Message from the Chair

Transcription

1 Message from the Chair In 2008/9, KNH presided over a budget of 37million. With this level of expenditure comes responsibility; to ensure that as many resources as possible are released for use in delivering customer focussed services; to meet our vision and values providing quality homes in successful communities ; to the wider environmental sphere in order to deliver sustainable outcomes and to align our priorities with those of our stakeholders. A mature procurement strategy, therefore, aims not simply to obtain the least expensive product by competitive tendering. Whilst cost is important it is also a tool for helping us attain many of our other objectives and values- for example social businesses to provide employment for local people, green trading to meet environmental standards and local purchasing to direct resources to the local economy and local people. This framework document reflects, therefore, what we are trying to achieve as an organisation.

2 Purpose/introduction This framework builds on the procurement strategy published in Changes have been made to reflect changes in our strategy and organisation and to provide a grater focus on how procurement will support our objectives. The framework talks in greater detail about procurement best practice and how this will inform our moves towards greater sustainability, equality & diversity, and Value for Money. Finally it sets out an action plan for achieving these changes. This document is divided into two linked sections. The first clearly sets out to our stakeholders including the operational managers, strategic directors, Kirklees Council, Board Members and suppliers, KNH s vision for the way forward in its procurement of services, supplies and works so that they may play a meaningful role in the implementation of that vision. The second is an action plan. This section of the framework provides further detail on how KNH will work towards meeting its social responsibility objectives. It highlights the barriers to achievement and ways to overcome these barriers. This framework provides a corporate focus for procurement and links to our Value for Money strategy. It embraces KNH s commitment to strategic procurement and sets out our aspirations. It is not a user manual ; more detail on procurement processes and issues will be found in the Contract Procedure Rules and the Procurement Code of Practice. This document has been developed with the help of Kirklees Council, will be circulated to all key stakeholders and suppliers and be accompanied by a series of briefings. Comments and views will be welcomed so that we can develop the framework in future years. Procurement in Context Procurement is the set of activities and processes by which KNH acquires goods, services and other works it requires to carry out its functions. KNH is responsible for spending nearly 21 million each year on repairs and for looking after approximately 5 million within the Housing Revenue Account (HRA). The External Context The Government s National Procurement Strategy set out to raise the profile and effectiveness of procurement within local government and, specifically, established a series of targets which local authorities are expected to meet. The final report issued in April 2008 confirmed that the 3 billion efficiency target had been met a year ahead of schedule and made clear the role that procurement would be expected to play in supporting local authorities to identify and realise further efficiency gains. The KNH Procurement Strategy provides the basis to ensure that we can play our part in contributing to these gains and work with our major partner Kirklees Council to support them in achieving their targets.

3 The national strategy itself was built upon a number of initiatives in recent years to promote effective procurement such as the Egan reports, the Best Value regime, and the national e-procurement project and these are also reflected in this strategy. The Gershon Efficiency Review has given further impetus to the need for effective procurement with some 35% of the 6.45Bn local government efficiency savings expected to come from more effective procurement. Furthermore, the 2007 Comprehensive Spending Review stated that more efficiency savings are expected to be made through Procurement over the next few years. This strategy works towards the key concept of making savings through good procurement and redirecting resources to front line services. Gershon helped to provide the momentum for collective procurement consortia and where value for money can be established, KNH will take advantage of the offers available through these consortia. Another top priority for all of us is the sustainability agenda. Procuring the Future clearly stated the case for government to lead by example and the flexible framework it promotes is included within this document as an aim for KNH. Lastly, KLOE 32 requires that there is a robust, modern procurement strategy to apply best practice to achieve improved value for money in priority areas, including working with partners. Furthermore, we must demonstrate value for money and deliver outcomes that meet the needs of users and/or the community. The Internal Context KNH is an arms length company and takes procurement decisions in the interests of its customers. This means that it will seek to attain value for money (VfM) in all its procurement decisions including those that relate to support services supplied by Kirklees Council. A definition of Value for Money is contained within our VfM strategy but briefly can be described as the relationship between economy, efficiency and effectiveness. In practical terms this means not favouring provision of services provided by Kirklees Council above those provided by other suppliers. We will market test the provision of services and goods to ensure we are getting value for money. We will also take into account risk and the achievement of our broader community objectives when making procurement decisions.

