2 Incentives for effective procurement
8. The £75 million savings target may not be
sufficiently ambitious. The Learning and Skills Council based
it on an average saving of 5% over two years on an estimated £750
million per year expenditure on 'administrative and operating'
goods and services. Modest improvements to procurement procedures
across all colleges would go a long way to achieving the target.
For example the National Audit Office found that 40% of colleges
responding to its survey were letting some large contracts without
competitive tendering, thereby reducing the likelihood of getting
good value for money.[16]
9. The Learning and Skills Council acknowledges that
the target may not be especially ambitious, but considers it a
sensible target for now given the current weaknesses in procurement.
By March 2008, the Department and the Council will have a clearer
picture of whether colleges are making the expected savings. By
then, colleges will have submitted their annual returns for the
previous year which, seeking to minimise bureaucracy for colleges,
include a small number of questions on the savings achieved from
making procurement more efficient. Colleges can measure savings
using the efficiency model supplied by the Department. The Department
and the Council will then be able to use this information to assess
whether a more challenging target should be set.[17]
10. Colleges are autonomous bodies
and the Learning and Skills Council has limited leverage over
their day-to-day operations. Its funding levers are geared more
towards improving the outcomes and experience of learners and
for employers, rather than the detail of how colleges are run.
The Council has therefore worked through persuasion rather than
enforcement to improve procurement. The Department and the Council
have been working to reduce the complacency in some colleges,
and to encourage more positive thinking about what can be achieved.
In addition to issuing guidance, the Learning and Skills Council
has set up a dedicated website, the Further Education Library
of Procurement. The website aims to help with the procurement
issues that can arise in colleges and to provide an on-line repository
of useful, up-to-date information on procurement. The Council
is encouraging colleges to view the website as a resource they
can contribute to themselves and use to share information and
good practice.[18]
11. Staff in the Learning and Skills Council's procurement
team have visited around 250 colleges so far to explain first-hand
how procurement in their particular college can be improved. They
have used the visits to explain to college staff the benefits
of making changes such as using purchasing consortia. The Council
has also set up 19 local networks of college procurement staff
to help create a culture focused on efficiency and improvement.[19]
12. Many colleges are reluctant to be open about
their procurement arrangements, which makes it difficult to spread
good practice and can hamper efforts to improve value for money.
Historically, colleges have seen themselves as in competition
and have been unwilling to share information, especially financial
information. Colleges may also be reluctant to share such information
because they fear that any savings will be removed when their
funding is reviewed. The Learning and Skills Council has emphasised
to colleges that any money they save can be used directly for
the benefit of learners. The rising number of colleges joining
purchasing consortia indicates that the barriers to collaboration
are beginning to be broken down.[20]
16 C&AG's Report, para 1.3, Figure 16; Qq 3, 17,
64-65 Back
17
Qq 4-5 Back
18
Qq 2, 11, 19-22 Back
19
Qq 17, 55, 57 Back
20
C&AG's Report, para 6.3; Qq 10,16, 46 Back
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