A Westminster Diary or An SME in King Arthur’s Court (Follow-Up) by Alun Rafique

Posted on April 23, 2014 by

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On the 25th of November, 2013, we had our calling to go to Westminster and change the face of local government procurement. Well, that was how we saw it although in reality there were over 10 sessions, 60 pieces of written evidence [see an overview of ours here] and more than a few Members of Parliament. This was part of the Communities and Local Government Committee covering Local Government Procurement.

PI EU Westminster Part 2

A report has now been produced and we wanted to scrutinize how the recommendations fared compared with our views. What did they come up with? Were there any earth shattering conclusions? We will tackle a few of the report sections in turn.

Improving local government procurement & delivering strategic objectives

There was a clear recognition regarding the sharing of best practices to gain commonality in approach by local government.

“… the Local Government Association should provide a forum for sharing data on successful approaches…and should work with local authorities to disseminate best practice case studies…”

They also reflected that aggregation can be a good thing as long as it is well thought through. This was supported by our evidence on a large framework by ESPO which, despite being broken down into lots, the applicants had to provide all. This essentially knocked SMEs from competing.

“When using framework contracts, councils should consider the potential for sub-dividing at least part of the contract to enable smaller organisations to bid for smaller parcels of work…We recognise that there are potential savings to be gained by increased aggregation and even national arrangements…but it has to be for local authorities to decide what provides the best value for money when weighted against their local needs…”

There was also an understanding that the local and national levels need to operate in different ways. This supports our view that centralisation can be a good force but the local levels still need degrees of autonomy. This is similar to many large companies today. They have a centralised procurement department to focus on aggregation, handle major contracts, managing the main procurement categories, manage major common suppliers (rather than the myriad of contracts managers that some suppliers have to deal with) and provide an expert source of procurement advice to local offices. The latter would continue to handle smaller procurements and be able to take into account local factors and issues.

One wonders therefore if the following statement from the report, “Local freedom and flexibility would be lost if they were compelled to adopt a centralised model of procurement such as that adopted by central government in its Crown Commercial Service…”, is a recognition that centralisation would be a hard sell and is an attempt to rationalise this.

Procurement processes

The majority of our evidence was aimed at the onerous and burdensome processes that small suppliers are forced to endure. This is due to local councils rigorously following OJEU processes for small value tenders or using inappropriate procurement systems. This was clearly stated in their report (as if there was ever a doubt!).

“Too many councils apply EU regulations over-zealously, using them as a self-serving justification to retain overly bureaucratic approaches…The first step is for the Government and sector leaders is to spell out what constitutes a sensible approach which will meet regulations in a proportionate manner.”

The repetition in Pre-Qualification Questionnaires that place a large overhead, especially on small business, was highlighted as an area for improvement, perhaps along the same lines as the Welsh with SQuID:

“…suppliers who wish to work with more than one council are frequently required to complete similar, complex forms. There is clear scope for more standardisation and simplification across the sector …”

Achieving change

We made the point during our evidence that regional centers of excellence could help with guidance, support, aggregating requirements (to reduce supply chain risks) as well as helping bring supply chains back to the UK.

“…The Local Government Association should consider supporting the establishment of a peripatetic procurement team—a ‘flying squad’ whose purpose would be to train regionally based teams of trainers…We recommend that the Cabinet Office offers Commissioning Academy programmes to council participants in order to raise the procurement skill levels…a change in effort is now required in order for successes to be fully replicated across the country … ensuring that lessons learnt in central government are translated into effective council action where appropriate.”

It discusses flying squads and regional trainers, although is this falling short of the mark? Is the intention to create regional centres of excellence and it’s just not been stated. Or has the report been too neutral in its language and conclusions? The regional centres of excellence (or eCademies as we like to call them) would lead to a three tiered approach with the Crown Commercial Service, handling the truly national tenders, and the local office providing day to day procurement and local strategic tenders.

The regional centres would be able to offer guidance to the local offices in terms of: regional aggregation strategies, category expertise, best practice, training etc. In fact, the regional centres would be close enough to understand the local issues thus ensuring that central led policies are not enforced inappropriately. It might also allow many more strategic tenders to take place where the local teams don’t have the time or expertise and the national teams are too high level. The regional centres could also act like a network of category managers with different expertise.

However there is a tension between centralisation and local autonomy. There is an argument that central or regional procurement centres should not make the use of their agreements mandatory. On the other hand, if they do not, the resultant lack of aggregation and commitment would often make it difficult for suppliers to offer the best deals. This would be costly to all councils, including those that did commit their spend. It is easy to forget that when operating in the commercial sphere, that the waywardness of some councils can damage the interests of all. That can be expensive for taxpayers.

Conclusion

It certainly seems we were listened to, combined with the fact that many of us also highlighted the glaringly obvious. However it was good to see our main concerns so prominently laid out.

einstein-insanity
There were two areas not really fleshed out which we touched upon although they were indirectly covered. The first of these was that councils need better methods to take account of innovative solutions. This could be easily resolved if councils did not narrowly interpret the OJEU processes and blindly follow them for below threshold procurements. Secondly was the use of incorrect scoring mechanisms in MEAT tenders. One would think that both these could be corrected by the dissemination of best practice. However such dissemination has been happening for many years, with only limited impact. If a local council operates poor procurement practice, there seems little one can do to change it.

As a provider of eSourcing systems, as well as being an SME, we had a deep interest in this area. The recommendations from this committee are directly along the lines of our evidence and for that we can feel proud that we have had a bearing on this potential change. And there can be no doubt that change is sorely needed.

“Insanity: doing the same thing over and over again and expecting different results.” – Albert Einstein

However, what is next? Is this just another paper exercise?  Their final paragraph:

“We make a number of recommendations for the Government to provide the right support and policy framework to enable councils to reform their procurement approaches and we commend them for urgent action.”

I come from a background that decisions need to be made. OK, sometimes you make a wrong decision but that can be fixed. Not to make any decision has got be the worst outcome. So when will the government make changes and will they act quickly enough? Some might say that the report was quite anodyne (see above on regional centres of excellence) so we will have to see what the LGA (Local Government Association) do next.

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