4 Our vision what do we want to achieve? Our vision for the Procurement function is to address all the themes that the external context provides and at the same time to ensure that the kind of organisation KNH wants to be is reflected in the way that we spend our money. This Vision has two key elements:- It is concerned with good procurement practice, spread throughout KNH; It is concerned with achieving value for money and within this to balance two priorities: delivering efficiencies and quality delivering socially responsible procurement, engaging with local and regional suppliers to promote the local economy and taking account of the social and environmental impact of spending decisions. Procurement does not exist in isolation, it is not an end in itself. As a purchaser of goods and services in the local area KNH s spending power is a valuable tool in the delivery of corporate objectives and the improvement of well being in the local community. In particular, the Procurement Framework supports a number of key themes for improvement These are contained within the Delivery Plan for Services ; Aiming for excellence in Customer Services Meet Kirklees Council s Strategic Objectives Delivering the Asset Management Strategy and Neighbourhood Management A commitment to Efficiency and Value Commitment to Staff Development and Reward The procurement activities of KNH KNH s head office is located at Perseverance House in Huddersfield. As of May 2008, KNH has 5 area offices managing around homes. This figure is reducing by some 250 properties a year, seeking efficiencies and value for money in everything we do helps to offset the lost revenue these properties represent. To enable a strategic direction to be developed, a snapshot of current procedures and outputs was taken during May 2008 to identify good practice and areas where practice could be improved. The following is a summary of what was found; There are two closely related methods by which KNH procures goods and services depending upon whether the procurement uses the KNH management fee or the Housing Revenue account (HRA) to fund the purchase. In the case of the management fee, KNH s own contract procedure rules (CPR s) should be followed. There is a set of financial and contract rules approved by the Board which sit behind this procurement framework. They are the detailed

5 procedure rules to be followed by KNH Board and staff when undertaking a procurement process. All other purchases are made through the HRA and in these cases, the Councils rules must be followed. In practice, the rules are very similar. For example, the same thresholds are being used to determine the type of procurement exercise required and the number of suppliers required to submit bids. However, an important distinction is the approval process for which two separate governance structures are in place. For KNH fee, all expenditure on goods and services is reported to the Board s Delivery Committee. Procurement of goods and services that are estimated to be over 50,000 are approved by Delivery Committee. Approval of suppliers selected by a procurement method for goods or services over the value of 50, 000 will be approved by Delivery Sub-Committee before they are appointed. Delivery Sub-Committee will use as criteria for selection value for money, and contribution of the supplier to the wider community objectives of KNH. The responsibility for purchasing in KNH is devolved to budget holders who are authorised signatories of the purchase orders. Purchase orders can be completed by any staff member as the need is identified but must be authorised by a budget holder. KNH uses a variety of ordering methods from order books to e-procurement such as websites and purchasing cards. The money we spend is divided between the KNH management fee and the Housing Revenue Account. Management Fee 80% of the KNH fee is spent on staff salaries. The majority of the remainder is spent on support services as detailed below. Employee Healthcare 14,000 Carefirst 950 Employment Agency 15,700 Human Resources Strategy Unit 10,150 Decision Support Unit 10,400 Central Mailing 33,250 Community Languages 11,500 Legal Services 101,950 Strategic Finance 41,400 Office Accommodation 368,500 InTech 355,650 Featurenet (Telephones) 131,650 Health & Safety 29,950 Central Printing 20,000 Central Insurances 517,850 Central recruitment/payroll 27,650 Cleckheaton Town Hall Receptionists 3,250

6 All of these contracts with support services are overseen by a senior manager who signs off the invoices. Contracts are in operation with all support services except for Healthcare/carefirst, Employment Agency, HRSU, Strategic Finance, Central Insurance and the receptionists. For all these except the receptionists, there are clear payment mechanisms tied to standards or work packages. Housing Revenue Account (HRA) Within the HRA, KNH oversees a repairs budget of million. Service Level Agreements totalling 2.7 million and Special Services budgets of 2.2 million. KNH has a wide range of procurement and other expertise and can call upon the help of the Corporate Procurement service of KMC. Those interested should consult the following resources within KNH for further advice/information; The Business Unit for procurement advice and for information on support contracts with KMC services HR Unit for TUPE implications and contract clauses that we may wish to include on employment for example training and apprentices Health and Safety Advisors Partnering Manager (Experience on construction contracts) Strategic IT Manager For IT implications Training and Development Team (Experience of service and supply tendering) Equalities Manager to ensure suppliers have a commitment to KNH s broader strategies Environmental Manager to ensure suppliers have a commitment to KNH s broader strategies Company Administrator for advice on supply chains for goods and services Our relationship with KMC procurement Whilst KNH is an independent company and has its own procurement objectives, the Council s Corporate Procurement offers a range of services which we are able to take advantage of. These include; Advice on CPR's/procurement processes Advice on EU level procurement procedures Negotiating corporate contracts and business accounts Liaison/negotiation with YPO Alito contracts database maintenance & development. Procurement good practice/ national and regional initiatives Operating a gateway for major procurement processes Joint procurement training opportunities / activities Procurement key contact meetings - shared experiences and information Codes of practice

