Gosport Borough Council. Procurement Strategy. Pursuit of Excellence

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1 Gosport Borough Council Procurement Strategy Delivering for Gosport Pursuit of Excellence

2 Contents Page 1 Introduction to Gosport Borough Council s 2 Procurement Strategy 2 Strategic framework 3 3 Procurement principles 4 4 Social responsibility 5 5 Current procurement arrangements and activity 9 6 Monitoring and review of the Procurement Strategy 13 Document Control: This is the second version of this policy dated March This policy will be reviewed annually and updated as necessary to ensure currency and completeness. This issue: March 2009 Last issue: Procurement Strategy Next review: March 2010 This document is owned by the Major Contract Sub Group. Page 1 of 13

3 1.0 Introduction to Gosport Borough Council s Procurement Strategy This document sets out the Council s strategic approach to procurement and provides the framework to enable value for money to be obtained in all procurement activity. This strategy has been developed taking into account the Byatt report, the National Procurement Strategy, the Sustainable Procurement National Action Plan, Improvement and Efficiency South East (IESE) procurement outcomes, a web-based consultation and other guidance and best practice examples. This Procurement Strategy emphasises the increasing importance of sustainable procurement, which supports wider social, economic and environmental objectives whilst balancing these community benefits with delivering efficiencies. It provides a corporate focus for procurement and ensures consistency by setting out the Council s strategic framework, procurement principles, social responsibility, current procurement arrangements, procurement priorities and an action plan for improvement. Further details on procurement processes are available in the Council s constitution, scheme of delegation, financial regulations, contract standing orders and procurement guidance. 1.1 Definition of procurement Procurement is the acquisition of supplies, works and services from third parties or in-house providers, from the initial assessment of need to the end of the life of an asset or service. It ranges from the negotiation of corporate contracts for the supply of routine goods and services to complex partnership arrangements for joint commissioning with other public, private or voluntary sector organisations. Procurement has a broader meaning than that of simply purchasing. It is about securing supplies, works or services that best meet the needs of users and the local community, to help achieve the Council s strategic priorities. Procurement is important because it is a key tool to providing better services, continuous improvement and value for money and any failure to provide this may put the achievement of the Council s strategic priorities at risk. Page 2 of 13

4 2.0 Strategic Framework Procurement is seen in the context of the Community Strategy and the Corporate Plan and aligned to the Council s values and strategic priorities. Procurement decisions are taken in light of the broader outcomes that the Council is seeking to achieve and not on price alone. The overall community benefit that the Council is seeking to achieve is set out in the Council s Vision: To work with our community to improve everyone s quality of life and deliver a sustainable future for the Borough. 2.1 The aims of the Procurement Strategy This Procurement Strategy aims to: Ensure procurement supports the Council s vision and delivery of strategic priorities. Encourage sustainable procurement and community benefits whilst endeavouring to achieve for money. Provide a corporate focus for procurement to improve the efficiency and effectiveness of procurement activity. Secure commitment to effective procurement from Members and Officers at all levels of the Council. Provide an action plan to further develop procurement. 2.2 The procurement vision In support of value for money and recognising the requirements of the Corporate Plan the following procurement vision has been developed. To obtain value for money through planned, responsive, professional, well managed, sustainable procurement that contributes to achieve the Council s strategic priorities and meets the needs of the Community. Page 3 of 13

5 3.0 Procurement Principles A number of key procurement principles support the Council s procurement vision: All procurement complies with the EU Public Procurement Directives, the principles of non-discrimination, equal treatment, transparency and the UK law. Procurement of services follows Government codes of practice on handling of workforce matters in local authority service contracts. Procurement procedures are operated by suitably trained staff in a professional manner to ensure the highest standards of probity, openness and accountability. Advice will be sought from external procurement specialists as necessary. Contracts are awarded fairly and transparently and in accordance with the evaluation criteria specified in the invitation to tender. For large or longer term contracts bidders are invited to demonstrate their track record in achieving value for money through effective use of their supply chain. Procurement activity is undertaken within a corporate framework to ensure that supplies, works or services procured are value for money and meet the needs of the local people. Procurement activity supports Council policies, priorities and social responsibility and encourages community benefits without disadvantaging non-local suppliers. Procurement activity, for significant contracts, is based on a whole life costing and benefits basis. Procurement activity is undertaken in the most effective manner and considers all options including: o Use of purchasing consortia, o Use of corporate contracts and open frameworks underpinned by clear business cases and option appraisal, o Joint procurement and commissioning, o Shared services, o Developing strategic partnerships especially where these deliver significant service improvement or efficiencies, o Use of e procurement solutions (including e market places and purchasing cards), o Consideration of trading powers. The Council encourages a diverse and competitive supply market, including small firms, social enterprises, ethnic minority businesses and voluntary and community sector suppliers and promotes partnering arrangements. Contractors comply with Council Policies as appropriate (e.g. Corporate Equalities Policy, Health and Safety Policies, Carbon Management Policy, Children and Young People s Policy, Safeguarding Children Policy, Vulnerable Adults Policy etc). Contracts are performance managed and developed to facilitate continuous improvement throughout the contract period. Page 4 of 13

