House of Commons - Local government procurement - Communities and Local Government Committee

Local government procurement - Communities and Local Government Committee Contents

8 Achieving change

98. It is clear that there is considerable scope to improve local government procurement. Alasdair Reisner from CECA told us that there were some examples of "terrible practice" as disseminated best practice was 20 years old and had never been updated.[237] IACCM considered that local government procurement suffered from an "absence of executive leadership and investment" and activities were not supported by the skills, tools or professional confidence required to support acquisition practices in today's complex business environment".[238] This chapter identifies future changes in policy and practice which could be adopted to improve procurement by the local government sector, focusing on three key areas for action: improving procurement across council functions; developing skills and capacity; sectoral and other support. The new EU Directive on procurement will provide added impetus to improve procurement and require councils to raise their game in order to take full advantage of its opportunities and respond adequately to its requirements.

Embedding procurement excellence

99. Many councils, such as Halton Borough Council, considered that procurement excellence needed to be embedded across councils, rather than confining it toprocurement as a "back office function".[239] Cheshire West and Chester Council told us that part of establishing the new council organisation entailed putting "procurement at the heart of what we were doing" and the council had made procurement "part of driving the culture of the organisation".[240]

100. To embed successful procurement across a council requires strategic leadership. Birmingham City Council told us that a very effective way to improve procurement and compliance across a council was to consider allocating to a Cabinet Minister responsibility for procurement, potentially under the wider portfolio of the Deputy Leader or as a specifically identified Finance Cabinet Member responsibility. It cited as a success its establishment of the post of Cabinet Member for Commissioning, Contracting and Improvement to oversee its £1 billion spend with a range of suppliers.[241] Furthermore it is important that, as procurement changes and expands, the roles of those frontline councillors responsible for scrutiny and monitoring are also given full attention.

101. Solace argued that there were three main benefits to having active political leadership: firstly, it provided stakeholders with assurance that procurement exercises were being taken seriously, secondly, it prevented a late emergence of lack of political support for an exercise and, thirdly, it provided Members with learning to give them greater knowledge and confidence.[242] Despite many witnesses acknowledging good practice, others noted the need for further dissemination of best practice, for example via the LGA. The LGA stated that, with some 375 member councils, some of its members did procurement "very well and some less well". The LGA stated that its work to put 'procurement at the top table' would help ensure senior officers and elected members "oversee and support procurement" and that they had a procurement strategy which recognised the importance of risk management.[243] Furthermore, the role of senior executives is key but the CBI considered that many senior council executives were still "too far removed from oversight of major commissioning projects".[244]

102. Procurement should not be viewed as a niche activity for specialists, rather as the essential underpinning of a joined-up process from initial service design and commissioning, through purchasing of goods and letting of contracts, to contract implementation and review. All those involved in commissioning, procuring and delivering services should recognise the need to embed excellence in procurement practices at the heart of these activities.We welcome the work by the Local Government Association to put procurement at the 'top table' within councils. There is a need for the political leadership in all councils to focus on commercial approaches, with the embedding of a culture of commercial awareness when designing and delivering services. We therefore see considerable advantage in councils identifying a lead cabinet member and a senior officer who will take overall responsibility for ensuring that procurement is as efficient as possible, and that fraud is pro-actively combated. Councils should also ensure that frontline councillors have a clearly identified role in reviewing and scrutinising procurement, including outsourced contracts and their impact on services for residents.

Skills and capacity

103. A key issue to consider is whether, given current resource constraints, councils have sufficient numbers of staff with the right skills and if the right training is being made available. This is an issue which affects the whole public sector. The NAO's Managing Government Suppliers report warned that there was a risk that the Cabinet Office's procurement reform ambitions would not be matched by the "right resources, capability and information" due to gaps in commercial experience and expertise below senior levels.[245] The Public Administration Select Committee (PASC) report on Government Procurementidentified shortcomings in the ability of the civil service to run effective and efficient procurement.[246] Local government also faces challenges in securing adequately skilled staff. The Audit Commission considered that a move to more commissioning and away from directly providing services meant that councils needed to acquire more commercial skills,[247] but was concerned that a lack of skills was a public-sector wide issue, citing the Institute for Government's 2012 report, Choice and competition in public services,[248] which concluded that councils generally lacked sufficient people with the procurement, risk or contract management skills to make effective use of market mechanisms.[249]

