Attached paper
This paper summarises the 29 conclusions
and recommendations of the House of Commons Select Committee report
on Local Government Procurement. The Local Government Association
(LGA) is currently working on a new national procurement strategy
for local government which will be launched at annual conference
in July, and welcomes the Select Committee report as it broadly
echoes very well with the current draft strategy.
The report recommendations are highlighted
in bold and LGA responses are given in italics.
1. SUMMARY
LGA and other bodies working with
councils, as well as local authorities themselves, prioritise
implementation of our recommendations in order to accelerate reform
of local authority procurement across England.
(Paragraph 6)
The LGA, through the National Advisory
Group for Local Government Procurement (NAG) is currently consulting
with councils and other stakeholders on a national procurement
strategy (NPS) that looks to implement many of the recommendations
in this report. The strategy will be launched at our Conference
in July 2014.
Improving local government procurement
2. IMPROVED PROCUREMENT PRACTICES
LGA should provide a forum for sharing
data on successful approaches and the information should also
be used to inform its programme of support for councils. (Paragraph
11)
The NAG, working with the Society of
Procurement Officers (SOPO) have hosted events and produced case
studies and guidance (e.g. recently on Social Value, Contract
Management, construction, ICT) and will continue to highlight
best practice through its website, newsletters, social media and
events.
We conclude that councils should
retain control over their procurement operations. 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.
(Paragraph 25)
We agree with the committee's conclusion,
the NPS assumes that local control will be maintained.
4. Cost savings by increased aggregation and even
national arrangements
LGA should review current procurement
spend on key categories to identify potential routes to increase
the use of aggregated spend for these products and services.
(Paragraph 26)
We agree with the committee's recommendation.
We are currently looking at national category spend in construction,
ICT and energy and intend, through the NPS, to work more closely
with the professional buying organisations to identify products
and services that might benefit from this approach.
5. Aggregation and Collaboration
The LGA should conduct a review of
collaborative approaches and produce best practice guidance for
authorities on the most effective means of joining up procurement
to deliver savings which reflect local priorities.
(Paragraph 33)
Appropriate collaboration and achieving
an optimal balance through the use of professional buying organisations
and local shared services is a major part of our NPS, working
with the Professional Buying Organisations as discussed above.
6. Aggregation with wider public sector
The LGA should conduct a review of
collaborative public sector approaches at a local level and produce
best practice guidance for authorities on the most effective means
of joining-up procurement budgets across a range of local public
sector bodies to help deliver joint local priorities. (Paragraph
35)
A number of collaborative approaches
exist and are highlighted on our shared services map, which can
be found at www.local.gov.uk/web/guest/productivity/-/journal_content/56/10180/3511353/ARTICLE
Collaboration in its wider sense, including
with the wider public sector, is dealt with in the NPS.
7. Tenders should be split into smaller lots
The LGA should produce guidance on
how the measures in the new EU Directive on public procurement
could be used to encourage smaller companies to engage in procurement
opportunities with local authorities.
(Paragraph 39)
We are working with the Crown Commercial
Service to develop and deliver training on the new EU Procurement
Directives. The NPS deals with encouraging smaller companies and
Voluntary, Community and Social Enterprise sector to engage in
tender processes.
Delivering strategic objectives through procurement
8. Use procurement to improve economic, social
and environmental well-being.
All councils should present an annual
report to a full Council meeting setting out the authority's strategy
for incorporating economic, social and environmental value in
its procurement. (Paragraph
44)
The leadership role of councillors and
chief officers is dealt with in the NPS and your recommendation
for an annual report has been included as a milestone. We agree
with the committee that procurement should be used to improve
economic, social and environmental well-being.
9. Best practice dissemination re social, economic
and environmental objectives
The LGA should disseminate best practice
case studies on how to maximise the impact of procurement approaches
to deliver local social, economic and environmental objectives.
This is part of the NPS, our approach
might be for councils or groups of councils to have a role in
dissemination of best practice with the LGA taking an overall
view.
LGA should update guidance on the
potential of new EU public procurement measures.
(Paragraph 45)
As detailed above, point 7, we are working
with Crown Commercial Service on disseminating guidance and training
on the new EU public procurement measures.
10. Public Services (Social Value) Act 2012
We recommend that DCLG undertakes
comprehensive post-legislative analysis of the Act to ensure assessment
of its effectiveness before the end of 2015.
