Strategic Supplier Relationship Management Programme - Annual Review 2020/21

This is the second review of the LGA’s SSRM. The LGA's National Advisory Group for Procurement commissioned the programme in 2017 to improve dialogue with strategic suppliers to local government; local government has not always acted strategically across councils in its view of supplier markets and the companies that operate within them and a key aim of the programme is to rectify that position.

In the two years of operation the programme has been successful in providing councils with market intelligence and a better understanding of the impact (and sometimes frustrations) that councils have on their strategic suppliers. This is making us think differently about how we need to interact with markets in the future.

The SSRM programme was severely affected during 2020/21 by the COVID-19 pandemic which had a detrimental impact on strategic suppliers to local government and effectively meant that SSRM work was slowed so as not to place additional burdens on both Suppliers and local government staff. Instead, a key part of the programme for 2020/21 has been to work with strategic suppliers to determine how best they can support local government to enable communities to recover from the impact of COVID-19.

About the LGA

The LGA is the national membership body for local authorities and works on behalf of our member councils to support, promote and improve local government. The core membership of LGA comprises 327 of the 333 councils in England and includes district, county, metropolitan and unitary authorities along with London boroughs and the City of London Corporation. The 22 Welsh unitary councils are in membership via the Welsh Local Government Association. Our improvement offer is for all councils whether members of LGA or not.

The LGA is a politically led, cross-party organisation that works on behalf of councils to ensure local government has a strong, credible voice with national government. We aim to influence and set the political agenda on the issues that matter to councils, so they are able to deliver local solutions to national problems.

The LGA provides a range of practical support on a free of charge and/or subsidised basis, to enable local councils to exploit the opportunities that this approach to improvement provides. This includes support of a corporate nature such as leadership programmes, peer challenge, LG Inform (our benchmarking service) and programmes tailored to specific service areas such as children's, adults', health, care, financial, culture, tourism, sport and planning services.

National Procurement Strategy for Local Government

The LGA launched a new National Procurement Strategy in February 2018. Its streamlined structure reflects learning from the previous 2014 strategy and a national diagnostic exercise, focussed on three key themes which, consultation has shown, reflects local government’s priorities for the next four years:

• showing leadership
• behaving commercially
• achieving community benefits.

In addition to the themes, the strategy identifies four ‘enablers’:

• developing talent
• exploiting digital technology
• enabling innovation
• embedding change.

These cross-cutting actions have been identified by councils as being necessary for successful delivery in the key areas. The idea is that each council chooses the level of maturity it aims for in each of the key areas. The choices will naturally reflect local priorities and the resources available to the council. It is recognised, of course, that all councils have different objectives that reflect their respective communities.

Strategic Supplier Relationship Management (SSRM) Programme

An important element of the National Procurement Strategy is to enable strategic supplier relationships. The LGA’s National Advisory Group for Procurement determined, particularly in the light of the collapse of Carillion in 2018, that it is essential for local government to have better strategic relationships with those key suppliers to local government and to be better sighted on issues affecting the industries in which they operate. 

Engaging strategic suppliers refers to the process of identifying strategic suppliers and engaging with them to improve performance, reduce cost, mitigate risk and harness innovation. Effective management of strategic supplier relationships can deliver a range of benefits including improved outcomes for the public, added social value, reduced cost, reduced risk and innovation.  The SSRM Programme has identified those key suppliers, by spend, in the main spend categories for local government and has commenced a series of meetings with 3-5 of those suppliers in each category with the aims of achieving the following:

• establishing relationships so that both sides are able to readily speak to each other in the event of difficulties/issues arising
• understanding the issues affecting each key industry supplying services to local government
• recognising that the process by which councils commission and procure goods and services has an impact on how suppliers and the supply chain can deliver - learning and sharing good practice
• identify how all parties can work better together.

This report sets out progress to date in engaging with those key suppliers. 

Funding

The LGA receives a grant from the Ministry of Housing, Communities and Local Government (MHCLG) part of which funds this programme. At a high level the grant provides for the LGA to undertake the following:

Strategic supplier relationships 

• Lead on relationships with local government’s key suppliers that are not part of the Cabinet Office Crown Representative programme, where relevant working with Government policy lead Departments. 
• Work with Crown Representatives to ensure that their central programme meets the needs of local government.

Collaboration

• Provide opportunities for councils to network and collaborate through the work of the groups in children’s, adults, construction categories.

