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Waverley Borough Council Committee System - Committee Document

Meeting of the Environment Overview and Scrutiny Committee held on 14/11/2001
PROCUREMENT STRATEGY



Local Authorities are required to develop a formal Procurement Strategy as part of the Best Value process. The District Auditor and the Best Value Inspectorate are currently reviewing local authorities procurement strategies and if authorities have no strategy they are being encouraged to develop one; failure to do so is expected to lead to adverse comment being made, as procurement strategies are seen as central to the way in which best value is developed. This report outlines the framework for Waverley’s Procurement Strategy, and seeks its endorsement. The Executive Committee will adopt a framework which will then form the basis for further, more detailed, work to translate these strategic ideas into actions.
APPENDIX H
WAVERLEY BOROUGH COUNCIL

COMMUNITY OVERVIEW AND SCRUTINY COMMITTEE – 12TH NOVEMBER 2001
ENVIRONMENT OVERVIEW AND SCRUTINY COMMITTEE – 14TH NOVEMBER 2001
CORPORATE OVERVIEW AND SCRUTINY COMMITTEE – 20TH NOVEMBER 2001


Title:
PROCUREMENT STRATEGY
[Wards Affected: N/A]


Summary and Purpose

Local Authorities are required to develop a formal Procurement Strategy as part of the Best Value process. The District Auditor and the Best Value Inspectorate are currently reviewing local authorities procurement strategies and if authorities have no strategy they are being encouraged to develop one; failure to do so is expected to lead to adverse comment being made, as procurement strategies are seen as central to the way in which best value is developed. This report outlines the framework for Waverley’s Procurement Strategy, and seeks its endorsement. The Executive Committee will adopt a framework which will then form the basis for further, more detailed, work to translate these strategic ideas into actions.


Introduction

1. The District Auditor and the Best Value Inspectorate are both now actively reviewing Procurement Strategies when they visit local authorities. They are looking for a set of rules which are systematically applied within an authority to produce sound and consistent conclusions.

2. Members may recall that on 7th December 1999 the Council adopted a Procurement Strategy for construction contracts, the central features of which included the need for clarity over roles, rigorous and on-going risk assessment and renewed emphasis on the project planning stage to avoid risks and to better achieve quality.

3. The purpose of a Procurement Strategy is much wider. The Local Government Act 1999 calls for authorities to improve the way in which its functions are exercised.

4. Section 5(5)(b) of the Local Government Act 1999 says that the Secretary of State may issue guidance on “the procedure for a review”. The relevant Guidance Circular calls for authorities to have “clear strategies for community consultation, procurement and staff development”. To date the District Auditor and Best Value Inspectors have concentrated on consultation and procurement, and have said very little about staff development. Staff development is, of course, central to the improvement of service delivery.


5. The definition of procurement goes beyond simple purchasing decisions. It encompasses the decision as to the way in which services are to be provided. This is where the familiar options for procurement as cited in the Guidance become relevant:-

Cease delivery of a service in whole or in part
Restructuring or repositioning the in-house service
Joint delivery and/or commissioning
Market testing all or part of the service
Transfer or externalisation of the service
Re-negotiate with existing providers as far as is possible
Creation of a public-private partnership.

6. The Guidance Circular calls for the selection of these options to be made in the context of an authority’s Community and Corporate Strategies. However, other issues such as e-procurement, selection of suppliers/partner organisations and the use of other procurement facilities are also relevant.

Definition of procurement and the scope of a strategy

7. Procurement itself can be defined in a variety of ways. It is therefore important to understand exactly what is to be covered by the Procurement Strategy.

8. A best value authority will be expected to take into account a range of issues. Procurement decisions are not to be simply about the “compete” and “challenge” elements of best value, but also about putting into practice a wide range of Council policies and priorities.

