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Council Our Strategies, plans and policies Strategies and Plans Draft Commissioning and Procurement Strategy
Council Our Strategies, plans and policies Strategies and Plans Draft Commissioning and Procurement Strategy
Draft Commissioning and Procurement Strategy
Draft Commissioning and Procurement Strategy 2010/11 - 2014/15
Introduction
Background
- Swale Borough Council is continuously exploring the best way to provide services to its community, and where practicable to meet the aspirations of the National Action Plan for Sustainable Procurement and Total Place initiative. It does not seek to provide everything itself - for example, refuse collection, management of leisure centres and grounds maintenance are all carried out in partnership with private contractors.
- The Council has a strong track record of improving its procurement approach and processes over the past three years. These include:
- Utilising specialist procurement support in procuring major long term contracts on leisure, grass cutting, waste.
- Category spend of other areas across the Council of over £100k to identify further opportunities for efficiency savings.
- Opening up web to enable businesses to have better access to Council tendering in response to consultation with a recent business surgery.
- However, it is now appropriate to revisit our approach to commissioning and procurement with a view to taking our performance closer to that of the best performing councils. It is envisaged that in doing so this will drive greater efficiencies in our spend on third party goods and services, thus providing even greater value for money for local council tax payers.
- This strategy therefore aims to set a clear framework for procurement which reflects the Council’s community and corporate plans and stands alongside Contract Standing Orders and the Constitution. It sets out an action plan for achieving an approach to commissioning and procurement that meets our corporate priorities of regenerating Swale, creating a cleaner and greener Swale, promoting a safer and stronger community, and becoming a high performing organisation.
Working definitions
- Commissioning is the process by which decisions are made about what goods and services are required. It is informed by consultation with service users (captured through the Duty to Involve"1") and research with suppliers and the market more generally about what is both possible technologically, and appropriate to provide. Commissioning decisions therefore balance the needs and aspirations of service users with the opportunities of the market and the budgets that are available.
- ("1" Duty to Involve, LGPIH Act 2007)
- Procurement is the way the Council obtains the goods and services that it has determined to commission for the people of Swale. This ranges for example from everyday supplies of office stationery to whole service area provision and major construction projects. The way in which procurement takes place is subject to statutory provisions and case law, as well as our own Constitution and Contract Standing Orders.
- Market testing involves comparing competitive bids from external bidders with a statement of the in-house Service's cost and performance levels. This may include an in-house bid. The outcome of market testing may result in the service being commissioned from an internal or an external service provider, depending on which service provider offers best value for money.
- Outsourcing is the award of a contract to an external service provider without any in-house bid being involved. External contractors and other providers often prefer this to market testing, although in most cases the external organisation is still selected through a process of competition.
- Partnerships have many variations both formal and informal, and includes the provision of shared services; for example through the Mid Kent Improvement Partnership. They provide an opportunity to develop an approach to service delivery that moves away from a straightforward, and sometimes adversarial, contractual relationship to one based potentially on shared objectives, shared risk, mutual learning, joint investment and sharing of reward.
Core Principles
Ethical behaviour
- The highest standards of professional behaviour are expected from all councillors and employees in their dealings with partners and suppliers. We will act with integrity and, where possible, with openness when we undertake procurement. Any conflicts of interest in the procurement process will be documented and managed in line with our constitution and Contract Standing orders. Our decisions will be communicated clearly.
- We will act fairly with our suppliers in all matters, including prompt payment in accordance with agreed terms. Should disputes arise we will seek to resolve them promptly. There will be no favouritism or bias shown towards one supplier over another.
Effective practice
- The Council will fulfil its statutory duties meeting both EU Directives and UK statutory requirements, and taking account of case law that emerges. We will also ensure that we follow our own Constitution and Contract Standing Orders, internal audit and other best practice requirements.
- No one individual shall be empowered to authorise all stages of the procurement process. The authority to release funds from a budget will be separated from the authority to certify the purchase, so as to ensure that at least two people are involved in determining that the purchase is legitimate, necessary and that it delivers value for money.
- As part of the procurement planning process, the length and type of supplier relationship will be decided that is appropriate to what is being purchased. Long term supplier relationships will incorporate the principles of continuous improvement and seek to obtain targeted improvements in delivery, quality and price.
Decision Making
- Procurement decisions may be taken:
- As part of the Council's annual service planning and budgeting process;
- Prior to the expiry of an existing contract;
- Following a Fundamental Service Review; or
- As a matter of urgency if a service/contract is failing.