104. Councillor Scott from Sheffield City Council considered that lead members needed to develop a new skill set that 15 or 20 years ago was not required. Pointing to the £1 billion which the NHS had invested in training commissioning and procurement staff, he said that local authorities did not have the same level of focus on skill development and innovation, and that although Sheffield and other councils were "getting there" there was "still an awful lot more that we need to do".[250] Sheffield City Council was the first council to develop a procurement toolkit, shared with several other councils, for training every officer in charge of procuring a service in order to avoid "fuzzy commissioning".[251] The council told us they had been investing in the professional skills of its employees: some 75% now had a CIPS qualification although across the Yorkshire region the figure was only 40% due to a lack of training funding.[252] Cheshire West and Chester Council also told us about its work to improve specification and commissioning skills.[253] The Audit Commission noted that commissioning, procurement and contract management skills remained "underdeveloped" but councils nevertheless were able to recruit staff from a commercial background with the "right skills" or use consultants.[254] The LGA's Making Savings from Contract Management report also found that training in contract management was "increasingly common".[255]

105. Many witnesses recommended further action. NOA recommended that a "repository of best practice" be established to assist councils in understanding better what suppliers are trying to achieve out of their relationships.[256] Halton BC recommended that a national campaign be conducted to improve skills and capacity in procurement at local level.[257] CECA pointed to the potential for a "flying squad" to address skills gaps in particular local authorities.[258] This would address the headcount reductions recently incurred by procurement teams by providing a team that moved from council to council to deliver procurement services which an authority might need to access only every six months or two years.[259] CIPS considered that a centre of excellence approach where "suitably experienced and qualified procurement personnel could be contracted in to provide independent commercial advice to the local team" would be helpful, noting that it would be "impractical" to build a critical mass of expertise within each authority owing to their limited scale of spend.[260]The LGA reported that it was working with CIPS to assess education and training options for the sector.[261]

106. Some witnesses noted that collaborative approaches and the use of procurement bodies could help to deliver cost-effective skills capacity. YPO noted that one of the benefits to councils of a procurement organisation was the access to an additional central, skilled resource to supplement in-house capability as and when required.[262] Scape noted that it delivered free training to clients such as Leicester City Council on how to get the best out of frameworks, how to use contracts, and how to collaborate effectively. It counselled that "local authorities should always use specialist procurement organisations such as Scape rather than try to do their own procurement and reinvent the wheel".[263] NEPO noted that one of its roles in developing procurement capability regionally had been delivery of intensive training to over 200 staff, stating that as local authorities downsized, capacity to collaborate was "getting harder" especially where experts in particular service areas were needed to help specify requirements, support tender evaluations and implement changes to suppliers or processes. It recommended that there should be a "national approach to skills and developing/retaining procurement talent" to help councils to continue to invest despite financial restrictions and that this could "usefully prioritise social care where the skill base is lowest".[264]The Cabinet Office told us that the Commissioning Academy which it had established brought together senior commissioners from across the public sector to learn from the most successful, with some 67 local authority participants to date (some 58% of the total).[265]Nonetheless, this number represents only a fraction of those working in relevant areas who could benefit from the Academy's offering. Although rates are subsidised by the Cabinet Office, councils are required to fund some of the costs of participation in Academy programmes.

107. If all councils are to procure at the optimum level, including procuring in the most effective manner for delivering social, economic and environmental objectives, most need to improve their procurement skills. This will require investment but more cost-effective ways of sharing capabilities need to be found if councils are to address their skills shortages at a time of financial constraint. 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. These would be available to augment council capacity for complex procurement exercises where there is a current lack of in-house capacity or to plug short-term skills deficits. We recognise that such approaches are only a stop-gap and that a more comprehensive, long-term programme is needed to train enough staff to high enough standards to meet the challenges of managing the sector's multi-billion pound investment. Much greater use must be made of toolkits, such as that developed by Sheffield City Council, and the LGA must ensure that these are disseminated across the sector. Councils should also make fuller use of initiatives such as the Commissioning Academy. We recommend that the Cabinet Office offers Commissioning Academy programmes to council participants in order to raise the procurement skill levels and status of far greater numbers of local authority staff.

