Procurement strategy
Scope
1. For the purposes of this strategy, procurement is the acquisition through the Council of goods, services and works to the benefit of Liverpool's citizens; business community; and visitors. It is central to this strategy that procurement is understood in this wider scope: it is limited neither to the purchase of goods nor to the provision of services directly by the Council.
Context
2. All local authorities have a duty to secure best value throughout service provision. The Council is committed to the principles of best value and will seek this through providers of goods, services and works who are most able to demonstrate best value to the community whether that be public; private; voluntary; or partnership provision. Identifying the best value provider is a procurement decision. Clear and effective procurement processes are therefore central to implementing best value. This strategy sets out the framework for those processes.
3. As a major procurer of goods, services and works the Council is in a position to further the well being of the local community whether that be economically or through an improved quality of life and environment. This strategy seeks to support the drive towards achieving community well being.
Objectives
4. Specific objectives for this strategy are:
- to ensure that procurement activities are consistent with and supportive of the Council's Corporate aims;
- to improve corporate procurement capability particularly in respect of services;
- to support all Council officers in identifying best value providers and innovative solutions;
- to improve the value for money of procurement activities;
- to assist the process of continuous improvement;
- to ensure that procurement activities comply with statutory requirements and highest probity standards;
- to develop mutual understanding between the Council and the private sector in respect of best value procurement processes;
- to make maximum use of procurement experience available from all areas including the private sector, governmental agencies and other local authorities and
- to assist understanding of the workforce issues within alternative procurement routes.
The Strategy
5. Member responsibility for procurement and its strategic implementation will rest with the Executive Member for Resources and be scrutinised by the Resources Select Committee.
6. The foundation for the strategy will be the development and publication of the Council's procurement policy. This will be distilled from the Council's corporate objectives, values, key pledges and policy initiatives. A cohesive procurement policy must be seen as supporting the Council's strategic objectives and will establish procurement, in the above wider definition, as a key activity of the Council.
7. A corporate procurement specialist will be appointed at a level appropriate to the importance of this key activity to pursue the policy vigorously, to lead the drive towards procurement excellence and to provide professional support Council wide
8. The Corporate Procurement manager will establish:
- Procurement Support Unit of officers dedicated exclusively to procurement issues, and
- a Procurement Advisory Group comprising senior officers from procurement, legal and finance disciplines. The Group would be supplemented by officers from Best Value and other officers from the Council and its partner agencies with particular specialist skills as required.
This will provide the structure within which the strategy can be delivered and enable joint procurement to be explored fully.
9. The strategy will comprise the following elements:
- A review of processes
- Development of training packages, and
- Client support, intelligence gathering, and market analysis/development.
Review of processes
10. An e-procurement system will be developed to improve the value for money element of procurement and to reduce transaction costs and streamline processes. This capability will be piloted in 2001/02. Pending availability of a full
e-procurement system use of consortia purchasing arrangements will be explored to minimise procurement costs.
11. In order to gain the full benefits from e-procurement the Council's ordering processes and supplier payment systems will be reviewed and re-engineered as appropriate.
12. Council Standing Orders and financial Regulations covering procurement and tendering will be reviewed to ensure compliance with, and maximum use of, the Best Value legislation and guidance. The Council's select list will also be reviewed to ensure that all potential providers continue to be relevant to the Council's needs and objectives.
13. A review of procurement and contract documentation will be conducted in order to standardise wherever possible. Such a review will not only reduce future transaction costs but will also assist client officers in understanding and implementing the procurement process.
14. The Council will review the application of European legislation to its procurement processes and produce detailed guidance on the alternatives available for the guidance of all client officers.
15. A review will also be initiated of the Council's existing major contracts to identify opportunities for improvement and/or development through negotiation. This will also identify major supplies and key volumes.
