National Procurement Strategy for Local Government in England 2022

This refresh of the National Procurement Strategy for Local Government in England is launched at a time of many opportunities and pressures on council procurement. We are tasked with delivering both economic and social value to our communities and for levelling up within and between our places. The role of procurement in local government remains pivotal in maximising these opportunities through our supply chains and managing the challenges faced by our sector and our communities.  

Third-party spend is increasing, as is the reliance on procured goods and services, with local government remaining a significant commissioner and purchaser at both a place and aggregate level across all key spend categories. The current operating context sees increased pressures on councils facing further restrictions on revenue and capital finances. In addition, increased volume and complexity of demand and market pressures on services, particularly social care, creates further challenges. Increased costs due to high inflation, exponentially higher energy costs, the climate change emergency, disruptions in the supply chains and suppliers unable to meet contractual requirements, and the war in Ukraine are all material to the way in which councils approach procurement.  

There is an imperative for the sector to share new approaches and to learn rapidly and openly with key partners including commercial partners. We must understand data and insights in order to develop innovative solutions to issues including price increases and potential market failure. The sector must work even more collaboratively and commercially. We must continuously improve our end-to-end contract management to fully realise the benefits from the contracts we have let.

We need to continue the improvement journey supported by clear strategy. This strategy is sector-led and endorsed by councils across England. It is a strategy relevant to councils across all types, sizes and geographies. We need to ensure that the importance of the procurement function in local government is recognised and harnessed, that opportunities are taken and pressures managed. 

We urge you to make use of this strategy and the supporting toolkit so that we can move from good to great.

Councillor Peter Fleming

Chairman, LGA Improvement and Innovation Board (2018 to 2022)

Professor Martin Reeves

Chief Executive, Coventry City Council and National Procurement Champion

The vision of this strategy is to support local government procurement in developing from good to great.

This strategy is supported by a ‘recipe for success’ and a detailed self-assessment toolkit for improvement which identifies maturity levels against themes and enablers.

‘Recipe for success’ for local government procurement

The National Procurement Strategy (NPS) for Local Government in England has been developed, owned and lived by officers and councillors. It sets out the ambition of the sector and includes guidance and a roadmap to improvement and innovation.

This strategy promotes:

• adding value
• fulfilling our social value priorities through procurement:
  • creating new businesses, new jobs and new skills
  • improving supplier diversity, innovation and resilience
  • tackling climate change and reducing waste
• building even greater connections and partnerships locally, across the public sector, with suppliers and the voluntary sector
• attracting, developing and retaining talent
• exploiting data and technology
• effective contract, supplier relationship and supply chain management
• embracing public procurement transformation and innovation including making procurement easier for bidders.

This strategy is released at a time of challenges and opportunities. Local government faces challenges including inflation, supply chain shortages, war, and climate change – and opportunities including new procurement legislation and the National Procurement Policy Statement. Spend by local government is increasing – in 2021, local government spend stood at more than £70 billion. The new procurement rules are expected to move the winning bidder test from ‘most economically advantageous tender’ (MEAT) to ‘most advantageous tender' (MAT), and this change will help councils to focus on value in its broader sense beyond economic value. This, along with the ability to implement competitive flexible procurements, will help councils to increase innovation and social responsibility in procurement. This strategy provides the emphasis and tools that help local government continue on the procurement improvement journey.

Self-assessment toolkit

The National Procurement Strategy (NPS) toolkit supports this strategy's vision and ‘recipe for success’. It is a self-assessment toolkit which councils can use to

• understand the maturity of the procurement function
• set goals
• assess progress.

The toolkit is for guidance only as it is recognised that ‘one size doesn’t fit all’. The expectations are that each council chooses the level of maturity it will aim for in each of the key areas. These choices will reflect local priorities and the resources available to the council. It is recognised that district councils may have different objectives to larger councils and each council can determine what maturity level is right in their own local context.

It is acknowledged that councils' engagement with the NPS toolkit diagnostic has been high and is increasing over time. The NPS toolkit approach is a ‘journey’ for councils and regions in assessment and improvement. Recently reported indicators against the diagnostic toolkit indicate that there is still room for further improvement within the current themes and enablers, and that they remain relevant. The 2022 strategy, therefore, builds on the 2018 strategy to provide confidence in a continuous improvement journey. All councils are encouraged to make use of the toolkit to understand both their individual and regional perspectives for improvement and collaboration, and district councils are particularly encouraged to make use of the toolkit given the limited resources available to them. Overall, the benefits of sharing good practice identified through the toolkit diagnostic results, to help with improvement, is key.

Additional indicators in the toolkit are ‘flagged’ and will be identifiable so that councils can continue to score themselves against previous outcomes from the assessment process. The strategy and toolkit benefit from an additional focus on adding value and creating social value.

From 2022 onwards, a ‘peer review’ approach is planned to provide additional validity to assessments. This may be through a ‘buddying’ scheme, where councils review each other, or through expansion of a central resource offer to provide ‘fitness checks’. The Government Commercial Continuous Improvement Assessment Framework (CCIAF) is also available to councils to assess their procurement maturity against central government standards. Some councils are also undertaking the Head of Procurement assessment process to support their score against the CCIAF. This may be in addition to, or instead of, the NPS toolkit assessment.

