Report to CLACKMANNANSHIRE COUNCIL of 29th JANUARY, Prepared by: Derek Barr, Procurement Manager

Transcription

1 CLACKMANNANSHIRE COUNCIL THIS PAPER RELATES TO ITEM 7 ON THE AGENDA Report to CLACKMANNANSHIRE COUNCIL of 29th JANUARY, 2009 Subject: Procurement Strategy Prepared by: Derek Barr, 1.0 Purpose 1.1. The Clackmannanshire Procurement Strategy sets out a procurement strategy for the Council that seeks to communicate the Council s vision for procurement. The Strategy provides a common framework for all procurement management where greater efficiency, accessibility and flexibility are priorities The procurement strategy is not an end in itself, but the framework by which the Council s current aspirations and priorities can be progressed. The strategy provides a coherent approach to the adoption and application of innovative procurement practices A copy of the Strategy is appended to this report. A detailed Procurement Improvement Plan and Best Practice Indicators have also been produced outlining how the strategy will be taken forward and timescales for action Effective, efficient and innovative procurement will allow the Council to enhance goods and services provision, whilst providing Best Value and savings opportunities. Technology solutions will improve accessibility, efficiency and accuracy of information. This will require corporate leadership, increased professionalism and the need to develop a culture of continuous improvement in all procurement activities The Strategy aims to integrate environmental, social and economic considerations into all stages of the purchasing process with the goals of reducing the impact on human health and the environment, and improving social and economic conditions The procurement strategy recognises the Council s objectives in the context of the Scottish Government agenda on Efficient Government, and in particular, the McClelland report on procurement. 2.0 Recommendations 2.1. That the Council approves the Procurement Strategy That the Council approves the Procurement Improvement Plan on the basis that it will be monitored, reviewed and updated annually.

2 3.0 Considerations 3.1 Clackmannanshire Council spends more than 82 million per annum on supplies, services and works. The Local Government in Scotland Act 2003 sets out a clear statutory duty on local authorities to secure Best Value, which is defined as the continuous improvement in the performance of the authority s functions. The Act requires local Councils to maintain an appropriate balance between the quality of service, the overall cost of service delivery, and the cost of service delivery recharged to users. The Act includes various accountability and transparency requirements including a framework for proper accounting practice. It establishes strong links between the duty of continuous improvement and the reporting of performance 3.2 Effective procurement practices can influence what the council spends to the benefit of the Council and its citizens. The implementation of this Procurement Strategy is intended to improve the value that the Council obtains from its procurement spend. 3.3 The Strategic Procurement Review (Versko Report) undertaken in 2002 was adopted as our interim procurement strategy. It identified fragmented procurement provision within the Council. The review highlighted the advantages of standardised procurement processes, as well as the requirement for the differentiation made between strategic procurement and operational buying. 3.4 The 2006 McClelland Report Review of Public Procurement in Scotland - provided a number of recommendations to radically transform the landscape of public sector procurement in Scotland. Because of the current fiscal climate and the increasing pressures on public spending the Scottish Government has put in place the Public Procurement Reform Programme to support the implementation of new structures, deliver continuous improvement, and support the delivery of Value for Money improvements as well as increased efficiency. The key national objectives include: Delivery of cross-sectoral collaboration & support structures. Improving procurement management information to identify efficiency savings. Enhancing procurement skills & practices. Improving efficiency via electronic procurement systems. Improving supplier relations via a supplier charter. 3.5 The delivery of these national objectives will have a significant impact on how Clackmannanshire Council procures supplies/services/works. Structured collaborative working and sharing of best practice is at the heart of the reform programme.

3 3.6 In the last ten years, the procurement function has been steadily gaining a higher profile. Within the private sector, the effectiveness of the function is seen as being critical to a company s competitive advantage. In the public sector, the role is now seen as critical to cost reduction and, increasingly, in the achievement of policy objectives that can add value to entire business processes. 3.7 A particular focus is placed on how the Council can build on its successes in its integration of environmental, social and economic considerations into all stages of the purchasing process. Exploiting the synergies between improving environmental and financial performance, could be shown through improving our approach to carbon management, helping reduce greenhouse gas emissions while also reducing our energy costs. The Strategy identifies the actions we intend to take to improve sustainability in the community. 3.8 The Strategy will act as an overarching framework which brings together and illustrates the linkages between the many actions to improve procurement that are already underway and will be undertaken in the future. The detailed implementation of some key aspects of the Strategy will be undertaken through linked plans and strategies, including the Single Outcome Agreement, Sustainability & Climate Change Strategy and the Carbon Management Strategy and Implementation Plan. 3.9 Approval was sought and approved from to consult on the Procurement Strategy in November 2008, both within the Council and in Clackmannanshire as a whole. The ation database was used with the opportunity for all stakeholders to play a full part in preparing this final version of the Strategy. Appropriate comments resulting from the consultation have been reflected in the final version. 4.0 Sustainability Implications 4.1. The Procurement Strategy will make a strong contribution to improving our performance in both procurement and sustainability by: Setting specific deliverable targets for Corporate Social (CSR), to comply with all equalities legislation & conform to commission for Equality Human Rights guidance. Smarter engagement with suppliers, particularly small medium enterprises, the third sector, & social economy organisations to encourage innovation and subsequently increase social benefits. Improvement and accessibility to procurement for the community. To lead by example on current & future corporate sustainability priorities including Green Office, Fair Trade, Carbon Mgt, Sustainable Construction, Waste Mgt etc.