SSRM leads: Gail Stephens and Vivianne Mckay

Background to the year

This is a busy market characterised by a large number of small businesses who will often own just one nursing home but dominated by five large providers. This year the sector has been overshadowed by the impact of the COVID-19 pandemic on residents and their families, staff, management of the business and public sector commissioners. The key impacts on strategic providers in this category have included:

• high numbers of resident fatalities due to COVID-19
• management of stringent public protection requirements and isolation of residents and staff
• spiralling costs in the delivery of care
• reduced occupancy levels in homes
• the restrictions placed upon family and friends to visit residents during the pandemic
• relentless pressure and strain on the workforce
• increased reporting of data to public bodies
• acceleration and implementation of digital solutions
• creativeness and responsiveness of suppliers to enable communication with family and friends, for example the development and implementation of visiting pods, use of iPads and window visiting.

Key achievements

Despite the turmoil within the sector and some changes in staff engagement has continued with the four strategic suppliers (Barchester, Care UK, HC-One and Bupa); the ongoing commitment and time given by these suppliers in light of the ongoing pressures in the care home market has been much appreciated. Four Seasons Healthcare continue to engage with the LGA Care and Health Improvement Programme (CHIP) team in relation to their ongoing market position.

Annual reviews with all four suppliers were held together with regular virtual ‘touch base meetings’ to ascertain the state of play in the market in relation to emerging COVID-19 issues and provide support where necessary; these meetings were held in April, May, July and December 2020 and March 2021.The issues and challenges highlighted by the suppliers were fed back through LGA networks to inform wider market discussions. In addition, the workstream engaged in a wider post pandemic workshop with the LGA and organised workshops with those councils that have a high spend with the key suppliers in September 2020. In October 2020 and January 2021, workshops with high spending councils and suppliers took place with the objective of understanding the key emerging issues for the market. A spin off from those meetings has been the establishment of a council peer support group to consider procurement plans and market shaping for the sector. The LGA is taking an active part in this initiative.

Outcomes of SSRM engagement

The main concern at the start of the pandemic was in relation to the lack and timely distribution of PPE, this issue was promptly escalated through to the LGA to address distribution issues and was subsequently resolved with the implementation of the PPE portal.

The use of the ‘tracker’ and other data requested from suppliers caused challenges to providers in terms of the volume and different reporting requirements requested of them. The impact of that caused additional stress on suppliers whilst trying to deal with the day-to-day pressures of the pandemic.  Again, this issue was escalated through the LGA. Suppliers reassigned staff to support the data reporting and during SSRM meetings in March 2021 some suppliers raised concerns that if funding did not continue beyond March, then capacity may not be available to manage this as an ongoing data requirement.

The ability to obtain adequate insurance to cover COVID-19 positive residents became a key challenge throughout the pandemic and this issue was highlighted by both councils and the strategic suppliers. Representations were made to the Crown Representative for Insurance. Suppliers were encouraged to complete the Consumer Protection Association Insurance (CPA) survey to inform government thinking. The Government agreed to indemnify homes acting as ‘designated settings’ (where homes take non acute coronavirus patents in from hospitals) up to the end of March 2021. This covered gaps in commercial cover which was problematic.

Issues relating to market stability/viability post pandemic have been recognised and fed back to LGA networks. These are also being addressed at regional and local levels through councils’ risk management processes. During the pandemic, suppliers took up and appreciated the emergency funding supplied by Government through councils. At the time of writing this report all suppliers had received infection control monies. The distribution method of those monies varied between councils and some suppliers received guaranteed income to cover the costs of empty beds. Some suppliers reported the ending of block contracts in March 2021 and are therefore anticipating a further reduction in occupancy levels. All suppliers expressed concerns that funding post March 2021 had not been confirmed and the impact those shortfalls may have on their viability. Occupancy levels in nursing homes were reported by suppliers as running at around 70 per cent in September; these increased to around 80 per cent in March. Vaccination of staff and residents may also have an impact in occupancy levels. As at March 2021 the levels of vaccination were reported within the range of 90 and 97 per cent for residents. Vaccination levels of between 50 per cent and 87 per cent were reported for staff (with regional variations).

In addition, some pre-market engagement work was undertaken in respect of the domiciliary/home care market. An initial meeting was held with SSRMs and UKHCA. However, this work has been paused in 2020/21 due to the need to prioritise the care home sector. It is intended to revisit this strand of work during 2021/22.

