Meeting documents

Apologies were received from Mr Doug Anson, Mrs Margaret Aston, Mrs Lesley Clarke, Mr Steve Kennell and Mr Roger Reed.

Deborah Heenan, Deputy Director, Local Transformation, Improvement & Efficiency Support (LTIE) sent her apologies for agenda item 4.

There were no changes in membership.

There were no declarations of interest.

The minutes of the meeting held on 11 November 2010 to be confirmed as a correct record.

The minutes of the meeting held on Thursday 18 November were agreed as a correct record.

Contributors:

• Andrew Culver, Head of Corporate Procurement, Communities and Local Government (CLG)
• Deborah Heenan, Deputy Director, Local Transformation, Improvement & Efficiency Support (LTIE)

Context: Andrew and Deborah will provide a 10 minute presentation on the national context of procurement, followed by a question and answer session.

Purpose: To enable members to gain an understanding of the national procurement context in terms of central government’s direction of travel for local authorities; and practice elsewhere. This will enable members to consider the implications of the national procurement context for Buckinghamshire County Council. 

Papers: Pen portrait of Andrew Culver

The Chairman welcomed Andrew Culver, Head of Corporate Procurement, Communities and Local Government (CLG), who took Members through his presentation.  Andrew explained that Andrew Larner has written a paper entitled "How to challenge efficiencies in Local Government" and is seen as a champion on procurement.

He started by providing an overview on the Central Government’s future direction for procurement and he focussed on 4 main areas:

• The Green Review
• Centralised Common Procurement
• Shared Services
• Procurement Transformations.

Sir Philip Green identified a number of themes and he has been instrumental in establishing drivers for change in the procurement process.  He found that Central Government was not achieving economies of scale as departments were paying different prices for similar or the same goods.  He felt that for common goods and services, centralisation was the way forward to avoid duplication and to achieve lower prices.

Sir Philip Green also stated that Central Government commit contracts for too many years.  Andrew added to this by saying that PFI deals no longer make sense and there is a need to re-negotiate contracts.  He went on to say that competitive tension is the best tool available for driving down cost.

Andrew explained that there is a correlation between market share and challenge and gave an example of clothing for the Fire Authority where they were locked into a contract for 16 years with a particular supplier but other suppliers challenged this.  He said that over the years there has been an increase in pro-supplier legislation.  He went on to say that procurement is very data driven and data is now used as a means to measure success and performance.  It is also important to use common language.

During his presentation, Andrew made the following main points.

• There has been a shift in the marketplace and the market wants to drive inflation.
• It is not always best to go to the marketplace and each contract should be looked at on an individual basis.
• In terms of budgeting and forecasting, from estimate to finish - it is very important to have this as part of the process.
• A holistic approach to property is a sensible approach (The Green report made a recommendation to develop a Whitehall property strategy but there is a need to be cautious about long-term contracts).
• Energy will be the first national contract with formalisation of this taking place in January/February time.
• Common commodity procurement includes Advertising and Media, Print, HR Services and Fleet (which is due to be implemented in January 2011).
• Some budgets may be centralised.
• Main challenge is to be better than today and more efficient.  The organisation needs to become more commercial.
• User experience needs to be good in order to get the mandate correct.
• The data collected needs to be meaningful and this will inevitably lead to a shift in behaviour and ownership.
• Shared Services – there is a plan to consolidate existing "academies" by May 2011 (including Ministry of Justice, the Home Office and the Prison Service).  Shared Services  ...  view the full minutes text for item 4.

Contributors:

• Laura Langstaff, Procurement and Commercial Manager, Surrey County Council

Context: Laura will provide a 10 minute presentation, followed by a question and answer session. Surrey County Council has been invited to attend as its category management approach is at a more advanced stage than at Buckinghamshire County Council. 

Purpose: To enable members to gain an understanding of procurement processes at Surrey County Council, with a view to considering learning for practice at Buckinghamshire County Council.

The Chairman introduced Laura Langstaff, Procurement and Commercial Manager at Surrey Council Council (SCC).  Laura took Members through her presentation and the main points are listed below.

