The LGA launched its first National Procurement Strategy for Local Government with DCLG in 2007/2008 along with the formation of the RIEPs – even then, getting better outcomes from our near £50 billion spend was critical.
Since then, a credit crunch, two recessions, and the largest contraction in peacetime public expenditure mean we have to be much more radical. As spending cuts of around 28 per cent have bitten, more work is now contracted out - around £62 billion. Councils have grouped together to purchase goods and services (e.g. the eight regional Hubs) and on a category basis (for example energy with Kent's Laser buying for 70 councils, and London's London Energy Partnership on behalf of 30 councils) and we need to think hard about our next steps.
In 2010/2011 the LGA worked with a number of chief executives and local politicians from councils (led by Andrew Smith, Chief Executive of Hampshire County Council) as part of our Productivity Programme to produce a draft ‘Big Wins Strategy'
This highlighted a number of opportunities for councils to improve how they procure goods and services across the main categories of spend (waste, highways, property, social care and corporate services).
Separately, this year the LGA's Productivity Team have looked to develop and support innovation in procurement practice, and we are currently funding 72 councils in eight partnerships from which we hope to publish results early next year.
In all of these initiatives we have sought to work closely with the sector by setting up our National Advisory Group earlier this year; with suppliers by working closely with the Federation of Small Businesses (FSB); and with the voluntary sector by working with NAVCA.
The LGA supports the overall ambition and vision to develop a sector approach to procurement that helps maximise value for money, reduces the costs of procuring (both for suppliers and councils) and harnesses the opportunities that procurement can provide to drive economic growth. To this end, throughout the spring we consulted on a Procurement Pledge for the sector, and this is published on our website at:
The LGA Improvement Board agreed to fund a business case for a new National Procurement Strategy that would build on the earlier initiatives and look hard at what more can be done. Led by Andrew Smith, a sponsor group of Chief Executives have commissioned Deloitte to look at the big spend areas of Adult Social Care, Construction, Energy & Utilities, and ICT.
A spend analysis has been prepared by Spikes Cavell which has provided useful evidence of around £16 billion of modelled sector spend. This paints a compelling picture of potential gains from strategic collaborative/category management. Amongst others, the project group has looked at the Scottish Government spend model – Scotland Excel.
A first draft of the report is expected soon and is likely to identify where further consolidation can drive out greater savings whilst maintaining local spend, maximising spend with SMEs and the voluntary sector, and producing quality outcomes for taxpayers.
Watch this space!
2 August 2012