4 5.0 Resource Implications 5.1. Financial Details 5.2 There are no financial issues arising directly from this report in relation to the Procurement Strategy. 5.3 Staffing 5.4 Any staffing issues are contained within the final strategy document 6.0 Declarations The recommendations contained within this report support or implement our Corporate Priorities and Council Policies. (1) Our Priorities The area has a positive image and attracts people and businesses Our communities are more cohesive and inclusive People are better skilled, trained and ready for learning and employment Our communities are safer Vulnerable people and families are supported Substance misuse and its effects are reduced Health is improving and health inequalities are reducing The environment is protected and enhanced for all The Council is effective, efficient and recognised for excellence (2) Council Policies (Please detail) These are listed as appropriate within the Procurement Strategy. 7.0 Equalities Impact 7.1 Have you undertaken the required equalities impact assessment to ensure that no groups are adversely affected by the recommendations? NO 8.0 Legality 8.1 In adopting the recommendations contained in this report, the Council is acting within its legal powers. YES APPROVAL/SIGNATURE DATE Head of Service: Chief Executive/ Director: Delete as appropriate

5 REPORT TO COUNCIL (to accompany all reports to Council or Committee) To: Head of Administration and Legal Services, Greenfield, Alloa FK10 2AD Report author: Derek Barr, Service: Corporate Development Services Report title: Procurement Strategy Date of meeting: 29th January 2009 It is recommended that the attached report be: 1. Given unrestricted circulation 2. Taken in private by virtue of paragraph of schedule 7A of the Local Government (Scotland) Act 1973 List any appendices attached to this report (if there are no appendices, please state 'none') 1. Procurement Strategy including : Procurement Improvement Plan & National Procurement Best Practice Indicators (BPI's) List the background papers used in compiling this report. If you have completed a sustainability checklist please add this to your list (if there are no background papers please state 'none' Nb. All documents listed must be kept available by the author for public inspection for four years from the date of the meeting at which the report is considered

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7 Procurement Strategy

8 CONTENTS 1. SUMMARY INTRODUCTION CONTEXT ROLES & RESPONSIBILITIES ACCOUNTABILITY, GOVERNANCE & LEADERSHIP PRACTICES & BUSINESS PROCESSES INFORMATION SYSTEMS COLLABORATIVE PROCUREMENT SAVINGS AND BENEFITS CORPORATE SOCIAL RESPONSIBILITY (CSR) PEOPLE & SKILLS POLICY & IMPLEMENTATION Appendices 1. Procurement Improvement Plan 2. National Procurement Best Practice Indicators (BPI's)

9 Procurement Strategy 1. Summary 1.1 This document sets out a procurement strategy for the Council that seeks to communicate the Council s vision for procurement. The Strategy provides a common framework for all procurement management where greater efficiency, accessibility and flexibility are priorities. The procurement strategy is not an end in itself, but the framework by which the Council s current aspirations and priorities can be progressed. The strategy and its appendices provides a coherent approach to the adoption and application of innovative procurement practices. Effective, efficient and innovative procurement will allow the Council to enhance goods and services provision, whilst providing Best Value and savings opportunities. Technology solutions will improve accessibility, efficiency and accuracy of information. This will require corporate leadership, increased professionalism and the need to develop a culture of continuous improvement in all procurement activities. The Strategy aims to integrate environmental, social and economic considerations into all stages of the purchasing process with the goals of reducing any adverse impact on human health and the environment, and improving social and economic conditions. 1.2 The Strategic Procurement Review (Versko Report) undertaken in 2002 was adopted as our interim procurement strategy. It identified fragmented procurement provision within the Council. The review highlighted the advantages of standardised procurement processes, as well as the requirement for the differentiation made between strategic procurement and operational buying. 1.3 The procurement strategy recognises the Council s objectives in the context of the Scottish Government agenda on Efficient Government, and in particular, the McClelland report on procurement. The procurement improvement plan follows the structure and recommendations in the McClelland report and covers the following overarching areas. Accountability & Governance Procurement Leadership Procurement Policy People & Skills Procurement Practices & Business processes Procurement ation Systems Collaborative Procurement Corporate Social (CSR)