Development of Training Packages
16. Key performance indicators will be identified and targets established.
17. Both the Procurement Support Unit and the Procurement Advisory Group will be available to provide training and support to relevant officers. Specifically a procurement manual will be produced and made available on the Council's intranet site to provide guidance for all staff.
18. The use of external training packages will also be evaluated and used where appropriate. The training needs of elected Members in respect of the procurement process will also be taken into account.
19. A structured training programme; standardisation of documentation; and expertise built up within the Procurement Advisory Group will reduce the reliance upon external consultants. However, external consultancy support will continue to be required. Training will be provided in the selection and use of consultants to ensure best value for expenditure incurred. Consultancy support should be used to address skills shortages but also to help build future capacity.
20. Training packages and guidance will also be made available on the management of contracts once let. The procurement process must be seen as continuing throughout the life of the contract.
Client Support and intelligence gathering
21. A procurement decision is central to the principles of best value in respect of services provided through local authorities ie. a `make or buy' decision on whether service is provided directly by the authority or by another agency. Effective challenge, comparison, consultation and competition demand a knowledge of the market place and specifically what can be procured, how and through whom. This
procurement strategy must therefore provide the capacity to make such judgements in an informed and cost effective manner.
22. A major task for the Procurement Manager, Procurement Support Unit and Procurement Advisory Group will be to provide that capacity.
23. To this end strong linkages will be established with governmental agencies operating in the field of public sector service procurement. The Office of Government Commerce, Partnerships UK, and the IDEA are sources of expertise that will be accessed to enhance the Council's procurement skills and capabilities. Best practice will be identified through local authority networks and built upon to provide procurement excellence within the Council.
24. It is essential that the Council develops its knowledge of and capacity to work with the private sector. Appropriate linkages will be established with the aims of identifying and developing potential markets; understanding the needs and constraints of the private sector; and developing mutual confidence.
25. The voluntary sector and local authority partnerships are also potential alternative procurement routes. The Council will also establish data on the capacity for joined-up service procurement as part of its market intelligence gathering.
26. Workforce issues are often a factor in service procurement decisions. It is essential therefore that the Council understands such issues both from the public sector employee and private sector employer perspective. The views of trade unions and employing organisations will also form a part of intelligence gathering.
27. The Council must also learn from its own experiences. A system of debriefing will therefore be established under which officers party to a major procurement exercise will detail their experiences and make appropriate recommendations.
28. Through the above means the Council will establish, maintain and continuously refine a databank of market intelligence and procurement expertise on which all officers must draw. This will be brought within the Best Value review process through either specific membership of a review team or by periodic reference of developing review reports to the Procurement Manager. All reviews will therefore receive procurement input.
29. Where a chosen procurement route is for service provision through an agency other than the Council, client officers themselves may not have the skills necessary to complete the procurement. The Council will make available officers with the necessary skills, through the Procurement Advisory Group, to assist client officers through the process. Those skills will particularly include negotiation and project management expertise.
30. Throughout the procurement process it is essential that the Council evaluates and manages effectively the risks inherent in that process. This procurement strategy will therefore establish linkages with the Council's risk management initiative to ensure optimum risk allocation within external procurement exercises.
Timetable
31. It will be the responsibility of the Procurement Manager to complete a detailed timetable for the elements of this strategy. Such timetable will recognise that just as the best value process is continuous so to is the development of corporate procurement skills and expertise. However the major elements of this strategy must be in place to support the Council's second year best value reviews. The imperative therefore is that the strategy be taken forward immediately and this will be achieved through the Assistant Executive Director (Treasury and Risk Management) in advance of appointment of a Procurement Manager. Officers taking forward procurement options following first year best value reviews should consult with that Assistant Executive Director to identify any assistance required and to aid the intelligence gathering processes.
Review
32. This strategy seeks to assist the process of continuous improvement under the best value legislation. It must therefore itself be subject to regular review and assessed on its contribution to the improvement process. Annual review reports will therefore be considered by the Resources Select Committee.