Gloucester City Council PROCUREMENT STRATEGY

Transcription

1 Gloucester City Council PROCUREMENT STRATEGY Financial Services May 2011

2 Definitions Procurement The action of obtaining or procuring something; Financial assistance for the procurement of legal advice Oxford Dictionaries Procurement is the acquisition of appropriate goods and/or services at the best possible total cost of ownership to meet the needs of the purchaser in terms of quality and quantity, time, and location. Corporations and public bodies often define processes intended to promote fair and open competition for their business while minimizing exposure to fraud and collusion Wikipedia Page 2 of 12

3 Introduction Gloucester City Council spends in excess of 60 million per annum on procurement, 18 million on major contracts. This strategy outlines the organisation s approach to procuring goods, works and services and the ongoing management of contracts. It incorporates staff responsibilities and the anticipated changes to procurement at Gloucester City Council in the future. The aim of the strategy is to ensure the Council s procurement activities are undertaken efficiently and economically, that they contribute to the achievement of the Council s strategic aims and are aligned to the Corporate Plan which encompasses the core principles of: Leadership Sound finances The environment Your services People We will provide strong, ambitious and enthusiastic leadership, putting the interests of the city first and we will act in an open and transparent way We will strive for value for money and only spend what we can afford We will consider the impact on the environment of everything we do We will strive for top-performing services, built around you the customer, in partnership with the public, private and voluntary sector We will consult and engage with the community to help shape the decisions we take, giving everyone a voice and looking after the most vulnerable in society The Council s strategic priorities for procurement are to encourage long term thinking and commitment to a strategic approach relating to procurement by providing greater visibility and understanding of the procurement function; taking advantage of the opportunity to conduct procurement activities electronically; helping to stimulate markets and achieve community benefits, including efficiencies, sustainability, equality and diversity. Strategic Procurement Approach This strategy will include setting out the Council s approach to- Collaboration Sustainability Equalities Competition and Access for Small and Medium Enterprises (SME s) Procurement Training Best Value Procurement Contract Management The Procurement Process Governance Page 3 of 12

4 Collaboration The Council will actively encourage and participate in a culture of partnering and collaboration with other authorities and organisations, such as the Gloucestershire Procurement Partnership (GPP), which is made up of representatives from the district councils, NHS & Gloucester City Homes, to seek economies through joint procurement, joint commissioning and shared services. The Council will continue to investigate the use of purchasing consortia or panel frameworks, such as Eastern Shires or OGC, and look to utilise them when appropriate. The Council has joined with other local authorities in implementing South West Portal procurement software. The software allows for consistency of approach between authorities and the sharing of supplier data. Future developments will enhance the Council s ability to work with local authorities throughout the South West. Recent joint ventures with other district councils include the West Mercia Services Utilities contract, the Bailiff Services contract, the Printer/Copier, and Stationery contracts which are let through framework agreements. Future opportunities include CCTV maintenance, Reprographic solutions and mobile phone contracts. The Council will engage with the Voluntary Sector to investigate the possibility of utilising council contracts to gain efficiencies for the sector, where appropriate. Sustainability The procurement of goods, services, and works will comply with the Council s environmental policy. Sustainability should be considered in all procurements and a needs analysis and impact assessment should form part of the decision making process. Wherever possible, subject to economical constraints, Gloucester City Council will procure from sustainable sources and where environmental damage can be minimised. Suppliers are expected to act in a manner commensurate with the Council s policies, particularly with regard to Council policies on Sustainability, Equality and Diversity, and Health and Safety. Equalities The Council strives to ensure its services are equally accessible and appropriate to the needs of the Gloucester community. Procurement Services will endeavour to ensure that all procurement activities undertaken are compliant with Equalities legislation by requesting Managers undertake Equalities screening of the project or requirement at the earliest stages of the procurement lifecycle. Equality can be difficult to establish and measure in procurement, for example, using local suppliers can have a positive impact on the environment as it may mean goods are transported shorter distances, however using local suppliers does not always allow for equal opportunity and can in some cases be anti-competitive. Therefore the Council will look to balance the cost to the environment and local businesses with issues of equality and competitiveness. Page 4 of 12