10 Procurement Strategy 2. Introduction 2.1 Clackmannanshire Council spends more than 82 million 1 per annum on supplies, services and works. The Local Government in Scotland Act 2003 sets out a clear statutory duty on local authorities to secure Best Value, which is defined as the continuous improvement in the performance of the authority s functions. The Act requires local Councils to maintain an appropriate balance between the quality of service, the overall cost of service delivery, and the cost of service delivery recharged to users. The Act includes various accountability and transparency requirements including a framework for proper accounting practice. It establishes strong links between the duty of continuous improvement and the reporting of performance 2.2 Effective procurement practices can influence the spend to the benefit of the Council and its citizens. The implementation of this Procurement Strategy is intended to improve the value that the Council obtains from its procurement spend. 2.3 Procurement is often defined in terms of six rights. It can be seen as the process of obtaining through purchase, lease, hire or other legal means - the right goods (or services or works) at the right time in the right quantity to the right place from the right supplier at the right price. The process of identifying or specifying what the right goods or supplier or price might be, gives the procurement function and services the ability to work together to ensure that all needs are addressed appropriately through the procurement exercise. 2.4 Procurement activity within any organisation is widely perceived as forming a cycle. The procurement cycle extends from recognising an unmet need right through to management of the end contract, and will include authorisations and audit arrangements appropriate to that organisation. Depending on the need being addressed, the procurement cycle within the Council may vary from a simple transactional process, such as the on-line ordering of basic stationery supplies, to the complexity of a PPP project. Well-trained procurement practitioners can add value to every stage of the procurement cycle, minimising costs and maximising value. 1 1 The financial information was obtained through the recent business case for shared services done in 06/07 for five councils and has been validated through the robust business case process.

11 Procurement Strategy The Procurement Cycle 2.5 In the last ten years, the procurement function has been steadily gaining a higher profile. Within the private sector, the effectiveness of the function is seen as being critical to a company s competitive advantage. In the public sector, the role is now seen as critical to cost reduction and, increasingly, as an additional tool in the achievement of policy objectives. The wider influence of the procurement function has seen the role develop from an essentially administrative function, processing purchase orders and invoices, to one that can add value to entire business processes.

12 Procurement Strategy 3. Context Procurement Strategic Objective 1. Create a procurement service that addresses the aims of the Procurement improvement plan, and meets the guidelines and recommendations of the Scottish Government. Rationale To Implement the procurement strategy with high level support in order to: Raise visibility and importance of procurement. Improve internal communication and collaboration. Create a strategic centre for information and advice. 3.1 The 2006 McClelland Report Review of Public Procurement in Scotland - provided a number of recommendations to radically transform the landscape of public sector procurement in Scotland. Because of the current fiscal climate and the increasing pressures on public spending. The Scottish Government has put in place the Public Procurement Reform Programme to support the implementation of new structures, deliver continuous improvement, and support the delivery of Value for Money improvements as well as increased efficiency. The key national objectives include: Delivery of cross-sectoral collaboration & support structures. Improving procurement management information to identify efficiency savings. Enhancing procurement skills & practices. Improving efficiency via electronic procurement systems. Improving supplier relations via a supplier charter. The delivery of these national objectives will have a significant impact on how Clackmannanshire Council procures supplies/services/works. Structured collaborative working and sharing of best practice is at the heart of the reform programme. This is managed at three levels: Category A procurement contracts developed & managed for all of the public sector Category B procurement contracts developed & managed on a sector specific basis. Category C1 procurement contracts developed & managed on a regional basis. Category C procurement contracts developed & managed on local basis. 3.2 Category A (Cat A) Public sector spending in Scotland is more than 11 billion per annum with an estimated 1 billion of that total relating to Cat A goods and services. Cat A commodities are standard and/or largely common requirements for the public sector in Scotland which can be sourced at a national level. Improved cost will be achieved via a leverage of spend, consolidated volumes, and the optimised use of scarce procurement resources/skills in the development and management of Cat A contracts. All public sector organisations will have access to these contracts. The Council will be required to report to the Scottish Procurement Directorate (SPD) in respect of efficiency, collaboration, and compliance to national/sectoral contracts. The SPD launched in 2008 a Contract Advertising Portal providing details of all contracts in the Scottish public sector. Additionally, the SPD facilitate a Single Point of Enquiry for suppliers who wish to raise concerns about public procurement practice in Scotland. 3.3 Category B (Cat B) Local Government accounts for more than 4 billion of public sector spend. Procurement Centres of Expertise will develop and manage Cat B commodity contracts specific to the appropriate government sector. Scotland Excel, the local government Centre of Expertise, will create a strategic procurement partnership covering 3.

