To consider the attached report.
Contact Officer: Rafael Lima (01296) 585248
The Committee received a report updating Members on the approach taken by the Business Support and Enablement sector to manage procurement activities and contract management across the organisation.
A business review had been undertaken during the Commercial AVDC Programme in 2016/17 to identify opportunities to deliver best practice in procurement and make recommendations for potential efficiencies across both the procurement and contract management functions for the council. The analysis had categorised all contracts by risk, value and opportunity, and identified strategic and tactical contracts that could deliver better quality services and/or cost efficiencies.
Additionally, the review had made recommendations to:
· recruit a procurement and contract management specialist team.
· develop a consistent approach to procurement.
· implement a framework for effective contract management.
· develop training and upskill contract owners to ensure contracts were being delivered effectively.
· identify opportunities to reduce/amalgamate spend across the organisation.
Typically with measures such as these in place around 2.5% - 5% of efficiencies and savings could be delivered over the life of all contracts (roughly 5 years).
In August 2017 a centrally led expert team had been created to govern the process. It had been recognised that low value / low risk contracts did not necessarily need to be led by this team. However the team would monitor and act as quality assurance to deliver the identified efficiencies.
The new Corporate Contracts and Procurement team had been created with four members. Aligned with the investments and evolution of Connected Knowledge, the team was managed by Rafael Lima as the IT Procurement Specialist who supported all IT functions. Members welcomed him to this, his first meeting. The roles of procurement specialist, contract management specialist and procurement apprentice had also been created to support all other categories.
The area’s objectives were to enhance benefit/value from external service providers, achieve the budget commitment for contract savings, manage risks and ensure compliance with legislation and internal policies. A recent example of this was the Guide to the General Data Protection Regulation (GDPR) requirements, where all, even low value contracts, were being amended to ensure they complied with GDPR.
The new Contract Management practice was to proactively review contracts that were up for renewal by reviewing the scope with internal stakeholders and re-negotiating terms, ensuring exit and termination of contracts were managed, and that any unnecessary expenditure and risks were mitigated.
Difficult supplier-contract relationships where best value was not being delivered were being closely monitored in a new Monthly Performance Review process. The collaborative approach invited both AVDC and the supplier to take actions on areas such as communication, fulfilment of contract and cost. This approach had led to improvements to internet connection (MLL) and the Finance System (Technology One). At this stage in the evolution of the team, the Monthly Contract Reviews were targeting contracts above £60K with participation of Contract Owners/Budget Holders to drive improvements in the service.
The Tender Exercise process was being standardised to improve the reporting and outline the team’s performance, a savings methodology that was also aligned with Strategic Finance. For example, approximately £43,000 savings would be achieved with the 2018 budget through the tender exercise for facilities cleaning and maintenance.
The current specific focus was to improve cost-benefits obtained through tender exercises, amending existing contracts for GDPR compliance and embedding procurement practices and procedures across the Council. The Council’s Contracts Procedure Rules stated that procurement involvement was legitimately optional for values below £30,000. In these early stages the procurement team was focussing on renewals and tender exercises above this threshold. The lower value categories were being analysed and spend was being monitored monthly to identify opportunities to reduce costs or align into a contract.
In February 2018, “Topic Taster” sessions had been delivered to managers to create awareness and a revised toolkit had been launched with standard templates and up-to-dated information on Connect. Training sessions would be delivered in April/May 2018 to instruct on best practices of purchases, review of procedure, negotiation and contracting. Finally, a closer engagement with the Commercial Strategy team had identified new ideas on how procurement could cultivate partnerships for added value/income opportunities. Further projects in progress included to implement contracts with built-in pay back terms and outsourced consultants acting on behalf of AVDC.
Members sought further information and were informed:-
· Contracts were being reviewed/analysed on a monthly basis in order to understand exactly what the Council’s spend amounted to. Some positive results had already been identified from this process, for example in some cases it had been established that the Council was paying for services as an “extra” but they were in fact included within the contract provisions. In some cases even the contractor was not aware of this. This was an initial step in understanding all the contracts the Council had.
· As indicated above, close attention was being paid to staff training in order for service managers to obtain the greatest advantage from the particular contract. These sessions, among other things, covered how to engage with contractors and suppliers and to recognise the advantages in some cases of combining contracts. A senior managers group had been established and this was also being used as a conduit for training and discussion of issues around contract procurement.
· It was not intended to implement new software on an ad hoc basis but to analyse and assess properly the need and type of IT that might be useful in contract management before committing to any expenditure in this area. Any review of IT requirements would await completion of the staff training programme.
That the approach being taken the Council to manage procurement activities and contract management be endorsed.