Market issues – COVID-19 and Brexit

The following issues were reported/discussed by councils/suppliers and subsequently escalated as appropriate:

• Improved sharing of data building on ‘capacity tracker’.
• Occupancy rebuilding/recovery – there is a recognition that demand for some types of care home placements (as reported by some councils) is now at a 10 year low, and that the ability to return to pre-COVID levels may never materialise. Suppliers have expressed a desire to collaborate closely with councils through this project to support service redesign based upon future need.
• Challenges/changes to the care home model and progression of design featuring small group settings and consideration of siting and separation of entrances/exits, air purifying systems and more personal facilities.
• Funding (currently Government and councils are subsiding empty beds). The sector will need to cost reset as government infection control monies and other initiatives are unlikely to continue indefinitely. 
• Workforce exhausted and some staff may leave the sector all together.
• Leaving the EU may impact on the supply of staff, although strategic care home providers understand this impact to be minimal.
• Closer integration with NHS – how can care homes work more effectively with hospitals with support from councils for hospital discharge.
• Acceleration of the development of digital solutions.
• Support for the sector to manage home closure as demand for some types of beds is decreasing year on year. There may well be a need for councils and NHS to step in to work in an integrated manner to ensure the workforce is retained in the sector and ensure mechanisms are in place to support staff to move to alternative roles within different emerging care settings.
• The need to work with the market to re-design and re-launch post pandemic.
• Likely impact of future green paper on social care.

Future plans

The most important priority that has emerged is the desire to continue the dialogue between strategic nursing home providers and high spending councils to help shape the future of the nursing home market. It is therefore planned to host joint workshops in 2021/21 and continue regular liaison meetings between SSRM project officers and suppliers.

One of the aims in the past year was to progress work on the home care market. Work was undertaken to identify and gather data to understand the market from a strategic standpoint and inform the way forward in this area. The key activities that will be undertaken in this market are to:

• obtain and analyse performance/spend data
• carry out due diligence and identify emerging business risks on large strategic suppliers
• make contact with representative bodies to commence dialogue
• identify interested councils
• identify risks and challenges via meetings/workshops with representative bodies and councils.

SSRM leads: Becky Polito and Christopher Dale

Background to the year

There can be no doubt that the COVID-19 pandemic has had a major impact on organisations and individuals across the UK, the children’s residential, fostering, and education markets included.

Across these markets we have seen multiple challenges, including but not limited to:

• a lack of specific and consistent guidance to the children’s markets from central policy makers on how to respond to COVID-19
• a significant effect on staffing shortages that impacted on the operation of statutory services and those services that endeavoured to remain accessible to the vulnerable children and young people and children of key workers, including additional costs for agency staff
• ensuring access to appropriate PPE
• working with children and young people to help them understand the importance of adhering to Public Health England and Government requirements regarding social distancing and lock down measures
• an increase in reporting requirements to public bodies and commissioners
• the use of innovative and digital solutions to ensure children and young people could maintain appropriate contact with family members, friends and social care staff.

Key achievements

Despite all the challenges that this past year has created within children’s markets, there have been many fantastic examples of innovative working and examples of good practice from some incredibly dedicated organisations and staff to overcome these challenges. For example, the level of attendance by professionals at review meetings has increased via the use of digital platforms and the use of on-line education options for some children and young people with special needs who have flourished in this environment.

With all the additional pressures in 2020/2021 there continued to be a commitment to engagement with the SSRM programme from both key stakeholders and councils.  As a result, in June/July 2020 meetings were held with the top 10 spending councils (as identified by Porge Research report ran 14.02.2020) with the programmes four identified strategic suppliers: Cambian/Caretech, Keys Group, Priory Group and Witherslack. Attendance from councils was high with representation from all ten councils at almost all meetings. Discussions were solution focused and identified the key benefits and challenges for councils when working with each of these providers.

Meetings with each of the providers were held after the council meetings to provide them with this honest feedback. 

In 2020/2021 it was agreed that the children’s services work under SSRM would be expanded to include the independent fostering market. Initial meetings have been held (or are planned) with key providers including Core Assets Group, Outcomes First Group, Compass and Acorn Care and Education.

Information gathered through discussion with various councils provided anecdotal evidence that many councils were planning on taking the decision to become providers rather than commissioners in the future, with planned growth in their in-house services. If this was the case it would have a significant impact on discussions with external markets. With the permission of the Association of Directors of Children’s Services, in July 2020 a questionnaire was sent to all councils with responsibility for children’s services in England to gather information on planned internal growth over the next two-years in children’s residential homes, fostering services and education services for children and young people with special education needs and disabilities.