13 Procurement Strategy geographical regions. The aim is to develop high value contracts specific to local government requirements such as vehicles, utilities, refuse management, building materials etc. Contracts for Cat B commodities will be phased in Waves 1, 2 and 3. for example: Wave 1 Tyre Dealers, Lighting Manufacturers, Advertising Services, Dairies, Art & Craft Materials etc. Wave 2 Civil Engineers, Residential Care Homes, Nursing Homes, Van & Truck Hire etc. Wave 3 Construction Management, Architects, Waste Disposal Services, Solicitors etc. The Centres of Expertise will have a role to play in promoting best practice, enhancing skills, delivering cost reductions via economies of scale, reduced duplication of effort and achieving savings via increased collaboration. 3.4 The Council decided that that we would not join Scotland Excel in 2008/09 on the basis that there was no financial benefit in doing so, as the cost of joining significantly exceeded the potential savings. However the Council will consider the case for committing to Scotland Excel in the future and will review the position annually to establish if and when beneficial for the Council to join Scotland Excel. 3.5 Category C (Cat C) Commodities that are not Cat A or Cat B are automatically classified as Cat C. Clackmannanshire Council will have the remit to develop, let, and manage Cat C commodities at a local level. The will organise and facilitate inhouse user groups involving key staff from across the service areas to develop general contracts unique to Clackmannanshire Council. 3.6 Category C1 (Cat C1) There is also scope for the Council to collaborate at a regional level via Cat C1 commodity contracts. Strategic procurement relationships with neighbouring councils through the joint buying arrangement (JBA) can be developed to take advantage of geographical and/or local supply base benefits to further optimize purchasing power and sharing of resources. 3.7 The procurement improvement plan, will provide the means to meet the national initiatives shown in The development and implementation of this strategy is also referenced in the Single Outcome Agreement (SOA) that we have reached with the Scottish Government.

14 Procurement Strategy 4. Roles & Responsibilities 4.1 The 's role within Clackmannanshire Council is to deliver the Council's procurement performance and related continuous improvement across the full range of council services, including shaping and communicating the procurement strategy Council-wide. The will be the focal point providing specialist advice, guidance, support, and leadership on all procurement related matters. This includes tendering and EU Procurement ensuring due diligence is applied to all procurement with EU/UK legislation. The will develop working relationships with internal and external customers and partners across the procurement community. He or She will develop and improve the procurement management service provided, combining an innovative approach with an ability to adopt best practice and/or leading edge procurement solutions, where appropriate. 4.2 As responsibility for procurement is devolved throughout the Council, potentially everyone has a role in the procurement process: Elected Members: Leadership in terms of sanctioning strategy and policy. Delegating appropriate authority to Chief Officers. Directors/Chief Officers: Implement and shape strategy & policy, report to committee, delegate authority to Heads of Service. Appraise relevant members/committees. Heads of Service: Define business need, control budgets, sanction strategic procurement decisions, develop business case and support line managers. Line Managers: Plan & deploy resources, approve operational procurement, buying authority of up to 30k / control budgets. Define specifications, manage supply base, monitor contracts, assess & manage procurement risk. Ensure compliance. Provide technical expertise. Operational Staff: Initiate purchase & process orders, monitor contracts & feedback supplier/contract performance. Provide technical knowledge of service. 4.3 Responsibilities of all members and officers involved in the procurement process require a: Duty to comply with Council Contract Standing Orders and Financial Regulations. Duty to be aware and comply with current and proposed UK and EU legislation. Duty to act ethically. Duty to comply with all Equality Legislation. Duty to be aware of current requirements in relation to equality & procurement. Duty to act fairly, openly and reasonably.

15 Procurement Strategy 5. Accountability, Governance & Leadership Procurement Strategic Objective 2. To create an environment that allows procurement decisions that are consistent with a manager s fiduciary, legal, and ethical responsibilities. To develop a procurement service with an excellent communication framework at its heart. To develop the means to disseminate best practice, information and advice to all levels of the Council and its stakeholders. Rationale To ensure that the leadership and implementation of governance concepts in procurement are accountable. To ensure that there is sufficient management of internal and external control systems. Raise visibility and importance of procurement to ensure that staff, managers, chief officers and elected members have an appropriate understanding of procurement procedures. Improve internal and external communication. 5.1 National and local government have recognised the need to raise the profile of procurement services within the public sector. The primary goal is to ensure that procurement is accountable, not only to the organisation s senior management but also to the wider public which it serves. 5.2 Within the Council, this will require a more direct route to senior management and a greater involvement in the formulation of relevant Council strategies and policies. Additionally it will also require greater communication between dedicated procurement officials, those who have limited procurement duties and of course clients and service users within the Council. 5.3 In the wider community, better communication with suppliers and service providers is needed, especially smarter engagement with suppliers, particularly small medium enterprises (SME's), the third sector, & social economy organisations to encourage innovation and subsequently increase social benefits. 5.4 Communication with the public will be necessary to ensure that procurement is meeting the community s aspirations for creating sustainable growth of the local economy, ensuring equality of access, addressing environmental concerns and generally contributing positively to the quality of life. 5.5 Every public sector organisation in Scotland has voiced the commitment to collaboration to obtain the maximum benefit for the public pound. Such collaboration will only be feasible by promoting regular and informative communication between procurement professionals across the public sector. 5.6 As part of the Procurement Improvement plan the will explore and present implementation proposals for Matrix Management of procurement staff to the. This will entail a comprehensive review of our procurement activities and transactions to establish or confirm which organisational units, departments or groups within the structure are entitled to be authorised to procure goods and services including the creation of, and commitment to, contracts, orders and other goods/service requests to outside parties. This authority should be justified, documented and regularly reviewed for ongoing validity and its terms should include minimum requirements for sound business processes, practices, contracts and staffing.