5 Gloucester City Council will request that companies provide details of the Equal Opportunities Policies as part of the tender pre-qualification process and will ensure that the tendering process is conducted in a manner which ensures equal treatment of all companies, basing the decision of preferred supplier on the basis of the criteria set out in the tender documents. The Council will audit existing contracts as part of contract management to ensure contracts meet specified requirements. Competition and Access for Small and Medium Enterprises (SME s) Local government has responsibilities to local communities to promote economic development. The Council will balance the priorities of business decisions and supporting the local economy whilst conforming to legislation and regulation governing public procurement. The Council will encourage the use of local small and medium size business by the use of supplier lists to be utilised for low and medium value procurements. Local businesses will be provided additional support (if required) by the Council by way of explaining requirements and opportunities to enable them to compete with contractors from other areas, in this regard the Council will comply with the Competition Act 1999 and no supplier will be given an unfair advantage. Gloucestershire Procurement Partnership has recently hosted a training day aimed at Small/Medium enterprises to help them understand the process of supplying local authorities. A similar training day for the third sector suppliers has also taken place. Included in the South West Portal software package is an electronic tendering system called ProContract. Once fully implemented, all supply opportunities will be advertised and tendered through this system, allowing transparency and improved communication for all involved. Suppliers can register for free and will receive automatic notifications whenever opportunities matching their supplier profile become available. Registering also means that in the future suppliers will be able to: Receive Pre-Qualification Questionnaires, Requests for Quotes and Invitations to Tender electronically. Submit their quotations and tenders electronically almost instantly. Reduce paper and associated printing costs. Benefit from proven added security and knowledge that submissions have been delivered. 24/7 access to ProContract. Gloucester City Council can also use the system to publicise the contracts register, aid with contract management and transparency. Procurement Training Categories of procurement: 1. Procurement Card / Simple Purchases 2. Simple Purchases / Best Value 3. Quotation / Low Value Tender 4. High Value Tender 5. OJEU Page 5 of 12

6 Officer training programmes will be developed and implemented, with training appropriate to Officers procuring in the different categories. For instance, there will be specific initial and refresher training for categories 1, 2, and 3, above, and separate courses to cover categories 4 and 5 No officer will be able to procure goods or services above category 2 without appropriate training. There will be ongoing review of the training programme to ensure it remains consistent with changes to the procurement process and the Constitution. Best Value Procurement With a constant drive for efficiency in an environment of limited financial resources, we have a continuing obligation to demonstrate that we are obtaining value for money and procuring the most economically advantageous option that fits the specification including required quality standards. Procurement Services will lead on a number of initiatives to ensure that best value is demonstrated in all purchasing and procurement processes. Initiatives include: Implementation of category management Spend Analysis on a category basis to identify areas for efficiencies and savings Encourage the development of a business case and/or options appraisal prior to commencing procurements Identifying and engaging in collaborative opportunities Undertaking on going cost reduction initiatives Ongoing provision of advice and assistance on a structured approach to tender evaluation. This will include the setting of award criteria, setting and evaluating quality/price ratios and provision of template evaluation matrix Contract Management The Council will continue to develop its contract management skills, utilising the experience of officers in Procurement, in the delivery services and partner organisations. Procurement Services will initiate a program of contract management reviews as part of the increased use and improvements to the Corporate Contract Register. These will ensure that best value and appropriate relationships are maintained with the Councils suppliers. The Procurement Process Financial Services has completed a LEAN Review of all the processes from identification of a need, all the way through to the production of Final Accounts. This review focused quite heavily on the order and invoice process. The outcomes will change the Council s approach to the procurement process These changes include: Investigation of potential centralisation of the procurement of certain supplies and services Page 6 of 12

7 Investigation into the improvement of the procurement process for certain supplier and services Continuation of procurement projects Potential use of procurement cards (see below) Potential amendments to the Constitution to ensure it remains fit for purpose The Council will continue to have ongoing regular reviews of procurement to ensure the processes remain the most effective. The Council must operate the highest standards of probity and accountability when dealing with public money. We achieve this through the application of standards, controls and procedures that are transparent and auditable. The procurement process is outlined in Appendix One. Procurement cards The Council will evaluate the benefits of using procurement cards for certain supplies or services. The LEAN Review Team will be used to investigate and implement any development. Procurement cards are very similar to credit cards in look and in terms of the potential uses. The main difference is the ability that the Council would have to control usage and to monitor expenditure. Usage can be controlled not just by spend levels but by category of spend or even by supplier, and each of these controls can be applied down to individual officer level. The monitoring of spend can be done in a real-time, on-line environment and there is a large variety and detail with regard to the reports available for monitoring expenditure. If the investigation does suggest the use of procurement cards, there will be a need to identify, initiate and establish the control mechanisms which need to be in place before the cards are issued for use by Officers. Transparency It is vital that there is transparency in the process of obtaining quotes, inviting tenders and awarding contracts. The Council will conduct all procurement activity in a manner that is open and fair. The future proposed use of ProContract and the South West Portal will assist with the transparency agenda and ensure consistency of approach. Risk management The Council s risk management strategy has been developed to make sure that risk to the Authority, and the community it serves is managed. In all its procurement dealings the Council will evaluate risks, their potential consequences and manage those risks effectively. The Kraljic Matrix (below) shows how we will categorise goods and services and formulate a proportionate approach to risk. Page 7 of 12

