Sustainable Procurement Strategy

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1 Sustainable Procurement Strategy Photos by Peter Barton

2 Contents Page Contact Details 4 Procurement Lincolnshire - What is it and how does it work? 5 Foreword 6 Introduction 7-8 Aims of the Strategy 9-10 Our Core Values 11 The Vision: Local Strategic Vision The Strategic Framework for Procurement Procurement Vision Delivering the Vision - Strategic Objectives The National Context The Regional Context Value for Money Principles for Efficient and Effective Procurement Socially Responsible Procurement Performance Management in Procurement Measurement of Improvement 37 Gateway Review Process 38 Governance, Monitoring and Review of this Strategy 39 Appendices: Appendix 1 a) Shared Services Lincolnshire Strategic Objectives b) Background to Procurement Lincolnshire c) Organisational Structure for Delivery d) Structure Chart Appendix 2 - National Context to Sustainable Procurement Appendix 3 - A Framework for Procurement Appendix 4 - Procurement Lincolnshire s Performance Indicators

3 Contact Details Please contact us if you have any questions or comments regarding this Strategy. Telephone: Helpline: Write to: Procurement Lincolnshire c/o Lincolnshire County Council County Offices Newland Lincoln LN1 1YL Website: This document can be made available in large print, Braille, audio and other languages. Please contact the Procurement Lincolnshire Team above for help. 3

4 Procurement Lincolnshire - What is it and how does it work? Procurement Lincolnshire is a Shared Service partnership between the local authorities in Lincolnshire. Procurement Lincolnshire will operate at a strategic level focussing on those activities that will lead to better public services and greater savings from public procurement. The members are Boston Borough Council, City of Lincoln Council, East Lindsey, North Kesteven, South Holland, South Kesteven, West Lindsey District Councils, and Lincolnshire County Council who formally host the service on behalf of the member partners. Procurement is part of a wider Lincolnshire Shared Service programme which aims to be innovative in transforming the way in which services are organised and delivered to improve the customers experience. The Shared Service partnership will work to give communities a voice and Partner Authorities will work together to provide more integrated, simplified services. For further information about the service and how it works please see Appendix 1. Lincoln West Lindsey North Kesteven East Lindsey Boston South Kesteven South Holland 4

5 Foreword On behalf of the Partner Authorities, I am pleased to present Procurement Lincolnshire s first Sustainable Procurement Strategy. We understand that excellence in procurement is at the heart of our ability to deliver good quality, value for money services to the people of Lincolnshire. Together we spend in excess of 480 million per year on the procurement of goods, services and works and we have a duty to make sure that this spending represents value for money. This strategy provides an ambitious framework in which Procurement Lincolnshire will work to deliver two clear priorities: Delivering year on year efficiencies, but not at the cost of quality; Developing and embracing socially responsible procurement that delivers value for money, engaging with local and regional suppliers to promote the local economy and taking account of the social and environmental impact of spending decisions. commitment and determination of the eight local authorities in Lincolnshire to share resources and to do things differently to secure tangible savings that will benefit the people of Lincolnshire. This commitment is translated into an ambitious Strategy that needs to be delivered with enthusiasm and pace if we are to achieve the demanding efficiency targets set out in the Comprehensive Spending Review Delivery of the Strategy requires high level commitment, action and buy-in from members, staff and suppliers. We will keep the Strategy under review to ensure that it reflects the progress we are making and takes account of emerging best practice across the country as well as changes in the challenges we face. Sharon Cuff, Head of Procurement Lincolnshire Balancing these two priorities will require us to adopt a mixed economy approach, to evaluate tenders on the basis of whole life costs, and to break down the barriers to procurement opportunities. This will require us to develop new and innovative ways in which to procure goods, services and works and to work in partnership with suppliers to drive down costs and increase service quality. Procurement Lincolnshire demonstrates the 5