- Decisions on procurement of services must be based on clear and justifiable evidence. They must also be transparent and have an audit trail which can be scrutinised.
- The lowest price will not be the sole criteria for establishing value, but will be an important factor to secure cashable efficiency savings for the Council. Criteria will be established prior to invitations to tender to enable a balanced assessment to be made which takes into account quality, deliverability and fitness for purpose. Such criteria will be shared with potential suppliers.
Risk Management
- The Council will make sure that any risk to the authority or the community it serves, is properly recognised in all its procurement dealings. It will identify risks, evaluate their potential consequences and effectively manage those risks accordingly at every stage of procurement.
Supporting Local Businesses and Small and Medium Enterprises
- We will aim to promote local businesses and community organisations, as well as small and medium enterprises (SMEs) more generally to compete for and win contracts, insofar as far as is possible within the legal framework.
- As part of its encouragement of partnerships, the Council will continue to support the development of capacity within the Third Sector though providing guidance, and adhering to the principles of the Compact agreement.
Sustainable Procurement
- The Council will seek to meet its needs for goods, services, works and utilities in a way that achieves best value for money on a whole life basis in terms of generating benefits to the local community and economy whilst minimising damage to the environment. Sustainability, quality, deliverability and fitness for purpose will be important considerations as well as price in making procurement decisions.
- The Council have already agreed and adopted a Climate Change Strategy and a Carbon Management Plan, and their principles will be applied to procurement policies and processes covering goods and works as well as services.
- Environmental impact will be assessed at the key stages of procurement to ensure that principles of waste reduction, recycling and use of environmentally acceptable materials are met.
Equalities and Diversity
- The Council's commitment to equal opportunities as regards service users and potential service users, contractor staffing and relationships with our own staff, will be built into procurement considerations.
- We will seek to reflect the diversity, profile and nature of our community as part our approach to commissioning.
- We will have regard to appropriate workforce strategies in the contractual process.
- We will include a summary of our equality and diversity policy with our tender documentation. We will include an assessment of the tenderer's approaches to equalities and diversity as part of our evaluation criteria.
Staffing-related issues
- Employees affected by any procurement process will be consulted and those who may transfer as a consequence of a procurement decision will be protected under TUPE"1".
- The Council is also committed to ensuring that contractors are good employers, and will look to ensure that contractors (and their subcontractors) utilise local labour wherever possible, particularly for apprenticeship schemes and similar.
- ("1" Insert TUPE footnote)
Commissioning
Meeting the Duty to Involve
- We will seek to achieve both efficiency savings and improved service delivery through better commissioning. We will achieve this through developing a clear methodology for involving local people, particularly service users and potential service users, when specifying the service that is required. Efficiencies and service improvements will be achieved by including only those items or levels of quality of delivery in the specification that are of value to customers.
Planning for Procurement
- In order to manage this process efficiently, we will need to plan well ahead for any procurement process. Larger contracts can take up to two years to re-specify and then let the contract. We will therefore put in place a Contracts Register that will map the current contracts that the council manages, including their renewal date and a forward plan of contracts due to be re-let or approaching expiry. The Register will be updated by Heads of Service on a monthly basis. We will use the Register to plan well ahead for contract renewal.
Understanding the market
- Improving commissioning also requires a good understanding of what the market can offer. The Council will therefore analyse and research supply markets for different services, and will maintain a dialogue with potential providers, including organisations from the community and voluntary sector. Local business surgeries will be used as a means of communicating opportunities for and guidance on doing business with the Council and partners, as well as through the Council website and South East Business Portal.
Category management
- Nominated lead officers for individual categories of expenditure over £100k across the council (for example, agency staffing, ICT equipment and software, and utilities spend) are responsible for reviewing opportunities to make further improvement in value for money in their procurement areas, in conjunction with the newly appointed Head of Commissioning and procurement.
Procurement
Appraisal of alternative service delivery options
- Services should only be delivered directly in-house if other more efficient and effective means are available, having regard to benchmarking and the cost of the procurement process balanced against the risks and cost-benefit of alternative options of service delivery.
- When considering commissioning and procurement the options are whether to:
- Provide or continue service delivery in the first place and at what level;
- Collaborate with partners; or
- Provide services in-house to a new specification or as a result of service redesign
- Or to outsource those services.