6 4.0 Social responsibility The Council recognises its vital role in furthering social responsibility through procurement which has major socio-economic and environmental implications, locally and globally, both now and for future generations. 4.1 Sustainable procurement Sustainable Procurement is a process whereby organisations meet their needs for goods, services, works and utilities in a way that achieves value for money on a whole life basis in terms of generating benefits not only to the organisation, but also to society and the economy, whilst minimising damage to the environment. Source: Procuring the Future, Sustainable Procurement National Action Plan. Sustainability is integral to the whole procurement cycle: defining need, evaluating options, design and specification, supplier selection, tender evaluation, contract management and supplier development. To help ensure procurement is sustainable the Council strives to comply with the following: People, Education and Awareness Educate, train and encourage internal purchasers to review their consumption of goods and services, reduce usage, re-use goods, consider energy efficiency and carbon emissions and adopt more environmentally friendly alternative products. Communicate the sustainable procurement policy to staff, suppliers and stakeholders. Policy, Strategy & Procurement Process Promote and embed best practice for sustainable procurement. Work in partnership with other South East region councils and the Hampshire and Isle of Wight Procurement Partnership to maximise sustainable procurement gains. Environmental Products Consider the costs and benefits of environmentally preferable goods, suppliers and services. Wherever possible and practicable, specify a requirement in line with nationally or regionally agreed minimum specifications and the Council s Carbon Management Policy. Where such exact specification is not possible, offer a facility for suppliers to submit offers for environmentally friendly alternatives. Environmental construction, biodiversity & recycling Set targets for Carbon Management (embedding carbon emission reduction), Building Research Establishment Environmental Assessment Method (BREEAM) and sustainable construction, Page 5 of 13

7 refurbishment, maintenance and ensure adequate adaptation in respect of Climate Change. Fulfil obligations under the Biodiversity duty as part of Sustainable Development Plans. Investigate opportunities for recycling, reduced usage, bulk delivery and better packaging. Socio-Economic Fully support the Council s commitment to the Small Business Friendly Concordat and the Community and Voluntary Sector Compact. Ensure that where appropriate and allowable, sustainability criteria are part of the supplier evaluation process and are used in the award of contracts. Engaging Suppliers Communicate the Council s sustainability objectives to suppliers including the Council s Carbon Management Policy. Encourage and persuade suppliers to adopt environmentally friendly processes and supply environmentally friendly goods and services as part of their Corporate Social responsibility. Address barriers to the Council doing business with Small Business and Voluntary Sectors. Measurement and Results Comply with all legislation relevant to sustainability. Collaborate with South East Region Councils and the Hampshire and Isle Of Wight Procurement Partnership in support of the common targets. Support achievement of local Council targets for sustainability improvement. 4.2 Equality and Diversity in procurement The Council s commitment to equality and diversity extends beyond its role of service provider and employer to that of a major purchaser of supplies, works and services. All organisations which do business with the Council must demonstrate their own commitment to equal opportunities through their employment and service delivery practices and must comply with the Council s statutory equality duties. When procuring, the Council complies with European and UK procurement requirements and the Council s internal procedures. It also recognises its statutory duty to promote equality of opportunity and eliminate unlawful discrimination on the basis of race, disability, gender and gender identity, age, sexual orientation and religion or belief under current legislation and Government guidance Equality is integrated into all stages of the procurement process to assist the Council to deliver better services that meet the needs of an increasingly diverse population. Page 6 of 13