16 6. Practices & Business Processes Procurement Strategy Procurement Strategic Objective 3. Simplify, standardise and thereby reduce the cost of procurement processes and ensure legislative compliance using corporate standard processes and tools across all Council resources. Rationale Without sound business practices and processes, it is impossible to operate in a way that is internally efficient and that also delivers good value in procurement cost. Where practices are particularly weak there is also, potentially, an impact on accountability and governance needs. Objective will: Improve business information re procurement processes. Apply consistent standards. Ensure legislative compliance. Embed Council policy. 6.1 Efficient Government recognises there are major gains to be made from promoting better procurement practice across the public sector in Scotland. In particular, the Efficient Government Plan identifies savings arising from the use of eprocurement and public sector bodies joining together to maximise purchasing power through collaborative buying. Using eprocurement generates immediate savings through more efficient processes; improves management information so that buying decisions are better targeted to meet cost and policy objectives; and supports coordinated purchasing between different organisations. Efficient Government Collaborate enable Standardise Simplify 6.2 The need to review efficiencies across government has been identified in the wider Scottish context within the McClelland Report. Without sound business practices and processes, it is impossible to operate in a way that is internally efficient and that delivers good value in procurement cost. The Scottish Government has proposed to standardise processes for the whole country using electronic procurement. There is a sound case to standardise process and documentation within the Council, for obvious efficiency and service gains, but also to enact the first step locally of a wider national programme. 6.3 The introduction of e-technology is essential in delivering and promoting the need for change and effecting such change by virtue of standard software application formats. In adopting standard process and a suite of standard documentation, the Council will be well placed to adapt to e-business upgrades and future legislative requirements. 6.4 e-procurement is the term used to describe the use of electronic methods in every stage of the purchasing process from identification of requirement through to payment, and potentially to contract management. Electronic enablement of the purchasing process can be more specifically identified as: e-sourcing - for contractual processes. Tools include e-tendering, e-rfqs (Request for quotations and evaluations) and e-auctions.

17 Procurement Strategy eprocurement - for transactional processes. Tools include marketplaces such as E-procurement Scotland (PECOS) using Techniques such as e-catalogue and punch-out using suppliers web sites. e-payment - Tools include virtual or embedded GPC (Government Procurement Card), e-invoicing and self-billing. The collection of these technology tools can facilitate efficient Procurement and are recognised as an essential element of a modern procurement function.

18 Procurement Strategy 7. ation Systems Procurement Strategic Objective 4. Develop and implement procurement information systems to deliver key performance indicators (KPI's) see appendix 2. To create an environment in which Procurement performance can be properly assessed and its continuous improvement encouraged. Rationale The absence of consistent and reliable data will inhibit understanding. Without the reported information being translated into KPI's it is difficult to create an environment in which performance can be properly assessed and its improvement encouraged. Reliable & accurate procurement management information will allow the Council to analyse spend more effectively. This will support strategic sourcing in terms of how the Council identifies, selects & manages its suppliers. 7.1 In procurement the effective analysis of information is a critical success factor, e.g. How much is actually spent externally. On what commodities and services it is spent. With what suppliers. Where the suppliers are based. How much does it cost to administer the spend. How does current value achieved compare with previous performance. Are financial targets being met. Is the content or format of the reported data consistent with that of other public sector organisations. 7.2 The Best Practice Indicators for Public Procurement in Scotland suggest nine indicators to measure, including year on year savings, customer and supplier satisfaction and collaboration in contracts. The Indicators were developed by a working group with representation from all parts of the public sector, including Local Authorities, Health Boards, Higher and Further Education and Government Agencies. 7.3 The following core deliverables were identified by the group: To provide a value-for-money service that delivers financial savings. To provide a quality service which delivers quality products. To procure goods and services in a lawful and ethical manner which encourages participation, collaboration and sustainable economic growth. 7.4 The following key processes were identified by the group: Working effectively across public procurement sectors and organisations. Ensuring effective contract and supplier management. Communicating effectively and ensuring productive stakeholder and customer relations. Ensure compliance with good procurement practice. Continuously improving performance and innovation. 7.5 The following organisational capacity requirements were identified by the group. Ensure effective governance and accountability of procurement. Ensure the procurement process is resourced by skilled staff appropriate to spend. Adopt an end-to-end e-procurement service.