8 Increasing Risk BOTTLENECK Items that are of low value, but could have significant implications if they were not available. STRATEGIC Items that are high costs and high risk. E.g. large capital projects ROUTINE Items that are bought on a day-to-day in small quantity and are readily available from a range of sources. LEVERAGE Items that have low value and low risk but through economies of scale can be bought in large quantities and at discounted prices. Increasing Expenditure EU Public Procurement Regulations As a member of the European Union, the UK is subject to EU Public Procurement Regulations. They set out procedures for the tendering, evaluation and award of contracts for works, services and supplies above a certain value. This value is revised bi-annually. Appendix 2 provides an outline of EU procurement thresholds and internal procurement limits set out in the GCC constitution E-Procurement Gloucester City Council is committed to meeting the objectives set out in the National Procurement Strategy for Local Government and using where appropriate e-procurement solutions. Wherever possible, procurement should be undertaken electronically, subject to the existence of appropriate processes and systems. This includes, but is not limited to, electronic submission of tenders, electronic transmission of purchase orders and invoices, and the use of electronic auctions and dynamic purchasing systems where applicable. The Council is committed to working with neighbouring authorities to identify and implement an appropriate market place solution, whilst being mindful of the potential impact on small and medium businesses. The Council will endeavour to ensure that SME s are not disadvantaged, and where practical offer advice to small business who wish to develop their ability to engage in e-commerce. Ethics Gloucester City Council is committed to ethical purchasing and is on its way to becoming a fair trade city. In acquiring fair trade status we look to help alleviate the challenges facing developing world Page 8 of 12

9 producers and the promise of positive action to make a difference into the immediate locale and everyday life of ordinary citizens. The Council will endeavor to encourage its suppliers to review health and safety; environmental practices to ensure the Council s standards are upheld. Governance Gloucester City Council s Constitution contains the Council s Standing Orders, which set out the framework for the procurement of goods, supplies, services and for the execution of works. These are shown in Appendix One. Adherence to the Constitution will ensure value for money, propriety, fair competition and the proper spending of public money. Codes of Conduct It is mandatory that the highest standards of conduct and probity are observed by Members and officers engaged in the procurement process, awarding and / or management of Council contracts. In all dealings, they must preserve the highest standards of honesty, integrity, impartiality and objectivity and comply with Council s Standing Orders, Financial Regulations and applicable Codes of Conduct. Guidelines for employees and members to help maintain standards to ensure public accountability in all procurement related activities can be found in the Councils Constitution. To help ensure appropriate governance, the Procurement Service will: Provide guidance and advice regarding the appropriate route for procurement Ensure initial and refresher training covers the methodology around selecting the correct procurement route Provide advice, where the manager responsible for the procurement cannot reconcile risk management and opportunities Provide advice on contracting options. Provide strategic thinking on corporate procurement Convert the strategic vision into practical schemes. Provide the financial expertise to establish the business case. Work closely with Legal Services to provide assurance that contract documentation protects the interests of the authority and that the contract will deliver the desired outcomes The Council operates a Whistleblowing Policy that gives employees a route where they can raise any areas of concern in relation to procurement activity. Page 9 of 12

10 Gloucester City Council Procurement process Appendix one Before the commencement of any purchase check with Corporate Procurement to enquire if there is any potential to collaborate with other departments or organisations, any in-house provision, contractual arrangements or framework agreements. Is the value of the purchase - Likely to exceed 5,000 but less than 50,000? Likely to exceed 50,000? No Yes No Yes Low Value Obtain at least one written quotation before issuing an Official Purchase Order or using a procurement card Intermediate Value Obtain at least three written quotations before issuing an Official Purchase order. A risk analysis must be carried out and if perceived to be high, the procurement is to be treated as High Value High Value Follow the contract award procedure as set out in the constitution Are you intending to procure - Services? Supplies? Goods? Is the value of the contract likely to exceed 156,422? Is the value of the contract likely to exceed 3,927,260? No Yes Yes No Consult with Corporate Procurement Follow the OJEU Process Consult with Corporate Page Procurement 10 of 12 Follow the Tendering process as set out in the Constitution

11 PROCUREMENT THRESHOLDS Appendix Two EU Directives The European Union (EU) procurement directives, and the Regulations that implement them in the UK, set out the law on public procurement. Their purpose is to open up the public procurement market and to ensure the free movement of goods and services within the EU. The rules apply to purchases by public bodies and certain utilities which are above set monetary thresholds. They cover all EU member states and, as a result of international agreements, their benefits also extend to a number of other countries worldwide. Where the regulations apply, contracts must be advertised in the Official Journal of the EU and there are other detailed rules that must be followed. The rules are enforced through the courts, including the European Court of Justice (ECJ) The current EU thresholds (revised January 2010) are as follows: Supplies Services Works Public Sector Contracting Authorities 156, ,442 3,927,260 Contract Rules Gloucester City Council s constitution outlines rules to regulate procurement in the organisation.these internal thresholds are as follows: Value Procedure Decision maker Low Value Procurement Below 5000 One written quotation Intermediate Procurement Over 5000, below 50,000 Three written quotations Group manager and service manager by delegation Corporate Director and Group Manager by delegation High Value Procurement Over 50,000, below the EU threshold Tender process, unless a waiver is obtained from a Corporate Director Chief Executive, Corporate Director of Resources Page 11 of 12

12 Contact details Corporate Procurement Financial Services Herbert Warehouse The Docks Gloucester - procurement@gloucester.gov.uk GL1 2EQ Tel Links to other strategies and Policies Page 12 of 12