Agenda Item No
The Vale of Glamorgan Council
Cabinet Meeting 19th November 2012
Report of the Leader
Invitation to Join the National Procurement Service
Purpose of the Report
1. To gain Cabinet’s approval to join the National Procurement Service for an initial 5- year period in order to benefit from a co-ordinated approach to procurement in areas of common and repetitive spend throughout Wales.
It is recommended that:
1. Cabinet accepts the invitation to join the National Procurement Service for an initial period of 5 years.
Reasons for the Recommendations
1. In order that the Council may benefit from a co-ordinated approach towards procurement across the Welsh public sector in areas of common and repetitive spend.
2. The proposal to set up a National Procurement Service first emanated from one of the work streams set up by the Welsh Government through the Efficiency and Innovation Board. This built upon the principles first set out in the Welsh Government's 'Making the Connections' policy statement and confirmed in the Beecham 'Review of Local Service Delivery'. Its aims were to achieve a step change in operational efficiency and innovation and transformation in public service delivery and design.
3. The public sector spends one third of its budget on external goods and services - some £4.3 billion per year. At least 20-30% of these purchases are common across organisations and are bought year-on-year. The 2010 review 'Buying Smarter in Tougher Times' recommended that contracts for this spend should be set up on a 'Once for Wales' basis, a step change that was fully endorsed by the recent McClelland Review on the overall effectiveness of Welsh public sector procurement.
4. The National Procurement Service model has delivered significant benefits to other devolved governments within the UK. It is a proven approach to maximising procurement benefits and is a model used in the majority of global private sector businesses. It is now proposed to establish a NPS to carry out common and repetitive spend once for Wales.
Relevant Issues and Options
5. Appendix ‘1’ to this report sets out the Business Case Executive Summary for the establishment of a Welsh National Procurement service (NPS). The main features of this proposal are:
· It will form a strategic vehicle for procuring common goods and services for Wales, taking into account the needs of all sectors;
· It is intended to be a central delivery model with its own governance structure with appropriate representation from all sectors (expressions of interest to host the service are currently being sought).
· It will focus on 3 key aspects of the procurement process - developing common specifications, tendering and contract management.
· It will be structured on a category management basis and will seek to leverage the procurement scale, influence demand management and implement best practice approaches.
· It plans to utilise Welsh Public Sector Procurement policy to support best practice.
· It will have the capability to procure as yet unknown new or innovative solutions in support of public service reform.
· It will enable a co-ordinated approach to procurement which seeks to develop the SME (small and medium enterprises) community within Wales.
6. The benefits attributable to this collaboration include:
· Cashable savings achieved nationally through reduced total cost of acquisition for the common and repetitive spend goods and services estimated at £75 million over 5 years. It will provide effective supplier relationship management through a single route.
· Cost avoidance benefits delivered through the simplified procurement and increased compliance.
· Opportunity to be gained by individual stakeholder organisations by redeploying their scarce resources onto higher risk more critical spend areas.
· Developing the professionalism and capability of the procurement community in Wales.
· Positive impact upon the Welsh economy.
· Easier for suppliers to engage and transact with the Welsh public sector.
7. The Business Case is predicated upon the NPS being funded directly by Welsh Government until it reaches a point of maturity (currently estimated at year 3 of operation in 2017/18). Thereafter, it is proposed that the funding switches to a self-funding rebate model (such as that employed in the Scottish NPS where suppliers on a contract will mark up their prices by an agreed percentage to cover the host organisation's operating costs).
8. Annual expenditure by the Vale of Glamorgan on supplies and services lies in the region of £90 million of which approximately 24% falls within the category groups to be covered by the NPS in terms of common and repetitive spend. The Council is also a member of the Welsh Purchasing Consortium (WPC). Continuation of the Council's participation in the WPC will be dependent upon the range of WPC administered contracts falling under the NPS remit.
9. Organisations will be expected sign up to using the NPS for an initial period of 5 years. In signing up, organisations will be expected to embrace an agreed management information approach and fully commit to using the contracts that are created by the Service.
10. Unlike a number of Welsh unitary authorities, the Vale does not have a large central procurement operation (many of which are a legacy of the former county supplies functions). Instead it has a central core of 2 FTEs with other procurement expertise located in specialist areas of Council spend (e.g. Property Services for building contracts).
11. Dependent upon the development of the NPS, and notwithstanding any other collaborative initiatives that may be pursued (e.g. shared services with other local authorities), this may see a shift at a local level in terms of central procurement support towards monitoring and compliance with NPS (and other consortia) requirements rather than the traditional procurement role..
Resource Implications (Financial and Employment)
12. As set out in the body of the report.
Sustainability and Climate Change Implications
13. None as a direct consequence of the report.
Legal Implications (to Include Human Rights Implications)
14. Governance of the NPS will be through a Board that will consist of a number of chief executives and senior managers across the public sector.
Crime and Disorder Implications
15. None as a direct consequence of the report.
Equal Opportunities Implications (to include Welsh Language issues)
16. None as a direct consequence of the report.
17. Contributes to the corporate priority of Corporate Resources.
Policy Framework and Budget
18. This is a matter for Executive Decision.
Consultation (including Ward Member Consultation)
Relevant Scrutiny Committee
20. The lead Scrutiny Committee is Corporate Resources.
National Procurement Service Business Case
Head of Accountancy and Resource Management
The Corporate Management Team has been consulted on this report
Sian Davies Managing Director