Agenda Item No
The Vale of Glamorgan Council
Cabinet Meeting: 15th July 2013
Report of the Leader
Public Service Leadership Group - Procurement Work Stream
Purpose of the Report
1. To update Cabinet on the Public Service Leadership Group's (PSLG's) Procurement Work-stream for 2013/14 and to gain formal approval to continue to support the procurement commitments made at the PSLG.
It is recommended that Cabinet endorses the 2013/14 Work Plan associated with the Public Sector Leadership Group Procurement Work Stream and:
1. Agrees, as a member of the National Procurement Service (NPS), for officers of the Council to engage with the newly-established NPS Team and to support the contracts established by the NPS where these prove beneficial to the Council.
2. Adopts the 9 principles as set out in the Welsh Government Finance Minister's Procurement Policy Statement and continues to work with the Welsh Government to achieve their practical implementation in helping to drive value for money and benefit for the Council and the economy of Wales.
3. Agrees to participate in the Welsh Government Procurement Fitness Check Programme to ensure appropriate capability and capacity exists to deliver a devolved procurement function across the Council.
4. Continues to support the adoption of e-procurement tools where it can be demonstrated that it is in the Council's interests to do so.
Reasons for the Recommendations
1 - 4.In order that the Council may benefit from a co-ordinated approach towards procurement across the Welsh public sector.
2. The Public Service Leadership Group (PSLG) provides national leadership for collaboration, with a view to driving the pace of improvement in services for Welsh citizens, comprising partners from across the Welsh public service. The Group, chaired by the Minister for Local Government and Communities, Lesley Griffiths AM, comprises senior leaders who represent public services and geographical areas across Wales. The Vale of Glamorgan Council is represented on the Group by the Managing Director.
3. The PSLG has 3 national work programmes, one of which relates to Asset Management and Procurement. The Procurement Work-stream comprises a number of projects covering areas of Collaborative Procurement, Procurement Practice and Capability. A work-plan has been developed for 2013/14 which sets out key deliverables for each of the projects together with a timeframe for completion to which the Council is being asked to indicate its support.
Relevant Issues and Options
4. A copy of the Procurement Work-stream projects and key deliverables is attached at Appendix 1. The Collaborative Procurement project revolves around the setting up of the National Procurement Service (NPS) which Cabinet at the meeting of 19th November 2012 agreed to participate in initially for 5 years (Minute No C1905). Value Wales will host the NPS and the Welsh Government has agreed to fund the costs associated with running the NPS for the first 3 years until it is fully established. Thereafter, it is proposed that the funding switches to a self-funding rebate model (where suppliers on a contract will mark up their prices by an agreed percentage to cover the host organisation's operating costs).The NPS is set to go live in November 2013.
5. There are two projects in train in relation to Procurement Practice. The first is the e-Procurement service which is intended to take time and cost out of the purchase-to -pay process by providing common systems and e-tools across Wales (the Council currently uses the Oracle ERP system which includes an i-Procurement module).
6. The second is the establishment and roll out of the Wales Procurement Policy. This Policy, a copy of which is attached at Appendix 2 (along with the accompanying written statement of the Welsh Government Minister for Finance) is based upon 9 principles which are detailed below along with commentary as to the Council's current position on each:
Strategic - Principle 1
7. Welsh Government view procurement as a strategic corporate function and plan to set out a 'maturity model’ against which development of procurement can be measured. Welsh public sector organisations are expected to measure themselves in this respect by undertaking regular Fitness Checks. Welsh Government plan to establish reporting and sampling mechanisms to assess adoption rates of the actions required under the 9 principles. However, until details of this 'maturity model’ and the implications of failing the 'fitness checks’ are known, it is difficult to ascertain the potential impact on the Council. As part of the final element of the 2013/14 Work Plan (Capability),Welsh Government plan to award a contract by July 2013 to a supplier to establish the procurement fitness check programme and undertake the first local authority check.
Professionally Resourced - Principle 2
8. The expectation is that procurement expenditure in the organisation is supported by professional procurement staff who can meet a formal competency framework as part of a defined career path. Initially, Welsh Government has set at an initial benchmark of one procurement professional per £10 million of expenditure. For the Council this would mean a support network of approximately 9 staff (excluding capital schemes) Currently, in addition to the 2 corporate procurement officers, expertise is devolved across the Council (e.g. Property Services, ICT). The Council also uses collaborative organisations such as the Welsh Purchasing Consortium, Value Wales, SEWSCAP (South East Wales Schools Capital Working Group) and Government Procurement Service to reduce â€˜in-house’ procurement requirements.
9. In addition, the development of the National Procurement Service is expected to take over the organisation of contracts for up to 25% of the Council’s procurement expenditure to further reduce this 'in-house’ burden. As such, it is felt by Council officers that any â€˜benchmark’ for procurement support should take account of the current and burgeoning collaborative arrangements when determining the level of procurement expertise deemed to be required across the Council.
10. Consideration will also need to be given to the need for 'buying’ expertise as opposed to the strategic/corporate function where, in view of the above, a shift towards a monitoring and compliance role may be required. Again, as part of the Capability project under the 2013/14 Procurement Stream Work Plan, Welsh Government is planning to complete the second series of its 'Home Grown Talent' trainee placements and report outcomes by July 2013.