19 Procurement Strategy 8. Collaborative Procurement Procurement Strategic Objective 5. Establish a collaborative culture within the Council. Promote collaboration as the norm, whether for internal or external procurement activities. Rationale To align Clackmannanshire Council within the structure of public procurement in Scotland developed in response to the McClelland report, which recommended ways to improve the efficiency and effectiveness of procurement in Scotland's public sector. Collaboration has many advantages. Some of the most important are as follows: Better utilisation of scarce procurement resources and skills. Aggregation of spend to create greater purchasing power which will in return result in improved cost savings. A more efficient and less complex interface to suppliers utilising the efficiency of systems and other refinements of e-trading. Spread of best practice including sharing of market intelligence. 8.1 Internal collaboration has been an obligation under the EU procurement directives, more commonly described as aggregation of procurement. The McClelland report recognised that greater national collaboration with external partners from the public sector and internal collaboration have many advantages. 8.2 Internal collaboration will also ensure compliance with EU directives, reduce off-contract spend, reduce administration costs, provide accurate management information, support e-procurement, reduce the supplier base and encourage standardisation of specifications Matrix management of the procurement function will decouple the physical and logical locations of procurement activities. Buying will be executed where and how it makes the most sense, and within a structure that demonstrates collaborative purchasing internally. Strategic Procurement contributes structure, expertise and measurement to the process. 8.4 Procurement will develop a more consistent participation in collaborative ventures at regional and national level. Such collaboration advocated in the McClelland Report may become mandatory, especially at national level. These large-scale collaborations will harness extensive buying power. Procurement collaboration will not only mitigate risk, for example, in gas and electricity markets, but also enhance goods or service specification. In short, collaboration will encourage innovation and produce measurable savings in both cash and efficiency.

20 Procurement Strategy 9. Savings and Benefits Procurement Strategic Objective 6. The provision of a benefits tracking model that accurately identifies and values all perceived benefits accruing from procurement activities, is measurable to recognised standards and can be utilised for regular monitoring and reporting objectives. Rationale Develop effective procurement reporting mechanisms & systems to allow budget holders to: Make informed purchasing decisions. To accurately monitor and report benefits accrued. To adopt a model which allows easy comparison with other public bodies. Introduce consistency of approach to savings monitoring. 9.1 Good procurement practice will provide cash savings. Such savings have an immediate effect on the bottom line and can usually be easily measured and accounted for. However, good procurement practice will also address quality issues, efficiency gains, cost avoidance and service level improvement. In the past, these hidden benefits have been considered a bonus, with very little attempt made to quantify, value or appreciate their significance to improved service delivery or the Council's financial position. 9.2 The Council has identified, via the corporate improvement plan, and the business case for shared services, procurement savings targets until Achievement of savings will not be through service level cuts or significant rises in service level charges, but by efficiency measures. Therefore, it has become imperative to accurately identify, quantify and value both cash and efficiency benefits to validate resource efforts in meeting savings targets. 9.3 Spending categories will be reviewed and reflected in the new chart of accounts. The Council needs to analyse expenditure for classes of spend to enable proper control of procurement practices. The growth of detail codes since 1996 has frustrated the capture of procurement information in a meaningful way and the implementation of new codes will assist future identification of potential savings.