6 Introduction Procurement is the process of acquiring goods, services and works, covering both the acquisition from third parties and from inhouse providers. The process spans the whole cycle from identification of needs, through to the end of a services contract or the end of the useful life of an asset. It involves options appraisal and the critical make or buy decision which may result in the provision of services in-house in appropriate circumstances. (Source: National Procurement Strategy for Local Government October 2003) Local Authorities are required to deliver value for money public services and to secure continuous improvement in the way that functions are carried out, having regard to a combination of efficiency, economy and effectiveness. Effective procurement is crucial in securing high quality, value for money public services and the Government has highlighted that the development of a clear procurement strategy is a key step towards achieving value for money and delivering the demanding efficiency targets in the Comprehensive Spending Review Together, Partner Authorities spend in excess of 480 million per year on the procurement of goods, services and works a substantial proportion of annual revenue budgets. It is vital that the Partners obtain value for money from this expenditure, thereby releasing the maximum amount of resources to deliver front line services. This Strategy will promote effective procurement across all Partner Authorities to strike a balance between the need for a detailed blue-print for procurement with specific targets, and a flexible planning framework within which further procurement can evolve. Flexibility is essential if we are to respond to the rapidly changing environment of public sector procurement. This Strategy also sets out how Procurement Lincolnshire will adopt a strategic approach to sustainable procurement based on national and regional drivers, best practice and the recommendations made by the Government s Sustainable Procurement Task Force. This document sets out Procurement Lincolnshire s strategic approach to procurement, it is not intended to be a procurement manual; however, the principles contained within this Strategy should be applied to all procurement activity. The Strategy also emphasises the importance of socially responsible procurement, assessing whole life costs and social, environmental and economic impact. Value for money and efficiency targets will not be achieved if any of the Partner Authorities fail to approach competition positively, taking full account of the opportunities for innovation 6

7 and genuine partnerships which are available from working with others in the public, private and voluntary sectors. Importantly, this Strategy seeks to balance two priorities: Delivering year on year efficiencies, but not at the cost of quality; Developing and embracing socially responsible procurement that delivers value for money, engaging with local and regional suppliers to promote the local economy and taking account of the social and environmental impact of spending decisions. This will demand a mixed economy approach to procurement which relies on developing a collaborative approach to procurement within and across public authorities and partner organisations to achieve economies of scale where appropriate. Best Practice Procurement there is no one size fits all best practice to procurement but it is widely acknowledged that the best procurement practices reflect guidance issued by the Chartered Institute of Purchasing and Supply, the Office of Government Commerce, the Society of Procurement Officers in Local Government and the Improvement and Development Agency. Guidance from these bodies shall be considered in implementing this Strategy. EU procurement legislation is based on the principles of non-discrimination and equality of opportunity on grounds of nationality, transparency and competitive procurement in relation to goods, services and works. The overarching purpose of the Strategy is to support the delivery of high quality public services that offer value for money, and in a sustainable way taking account of:- Good Procurement is Sustainable Procurement - getting value for money for Procurement Lincolnshire with goods, services and works that are manufactured, delivered, used and disposed of in a manner which minimises their social and environmental impacts and which maximises their social and environmental benefits. 7

8 Aims of the Strategy The Strategy is aimed at promoting effective procurement across all Partner Authorities. It strikes a balance between setting out a detailed plan for reforming procurement, with specific targets and a flexible planning framework. We need to be flexible to be able to respond to the rapidly changing environment around public sector procurement and to learn from our own experience and the experiences of others. The rapidly changing environment is well illustrated by the pace of technological change currently associated with e-procurement. To deliver the two priorities our aims are as follows: Efficient and effective procurement: Secure tangible improvements in value for money whilst maintaining or improving standards of quality that will benefit the citizens of Lincolnshire; Through our procurement activities make a significant contribution to the efficiency targets set out in the Comprehensive Spending Review 2007; To ensure that suitable controls are in place to maintain consistent high standards and make sure that risk is managed; To ensure there is a structured approach to education, training, and development for all staff and council members with procurement responsibilities; To make best use of information and communications technology to improve efficiency and effectiveness; To reduce the cost of the procurement process and to encourage suppliers to adopt e- procurement methods; To promote the development and use of performance management; To improve the efficiency and effectiveness of services by working with a range of organisations to develop a Partnering approach with Partners and Suppliers to create mutually advantageous, flexible and long-term relations based on trust and continuous improvement; To provide and encourage access to highquality information about procurement; To deliver community benefits and involvement in procurement processes, and working with stakeholders to improve the procurement process. Socially Responsible Procurement: Achieving value for money with goods, services and works that are manufactured, delivered, used and disposed of in a manner which minimises their social and environmental impacts and which maximises their social and environmental benefits; To promote procurement practices and policies which contribute to our priorities on equality and diversity; To increase our understanding of opportunities arising from Fair Trade; To raise the profile of ethical issues in the procurement process; To support local regeneration and redevelopment. 8

9 Our Core Values The Core Values of Procurement Lincolnshire are fundamental to the planning and delivery of all services. Whilst aiming for continuity in our values, we will continually reconsider how we apply these values to our current procurement activities. Looking After Lincolnshire We are committed to improving the quality of life in Lincolnshire and want to inspire pride in our communities and protect our County for future generations. Putting Customers First We will make sure our services meet the needs of our customers and communities. We will communicate clearly and work hard to find out and respond to our customers needs. We are committed to providing excellent services that are value for money. Effective Working Partnerships We will ensure that partnerships with our customers, with other agencies serving local people, and with suppliers remain fundamental to our values. Code of Conduct We will ensure that all procurement activity is undertaken to the highest standards of ethics and probity. Valuing Colleagues We know that the good work of our colleagues is key to providing excellent services. We will support colleagues and encourage them to work creatively. Provide Value for Money We will aim to provide high quality services that represent value for money. Demonstrate Leadership in Sustainable Procurement We will take environmental, social and economic factors into account in all purchasing decisions so as to ensure a better quality of life for everyone both locally and globally, now and for generations to come. 9