• In 2007, Surrey County Council introduced category management and set up 3 main categories – Adults (£221 million spend), Children and Young People (£108 million spend) and Corporate, Environment and Communities (£241 million spend).
• The procurement function is now a central team.
• In 2008, the procurement team underwent very intensive training by an external organisation.
• The procurement team has a very clear understating of spend and the supply base and the team has a standard toolkit which they can refer to for information.
• The contracts are owned by the central procurement team and not by the service area.
• Hook in Procurement with Commissioning through category management – the procurement process needs to feed into the commissioning process.  A needs analysis should be undertaken to establish the common needs and requirements.
• The team were asked to make £17.5 million of savings through procurement and it is on target to achieve this with around £11-12 million savings in future.  These savings could not be predicted if category management was not in place.
• CIPPs (Chartered Institute of Purchasing and Supplying) – this is the professional qualification for people who work in procurement and most of those who are part of the SCC procurement team are CIPP qualified or are working towards it.  The aim is to have 100% of those working in procurement to be CIPP qualified.
• Use service users to help write the contract specification and to look at performance indicators.
• If a consortium of suppliers can be set-up to deliver the service, then it is advisable to bring them together at an early stage.
• SRM – Supplier Relationship Management.  SCC has a team of 3 people who are responsible for SRM.  There is a tendency that once a contract has been awarded to "let it and forget it" so the SRM team own the contract once it has been awarded and this has helped to up-skill members of the procurement team.
• Contract Management skills and Relationship Management skills are very important attributes for people working in procurement.
• SCC’s procurement team has a category specialist for each area and a senior category specialist who know the market very well.
• SCC also has a Strategic Development team who supports the business analysts (includes 3 people).
• Training is available for the service areas.
• Twenty five people are responsible for looking after the service delivery of the 25 top suppliers.

During discussion, Members asked the following questions:

What Member involvement is there in the procurement process?

Laura explained that there is a Governance Structure in place.  The Procurement Review Group (PRG) meets weekly.  Legal, Finance and the Procurement team are responsible for signing off the contracts.  The PRG is also responsible for approving the procurement strategy.  There is a paper going to Members with revisions to the standing orders and agreeing the route the market. 

In terms  ...  view the full minutes text for item 5.

Contributors:

• Graham Collins, Commercial Manager, Finance & Commercial Services Team/or Caroline Wood, Procurement Manager (Performance Enhancement)

Purpose: To provide members with a brief update on the changes made to the contract standing orders as agreed by the Regulatory and Audit Committee on 18 November 2010.

Papers: Report to Regulatory and Audit Committee, Changes to Contract Standing Orders, 18 November 2010.  The track changes reflect the proposed changes.

Caroline Wood, Procurement Manager, took Members through the changes made to the contract standing orders which were agreed by the Regulatory and Audit Committee on 18 November 2010.  The changes will be going to full Council on 17 February for ratification.  She explained that the document included with the agenda pack showed the proposed changes as track changes.

A Member asked for clarification regarding paragraph 2.1, section (d) "Officers must use any relevant Corporate Contract which is already in place".  Caroline explained that the corporate team sets up certain contracts for items such as paperclips and therefore they have to use the central supplier for such items. 

The Member went on to ask whether this defeats the object of trying to reduce costs.  Caroline explained that this was not necessarily the case.  The contract already represents value for money due to economies of scale (the stationery supplier list was reduced from 3,000 to just over 1,000).

A Member asked whether the County Council has any control over contractors that sub-contract in terms of monitoring the quality of their service delivery.  Caroline explained that there is a standard clause in all contracts regarding sub-contracting.  She acknowledged that contract management is a weakness at the moment but there is a new contract management framework which is being discussed by the AOP Board today.

A Member asked whether monitoring once the contract has been awarded is a stipulation in the contract.  Caroline said that she was not sure whether it is included in standing orders.  She explained that it is the responsibility of the service area to monitor the contracts which they award in their areas.

A Member asked whether the person signing off the contract is aware that they are responsible for monitoring the contract (paragraph 18 states that the officer signing the contract must monitor the contract if no project manager has been assigned).

A Member asked whether a contract can be terminated immediately if a breach of contract has occurred.  Caroline explained that if a serious breach has occurred, then the contract can be terminated immediately.  She stressed that it is important to get it right at the outset.

A Member said that there was no mention of penalty clauses and asked how these would be implemented if necessary.  Caroline explained that the Courts frown upon penalty clauses and they are not enforceable.

A Member expressed concern that the County Council did not have sufficient knowledge of the sub-contractors which are used and felt this is vital.

A Member asked whether it would be possible to look at establishing a consortia which could help to bring people together, in light of the Big Society.

The Chairman thanked Caroline for her update.

Purpose: To update members on writing to organisations on their experiences of procurement; and future witnesses. 

Sara Turnbull explained that a questionnaire is going to be sent out to both existing suppliers and unsuccessful bidders to help ascertain the strengths and weaknesses of the tender process.  Sara agreed to circulate a list of organisations to Members for their information.

Action: Sara Turnbull

The next meeting will take place on Monday 13 December at 2pm in Mezz Room 1.  Please note – there will be a pre-meeting at 1.45pm to discuss lines of questioning.

This is the final evidence session. Cora Carvey, Chief Executive of Community Impact Bucks will attend, followed by Frank Downes, Cabinet Member for Resources, alongside Gillian Hibberd, Strategic Director Resources. 

The next meeting will take place on Monday 13 December at 2pm in Mezz Room 1.