21 10. Corporate Social (CSR) Procurement Strategy Procurement Strategic Objective 7. Establish a procurement culture that delivers accessibility and sustainability as the norm and promotes the Councils objectives for business and the community. Rationale To comply with all UK & EU procurement regulations and conform to Scottish Government guidance & direction. Also comply with all equalities legislation & conform to Commission for Equality Human Rights guidance. Smarter engagement with suppliers, particularly small medium enterprises, the third sector, & social economy organisations to encourage innovation and subsequently increase social benefits. To improve accessibility to procurement for the community. To lead by example on current & future corporate sustainability priorities including Green Office, Fair Trade, Carbon Mgt, Sustainable Construction, Waste Mgt etc In local government, there has been a sea change in recent years to promote accessibility. Whether this is deemed to mean physical accessibility, for example via the Disability Discrimination Act, better access to services or more open access to information via the Freedom of ation Act. The Council is at the forefront in implementing access, through its advanced customer service operations, interactive website and decentralised approach to service provision. Procurement services will contribute to and enhance the work done to date Procurement will contribute to the Council s objectives to provide business with easily accessible portals in order to engage with the Council. This is especially pertinent for local SMEs, the voluntary sector, social enterprise organisations and ethnic minority businesses Procurement will also endeavour to provide greater accessibility to its activities to other Council stakeholders, whether internal or in the wider community The Council is committed to a sustainable approach in all its activities. We will encourage sustainable practices by focusing on the opportunity for energy efficency, the purchase of ethically produced goods, reccycled and recyclable products and materials. Wherever possible we will locally source materials to to reduce transport impacts and support local employment. In turn we will also expect a high standards of environmental performance to be achieved by existing and potential council suppliers At the forefront of this commitment has been the efforts to minimise the environmental impact of its business practices. Such efforts range from waste disposal and environmental clean-up to the purchase of recyclable office equipment. Sustainable social issues have also been targeted especially in areas such as improved housing, new schools and employment opportunities Procurement is recognised as a major contributor to the sustainablity and climate change commitment. A comprehensive strategic approach can address local needs, consider the larger global responsibilities of the Councils activities and set environmental standards as part of the environmental management and performance process We are required by the Environmental Assessment (Scotland) Act 2005, to determine whether the strategy is likely to have significant environmental effects. A determination has been reached after consultation with Scottish Natural Heritage, the Scottish Environmental Protection Agency and Historic Scotland. This has determined that our Procurement Strategy is not likely to have significant environmental effect.

22 Procurement Strategy 11. People & Skills Procurement Strategic Objective 8. Develop procurement staff with skills and competences to the necessary professional level. Rationale The Review of Public Procurement in Scotland recommended that skill levels of procurement staff should be upgraded through programmes of professional training and development. Objectives will: Facilitate procurement training & development appropriate to the roles & responsibilities in the procurement process. Apply continuous improvement to the delivery of procurement services. Identify and address skill gaps. Raise procurement standards by participation in national training programs. Motivate and empower staff Traditionally procurement has been viewed as a profession that practitioners drifted into, as procurement duties eclipsed their original role. However, the relevance of good procurement and the contribution it can make to business success is now widely acknowledged, especially in the public sector. Recent government reports, the Byatt and Gershon reports in England and the McClelland Report in Scotland, have firmly advocated the need to introduce greater competence, adequate training and professional standards and qualifications. These reports have encouraged all public sector bodies to professionalise the procurement functions and increase the status of procurement and its accountability The various recommendations and guidelines emanating from these reports have introduced an urgency to upgrade skill levels of existing staff through extensive programmes of professional training and development. There is no quick fix to provide immediate solutions to this requirement. Most authorities recognise that there is a shortage of competent and qualified staff nationally. The McClelland Report estimated the shortage in Scotland to be in the region of John McClelland s experience of dealing with similar issues in the private sector is that without adequate resources, skills and appropriate organisation, the prospects of achieving efficiency and Best Value will be poor. A well-planned training regime forming the core activity in meeting the need is deemed the best and most equitable strategy. Such a regime will present staff with career progression opportunities and retain and develop their existing skills and experience The capacity for Clackmannanshire Council to go it alone with a training plan will neither fully harness best procurement practice, nor provide staff with recognised skills and qualifications to enhance their career prospects. Our strategy will be wherever appropriate, develop a collaborative solution with external parties.

23 12. Policy & Implementation Procurement Strategy 12.1 The lead role in implementing the procurement strategy will be the procurement manager and shall be driven forward in each of the Council s services by an appointed procurement representative. It will be the responsibility of all executive directors to ensure that resource plans reflect the priority now accorded to procurement by the Council in line with the roles and responsibilities identified in The procurement improvement plan (Appendix 1) details how the council will implement the procurement strategic objectives for the immediate future (3+ years).

24 Procurement Strategy

25 Procurement Improvement Plan (Appendix 1) The Procurement improvement plan (Appendix 1) is formatted and structured to address the recommendations coming out of the Procurement Strategy to support local procurement issues and enhance the detailed recommendations identified by McClelland Review of Public Procurement in Scotland by John F. McClelland CBE. The Procurement Strategy for the Council seeks to communicate the Council s vision for procurement. It provides a common framework where the Council s aspirations and priorities can be progressed and provides a coherent approach to the adoption and application of innovative procurement practices, where greater efficiency, accessibility and flexibility are priorities. The endorsement of Clackmannanshire Council s Procurement Improvement Plan and its recognition of the national aims will contribute to the effectiveness of procurement in Clackmannanshire and Scotland as a whole.