This strategy has been developed by and for councils in England – it is endorsed by the Local Government Association's Procurement National Advisory Group (NAG) and has been informed by a survey of all council procurement leads in May 2022. It is hoped that it will also be relevant for the wider public sector (including councils in other parts of the UK, and fire and rescue services) as well as professional buying organisations.

This strategy looks to councils and groups of councils to provide local and regional leadership and to assess their own progress.

Leadership for this strategy is provided by the Local Government Association and its Procurement National Advisory Group (NAG) – a group of senior local government procurement professionals from England and Wales.

LGA and NAG will provide national leadership by:

• engaging regionally and nationally with councils in order to understand areas of good practice as well as areas of concern
• providing a single voice for local government on procurement and supplier management issues
• engaging with the sector’s strategic suppliers and trade bodies including those representing SMEs and VCSEs
• facilitating and supporting further collaborative and partnership working between councils and the wider public sector
• publishing case studies, good practice guidance and toolkits
• leading periodic diagnostic reviews, evaluating progress against toolkit maturity levels and sharing high level results
• connecting exemplar councils to other councils who identify a wish to improve in particular areas of focus, either individually or collectively, by sharing experiences at conferences and workshops
• engaging with chief executives through organisations such as Solace
• reporting progress through the LGA Improvement and Innovation Board and communications to councils will be delivered through:
  • the LGA Procurement and supply chain e-bulletin produced by NAG
  • the local government procurement Knowledge Hub group
  • social media.

The National Procurement Strategy for Local Government in England 2022 focuses on three themes which councils have identified as the sector’s priorities:

• showing leadership
• behaving commercially
• achieving community benefits.

Each of the themes is broken down into key areas whose content is set out in more detail below. Our toolkit, which accompanies this strategy, provides additional guidance to councils on how to frame objectives and assess maturity in each of the key areas.

Engaging councillors

Engaging councillors refers to the engagement of councillors in the leadership and governance of council procurement and commercial activity. This includes both the cabinet or portfolio holders and overview and scrutiny members. To perform their roles effectively councillors benefit from good procurement and commercial advice and skills.

What it is

Councillors set the council vision and strategic priorities and must be satisfied that the procurement and commercial arrangements for their delivery are robust. Councillors make key decisions, particularly in major projects, and maintain oversight of the performance of key contracts, agreeing corrective action where necessary. Councillor engagement needs to be supported through training, good procurement and commercial advice and reporting arrangements.

Why it is important

When councillors are fully engaged with procurement and commercial matters, the quality of decision-making

is better and oversight and accountability are improved. Councillor engagement leads to better project delivery and better outcomes for the local community.

High level principles and specific behaviours

Engaging senior managers

Engaging senior managers refers to the corporate management team valuing and benefiting from procurement and commercial input at all stages of decision-making, including early advice on major projects.

What it is

Key decision-makers value and benefit from procurement and commercial advice including at the early stages of major projects. This is a two-way process requiring action by senior managers on the one hand and by procurement and commercial advisors on the other.

Why it is important

Good procurement and commercial advice (wherever possible, provided in-house or shared between councils) can have a decisive impact on the outcome of a project, particularly one involving innovation. It is important that senior managers engage with procurement and commercial issues from the earliest stages of the project.

High level principles and specific behaviours

Working with partners

Working with partners refers to a ‘one team’ approach to the design and implementation of solutions for public services which spans council departments and organisations.

What it is

The council works as a single team to design and implement solutions for public services and commissioners or budget holders, and commercial and procurement advisors work together as part of that team.

Why it is important

A team approach is the best use of limited resources and can lead to innovative solutions and better results. The team approach should characterise how council departments work together and how the council works with other councils, health, fire, police, housing, voluntary, community and social enterprise (VCSE) and other partners.

High level principles and specific behaviours

Engaging strategic suppliers

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.

What it is

The council takes a strategic approach to the management of relationships with the most important suppliers (otherwise known as strategic supplier relationship management). This activity should be carried out cross-department and is most effective when done cross-organisation.

Why it is important

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.

High level principles and specific behaviours

Creating commercial opportunities (including income generation)

Creating commercial opportunities refers to how an organisation promotes revenue generation and value creation through the way it plans its major third-party acquisitions (works, services and goods), reviews its business options (make or buy), engages with, and influences, markets and potential suppliers, seeks to support and encourage innovation, and promotes the development of new ideas and solutions to service delivery.

Commercialisation is a broad subject, and this key area is confined to how procurement teams should contribute to its successful delivery.

What it is

There are many ways in which commercial opportunities can be created through the strategic management of the commercial cycle and the services and assets delivered through the contracts it creates. Commercialisation is a broad and important subject to the sector. This key area is confined to how procurement teams should contribute to helping identify and create commercial opportunities.

Why it is important

As grants from central government are reduced, organisations are required to look at other means of reducing funding deficits. Commercial opportunities can be created in many ways, from conventional means such as increasing returns on assets to the way the council engages with its development partners and third-party contractors.