Prior to the pandemic and national lockdown, the SSRM leads were invited to present a workshop at the National Commissioning and Contracting Training Conference (nccTc) (Children’s). Although the in-person conference was postponed, nccTc recorded presentations that were subsequently made available on YouTube through the nccTc digital programme.

The Competitions and Markets Authority (CMA) announced on 12 March 2021 that they will be launching a study into children’s social care provision. The outcomes of the study will be carefully reviewed by the SSRM leads to identify the implications for the SSRM programme.

Key outcomes

• continued commitment and engagement from councils and providers
• identification of council priorities when engaging with/purchasing from key providers
• increased national awareness of the SSRM programme
• 73 per cent response rate to the national questionnaire to councils on internal growth plans – the data is in the final stages of being analysed and will inform conversations going forward.

Future plans

In 2021/2022 we will:

• continue discussions with residential providers, getting their considered views on the identified challenges/benefits for councils, identifying the ‘common ground’
• continue discussions with independent fostering providers and their top-ten spenders
• use the information from the national internal growth survey to inform discussions
• engage with the Competition and Markets Authority (CMA) who will be considering the growing risks in the children’s social care markets,
• work with regional/sub-regional consortia to identify how the SSRM programme can help them work better with key providers.

SSRM lead: Bev Thomas

Key achievements

Due to the COVID-19, slow, but positive progress has been made during the year in obtaining a good understanding of the category through:

• an analysis of council expenditure on construction, in particular district councils 
• being a new member of the LGA’s Construction Steering Group
• providing feedback on the Government’s Construction Playbook.

Work with suppliers and their professional bodies was also affected by the pandemic and the national lockdowns. Contact was made in the autumn of 2020 with the District Councils’ Network and the Federation of Builders to explore their interest and invite them to participate in the programme.

The lead attended/arranged the following events.

Civil Engineering Contractors Association (CECA)

CECA are very keen to be involved in the programme; and in June 2020 held a webinar with the LGA Construction Steering Group on the topic of local infrastructure accelerators.

The purpose of the webinar was to look towards the drive to recovery from the pandemic, how to work together to restart local infrastructure activity and developing codes of practice.

Key points from session included:

• the sector traded through the COVID-19 crisis with lower levels of productivity
• industry collaboration tackling safe working and cashflow issues
• concerns about forward pipeline and supporting customers
• councils were facing severe challenges that undermined planned infrastructure investment
• how to build local infrastructure in a ‘new normal’
• some of the challenges include uncertainty about:
  1. funding
  2. supply chain
  3. impact on cost
  4. commercial/disputes
  5. managing Covid-19 health risk
  6. changing infrastructure use
  7. housing market demand.

LGA’s Construction Steering Group for Local Government Procurement

In September 2020, the lead prepared and presented a paper to the LGA’s Construction Group to explain the work of the SSRM programme and in particular the analysis completed of the ‘Construction and Highways category spend data’ to identify key suppliers to local government such as AMEY, Kier Group, Willmott Dixon, Balfour Beatty, and Interserve.

The next stage is to seek the engagement of councils to achieve the following programme aims to:

• establish relationships to enable both councils and suppliers to speak about difficulties/issues being faced from their respective perspectives
• gain a better understanding of the issues affecting the industry in supplying services to local government
• determine what things local government does well or badly, and how these impact on suppliers
• identify how all parties can work better together.

Further discussions to explore possible ways forward are to take place with the chair of the group and at quarterly meetings.

LGA eighth National Construction virtual (two day) conference

As a member of the Construction Steering Group, the SSRM lead attended the above conference in February 2021. The conference was well attended and covered the following topics:

• procurement green paper – what it means for local government procurement
• outsourcing playbook for construction
• climate emergency – construction’s role and responsibility
• implication of COVID-19 on the construction industry
• value toolkit – driving better social, environmental, and economic outcome through value -based decision making
• better use of data in the supply.

LGA modern slavery guidelines for construction procurement workshops

The lead attended one workshop in February 2021 and will attend further workshops, during 2021/22. The workshops cover various topics including:

• introduction to current modern slavery and construction guidelines for the private sector
• round table discussions – what are local authorities doing now; what is in scope/out of scope and what does success look like?

