Pendle’s new commissioning and procurement strategy

The original project was to raise the profile of procurement across the council (and within council departments) to increase procurement and commissioning capacity and contribute to the identified ’budget gap’ over the medium term of c£4m.

The Expert programme funded by the LGA enabled the council to review its procurement operations, ranging from compliance with regulation, to development of appropriate business case, to deployment of systems and processes, to contract management considerations. With input from key stakeholders during the programme, and set against future financial challenges, the council was able to formally update its procurement strategy at the same time.

(Senior Management Team Member and course attendee, Pendle Borough Council)

Background

The reduction in core revenue spending had seen the removal of specific procurement expertise within the council but approximately £0.7m of the £4m had been identified as potential savings emanating from improved procurement or commissioning arrangements.

The LGA Productivity Expert Programme was identified as a valuable resource to communicate the importance of procurement to council officers and Members, to support implementation and achievement of the identified savings targets to meet the ongoing challenges faced by the organisation.

The appointment of an external ‘Expert’ was seen as a valuable, independent way of assessing the council’s existing procurement baseline to determine future policy and strategy.

Support requested

The brief was to assess the council’s approach to commissioning and procurement, establish the baseline position and comment upon how well the approach contributed to achievement of the council’s objectives in the context of reduced core funding going forward, and the need to set a balanced budget.

The project, funded by the £6,000 grant, aimed to review existing systems and processes to assess the baseline position, identify any duplication and/or missed opportunities for e.g internal collaboration or a more streamlined approach to managing future expenditure. The conclusion of the assignment would be an Action Plan to help the council move forward from its baseline to a more advanced position.

Key deliverables included:

• Review of back-office systems and processes with recommendations for change and improvement, to support existing service delivery models;
• Production of an action plan to identify if and how processes may need to be reconfigured to support any future changes within departments or to better meet the demands of changing service delivery models;
• Quantifying efficiency savings linked to the review of current operations but also the potential savings obtainable from reconfiguring services. This will be measured against the council’s own estimate of potential commissioning and procurement related efficiencies of c£700,000 over the period 2015/18;
• Development and publication of Pendle’s commissioning and procurement strategy and policy 2015/18;
• Workshop/presentation to management team/executive/council by LGA Expert highlighting best practice/recommendations to deliver the Commissioning and Procurement Strategy 2015/18;
• Communication to key stakeholders, raising the profile of procurement within the organisation;
• Knowledge transfer from the LGA Expert to officers and members, to support continued progress in the discipline of procurement, increasing capacity within Pendle BC.

Outcomes anticipated

• A greater awareness of procurement activity for all those employed in the purchase to payment (P2P) process and how this contributes to the overall aims and objectives of Pendle Borough Council including the contribution to the identified medium-term funding gap.
• The creation of increased procurement capacity as departments take ownership of their responsibilities in support of, and pursuance of, the council’s accepted Commissioning and Procurement Strategy 2015/18.
• The procurement profile being raised at Pendle BC as relevant performance measures are captured as part of the council’s established performance management framework.
• Formulation of a working group to champion procurement at the council, increasing exposure to procurement best practice to be disseminated to officers for implementation, where feasible.
• The identification of any ‘gaps’ in existing skills and knowledge and the development of a training needs assessment to help deliver the aims of the commissioning and procurement strategy.

Following receipt of the expert’s report and action plan, the LGA agreed to allow the council to utilise the balance of funding to support revision of its corporate commissioning and procurement strategy document. Funding was also committed to the delivery of specific procurement training.

Expert activity

The expert spent approximately one week reviewing council systems and policies, interviewing staff and discussing council relationships with external stakeholders to assess the baseline position.

The action plan produced identified the need to:

• review and update the existing commissioning and procurement strategy document and communicate this to stakeholders
• provide procurement and contract management training to council staff.

Following the production of the action plan, there was a remaining balance of funding from the productivity experts programme. Discussions with the LGA confirmed the use of the balance of funding to secure the services of a second Expert to help review the strategic document. On and off-site discussions took place and a desktop review of the council’s strategy helped produce an updated document endorsed by the council’s management team.

A part of this endorsement, the council agreed to commit funds to a modular training course of five sessions covering regulation, specification, business cases, commercialisation and contract management.

A ‘train-the-trainer’ approach was adopted in which the council was able to retain the learning to then disseminate this to a wider audience. Learning materials were also provided for (later) reference.

It was agreed that the modular course would be specifically linked to the needs of Pendle BC and the development of strategy, linked to best practice and the necessity to comply with legal and legislative requirements such as the Public Contract Regulations 2015.