(Paragraph 48)
The LGA would be pleased to participate.
We held a 'Social Value Act - one year on' conference in February
2014 and highlighted a number of local authority case studies
on implementation of the Act.
11. Community Right to Challenge
Government should undertake a review
of the barriers to its uptake.
(Paragraph 50)
The LGA would be pleased to participate
in this review.
12. Procurement policies integrating support for
small businesses
LGA should disseminate best practice
case studies on how to integrate procurement and support for smaller
businesses.
We accept this recommendation; councils
are demonstrating good practice in this area. We have addressed
the further dissemination of best practice in the NPS.
The Cabinet Office, working with
the LGA, should produce guidance on how councils can apply the
provisions of the new EU Directive on public procurement to better
support smaller businesses and local economies.
(Paragraph 55)
We are discussing with Cabinet Office
how the EU Directives training (outlined above) might address
this issue.
Procurement processes
13. Simplify processes and make them proportionate
The LGA should produce guidance on
this aspect of the new EU Directive on public procurement and
disseminate best practice case studies.
(Paragraph 59)
We support the simplification of procurement
processes. This is addressed in the NPS. We are also engaging
with Crown Commercial Service on a standard core PQQ for cross
public sector procurements.
14. Reduce demand on bidders for excessive and
complex information
The LGA should take the lead in ensuring
that all Pre-Qualification Questionnaires are as simple and straightforward
as possible.
We believe that simplified and proportionate
processes will reduce demand on bidders. This this is addressed
in the NPS.
We do not consider the argument to
be fully made for the removal of Pre-Qualification Questionnaires.
(Paragraph 64)
We welcome the committee's conclusion
on this matter, councils use PQQs in a different way to central
government and we do not believe that complete abolition of the
PQQ for low value procurements would be a further burden on small
businesses and voluntary organisations that would now have to
complete a full tender even if they had very little chance of
winning the contract. Evaluation of a higher number of tenders
would also provide a further burden for councils.
15. Prompt payment of subcontractors
Councils should publicise this policy
and monitor implementation.
(Paragraph 66)
We agree and this has been addressed
in the NPS. The LGA has been working with councils, the Federation
of Small Businesses and Federation of Master Builders to promote
prompt payment terms in the whole supply chain.
Managing risk
16. Outsourcing and contract management
Councils must future-proof contracts
so that contractors bear their share of the effect of any further
budget cuts.
Councils should ensure clarity within
contracts on the point of responsibility for contract delivery
and on the provision of a seamless customer service to residents.
(Paragraph 73)
We believe that good supplier relationships
are vital to obtaining best value in all contracts including outsourced
contracts. Both supplier relationship and contract management
are addressed in the NPS.
17. Councils should embed appropriate risk management
LGA should undertake, with relevant
professional bodies, a detailed assessment of the level of contract
and risk management skills and resources available across the
local authority sector. It should share best practice.
(Paragraph 74)
The LGA would not support a detailed
assessment across the sector as such assessments would be costly
and will only provide a 'snapshot' of skills at any one time.
We do however recognise the importance of contract and risk management
and recently produced guidance on this in partnership with the
Audit Commission and we have seen a high number of downloads of
the document from our website. The NPS addresses contract and
risk management.
Outsourcing service delivery: employment issues
18. Employment issues in tender evaluation
LGA should produce guidance for councils
on how the new EU Directive may affect councils' ability to evaluate
on employment issues including zero hours contracts.
(Paragraph 78)
This will be dealt with as part of the
Crown Commercial Service guidance as discussed above.
19. Policy in relation to monitoring of pay and
conditions in social care sector
DCLG should explain how it will monitor
the ability of the social care sector to maintain effective pay
and conditions for employees against a background of rising demand
for services and constrained council budgets.
(Paragraph 80)
Probity and governance
20. Procurement Fraud and 21. Collusion
The Government should provide support
and guidance to councils on the best ways to identify and tackle
fraud.
LGA should provide information on
mitigating procurement fraud and collusion and disseminate best
practice. (Paragraph 89)
Those responsible for managing contracts
are alert to the potential for abuse of market power and collusion
amongst potential suppliers and that they share information effectively.
(Paragraph 90)
The NPS addresses procurement fraud
and we are planning to launch guidance on this shortly.