High level principles and specific behaviours

Managing contracts and relationships

Contracts and relationship management refers to the effective management and control of all contracts from their planned inception until their completion by the appointed contractor(s). It covers the supporting policies, procedures and systems needed to undertake it, together with broader issues from the identification and minimisation of risk, successful and timely delivery of outcomes and performance, effective control of cost and variations and the maintenance of clear communications and operational relationships with contractors.

What it is

Contract and relationship management is the process by which all contracts and variations are managed effectively to control costs, secure the quality and timeliness of agreed outcomes and performance levels and minimise the occurrence of risks.

Why it is important

Poor contractor performance or commercial failure can seriously damage a council’s reputation and its ability to deliver effective services and support to local communities.

High level principles and specific behaviours

Managing strategic risk

Managing strategic risk refers to the impact by an external event, passing of a statute or illegal activity upon business as usual, reputation or financial health of the organisation.

What it is

A series of actions and policies designed to reduce or even eliminate the probability of a perceived risk occurring and minimising the detrimental effects that may occur should it materialise.

Why it is important

The occurrence of any risk, particularly when it could be foreseen, can have a devastating impact on the organisation’s reputation and the lives of the people it serves, the quality of the services that it provides, and even its financial viability.

High level principles and specific behaviours

Creating social value (SV)

Social value refers to wider financial and non-financial impacts of programmes, organisations and interventions, including the wellbeing of individuals and communities, social capital and the environment. From a business perspective, it may be summarised as the net social and environmental benefits (and value) generated by an organisation to society through its corporate and community activities reported either as financial or non-financial (or both) performance. Councils are encouraged to measure social value achieved through their procurement activity. Several measurement tools exist, including the National Social Value Taskforce’s national themes, outcomes and measures (TOMs), the Government’s Social Value Model, or other models developed by individual councils, voluntary sector organisations and the private sector.

What it is

Social value is about improving economic, social and environmental wellbeing from public sector contracts over and above the delivery of the services directly required and at no extra cost.

Why it is important

Experience from procurements let by councils that have fully integrated social value requirements has shown that a minimum of +5 per cent to +20 per cent social value (according to sector) can be obtained on contract value by way of direct community benefits.

High level principles and specific behaviours

Engaging local small medium enterprises (SMEs) and micro-businesses

The Government definition of SMEs is any business with up to 250 employees and a turnover of up to 50m Euros. Micro businesses are those with 1 to 9 employees. There were around 6 million SMEs in the UK in 2021, which equates to 99.9 per cent of the business population. For the purposes of this document the term ‘SME’ shall refer to both SME and micro-businesses.

What it is

SMEs are non-subsidiary, independent firms.

Why it is important

SMEs play a major role in creating jobs and generating income for those on low incomes, they help foster economic growth, social stability, are a source of innovation and contribute to the development of a dynamic private sector.

High level principles and specific behaviours

Enabling voluntary, community and social enterprise (VCSE) engagement

VCSE refers to organisations that include small local community and voluntary groups, registered charities both large and small, foundations, trusts and social enterprises and cooperatives. These are often also referred to as third sector organisations or civil society organisations.

What it is

The VCSE sector is diverse in size, scope, staffing and funding of organisations. It provides a broad range of services to many different client groups. However, VCSE sector organisations share common characteristics in the social, environmental, or cultural objectives they pursue, their independence from government and the reinvestment of surpluses for those objectives.

Why it is important

VCSE organisations can play a critical and integral role in health and social care including as providers of services, advocates and representing the voice of service users, patients and carers.

High level principles and specific behaviours

Councils have identified a number of cross-cutting issues that will also need to be addressed if they are to realise their ambitions in the key areas.

These are referred to as ‘enablers’ of the strategy.

The five enablers are:

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

Adding value

Procurement has a key role in adding value in council spend.

We need to work proactively to understand emerging issues and learn how to manage them, we need to understand and mitigate against risks. We need to demonstrate the value we add to our colleagues and partners, sharing data and good practice to move from good to great.

This goes beyond making monetary savings, implementing category management, contract management, adding social value and ensuring value for money. As well as ensuring that these building blocks are in place, the sector needs to work openly, closely and rapidly with partners including the wider public sector, central government and key suppliers to seek out and realise all opportunities for adding value through the procurement process.

Developing talent

Talent management, recruitment and retention which are key building blocks to an excellent procurement function.

Developing talent includes professionalisation of council procurement talent, addressing recruitment and retention of procurement talent and developing agile procurement talent that can address commercial challenges and innovation in the procurement role.

Developing talent underpins councils’ ability to address issues and particularly issues of value.

Exploiting digital technology

Rapid use of data is critical for understanding how to manage procurements and contracts. Increasing data and transparency date is available, along with artificial intelligence, and making good use of this will be key to managing the pressures on councils.

Enabling innovation

The procurement rules reform will provide more opportunity to innovate in procurement and flexible procedures. Making use of these opportunities is key.

Embedding change

Procurement has a key role within councils and across the wider public sector and needs to sit at the top table to ensure commercial considerations run through the council decision-making.