Economic, Social and Environmental Impact - Principle 3
11. This outlines Welsh Government’s expectations in terms of the sustainability agenda including ascertaining the whole-of-life costs for not only the organisation but also society and the economy whilst minimising the damage to the environment. Tools such as a Sustainable Risk Assessment will be provided by Welsh Government to assist with this. The principles of sustainability are embedded into the Council’s Procurement Policy, Strategy and Guidance and assistance to develop this further is to be welcomed.
Community Benefits - Principle 4
12. The delivery of added value through the Community Benefits policy is expected to be an integral consideration in procurement. Welsh Government intends to lead on maintaining and developing the policy whilst strengthening support available on the ground. The Welsh public sector are expected to apply Community Benefits to all procurements where such benefits can be realised and to apply a Measurement Tool to all contracts over £2 million.
13. The principles of community benefits are in accord with the Council’s procurement policy, strategy and guidance and have been successfully applied to key schemes such as the development of Cowbridge School and the current Penarth Learning Community build as well as the Welsh Housing Quality Standard frameworks. The Welsh Government offer to strengthen support in order to allow this to be developed further in other procurement projects is to be welcomed.
Open, Accessible Competition - Principle 5
14. This outlines the risk based, proportionate approach which the public sector is expected to take to procurement to ensure that smaller, local suppliers are not disadvantaged or precluded from winning contracts. This will be facilitated by using the sell2wales website, applying a standard supplier qualification information database (SQuID) and providing information on forward programmes.
15. Whilst the principles outlined are to be applauded, it is felt that further work is required by Welsh Government to streamline and develop the processes surrounding the use of the SQuID and sell2wales website (particularly if all contracts over £25k are to be advertised via this) in order to minimise the additional administrative work falling upon participating public sector organisations.
Simplified Standard Processes - Principle 6
16. This sets out Welsh Government’s desire to see the provision of open and transparent procurement processes through the adoption of common systems and processes including the Welsh e-procurement service. The public sector will be expected to adopt and embed common procurement approaches and make best use of available e-procurement tools.
17. Whilst Council officers support the principles of standard procurement processes, where these can be seen to demonstrate tangible benefits through their adoption, regard should be made to individual organisations’ existing investment in e-procurement tools that may negate the benefits of using those which may be advocated by Welsh Government. In particular, any case for using the successor to the xchangewales trading hub will require further consideration in the light of the limited benefits previously identified as accruing to the Council from this trading hub as a result of our current investment in the Oracle ERP system.
Collaboration - Principle 7
18. Welsh Government expects areas of common expenditure to be addressed through strengthening vehicles to deliver collaborative procurement including use of collective leadership to drive this through. As such, the Welsh public sector will be expected to participate, monitor and report on engagement with collaborative procurement initiatives.
19. The Council supports the principles of collaboration and currently participates in a number of collaborative procurement arrangements. These include membership of the Welsh Purchasing Consortium and the Council has recently elected to accept an invitation to join the National Procurement Service. The Council is committed to the SEWSCAP framework, having been part of its evaluation team and now sits on its framework board.
Innovation - Principle 8
20. Dialogue with suppliers is expected to be improved to help get the best from the market place and deliver optimum value for money. The Welsh public sector will be encouraged to adopt approaches to procurement that are influenced by feedback from the supply chain including a single point of contact, ensuring that tender de-briefings are undertaken and use of outcome based specifications.
21. Council officers feel that feedback from the supply chain is important in developing its procurement processes and would welcome any assistance in taking this forward particularly in the development of outcome based specifications.
Measurement and Impact - Principle 9
22. This advocates the monitoring of procurement performance and outcomes to support continuous improvement through a framework of performance measures and collation of performance information.
23. Whilst the principles of this are supported, it is important that dialogue takes place as to the exact nature of the measures and information required in order to ensure that the cost of collating and maintaining and monitoring such information does not outweigh the benefits realised.
Resource Implications (Financial and Employment)
24. It is possible that the Welsh Government will mandate minimum levels of procurement resources commensurate with levels of annual procurement expenditure. There may also be a further resource requirement to ensure compliance by all Council services in buying from centrally negotiated contracts. It is expected that any additional costs falling on the Council as a result, if not funded by Welsh Government, will need to be met by through increased procurement efficiencies.
Sustainability and Climate Change Implications
25. The Council's procurement policies, procedures and practices are underpinned by the principle of sustainability.
Legal Implications (to Include Human Rights Implications)
26. The Minister for Finance has stated that the adoption of the Wales Procurement Policy is not considered to be optional and the potential of legislating to ensure the progress the Welsh economy and public services require is being considered.
Crime and Disorder Implications
27. None as a direct consequence of the report.
Equal Opportunities Implications (to include Welsh Language issues)
28. None as a direct consequence of the report.
29. Better procurement contributes to all of the Corporate Plan priority outcomes.
Policy Framework and Budget
30. This is a matter for Executive decision.
Consultation (including Ward Member Consultation)
Relevant Scrutiny Committee
32. The lead Scrutiny Committee is Corporate Resources.
Head of Accountancy and Resource Management
Operational Manager - Property
Sian Davies Managing Director