Future plans

It is planned that the SSRM construction and infrastructure category lead will undertake the following work in 2021/22:

• as a member of the LGA Construction Steering Group seek to increase councils’ interests and involvement in the programme through discussions/ questionnaire etc
• continue to participate in the development of LGA modern slavery guidelines for construction procurement
• hold meetings with the relevant Government’s Crown Representatives to explore common issues
• revisit and update the data on council’s spend and consider a possible geographical approach for councils’ engagement in the programme
• follow up contacts with CECA, the District Councils Network and trade bodies such as the Builders Merchant Federation to seek their participation in the programme
• subject to the ‘four steps road map’ of out the current national lockdown and possible interest – consider arranging virtual discussions/meetings with councils, suppliers, and professional bodies.

SSRM lead: Greg Povey

Key achievements

Engagement

Over the year considerable engagement was made in progressing the agenda to improve the availability of procurement data within councils to enhance local government’s procurement capabilities.

MHCLG, Cabinet Office and the LGA Procurement National Advisory Group (NAG) all supported the project aim of trying to solve a national problem with a national solution that will enable our colleagues to act locally and be better equipped to achieve community benefits from our third-party expenditure.

Business case

NAG formally signed off on a paper which discussed the scope of this project. Following this a project initiation document (PID) was approved in September 2020. The NAG approval led to the development of a business case necessary investment to go the LGA’s Improvement and Innovation Board to support the provision of a free of charge solution to councils in order to drive up adoption of best practice. MHCLG made their support known.

Longer-term, the expectation is that funding would need to be found in future years, at which point this would need to be a dedicated project for NAG and likely require the formation of a focussed project/working group in order to deliver it effectively. 

Wider stakeholder engagement

To develop the business case market intelligence was gathered.

• Internal LGA capabilities − discussions followed with experts in other departments of the LGA involved in the sharing data sets namely LGA Inform Plus. This then led to some soft market testing with one of LGA’s key providers in the Inform Plus data architecture, Porism, to see if they could provide guidance on how the procurement data architecture could be developed.
• The work with Porism highlighted the Open Data National Action Plan 2016-2018 and that the Cabinet Office is already the central government lead for a programme which shared many similar objectives and outcomes.
• In November 2020 this led to engagement with Cabinet Officer who shared their plans for the Green Paper on Procurement regulations post-Brexit in respect of procurement data. These included proposals on the use of Open Contract Data Standards (OCDS), transparency, a central platform and that data would be required on the whole procurement cycle including planning, procurement and performance.
• Given the considerable overlap between the aims of the Government green paper and the LGA procurement data project it was decided it would be appropriate to see what emerged in the white paper and compare those outcomes against the LGA project PID.

Future plans

The future plans for the project depend on the outcomes of the white paper, we will continue to work with Cabinet Office where appropriate to ensure that councils’ needs are met with any final solution(s) proposed.

Introduction

The SSRM programme has made good progress in 2020/21. As set out in this report relationships with the key suppliers to local government across a range of categories have been greatly improved as a result of the programme and more councils are seeing the benefits of working together collaboratively. It is planned to build on this work in 2021/22, funding permitting, to secure further benefits for local government by:

• continuing to develop the relationships already underway with a range of key suppliers and pursue the activities set out in the individual sections above
• extending the programme to additional areas of activity to broaden the benefits − the areas that we plan to extend the programme to are set out below.

Priorities for 2021/22

Home care

Following on from the work undertaken in the nursing care homes sector, the SSRM programme is keen to work with suppliers in the home care sector to consider the risks, opportunities for improved working, market forces and key issues in the sector and to generate a positive dialogue to exchange information and views. Work in this category area was due to commence in 2020/21 but this wasn’t possible owing to the impact of COVID-19. Due to the nature of the market, it has not been difficult to identify key strategic suppliers in this area. Contact has therefore been made with UKHCA (UK Homecare Association) as the representative body for suppliers in the sector and, following a positive discussion) further activity will be taken forward.

Waste category

Waste is a significant area of expenditure for councils and is a category that the SSRM programme will investigate in the forthcoming year. It is proposed to work with the Crown Representative that has been appointed to coordinate work in the category. As a number of key projects in this category have been taken forward as PFI/PPP projects it is also proposed to engage with Local Partnerships who have considerable expertise in dealing with such projects.   

Information and communications technology category – resellers

Much of the ICT market for hardware and software requirements is conducted via resellers; it is proposed to complete some initial research into this market to determine the size, key players, etc. to provide information on whether this is a market that warrants engagement to open up a dialogue that could provide benefits to local government.

Energy − renewables

This is a category area that is growing rapidly as councils seek to respond to climate change and climate emergency declarations. Again, initial research, working with the Climate Change Programme within the LGA will be conducted to determine the size of the market, key players, etc. to identify the potential for meaningful dialogue in this area.