26 Procurement Improvement Plan (Appendix 1) Definitions Responsible "The person or persons that will undertake the objective" "The person that is answerable and has liability for the objective" "Prior to making a decision" "After decision is made"

27 Procurement Improvement Plan (Appendix 1) Strategic Objective 1 Create a procurement service that addresses the aims of the Procurement improvement plan, and meets the guidelines and recommendations of the Scottish Government. Rationale To Implement the procurement strategy with high level support in order to: Raise visibility and importance of procurement. Improve internal communication and collaboration. Create a strategic centre for information and advice. Ref Objective 2009 / / / Align implementation of the procurement improvement plan and this supporting Strategy with national initiatives for procurement activities, such as the McClelland Report and the Scottish Procurement Policy Handbook (Draft) in its final form. Director Of Corporate Development Elected Members Clackmannanshire Business March 2009 Ongoing Ongoing 1.2 Review the Procurement improvement plan annually. 1.3 Revise and renew the procurement strategy and improvement plan. 1.4 The continuing development and implementation of the strategy shall at all times focus on the Single Outcome Agreement (SOA) that we have reached with the Scottish Government. All Council Staff Head of Business Improvement and Technology Services Director Of Corporate Development Elected Members Clackmannanshire Business Head of Business Improvement and Technology Services Elected Members Clackmannanshire Business Director Of Corporate Development Elected Members Ongoing Ongoing Ongoing Dec 2011 Ongoing

28 Procurement Improvement Plan (Appendix 1) Strategic Objective 2 Accountability, Governance & Leadership To create an environment that allows procurement decisions that are consistent with a manager s fiduciary, legal, and ethical responsibilities. To develop a procurement service with an excellent communication framework at its heart. To develop the means to disseminate best practice, information and advice to all levels of the Council and its stakeholders. Rationale To ensure that the leadership and implementation of governance concepts in procurement are accountable. To ensure that there is sufficient management of internal and external control systems. Raise visibility and importance of procurement to ensure that staff, managers, chief officers and elected members have an appropriate understanding of procurement procedures. Improve internal and external communication. Ref Objective 2009 / / / A programme of communication of information associated with the essential priority of procurement in the Council should be undertaken. Communications Head of Business Ongoing Ongoing Ongoing Improvement and Technology Services Director Of Corporate Development Elected Members All Council Staff 2.2 Structure & Organisation Explore and present implementation proposals for Matrix Management of procurement staff to the. 2.3 Structure & Organisation Prepare a detailed business case to support the proposal. 2.4 Authority to Procure. Guidelines should be reviewed and revised and formally documented. All delegated authorities to be reviewed and revised where appropriate. Procurement Staff Elected Members Finance Audit Director Of Corporate Development Elected Members All Council Staff June 2009 December 2009 Mar 2009 March 2010 March 2011

29 Procurement Improvement Plan (Appendix 1) 2.5 Business Conduct Adopt the Scottish Procurement Policy Handbook (Draft) in its final form. The Procurement Policy Handbook sets out a framework of fundamental rules, behaviours and standards applicable to public procurement activity in Scotland 2.6 Audit Conformity with governance and accountability requirements and the adequacy of basic practices and processes should be reported in Internal Audits for each service and form part of the Internal Audit work Plan. 2.7 Governance Adopt a champion at elected member level. 2.8 Governance Procurement user intelligence Network created. All services Elected Members All Council Staff Internal Audit Director Of Corporate Development Audit Scotland Elected Members Head of Business Improvement and Technology Services Head of Business Improvement and Technology Services Procurement Staff Mar 2010 Ongoing Ongoing Ongoing Ongoing Mar 2010 Ongoing Mar 2010 Ongoing

30 Procurement Improvement Plan (Appendix 1) Strategic Objective 3 Practices & Business processes Simplify, standardise and thereby reduce the cost of procurement processes and ensure legislative compliance using corporate standard processes and tools across all Council resources. Without sound business practices and processes, it is impossible to operate in a way that is internally efficient and that also delivers good value in procurement cost. Where practices are particularly weak there is also, potentially, an impact on accountability and governance needs. Objective will: Improve business information re procurement processes Apply consistent standards Ensure legislative compliance Embed Council policy Ref Objective 2009 / / / Update Contract Standing order s in line with Mar 2009 Ongoing Ongoing legislative changes and review annually. Legal Head of Legal and Admin Elected Members All Council Staff 3.2 Establishment an internal User Intelligence Group to: Help co-ordinate requirements and specifications. Rationalise the content of tenders and contracts to obtain Best Value. Ensure specifications to suppliers are comprehensive and accurate from an early point in the process. Head of Business Improvement and Technology Services All Council Staff Mar 2010 Ongoing 3.3 Adopt the Scottish Public Procurement Toolkit - A step by step guide to producing a strategic sourcing strategy for tenders, Standardising procurement processes and documentation. 3.4 Implement a standard electronic Purchase to Pay (P2P) solution across Council to standardise the purchasing process across the organisation. All Services Procurement Staff Systems Accountant Head of Finance Procurement Staff Mar 2009 Ongoing Ongoing Jun 2009 Ongoing Ongoing