10 The Vision Local Strategic Context: The Local Government Act 2000 places a duty on all local authorities and their partners to produce a Community Strategy to improve the economic, social and environmental well being of their area. The Lincolnshire Sustainable Community Strategy is a long term document which aims to improve the quality of life of everyone in Lincolnshire, for now and for future generations. Our vision for improving quality of life is: By 2021 Lincolnshire is seen as the place where people want to live, work, invest and visit. The Lincolnshire Sustainable Community Strategy is the overarching strategy for Lincolnshire and provides a framework for partners delivering services across the county to work towards achieving this challenging vision. The Lincolnshire Assembly, Partners in the local Strategic Partnership, is committed to working in partnership to achieve this vision by embracing Lincolnshire s diversity, valuing everyone s contribution and promoting sustainable communities. The partners will work together to achieve the vision by focusing on four priority areas. These are: Priority 1. Safer, Stronger Communities; Priority 2. Children and Young People; Priority 3. Health and Social Well-being; Priority 4. Economic Development. Climate change and environment is a cross cutting theme in the Strategy. The Lincolnshire Assembly will be responsible for delivering actions and meeting targets against the strategic objectives within these priority areas. The Local Area Agreement will be the primary delivery vehicle for the Sustainable Community Strategy in effect it will be the action plan that partners will develop to address the priorities for Lincolnshire. Source: A Sustainable Community Strategy for Lincolnshire , The Lincolnshire Assembly. For further information please refer to Lincolnshire County Council website: The Strategic Framework for Procurement: The Sustainable Community Strategy s strategic vision acts as the focus for all Partner Authorities activities including procurement. It is therefore vital that procurement activity can be seen in the context of the contribution it can make to this vision. The diagram below shows the arrangements in place in order to secure this objective. 10

11 Sustainable Community Strategy for Lincolnshire Partner Authorities Corporate Policies Improvement Plans and Strategies Service Plans Meeting Community Needs Sustainable Community Strategy Financial Procedure Rules Contract Procedure Rules Procurement Codes of Practice Procurement Competency Framework 11

12 Procurement Lincolnshire s Vision is: Procurement Lincolnshire s Vision is: Procuring goods, services, and works by the most economic, efficient, effective and sustainable means to ensure that the needs of the community are met, within a clear framework of accountability and responsibility. In doing so, Procurement Lincolnshire will become best in class by adopting excellent procurement practices and techniques. Delivering the Vision - Strategic Objectives: To support Procurement Lincolnshire s Vision, the specific strategic objectives are: Efficient Effective Procurement: Reduce the cost of the procurement process and obtain value for money on all procured goods, services and works; Ensure that risk is appropriately managed and that all procurement remains legal, ethical and transparent whilst embodying our Core Values; Develop the knowledge and skills of all those involved in the procurement process to enable the implementation and delivery of the actions and processes set out in this Strategy; Optimise technology to reduce the cost, improve efficiency and effectiveness of all aspects of the procurement process; Provide on-going measurement and review of the procurement process and activities; Collaborate, consult, share good practice and learn from experiences as a way of providing more flexible and cost effective services; Provide and communicate high quality information to allow efficient and effective procurement decisions to be made; Deliver processes and procedures to facilitate stakeholder input to procurement activities. Social Responsible Procurement: Promote Value for Money Sustainable Procurement practices and policies which contribute to improved performance and reduce global and local environmental impact in accordance with adopted environmental policies; Develop procurement principles to encompass community benefits; Promote procurement practices and policies which contribute to the priorities on equality and diversity; Work towards Partners vision of Fair Trade; Ensure that we meet the highest standards of ethics and probity and in turn expect the highest ethical standards from our suppliers; Encourage a mixed range of suppliers to help develop a varied and competitive market place. 12