22. Transparency
LGA should consider how greater transparency
in private sector contracts can be achieved, without compromising
councils' ability to attract a wide range of bidders.
We are exploring the effects of expecting
Private sector contractors to publish information on performance
and costs on the supply chain. The NPS suggests that councils
should ensure they have the rights to the data created under contracts
in order to achieve greater transparency.
We recommend that the Government
provide guidance on how central government experience of such
approaches as open book accounting can be further utilised by
the local government sector in order to improve procurement transparency.
(Paragraph 95)
The LGA recently engaged with Cabinet
Office and developing new model contracts which address this issue,
our website links to the Cabinet Office guidance and we have discussed
the guidance extensively with our stakeholders.
23. Whistleblowing
Government should publicise arrangements,
including the role of the National Audit Office, for the provision
of an anonymous channel for reports by potential whistleblowers
concerned at local authority procurement operations.
All contractors should have a robust
internal process for whistleblowers to report concerns.
(Paragraph 97)
We believe that some councils already
include whistleblowing policies in their procurement processes
and have addressed the need for these policies in the NPS.
Achieving change
24. Leadership and councillor role
Councils should identify a lead cabinet
member and a senior officer who will take overall responsibility
for ensuring that procurement is as efficient as possible.
Councils should also ensure that
frontline councillors have a clearly identified role in reviewing
and scrutinising procurement.
(Paragraph 102)
Leadership and the councillor role is
addressed in the NPS. LGA delivered a Councillors Guide to procurement
last year which is available on our website and we are developing
a further offer specifically aimed at councillors (including Scrutiny).
25. Procurement skills
The LGA should consider supporting
the establishment of a peripatetic procurement team—a 'flying
squad' whose purpose would be to train regionally based teams
of trainers and should disseminate good practice.
Cabinet Office should offer Commissioning
Academy programmes to council participants in order to raise the
procurement skill levels and status of far greater numbers of
local authority staff. (Paragraph
107)
The LGA Productivity Expert offer, our
work with SOPO and visibility at conferences satisfy this need.
Our preferred approach would be to engage
with councils and groups of councils to identify skills need and
we are working with CIPS to develop a 'Corporate Award' for professional
buyer training as well as planning a 'mentoring' offer to be launched
later in 2014.
We support the Cabinet Office Commissioning
Academy offer and hope to work with them further on more 'commercial-skills'
programmes.
26. Establishment of a task-force
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.
Cabinet Office should dedicate resources
for building procurement capacity in local government.
(Paragraph 111)
The LGA is already engaging, through
consultation with stakeholders, including those mentioned above
in developing the NPS. We have links to business through CBI,
FSB, FMB and to the VCSE sector through NAVCA, NCVO SEUK.
We welcome the offer of help from Crown
Commercial Service and we will take this up as appropriate. We
believe that improvement in local government procurement should
be very much sector led and believe that the NPS provides the
action plan for the sector to improve.
Conclusion
27. Conclusion
Key areas for the sector to focus
on are:
· improving collaboration
across councils;
· spreading best practice
on how to maximise the social, economic and environmental impact
of procurement;
· developing streamlined
processes to minimise costs to councils and suppliers and potential
suppliers;
· managing complex contracts
to secure better value, and to reduce risks to
· service delivery and the
likelihood of fraud; and
· skills development, particularly
of new commercial skills for an increasingly complex procurement
landscape.
Local government has a responsibility
to show that it can put its own house in order. If it does not,
we fear DCLG will opt for compulsion.
(Paragraph 112)
We agree with the Committee's conclusion
and would add there being a 'commitment from the top of each council
to procurement excellence' The NPS addresses these key priorities.
28. Effective partnership with central government
Key areas for central government
to focus on are:
· providing councils with
guidance, for example on how new EU public procurement measures
enable and require new council approaches to procurement;
· supporting councils in
capacity building to ensure all councils have access to adequate
skills, including through access to the Commissioning Academy;
· maximising the effectiveness
of current statutory measures, for example in enabling procurement
to deliver strategic public sector objectives and reviewing the
effectiveness of the Community Right to Challenge;
· monitoring national patterns
such as social care sector pay and conditions;
· with local government
sector organisations, disseminating advice to councils, for example
on tackling fraud. (Paragraph 113)
29. Government should support local government
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.
(Paragraph 114).
We agree with the Committee's conclusions
in relation to Government. We will continue to work with central
government on this.
May 2014
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