The programme and content were as follows;

Module One

Procurement Policy and the Regulatory Background

• Understand the procurement cycle and the basics of procurement;
• Assess what we do well/not so well in the council;
• Appreciate the background to government procurement policy;
• Understand the ‘drivers’ to improve procurement;
• Create a better understanding of the regulatory process including EU Directives and how to use them;
• Appreciate the different  approaches to markets and suppliers;
• Consider how procurement can add value to the council and wider government outcomes.             

Module Two

Developing Specification, Evaluation and Award (Whole Life Costing, Community Benefits/Social Value)

• Appreciate the importance of the specification in achieving the aims of the procurement project
• Understanding the links between specification, evaluation and tender award;
• Develop commercial awareness of the market and the link to the external environment;
• Understand the external environment and its impact on specification;
• Create the link to social value and the significance of the whole life costing approach;
• Demonstration of what can go wrong if you do not get the specification right.

Module Three

Preparing Business Cases and Financial Implications

• Developing the business case structure
• Understanding the importance of business case criteria and the links to other policy and procedures
• Complying with different stages of the business case
• Creating the five case model and its application to smaller contracts
• The need to address risk management
• The importance of strategic fit within the organisation
• Appreciating the need for accuracy in financial calculations
• Using tools such as Optimism Bias and discounted cash flow effectively

Module Four

Market Awareness and Sourcing Strategy

• Understanding the market with regard to risk and expenditure
• Developing an awareness of markets and how they operate
• Developing markets to meet needs, increasing value for money and securing effective service delivery
• Understanding analytical techniques and how to use them effectively
• Understanding supply chains
• Understanding other commercial factors and the impact they may have
• Developing commercial awareness e.g. external and internal business considerations and opportunities for change

Module Five

Designing, Implementing and Managing Contracts, Performance Management, Continuous Improvement and Risk Management

• The essential principles of contract management and its relationship with the procurement and the commissioning cycle;
• Application of contract management within the monitoring process
• The importance of governance in longer term contracts, developing structures and choosing the right options
• Realising benefits through improving supplier relationships
• Using key performance indicators and performance management principles
• Achieving continuous improvement
• Managing risk within long term strategic contracts and delivering the required outcomes
• Understanding the importance of transition, early termination and exit

Financial Savings/Income

As part of the budget-setting process, savings proposals are provided to members as part of the decision making process. In terms of the proposal content, officers assessed the viability and impact of such proposals with due regard to smarter working, improved procurement practices, collaborative working, sharing services and re-modelling service delivery as appropriate.

The council therefore builds into its cashable savings projections the outcomes from employing these skills and practices. As financial pressures continue to exist and much experience leaves the organisation naturally or through re-organisation, ‘new’, officers are charged with identifying how budget gaps can be ‘bridged’.

Through the expert programme, the council has taken the decision to provide its officers with access to the necessary skills, training and expertise to prepare robust proposals in the future. This includes commissioning third parties to provide services eg transfers to town and parish councils, working collaboratively with other organisations and developing a commercial strategy as part of an overall financial strategy to consider markets and income streams.

Table 1: Procurement Related Savings and Income Generation to date and forward looking

Impact and outcomes

As a result of working with the LGA Productivity Expert programme, Pendle Borough Council has achieved or expects to achieve the following outcomes:

• Production and publication of a robust commissioning and procurement strategy (2017-20);
• Delivery of a modular procurement training course designed to up-skill staff and achieve a culture where best practice procurement is embedded;
• A continued, robust approach to the identification of savings and income generation schemes by officers and delivery of a commercialisation strategy.

The council has updated its commissioning and procurement strategy (a copy can be viewed here) and has communicated this to all council officers. It is now included in a suite of documents reviewed annually to ensure it retains alignment with strategic aims and remains consistent with corporate objectives and governance arrangements eg Officer Scheme of Delegation, Contract and Financial Procedure Rules.

Council officers are encouraged to generate ‘new’ ideas in a continuing challenging financial environment. Through the work of the LGA and productivity experts, the profile and importance of procurement has been raised. Officers can appraise new suggestions in the context of procurement best practice, regulation, contract management and markets. They are encouraged to propose suggestions, not only for their areas of service, but for council services as a whole.

Council Contact

Craig Finn, Corporate Accountant

[email protected]

01282 661014

LGA Contact

Grace Abel, Productivity Adviser, Local Government Association

[email protected]

07825 726273