13 The National Context National Drivers for Change What are they? Improvement and Efficiency Partnerships: Over the last three years, nationally each region has been able to use the support provided by the Regional Improvement Partnership and Regional Centre of Excellence in order to improve practice and service delivery. The Regional Improvement Partnerships and Regional Centres of Excellence have merged to form Regional Improvement and Efficiency Partnerships (RIEPs), to strengthen regional support. They will act as the focal point for support to councils and will fund projects to help secure further efficiencies. The National Improvement and Efficiency Strategy places Regional Improvement and Efficiency Partnerships at the heart of supporting local arrangements for improvement and efficiency. Comprehensive Spending Review 2007 and the Value for Money delivery plan: The 2007 Comprehensive Spending Review (CSR07) ensures that local government can better deliver high quality public services, promote sustainable economic development and empower individuals and communities. An additional 150m will support the delivery of this efficiency programme and taken with other resources allocated to the improvement agenda, a total of 384m has been identified by government. A significant element of this will be delegated to the RIEPs to support implementation and delivery of the regional improvement and efficiency strategies. This will enable local government to deliver: The Value for Money Delivery Plan published alongside the 2007 CSR07 shows that 4.9billion of net cash-releasing value for money savings will be achieved by through: Business process improvements and collaboration initiatives, which could deliver up to 1.6 billion annual savings; Smarter procurement, which could deliver up to 2.8 billion annual savings. There will be significant investment in order to support this activity; Better asset management, which could deliver up to 300 million annual savings. Transforming Government Procurement (January 2007): This document sets out the scale, complexity and diversity of public procurement. It offers a clear mandate and challenge to raise public sector skills to develop innovative procurement methods and solutions, thereby ensuring that procurement drives the delivery of public services in a way that matches the high expectations of the public. 13

14 Sustainable Procurement: The publication of the UK Sustainable Development Strategy Securing the Future, March 2005 sets out four key priority areas for action: Sustainable consumption and production; Climate change and energy; Protecting natural resources; Creating sustainable communities and a fairer world. A subsequent report in June 2006 by the Sustainable Procurement Task Force Procuring the Future, sets out the strategic framework action plan for delivery. For further background information including the building blocks such as the Flexible Framework to make the steps changes required in seeking to meet the UK Sustainable Development Strategy goal of making the UK a leader in the European Union on Sustainable Procurement by 2009 please see Appendix 2. 14

15 The Regional Context The East Midlands Regional Improvement and Efficiency Partnership: The East Midlands RIEP Partners include all local authorities in the East Midlands, Fire and Rescue Services and the governmental and other regional improvement and support agencies (LGEM, IDeA, CLG, GOEM and the Audit Commission). The East Midlands RIEP has its own dedicated support team (formally the EMCE EMIP). The East Midlands RIEP aims to work collaboratively to: Support improvement and efficiency in all Local Authorities in the East Midlands; Engage and co-ordinate local authorities and regional support agencies; Support implementation of the Pay and Workforce Strategy; Align support activities to identified priorities; Build capacity to support continuous improvement; Deliver a joint improvement programme through investment of resources provided by government under the requirements of the Comprehensive Spending Review 2007, Value for Money Delivery Plan and the National Improvement Strategy; Influence regional and national activities to ensure they recognise and meet East Midlands priorities; Drive innovation and transformation of local services; Promote and maintain a collaborative partnership ethos. RIEP Chief Executives Task Group issued the following statement for inclusion in all Regional Improvement & Efficiency Strategies: We recognise and advocate that the good work on sustainable procurement as part of the best practice in commissioning and procurement should continue and be developed. The Local Government Sustainable Procurement Strategy provides a framework for action for each region to consider with its local authorities and partners. The activity will significantly help to progress the Value for Money work streams on smarter procurement and collaboration. Sustainable procurement contributes to the long-term integrated economic, social and environmental wellbeing of communities. It clearly delivers genuine Value for Money for citizens and helps to build resilient communities for better public health, social, local economic and environmental outcomes. Such work helps to reduce environmental harm particularly linked to climate change and reduces the financial costs that arise from unnecessary waste, poor resource use and demand management. Adopting a sustainable development approach as part of collaborative working 15

16 Value for money at the regional, sub regional and local levels has a positive role to play in place shaping to improve the prosperity and vitality of communities. It will help maximise the positive contribution that all sectors public, private and the third party can make to the delivery of services to improve the quality of life for all communities. Enhancing the robustness of, and linkages between, practitioner improvement networks reduces duplication, saves time and money, catalyses innovation and drives up performance improvement and builds capacity that empowers better leadership. Adopting and mainstreaming sustainable procurement will enhance the whole business transformation of services. We will ensure that the valuable synergy of sustainable procurement is not lost. We will ensure that it is fully considered and appropriately embedded in the evolution and delivery of our Regional Improvement and Efficiency Strategy and programmes. Value for Money requires Partner Authorities to demonstrate economy, efficiency and effectiveness of service delivery. Procurement decisions such as whether to continue to provide the goods, services or works, and whether to provide them internally or externally are central to this requirement. It is essential that Procurement Lincolnshire not only adopts processes to secure value for money, but can evidence the efficiencies obtained to demonstrate delivery of national efficiency targets arising from the CSR 07. Value for Money requires Procurement Lincolnshire to radically re-think and re-shape the way it undertakes procurement and imposes a duty on the service to secure continuous improvement in the way its functions are carried out. The efficiencies required by CSR 07 reinforce the need to secure that Procurement Lincolnshire maximise efficiency in all its activities, and that procurement savings must be evidenced and recorded. Procurement therefore will: Be driven by desired outcomes, outputs and results; Balance quality and cost; Respond promptly and effectively to service and citizen requirements; Minimise administrative processes and unnecessary bureaucracy; 16

