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Procurement: Role for a local hero

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Bill Roots was amazed by what he termed ‘initiativeitis’. The former Westminster City Council chief executive had not taken a good, hard look at local government procurement in more than three years.

He had been part of the 2004 Gershon review team, then last summer, he was asked by local government minister John Healey to lead yet another procurement review, and found that there had been a lot of talk during his absence.

“I saw that a number of initiatives had been introduced, but what I noticed was that there was a lack of a unified structure,” he says.

The minister needed Mr Roots to come up with ways of cutting the cost of procuring goods and services, so that councils could meet the centrally set savings target of 3% a year, without harming the quality of services.

Mr Roots’ recommendations have caused quite a stir since they were released in February 2009, heightened by the Operational Efficiency Programme, launched with last month’s Budget, which demands £15bn in savings across local and central government.

The latest efficiency savings initiatives are among the most stringent yet for cash-strapped local authorities.

The issue will come further under the spotlight at the June 2009 Public Procurement Show.

“Authorities have been taking little steps [on procurement], but we’ve got to take the bull by the horns,” Mr Roots declares.

The major step he suggested in his 28-page report was the creation of an overseeing ‘procurement champion’, with a powerful support network.

He or she would work alongside the Local Government Association and co-ordinate procurement across authorities so that they were aware of the plethora of options available to make efficiency savings.

The champion would force through savings.

Mr Roots admits that “there is some concern” about the role, with fears that the champion would be little more than a figurehead.

“I want it clear that this is a real role — something for someone who has been around, who has some nous and clout,” he says.

The LGA has yet to say whether it will accept the recommendation, but councils have questioned the need for the role.

David Pointon, head of procurement at Portsmouth City Council and a contributor to the report, says: “Anything that drives the profile of procurement has got to be a good thing, but whether a champion is the right move, I am not sure. There is a question over a top-down or a bottom-up approach.”

Mr Pointon would like to see more procurement specialists given a strategic, rather than just operational role. There are about 2,000 procurement officials across local government, who are responsible for about £40bn of expenditure.

Yet most deal with simple, day-to-day procurement.

His procurement budget is about £250m, and some 80% is allocated for awarding contracts in areas such as social care and waste collection.

He would like to see officers have the time and training to look at smaller goods and services across the authority and in neighbouring councils, such as how best to share computers.

Mr Roots’ focus on a more top-down approach — the need for a ‘stick’, as he puts it — is best demonstrated by a proposal that would punish certain councils that act independently: either not partnering with their neighbours to procure in tandem — and therefore repeating expensive tendering processes for goods and services that could easily be awarded to one supplier across the boroughs; or by taking no notice of the efficiency drives led by regional improvement and efficiency partnerships, the bodies established to seek savings by sharing ideas and expertise.

He proposes that the Audit Commission would be given the power to lower the use of resources scores of offending councils, should their actions be shown to provide poor value for money.

Mr Roots was dissuaded from going even further; he had wanted to give the commission the right to review councils’ procurement annually.

Alan Radcliffe, head of procurement at Cumbria County Council, counters: “There is an expectation at national level that we will join up deals on services across councils. It’s not that simple, as we have different needs. Cumbria is a very rural area and needs a supply market to complement that. And that is very different to our urban neighbours, like Manchester.”

Another proposal is described as a ‘horses for courses’ approach to procurement and commissioning processes.

Mr Roots wants more small suppliers to pitch for council contracts, creating greater competition.

Traditionally, a major supplier would be left to its own devices on how it awards sub-contracts, which occasionally leads to delays as further competitive processes are arranged.

In a ‘horses for courses’ approach, councils would parcel smaller contracts down to smaller suppliers directly, or have greater influence over the plans of the larger firms.

Steve Alambritis, head of public affairs at the Federation of Small Businesses, says that for this to work there will be a need for a “culture change in the minds of buyers”.

Rather than expect a small firm of perhaps fewer than five staff to complete a 20-page tender document, with 10 copies, within two weeks, officials would have to accept less time-consuming and bureaucratic pitches.

“Buyers want to legally back themselves by asking for all this information, but it’s ticking boxes,” argues Mr Alambritis. “Small firms find it harder to satisfy the needs of [council] buyers, but they will jump for joy if awarded a contract.”

He says that a large firm awarded a contact will use its existing staff and find economies of scale, while “smaller firms will go to the bank and raise the cash to hire more people, probably
from the area”.

Tony Travers, director of the Greater London Group at the London School of Economics, says the report’s ideas are not ground-breaking but its impact could be important at a time of pressure for savings.

“None of these ideas don’t already exist — this is not radical stuff,” argues Prof Travers, who is one of the keynote speakers at the Public Procurement Show. “However, the report is well timed. In the current economic environment, when authorities need to cut back, this kind of report has a much greater toehold than it had previously.”

In other words, councils must now take note of any ideas about how to make the savings that are becoming increasingly necessary.

Mr Roots’ report might just amount to more than another bout of initiative-it is.

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