9. Environmental and Ethical procurement issues should be one of the major issues encompassed by the Procurement Strategy. The Council is implementing its own LA21 Strategy’s aims and priorities, and the Procurement Strategy framework will form an important part of the overall direction of environmental and ethical policy. The detailed work that will follow adoption of the framework will be aimed at providing a practical guide for staff to aid them in the selection of, for example, the most appropriate product. Where an external supplier provides a Council service, the Procurement Strategy will also give guidance on the approach to be taken in the Council’s management and direction of that external service provider in terms of influencing their purchasing policies to bring it into compliance with the Council’s policies.

10. It is envisaged that decision matrices will be devised to record the evaluation of:

the appropriate procurement route (most commonly for use in Fundamental Service Reviews) – using those options set out in paragraph 4 of this Report that are favoured by Waverley as a starting point
the most appropriate product (for the day-to-day procurement activities).
whole life evaluation methodologies, including delivery issues, running issues, length of life issues and, finally, disposal and recycling issues.

11. Challenge is equally important as it is seen as being key to significant improvements in performance. It is about both how and why a service is delivered, and calls for consideration of the fundamental matters of services.

12. The criteria to be used will be defined so as to accord with Council policies, aims and priorities. Again, using environmental issues as an example, guidance will be given on selecting products which have been made using recycled materials, and evaluation of the most advantageous product. This will not necessarily be the cheapest simply to buy but will be assessed looking at the whole life-cycle of a product including other costs that would need to be borne.

Progress to date

13. Work on the Procurement Strategy started earlier this year with an information-gathering exercise. Key members of staff were interviewed to gain their views on the current rules and practices concerning procurement at Waverley.

14. This was followed by the development of the Procurement Strategy framework, attached at Annexe 1, upon which Members views are sought. Given the corporate nature of procurement, the views of each of the Overview and Scrutiny Committees are being sought and their comments will be considered by the Executive Committee at its meeting on 4th December 2001.

The way ahead

15. The Procurement Strategy will lead to selection of procurement options that follow consistent criteria, which need to look not only at the present but also to the future. Therefore, any factors that currently, or may in the future, affect the market or the ability of the Council to provide a service need to be taken into account in evaluating the options.

16. There will be a number of key policy issues that will have to be addressed which include identifying core services and appropriate procurement models and a staff development strategy which is central to underpin the procurement process. Further work will also include addressing the issues raised in Annexe 2 to this report.

17. Once the Strategy has been finally adopted, and the detailed work completed and approved by the Council, changes will be required to the Council’s Standing Orders with respect to Contracts, and possibly also to its Financial Regulations. The Standing Orders are currently written on the presumption that the lowest price tender or quotation will always be accepted. This may not be appropriate once the Strategy is in place. It is clear that quality and economically most advantageous considerations also need to be applied.

Conclusions

18. Members will appreciate that there is a need for the Council to have a comprehensive Procurement Strategy to ensure that there is thorough preparation for the commissioning or procurement of supplies, works and in particular services. It will enable the Council to ascertain fully both the nature of the works, supplies or services it wishes to buy, whether these will meet the needs of the community and to evaluate the nature of the obligations and liabilities the Council will be expecting the contractor to take on.


19. Further reports will be submitted to Members relating to the Procurement Strategy particularly the issues set out in paragraph 15 above. The aim is that the Procurement Strategy and the guidance will be fully in place in early 2002 to enable it to be included within the Best Value Performance Plan and to inform Year 3 Fundamental Service Reviews.

Recommendation

The Committee is asked to provide comments which will be reported to the Executive Committee on:-

the document attached at Annexe 1, intended as the framework of Waverley’s Procurement Strategy; and
any other issues that should be covered in the detailed work (with particular reference to Annexe 2).


Background Papers (DoF/CEx)

There are no background papers (as defined by Section 100D(5) of the Local Government Act 1972) relating to this report.


CONTACT OFFICERS

Name: Mr M Hill Telephone: 01483 523240
Email: mhill@waverley.gov.uk

Mrs A Bott Telephone: 01483 523415
Email: abott@waverley.gov.uk