17 Ensure that simple or routine transactions can be carried out in the most efficient manner; Consider all options in obtaining the most appropriate solution; Value innovation and creativity; Use competition to obtain value for money; Support Partner Authorities policies and priorities; Comply with legislation; Be transparent and accountable. In order to demonstrate value for money and continuous improvement, the following will be built into procurement activity: Performance indicators and targets will be established as part of procurement processes. Targets for Procurement Lincolnshire are contained at Appendix 4; Procedures to manage contractual arrangements will be established with performance measured and reported, including benchmarking arrangements; Procurement procedures and processes will be regularly reviewed; The management of risk will be an integral part of the procurement process; Procurement Lincolnshire will invest in procurement training and systems to support the procurement process. However, such providers must clearly demonstrate value and quality for service users, and will be subject to challenge. Should any Partner take a decision that in-house service(s) should be exposed to competition, it will undertake this in an open and fair manner, and ensure that: Staff and their representatives are fully and properly consulted; Appropriate outcomes, performance standards and monitoring processes are developed; All information required for a due diligence process is identified and collected; Innovation is encouraged; Relevant Partner s policies and priorities are incorporated into any specification; Probity, accountability and competitive neutrality is ensured and conflict of interest is avoided or managed; The responsibilities and accountabilities of all parties are explicit. In a value for money procurement framework, Partner Authorities value in-house providers that demonstrate quality and value for money. 17

18 Principles for Efficient and Effective Procurement Partner Authorities will manage strategic procurement through the Procurement Lincolnshire team. Procurement Lincolnshire will operate at a strategic level focussing on those activities that will lead to better public services and greater savings from public procurement. The service is not a central processing unit. It is a resource which leads on letting corporate contracts and supporting projects, whilst allowing departmental commissioning and purchasing staff to place orders locally within a clear corporate framework. It provides support wherever required, and monitors procurement activity across Partner Authorities. The team comprises of a team of skilled and experienced staff, and the activity of the service is measured on maximising benefits for all Partner Authorities. The following principles form the basis of the way all procurement activity is completed in order to achieve value for money results: Strategic procurement supports improved service delivery through the freeing up of resources and improving the quality of goods, services and works; Strategic procurement ensures that Partner Authorities obtain value for money in the acquisition and management of their resources, balancing quality and cost; Procurement Lincolnshire will undertake all procurement activity within a corporate framework to enable all staff to obtain goods, services and works to the required quality in the most efficient manner; Procurement Lincolnshire will ensure that procurement activity is undertaken in the most effective and appropriate manner, considering all options including (the following is not exclusive): o Develop and promote use of corporate contracts; o Use approved national/regional negotiated contracts (for example those arranged by ESPO, Pro5 group or by the Office of Government Commerce); o Use approved e-procurement solutions (for example, the approved Marketplace, purchasing cards, etc.); o Collaborative procurement with other local authorities and organisations; o Consider the value of joining strategic partnerships, particularly where these deliver policies and priorities, including service improvement and/or efficiencies; Procurement activity supports and promotes Partner Authorities policies and priorities, including sustainability and economic regeneration; Procurement activity will be transparent 18

19 (and fully compliant with the Freedom of Information Act), fair, consistent and be undertaken to the highest standards of probity and accountability. Procurement decisions must be evidence based; The training and development needs of all staff will be assessed via the use of a competency framework, and Procurement Lincolnshire will maintain a list of all staff that play a role in buying/procurement activities across the Partner Authorities to ensure that they are informed of new corporate contracts and developments in procurement; It is important that procurement is seen and managed as a component of the commissioning cycle. A Framework for Procurement: Procurement activity will operate within a strategic framework consisting of the Sustainable Procurement Strategy, the Contract and Financial Procedure Rules and the Procurement Code of Practice. Procurement activity must be carried out in a manner which supports Procurement Lincolnshire s strategic priorities and the Sustainable Community Strategy, including contributing to a safe and healthy environment, supporting the local economy, promoting equality, and being open, responsive, honest and accountable to the public in its decision making. Appendix 3 sets out the framework in which Procurement Lincolnshire will operate within which underpins effective and efficient procurement at Procurement Lincolnshire. Business Case; Justification for a project will be through a business case agreed by the Client Liaison Group. Where the requirement is specifically a procurement exercise the business case will be developed in consultation with the Service Manager(s) and agreed by the Client Liaison Group. Business Case s identify the baseline data in relation to the current provision, whole life costs of what is done now, together with a needs analysis and proposals for change and the measurable benefits it will deliver. This will include social, environmental as well as financial benefits to be achieved through each procurement process. There needs to be a clear statement of outcomes expected, including the key performance indicator that are to be used to measure performance and success. These may form part of the contractual arrangements. The Business Case will also summarise the risks identified and proposals for how they will be managed. Management Information; The outcome of all procurement exercises will be notified to the Business Analyst, for update of the Procurement annual work plan and Contracts Register. 19

