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Delivering the ambition: National Procurement Strategy for Local Government in England 2018

17 August 2018

This article is taken from August's public matters newsletter. Click here to view more articles from this issue.

The Local Government Association (LGA) has released its National Procurement Strategy for Local Government in England 2018. The strategy is aimed at assisting councils in meeting the three key themes:

  • showing leadership
  • behaving commercially
  • achieving community benefits.

The document is welcome because it signifies perhaps the strongest statement from local government that procurement is critical to deliver maximum benefits locally for council spending and in delivering on social value. At last, one might say, the importance of the function and the teams delivering procurement to the local authority is finally recognised. The strategy is accompanied by a toolkit, which provides more detail in the types of actions and behaviours necessary to achieve the three themes and what are called ‘enablers’ (being the cost-cutting issues to bring about the ambition of the council).

Nearly every local authority will spend at least half of its budget on the purchase of services, supplies and works, compared to the cost of employing staff to deliver direct services. How many, though, have a procurement team approaching anywhere near the size of its HR team? It has always struck us as odd that comparable sized businesses might have a much larger procurement function. Those buying teams are critical to the overall profitability and success of the business and the skillsets of such teams in purchase and supply is typically very high. Yet private enterprise buys outside of a regulatory framework. Unlike the public sector, they do not need to know their way around the labyrinth of public procurement rules. So the job of the local authority procurement officer is much tougher than that of the counterpart in commerce.

The three key themes of the document are all to be applauded. Procurement is not a checklist, but a key contribution to how the council functions.

Perhaps the most important of the themes is the first of them, with the emphasis on the need to engage councillors and senior managers. Nobody should doubt that the challenges facing today’s local authority leadership is difficult and varied and becoming harder by the day. It is no surprise that procurement is not at the top of the in-tray. The key challenge for the strategy is to get the message across that procurement has a key role not only in managing the council’s finances, but also in contributing to better communities, economic well-being and social value.

The second theme is about behaving commercially. In truth, this really is taking the strategy into broader areas. The key points are not so much about what and how something is procured, but how contracts are subsequently managed and how the councils approach strategic risk. This is hugely important, especially in the light of the demise of Carillion and increasing concern about the continuing value of outsourced and PFI contracts. However, this has not traditionally been the role of the procurement function and really opens up a bigger piece of work on how contracts are best managed. Contract management as a function shares the same woes as that of procurement – underfunding and lack of perceived importance.

It is important to read the strategy with the toolkit. The toolkit takes the reader into critical areas such as managing contracts and relationships, managing strategic risk and enabling opportunities for small and medium-sized enterprises (SMEs) and voluntary, community and social enterprise (VCSE) engagement. The ‘enablers’ point to the challenges ahead for local government procurement: developing talent, exploiting digital technology, enabling innovation, and embedding change. Whilst the key themes and the identification of the enablers are undoubtedly well-founded, the strategy has a number of weaknesses in the details.

The presentation of what it wants councils to achieve is done entirely through a table of how it would define a council in its procurement function, being Minimum, Developing, Mature, Leader and Innovator. This has echoes of the first attempt at the comprehensive performance assessment, but the categories seem rather too inflexible and push councils to aspire to achieve certain outcomes which might not always be appropriate.

The emphasis on innovation is not per se a bad one. Indeed, we strongly support the application of innovation in procurement and the use of procurement to bring about more innovative outcomes for local government in embracing new opportunities in areas such as artificial intelligence (AI), smart cities and disruptive technologies more generally. However, procurement also involves purchasing at a more mundane level and it would have been helpful had it also focused on this, particularly in the use of frameworks and dynamic purchasing systems and purchasing through consortia.

However, any criticism should not detract from the strong statement of intent about the importance of procurement. Martin Reeves, National Procurement Champion and Chief Executive of Coventry City Council says in his foreword of the strategy that “no council can afford to ignore it”. He is absolutely right.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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