- The Council’s presumption is that all services that the Council is responsible for will be exposed to genuine competitive tests unless it can be demonstrated that an external solution would not be feasible.
- Services currently outsourced or provided in partnership with other councils or other bodies will be monitored by the relevant Head of Service, with support and guidance from the Commissioning and Procurement Unit where appropriate to ensure that it is appropriate to continue to outsource that service and that appropriate governance arrangements are in place to ensure Council objectives are being met.
- It will be the on-going task of each Head of Service, as part of service planning, to consider options for delivery of the service. This will be presented initially to the Council’s Strategic Management Team who will assess, agree and in turn, present options to Members for consideration.
Types of contract
- We will look to ensure that we use the most appropriate contracting arrangement available for any given circumstance. For some contracts, such as the purchase of goods such as stationery, there will be a straightforward contractual relationship, possibly through consortia, whereby we order a good and we pay for it once it is delivered. However, for other goods and services, particularly those that are delivered over a long period of time, there is much less certainty for both parties, and it may therefore be appropriate to enter into ‘partnering’ agreements, whereby the relationship between the client and the contractor is a more open and transparent one, sharing both risks and returns.
- Whether via a partnering arrangement or otherwise, we will seek to ensure that the risks and returns from our activities are shared between ourselves and our contractors. We will ensure that contracts build in efficiency improvement expectations, and do not necessarily assume an inflationary increase each year. Where partnering contracts are being put in place we will seek to agree terms for open book accounting and ‘profit sharing’ arrangements.
- When pursuing a major partnership arrangement, a specific Project Group will be formed, chaired by one of the Directors and following the councils project management guidance. The Group would agree each of the key elements of the procurement process.
Minimising the transactions cost of procurement
- We will aim to minimising the ‘transactional’ costs of conducting procurement activities. There are two key ways of doing this. Firstly, via e-procurement, which is the use of electronic media to sell and purchase goods and services. The Council is fully committed to enabling its core business processes including its approach to procurement and will implement e-procurement where there is a clear benefit to do so.
- The second way is to use approaches that both ensure value for money and bypass or expedite the full statutory tendering requirements where it is legal to do so. One way of doing this is to use public services ‘Framework’ agreements wherever appropriate, e.g. via the ‘Buying Solutions’ the public sector buying solutions portal"1".
- Another way would be to ensure that contracts that are providing similar services across local authorities, e.g. waste collection, are brought together thus sharing the tendering costs across the partners involved (for example, those involved in the Mid-Kent Improvement partnership – Ashford, Maidstone, and Tunbridge Wells). This may involve all partners starting contracts at the same time, but contracts could equally be created in such a way that enable an additional authority or authorities to ‘piggy back’ onto a contract that has already started but at a later date.
- ("1" http://www.buyingsolutions.gov.uk)
Tendering
- The procurement process will follow the Council’s statutory duties meeting both EU Directives and UK statutory requirements, and taking account of case law that emerges. We will also ensure that we follow our own Constitution and Contract Standing Orders, internal audit and other best practice requirements.
- The tendering process will be policed independently via our corporate procurement team and verified by Internal Audit arrangements. Any complaints or queries regarding a tendering process will also be dealt with independently via Internal Audit in the first instance.
Contract Management
- All contracts (including partnering arrangements etc) will include a suite of contract standards and performance measures based on the outcomes set out in the specification. These will clearly set out what information needs to be collected and submitted (including clear definitions), how often, in what format etc. It will be a requirement that the winning tender agree to comply with all council policies and statutory requirements, for example Data Quality policy.
- Each officer responsible for the management of a contract will have regular (at least quarterly) meetings with contractors to discuss how the service can be delivered more efficiently and effectively to secure continuous improvement.
- Where there are emerging service delivery failures, an action plan will be agreed with the contractor to restore performance to that specified. . The Council will be clear about the ladder of escalation up to and including contract termination.
- Where there are contract disputes the Council seek to resolve these swiftly and, where necessary utilising independent mediation.
Annex I
Other Policies/ Strategies linked to Commissioning & Procurement
- Medium Term Financial Strategy
- Value for Money Strategy
- ICT (e-governance) Strategy
- Partnership Protocol
- Risk Management Strategy
- Climate Change Strategy
- Workforce Development Strategy
- Data Quality Policy and Strategy
Annex II
Outline Action Plan
| Period | Key Activities |
|---|---|
| Short term (2010/11) |
|
| Medium term (2011/12 to 2013/14) |
|
|
Long term |
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