20 Key Considerations Prior to any Procurement Exercise: The Efficiency Agenda sets challenging targets for Partner Authorities to meet. To achieve these targets we have to consider alternative ways of delivering goods, services and works, establishing at the outset any opportunities to deliver in a more cost effective way, whilst understanding fully all of the costs incurred over its life. Transforming Services; In transforming services we look for new and innovative ways of delivery, rather than repeating without challenge current ways of doing things. Consideration needs to be given to opportunities that exist through working with others. Researching what constitutes best practice, establishing what others achieved in similar circumstances and what can be learnt from their experience. Partnering enables the creation of sustainable relationships with suppliers in the public, private, social enterprise and voluntary sectors to deliver services, carry out major projects or acquire supplies and equipment. Procurement Lincolnshire will assess, for all its strategically important projects, whether partnering offers the long-term solution as part of its options appraisal. Whole Life Costs; Where relevant, we will evaluate all tenders on the basis of long-term value for money, using whole life costing to assess: Embedded energy in materials procured; Purchase, installation, transportation and commissioning costs; Operating costs, including labour, maintenance, re-processing, energy, water and consumables usage; Management costs, including staff training, insurance, health and safety and environmental costs; Disposal costs. This approach should be used for all capital investments, waste contracts and where comparing consumables against reusable alternatives. For key cost categories, such as energy, price escalation indices will be used to reflect cost increases over time. Key Procedural Elements of Procurement: The following are the key procedures, which will underpin effective and efficient procurement for Partner Authorities. Needs analysis; Prior to any procurement exercise, this looks at the qualitative and quantitative aspects of need. In line with policy, users and stakeholders should be consulted. Consideration of changing needs and priorities should be made. Avoidance of provision led demand is paramount in 20

21 minimising volume, scale, costs and environmental impact. We will establish that: There is a genuine operational need for the purchase; All cost effective opportunities for products to be shared, upgraded, refurbished, leased or delivered as a service have been explored; The product will be used efficiently, minimising waste. Increased Buying Power; The option of collaborating formally with other councils or suitable bodies will be considered for all procurement exercises and will be adopted where this option offers the best solution. Procurement Lincolnshire s primary routes for developing collaborative approaches will be considered through the RIEP and the Lincolnshire Procurement Forum. Procurement Lincolnshire will maximise the benefits of our relationship with public sector purchasing consortia primarily with Eastern Shires Purchasing Organisation (ESPO). This increased leverage will enable the raising of sustainability standards whilst improving affordability through volume discounts. It will also release procurement resource to support more strategic spend areas. Best Practice; In parallel to the needs analysis a review of emerging National, International and Regional best practice should be undertaken, feeding into the outcome based specification. Consultation; To consult with stakeholders will form a key part of the procurement process, to enable Procurement Lincolnshire to ensure that, as far as possible, their needs and preferences are met. Continuous Improvement; Where contracts are going to run for a number of years, the contract must be sufficiently flexible to provide for continuous improvement throughout the period of the contract. Risk Management; The risks associated with all procurement should be identified at the beginning of and throughout the procurement exercise and throughout contract delivery. A risk action plan will be created and procedures put in place to monitor and control the likelihood and the impact of any potential identified risk. Each identified risk should be allocated to the party most able to manage and minimise them, this being either Procurement Lincolnshire, contractor or supplier. This complies with the Audit Commission requirements for staff to manage the risk 21