8 Before initiating procurement activity an Equality Impact Assessment (EIA) is undertaken to determine the effect of the procurement on different groups of people and the extent to which promoting equality is relevant to each particular contract. Contracts which deliver services to the public and staff will have a high impact on the Council s duty to promote equality and eliminate unlawful discrimination in order to ensure fairness, equal opportunities and the best possible customer care. Contractors are asked to provide evidence that they have systems in place to ensure equal access and treatment in employment and service provision. Where equality is a core requirement to a particular procurement, these requirements are made clear in the advertisement for expressions of interest and are clearly defined in the specification details. Information on the Council s commitment to equality practices is included in the Invitation to Tender documentation and included in the contract. Potential contractors are required to provide a statement setting out how they intend to meet these requirements, will monitor compliance, and procedures for dealing with equality related complaints. The equality requirements of the contract must be understood by both the contractor and the monitoring officer and the Council: Ensures appointed contractors understand the Council s equality and diversity aims, objectives and statutory duties as stated in the relevant policies and schemes Corporate Equalities Policy Provides guidance for staff undertaking EIAs in procurement. Ensures equality requirements are clearly stated in all contract documents. Ensures monitoring arrangements stated in the contract are relevant and proportionate to the equality requirements of the contract. Contract monitoring requires contractors to disclose all findings made against them in an employment tribunal in relation to discrimination and collate reports of any complaints from service users, including any related to equality, together with action taken by the contractor to address. Service audits are undertaken to check on any issues in relation to any equalities element of the contract. 4.3 Stimulating Markets The Council aims to encourage a mixed range of suppliers, local, national and international, to compete for contracts to help develop a varied and competitive market place. To facilitate this, the Council Ensures an equal opportunity for all potential suppliers, who meet the stated criteria, to be aware of the Council s needs and express an interest. Keeps the tender process as simple as possible to minimise the cost to suppliers. Page 7 of 13

9 Considers the impact service packaging has on the markets in order to make these as attractive as possible and provide the highest quality of service to end users. Seeks feedback from suppliers and trade organisations on tendering process and improve it where possible. Offers meaningful feedback to suppliers following the procurement process so that suppliers can improve for future tenders. Ensures payment of suppliers within 30 days from receipt of a valid invoice and payment by suppliers to their sub-contractors within 30 days from receipt of a valid invoice. Seeks to encourage contractors, service providers and suppliers (and their supply chains) to reduce costs and continuously improve performance. Encourages main contractors to explore opportunities to use specialised sub contractors especially in delivering elements of larger contracts or framework agreements. Seeks to increase the amount of appropriate business undertaken by the third sector. Respects the Principles and Codes of Practice adopted by Gosport under the One Compact for Hampshire. Dedicates resource and time to critical contracts to ensure a positive contribution to the achievement of shared priorities. The Council also recognises the positive impact that the business community has on the Borough in terms of generating economic wealth for employees and residents. The Council legitimately supports local businesses as it: Works pro-actively to explain how to do business with the council. Produces a guide on How to do business with the Council Provides information planned procurement activity. Ensure contracts are advertised locally unless special circumstances make it inappropriate to do so. Works in partnership with other agencies and organisations which support local business. Where possible, package contracts that do not preclude the following from tendering: o Local and regional companies o Small and medium size enterprises o The community and voluntary sector. As far as practicable, ensure that developments in e-procurement do not put local companies at a disadvantage. Page 8 of 13

10 5.0 Current Procurement Arrangements and Activity 5.1 Procurement Roles and Responsibility Responsibility for procurement is outlined in the Council constitution, scheme of delegation, financial regulations and contract standing orders. Key groups and individuals in the Council also support procurement activity with their specific roles and responsibilities: Members provide political commitment to the Procurement Strategy and its delivery. Council Management Team provides commitment to strategic procurement and drives this forward ensuring the Procurement Strategy is successfully implemented. Procurement Champion acts as a change agent, generates an understanding of strategic procurement, ensures effective arrangements and performance management are in place, considers corporate procurement training needs and captures learning. Procurement Sub Group oversees the review, letting and management of contracts to ensure co-ordination whilst providing a centre of expertise and sharing of learning to ensure delivery of optimum procurement design. Those with operational responsibility for procurement ensure procurement activity is undertaking in accordance with the procurement strategy and the Council s internal procedures. Central Purchasing Section provides a corporate facility for all routine purchasing ensuring value for money is achieved. 5.2 Performance Management in Procurement Procurement is undertaken using performance management principles: Planning: Procurement activity is planned in advance to maximise opportunities for co-ordination, repacking and value for money. Good procurement planning reduces procurement timescales and allows consideration of service user and community involvement at each stage of the commissioning cycle. Specifications: Contracts include measurable outputs/outcomes and performance standards or other measures. Contract Management: Contracts are managed fairly and openly and have: o a named officer with responsibility for procuring, monitoring and managing the contract including the development of relationship management. o performance measures and monitoring protocols (including a clear understanding on data requirements and data quality). o a mechanism to provide regular, honest and constructive feedback on performance. o a mechanism to provide notice of any performance problems, an opportunity to address the matter and sanctions if appropriate. Page 9 of 13

