of value for money services to the public. It is important that no unfair advantage is given to any supplier during a procurement exercise and that our procedures are open, fair and accountable.
We shall therefore seek to develop ways of supporting the local economy, whilst staying within the bounds of national and European legislation and the EU Treaty.
Where there are real opportunities to realise wider benefits through our procurement processes (e.g. by building social, environmental and community benefits into the evaluation process where appropriate and legal to do so) these will be looked at positively through all the stages of the process. Opportunities for working with suppliers and contractors post contract award to explore opportunities for bringing wider benefits to the local community will also be explored.
1.9Operational procurement
The overall policy is to work with ConsortiumProcurement to ensure best value and for employees procuring similar areas to work together to achieve economy of scale. Routine procurement is carried out through the Radius Orbit system following Contract Procedure Rules.
The general expectation is that the lowest tender is selected, but committees can agree an alternative to this, if it can be justified, e.g. a highest overall score in a price/quality mix detailed in the evaluation criteria in the tender documents.
1.10Improvement and Efficiency Strategy
The Council will use the savings generated by its efficiency activities to deliver improvement in three priority areas:
- Capacity - through enhancing leadership and other skills and sharing knowledge and expertise
- Innovation and transformation- of structure, processes and culture
- Partnerships– through improving the effectiveness of existing partnerships and creating new partnerships where necessary so as to achieve the reciprocal benefits needed to deliver the best possible outcomes for the people of Wellingborough.
Improved procurement is expressly identified in the Strategy as one of the main ways to realise the cashable savings the Council needs to deliver improvement in its priority areas.
1.11Equalities
The Council has a duty to promote equality and evaluate the impact of its services on different genders and community groups. The Council spends public money every year on contracts with private and voluntary organisations for works, goods and services. It is essential that we ensure this investment is consistent with our wider equality obligations.
To this end the Council will use powers available to it to ensure that equalities issues are addressed in the procurement of goods, works and services and it will require all its contractors to meet equalities standards appropriate to the nature of the contract.
1.12Sustainability in procurement
‘Sustainable Procurement is a process whereby organisations meet their needs for goods, services, works and utilities in a way that achieves value for money on a whole life basis in terms of generating benefits not only to the organisation, but also to society and the economy, whilst minimising damage, or indeed improves the environment.’