22 within their own working environment. Business Continuity; Where the requirement of a commodity or service is to be delivered or includes a maintenance or service contract, which will be delivered over a period of time, the procurement process will require submission by potential contractors of their arrangements for business continuity. The weighting of this element of the evaluation will be appropriate to the potential level of impact business failure would have on Partner Authorities and its delivery of public services. Procurement Improvement: Spend analysis; This has been undertaken which enables Procurement Lincolnshire to understand spend with external suppliers. This will enable more effective aggregation and reduced transactional costs. The analysis better enables us to work collaboratively with other authorities in the East Midlands region. Working with East Midlands RIEP; Procurement Lincolnshire is committed to work with the RIEP in the development of improved procurement procedures and policies. power. Identifying opportunities for efficiencies through the supplier analysis spend and delivering them through the Forum. Construction Procurement; Procurement Lincolnshire will continue to implement Rethinking Construction and any other related construction best practice. We will work with our Property and Highways Service Managers and the East Midlands Property Alliance to understand the relevant benefits for Procurement Lincolnshire s Partner Authorities. Category Management; One key benefit of Procurement Lincolnshire is it increases the capacity to adopt a category management approach to procurement. Each procurement officer is responsible for the management of a category of related goods and services and looks for opportunities to maximise efficiencies across the category. Adopting this approach means that procurement officers develop a high level of knowledge and expertise within their category area and can apply this expertise to drive out the maximum benefits. This approach forms the backbone for a step change in procurement. Lincolnshire Procurement Forum; Procurement Lincolnshire works closely with the other members of the Lincolnshire Procurement Forum, identifying opportunities to buy collaboratively with increased buying 22

23 Innovation and Supplier Development: Sustainability is a key aspect of Partner Authorities commitment to innovation. Procurement Lincolnshire will prioritise key suppliers with the highest spend and sustainability impacts for targeted supplier development activities. This will give senior management support and focus on continuous improvement and tangible delivery of sustainability benefits throughout the supply chain. Procurement Lincolnshire will work with these suppliers to explore service based contracts for products. This will encourage suppliers to be responsible for the life management of products, using gain share and incentives to reduce their whole life costs and environmental impacts. Procurement Lincolnshire will demonstrate their commitment to sustainability and make a commitment to increase the sustainability of specifications, achieving minimum mandatory standards at least equivalent to those of Office of Government Commerce. In addition to increasing the sustainability of specifications, we will encourage suppliers to strive to offer innovative and cost effective sustainable solutions which improve the sustainability of their tender responses and reflect this in tender evaluation criteria. When tendering service contracts Procurement Lincolnshire will consider in its evaluation and award criteria any additional community benefits, that meet the priorities contained in the Sustainable Community Strategy, which the supplier can offer as part of their tender bid. Training and Development: It is important that procurement activity is undertaken by persons who are competent to do so. Procurement Lincolnshire will introduce a procurement competency model which can be used by managers to identify training and development needs of any staff procuring goods, services or works for Partner Authorities. Procurement Lincolnshire will ensure that all staff responsible for procurement receives training in the principles of good procurement. Such training will include refresher courses as and when required (but in any case no more than two years apart) to ensure familiarity with Constitutional rules, legislation and best practice. A procurement website (electronic manual of guidance and procedures etc) is being developed to provide all staff engaged in procurement activities with a reference point and ensure a consistent approach throughout the partnership. 23

24 Information and Communication: This Strategy will be distributed to key suppliers. An electronic Procurement Lincolnshire Newsletter will be published on a bi-monthly basis to provide staff with information about new contracts, changes to the purchasing process that effect them and procurement news of general interest. In addition an electronic Procurement Lincolnshire Newsletter via the website will be published on a quarterly basis to all suppliers. This will include procurement news of general interest including sustainable procurement information. Procurement Lincolnshire as the Preferred Customer : We will aim to be seen as a Preferred Customer by Suppliers by putting in place a set of policies, actions and measures that will: Ensure that the effort required by suppliers when bidding for business is commensurate with the risk/value involved; Create greater visibility of Procurement Lincolnshire s requirements for goods, services, supplier performance, and supplier business conduct, and the type of mixed economy it wishes to procure from; Create effective trading relationships and / or partnerships with all key suppliers (public, private, in-house and voluntary); Encourage a diverse and competitive supply market, including small and medium sized enterprises, social enterprises, ethnic minority businesses, and voluntary and community sector suppliers. Working with Other Public Buying Organisations: Eastern Shires Purchasing Organisation (ESPO); ESPO is a joint Committee of Local Authorities and operates within the Local Government (Goods & Services) Act Lincolnshire County Council is a founder member and part owner of ESPO. It acts as a purchasing agent for its member authorities and other customers and provides a professional cost effective procurement and supply service. The use of their products and services by the member authorities and other customers, as measured by the value of their combined procurement activities, amounts to some 400 million per annum. The Pro5; ESPO, Central Buying Consortium, West Mercia Supplies, North Eastern Purchasing Organisation and Yorkshire Purchasing Organisation have agreed to work together as the Pro5. These five professional buying organisations with a combined purchasing power in excess of 2 billion are 24