11 Risk Based Approach: Risks are identified and managed and recorded on the risk register. Review: Lessons learnt inform future procurement decisions and are shared with the Procurement Sub Group and any problems inform future risk analysis. Training and Development: Training and development needs for individual posts are assessed ensuring procurement staff are suitably trained. Project Management: The Council s project management methodology is used as appropriate. 5.3 E Procurement The Council uses e-procurement (purchasing good and services via the internet) where appropriate. Independent consultancy advice has been followed therefore the Council has not developed its own e-procurement solution as the return on investment would not be adequate. However the Council extensively uses e-cataloguing and e-ordering using supplier order systems and e business cards. Options such as e-tendering and e-auctioning have been explored but these generally benefit larger organisations however all e-procurement options are kept under review. 5.4 The Council s procurement expenditure A spend analysis has been produced for 2006/07, 2007/08 and 2008/09 by Exor. At present it is estimated that the Council s annual spend on goods, services and works totals 17m, with the top three categories being maintenance/works/construction 1 53%, waste management 7% and financial services 4%. The ratio of spend is 32% locally and 68% nationally/internationally. Areas of spend have been analysed for their potential sustainability impact and those with the highest impact have been identified as follows 2 : 1. Construction and Building Maintenance 2. Waste Management 3. Grounds Maintenance 4. Utilities and fuel 5. Information Technology. When procurement in these five areas occurs the Climate Change Working Group is involved at the start of the procurement. Spend analysis shows that for the 2007/08 financial year, the Council used 1500 suppliers and paid 10,226 invoices. 1 Gosport Council owns and maintains its Housing Stock of approximately 3250 properties. 2 Using the South East Centre of Excellence Analysis (Spend Prioritisation Methodology Tool Findings) Page 10 of 13

12 5.5 Risk based analysis of the Councils Expenditure The choice of procurement method is dependent upon a range of variable and the standard portfolio matrix analysis sets out the Council s general approach: High Strategic Bottleneck Control Supply Med/long term contracts Supplier development Consortia Contracts Strategic Partnerships Long term contracts Supplier Development Retain control Risk of supply Routine Leverage Automate process Use of catalogues Collaborative procurement Procurement cards Short/med term contracts Collaborative procurement Multi source tendering Low High Value/Proportion of spend For strategic (high-risk, high value) procurement the Council investigates partnering arrangements to develop strategic partnerships. For routine (low value, low risk) purchases the Council aims to reduce the number of suppliers, aggregates contract values for leverage, uses procurement cards and concentrates on process efficiencies. For leverage (high value, low risk) purchases the Council achieves efficiencies through supplier competition and considers the use of local and national consortia arrangements and corporate contracts. For bottleneck (low value, high risk) purchases which may be for sensitive or critical goods or services, emphasis is on security of supply and the Council Page 11 of 13

13 ensures continued supply through multi-sourcing and encouraging new entrants to the market. 5.6 Procurement Priorities The following improvement priorities have been identified to support achievement of the procurement vision: Procurement procedures: o Produce Pre Qualification Questionnaire and Invitation To Tender Guidance (including Equality and Diversity and sustainability). o Develop corporate contracts and open framework agreements. o Improve supplier data held within the finance system. o Implement a corporate purchase order processing system and a pilot department using the e-procurement module. o Implement and use the IESE Business Procurement Portal. o Explore number of suppliers and identify opportunities for rationalisation and efficiencies. o Explore off contract spend with a plan to extend commissioning and procurement contracts to cover these. o Develop a complaints procedure. Sustainable Procurement: o Develop a green purchasing guide. o Produce guidance on sustainable procurement. o Target and engage suppliers of high sustainability impact goods. Stimulating markets: o Improve co-ordination of business support activity in respect of procurement, with other organisations. o Support and participate in meet the supplier events. o Produce and adopt Small Business Friendly Concordat. o Produce a web based selling to the Council guide. Procurement Training o Establish training and development needs of those involved in procurement. Page 12 of 13

14 6.0 Monitoring and review of the Procurement Strategy 6.1 Monitoring To ensure that the objectives of this strategy are achieved, progress on actions and any performance management data is regularly reviewed by the Procurement Champion and corrective action taken as necessary. 6.2 Review of Strategy The Procurement Champion will ensure that the Procurement Strategy undergoes an annual review in April to ensure that it is still relevant and undergoes a major review in January 2011 in advance of the strategy expiring. Reviews include the following: An audit of the previous version Issues highlighted by users Complaints/compliments/incidents/inspection feedback New legislation or evidence that could change the strategy Effectiveness of the strategy/evidence of achievement. Page 13 of 13

15 Gosport Borough Council is committed to equal opportunities for all. If you need this document in large print, on tape, in Braille or in other languages, please ask. Published: March 2009 Gosport Borough Council Town Hall, High Street, Gosport, Hampshire, PO12 1EB Tel: (023)

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