Sectoral and other support

108. The local government sector is already addressing some of its need for support with initiatives such as the publication of the LGA's Making Savings from Contract Management report.[266] The LGA told us that local government members and officers, as well as private sector procurement and contracting experts, have access to its services and that it had coordinated the 'one voice' for local government procurement programme via a National Advisory Group.[267]Furthermore, central government is also providing support.DCLG told us that, although it was not for central government to dictate local procurement practices, strategies or structures, it had an" important role in incentivising service transformation and encouraging innovation through a number of mechanisms" including through providing examples of procurement savings in its report 50 Ways to Save - Examples of Sensible Savings in Local Government.[268] DCLG also cited the Transformation Challenge Award under which £6.9 million would be made available to councils wishing to make savings by "transforming and sharing their services with others". DCLG expected to see the "innovative use of procurement functions to feature strongly in those bids, which will enable us to reward success and promote exemplars even further".[269]

109. At national level, the NAO noted that after abolition of the Audit Commission it would take on some roles including conducting some national studies across the sector and drawing out good practice.[270] Nevertheless, there are some doubts as to whether this will provide as comprehensive a level of support as is available now since the Audit Commission's current role in central collation of audit information and mapping of the variability of performance across the country would disappear. The Commission recommended that there be established after its abolition "some means of collating the assessments that auditors make in an easily understandable and digestible way".[271]

110. Other witnesses also expressed concerns about the adequacy of support for the local government sector. Bodies representing children's service providers told us that, although they were "encouraged" by Cabinet Office efforts to boost the skills of commissioners, they wished to see more effort across government, including through creation of a national (children's services) framework that could be followed by all local authorities. They wished to work with both the Government and the LGA to promote best practice.[272] YPO considered that the abolition of the Regional Improvement and Efficiency Partnerships had "undoubtedly left a hole" for local authorities in the provision of market intelligence, guidance and expertise. For this reason YPO was seeking to offer networking opportunities to allow its category groups to share knowledge with procurement teams.[273] The recent changes to EU procurement regulations mean that there will be a number of areas upon which councils will need guidance, including new thresholds triggering EU procurement process rules, revised approaches to inclusion of social value and approaches to support smaller organisations wishing to tender for public contracts.

111. We commend the work undertaken to date by many councils and by the Local Government Association to improve approaches for procuring goods and services for local communities. We endorse this sector-led approach to supporting council action since it is an effective means of tailoring procurement to local needs. Nevertheless, a change in effort is now required in order for successes to be fully replicated across the country and for detailed support to be provided to tackle all the complex aspects of procurement, particularly given the reduction in some support such as that provided by the Audit Commission. This will require renewed commitment across local and central government. We therefore conclude that the LGA, with the support of DCLG, should establish a task-force with representatives of the private and third sectors to develop an action plan for improving council capacity to conduct effective procurement. We recommend that the Cabinet Office dedicate resources for building procurement capacity in local government and for ensuring that lessons learnt in central government are translated into effective council action where appropriate. The Government should also ensure that full guidance on the implications of new EU public procurement measures is provided during the transposition of the Directive into UK law.

237 Q165 Back

238 International Association of Commercial and Contract Management (LGP 14) Back

239 Q2 [Lorraine Cox] Back

240 Q2 [Julie Gill] Back

241 Birmingham City Council (LGP 45) para 6 Back

242 Solace (LGP 42) Back

243 Local Government Association (LGP 17) para 36 Back

244 Confederation of British Industry (LGP 59) para 19 Back

245 National Audit Office, Memorandum for Parliament; Managing government suppliers, HC 811, November 2013, p 13 Back

246 Public Administration Select Committee, Sixth Report of Session 2013-14,Government Procurement, HC 123,p 5 Back

247 Audit Commission (LGP 11) para 3 Back

248 Institute for Government, Choice and competition in public services: learning from history, August 2012 Back