25 set to offer local authorities outstanding deals in key markets following an historic agreement to work together. Under these arrangements, the Pro5 will identify and promote the best deals for local authorities, including those offered by other professional buying organisations. Procurement Lincolnshire will secure the benefits that the public buying consortia offer to secure the best outcomes for Lincolnshire and will seek to use ESPO and Pro5 where these deliver value for money to the Partners, for example, through Framework Contracts. Delivery Partners Procurement Lincolnshire works closely with other key strategic delivery partners to maximise benefits of these relationships including Mouchel and other established Partners. E-Procurement: Is doing business electronically. The benefits of e-procurement include: purchasing cards can speed up the process of obtaining materials for maintenance work). Procurement Lincolnshire is seeking to adopt a comprehensive set of e-procurement solutions that include: An on-line Marketplace, an e-procurement portal for ordering supplies and services; The Supplier and Tender Management System for the full tender and quotation process including e-tendering; E-auctions where appropriate; Corporate financial systems that integrate with the e-procurement solutions. Procurement Lincolnshire will continue to roll out Purchasing Cards for low value goods. Advancement in technology is eliminating unnecessary cost from the procurement process and releasing resources to be utilised more efficiently elsewhere. An integrated procure-to-pay process across Partner Authorities will deliver real savings and improved management information. Deliver savings through streamlining the internal procurement procedures and processes; Provide a framework to ease the ordering of goods, services and works whilst maintaining compliance with legislation; Improve services (for example, the use of 25

26 Socially Responsible Procurement Procurement Lincolnshire is working regionally and nationally to develop models of socially responsible procurement that deliver value for money, and engages with companies, agencies and the voluntary sector to test these models. The three strands of socially responsible procurement should be considered as having three distinct but independent pillars - economic, social and environmental. As such sustainable procurement is wider than just greening the supply chain. It is a vital ingredient in Partner Authorities obligation to preserve the well being of the citizens of Lincolnshire. Economic Regeneration: The more money that is spent locally, the greater the positive impact this will have on the local economy, particularly for small and medium sized businesses (SME s). Procurement legislation limits Procurement Lincolnshire s ability to favour local businesses, but there are numerous ways in which it can legitimately support local businesses, including: Working pro-actively with the local businesses to explain how to do business with Procurement Lincolnshire; Providing information about future procurement activity, and advertising tenders on SourceLincolnshire.co.uk; Running an annual Meet the Buyer Event; Developing local and regional lists of approved contractors and suppliers; Provide advice, guidance and training where appropriate; Using purchasing cards to procure low value goods (often through local outlets); Follow the principles of the concordat between Partner Authorities and SME s; As part of the sourcing strategy, Procurement Lincolnshire will consider the potential to: o Use contract packaging to break down larger contracts to match SME and Social Enterprise capacity; o Ring-fence a share of the requirement as a pilot contract for local or Social Enterprise supply; o Encourage collaboration between local SME s and Social Enterprises to compete for larger contracts; o Encourage larger suppliers to sub-contract to local SME s and Social Enterprises; o Hold supplier briefings prior to issuing Invitations to Tender to explore innovation and ensure that specifications are deliverable by the marketplace. 26

27 The challenge for procurement is to balance the following priorities: Obtaining Value for Money and the required quality; Sourcing locally where possible within the legislative framework; Reducing the number of low-value creditors. Diversity of Providers; Partner Authorities are committed to a mixed economy and they believe that services should be delivered by the organisation whether public, private or voluntary that best meets our standards. Procurement advice to buyers is essential to ensure that the best service delivery option is chosen that can meet the current and future needs of local people and provide value for money. Procurement Lincolnshire will establish a Supplier Management Strategy, which will aim to achieve a good market response and will complement achieving this objective. Included within such an approach will be: The development and implementation of better market intelligence gathering; The development of e-procurement to inform suppliers of probable selling opportunities by advertising in more accessible places; The development of tendering processes and documentation to encourage small to medium size enterprises to submit tenders; Seeking feedback from suppliers. Partner Authorities recognise and value the added benefits that the voluntary, community and social enterprise sectors can provide and can play in supporting their strategic priorities and provision of services. Partner Authorities also recognise the value the voluntary, community and social enterprise sector can play in delivering services in: Addressing market failures; Filling gaps in the marketplace; Developing business in the most deprived areas; Decreasing barriers to employment. Partner Authorities are committed to achieving the economic, social and environmental objectives set out in the Sustainable Community Strategy for Lincolnshire so as to ensure a better quality of life for all Lincolnshire s citizens, now and in the future. To achieve this Procurement Lincolnshire will consider including employment, training, equal opportunities and opportunities for SME s, in its specifications for service and works contracts. Where such factors are included in contract specifications, consideration of the ability of contractors to meet these requirements will feature in all stages of the selection and appointment process. 27

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