7 Collaborative opportunities Furthermore, the Design and Property Services department (D&PS) offer advice and assistance on a range of procurement projects. Good procurement practice The following principles will form the basis of all procurement activity in order to achieve value for money: Getting an increased level or quality of service for the same cost Avoiding unnecessary purchases Ensuring that user needs are met but not exceeded Wherever possible specifying the purchasing requirements in output terms so that suppliers themselves can find the most efficient way to meet the need Using service level agreements with the Council s support services and other suppliers in which we agree in advance the level of service to be provided Using negotiations to improve deals where appropriate and not for EU level procurement exercises Optimising the cost of delivering services or goods over the life of the contract rather than minimising the initial price Benchmarking existing agreements against the wider market, for example the deals that purchasing consortia have to offer Using incentives to ensure continuous improvement Supporting improved service delivery through the freeing up of resources and improving the quality of goods, services and works Ensuring all procurements are made available to an appropriate degree of open competition Use approved lists of suppliers maintained by the Council or a formally approved organisation Where appropriate, use consortia of which KNH or KMC is a member (for example, YPO, PfH) Use approved nationally negotiated contracts (for example those arranged by the Office of Government Commerce) Use approved e-procurement solutions (for example, the IDEA Marketplace, purchasing cards, etc.) Collaborative procurement with other organisations Develop strategic partnerships, particularly where these will deliver significant service improvement and/or efficiencies

8 Socially responsible procurement KNH is committed to systematic consideration of the environmental, social and cultural impacts of our operations. In line with KMC s corporate objectives, this includes issues of sustainability both environmental and economic community relations and equality and supplier and customer relations beyond our legal obligations. Our vision is to create long term value in the communities we serve, contributing to the improvement of the social conditions of the people affected by our operations. Environmental sustainability In more detail, we will use our spending power effectively to promote environmental sustainability. We will aim to reduce the negative effect on the environment of the products and services that we buy. We will achieve this by considering the effect of our decisions and by working with suppliers to make sure they have a similar commitment. We will use the flexible framework suggested in Procuring the Future to inform our actions. We will support Kirklees Council in their objective to cut carbon emissions by 30% by Economic and social sustainability KNH will use its resources both in terms of the money we spend on goods and services and the money we spend on people to help sustain the communities in which we work. We will work toward ensuring that community needs are reflected in service design, delivery and review. We will explore how we can work with small and medium-sized enterprises (SMEs), social enterprises (SEs), voluntary and community-sector suppliers, local suppliers, and black and ethnic-minority suppliers in the council s procurement process to support Kirklees Councils regeneration strategy, benefit the community and contribute to economic development and the Socially Responsible Procurement agenda Equality & Diversity and Community Cohesion We recognise that we can use our influence to promote equality and diversity both in relation to the employment practices of our partners and the way in which goods and services are provided to our customers. In our procurement processes, we will ensure that equality and diversity is a significant qualification requirement and performance measure. We will work with suppliers to deliver excellent equality and diversity outcomes and will take steps to ensure that suppliers understand and share our vision for equality. We are committed to facilitating a learning culture where our suppliers can join us in sharing best practice and creating a culture of continuous improvement. We will build accountability and transparency into our procurement processes so that our customers can judge how fairly we are selecting suppliers and how successfully contracts are promoting equality and fairness for all.

9 We will also expect our suppliers to contribute actively to the promotion of community cohesion especially where a contract involves delivering major environmental or housing improvement schemes. Where necessary KNH will assist suppliers to prepare their staff to promote good community relations and to avoid acting in a way that could increase local tensions. Stakeholder involvement When making procurement decisions to make or buy a product or service and to specify what this product or service should look like, we will involve staff and take into account the views of users of services. Where appropriate, we will consult organisations and rights networks that are able to explain the needs of groups who are at risk of discrimination or disadvantage. We believe staff and customers bring an invaluable perspective to the best way of approaching a process and defining an outcome essentially of attaining best value. Review and responsibility This strategy will be reviewed annually beginning in April 2010 to ensure that it remains in line with KNH and government priorities and remains a useful, living document. Part of this review will include reality checks to ensure that people involved in procurement are using this document to inform their decisions. Responsibility for procurement in KNH lies with the Director of Investment.

10 Part 2 Action plan Good procurement practice Following the procurement audit, a number of actions to improve how we purchase goods and services have been identified Action plan Lead Officer Target date Review the supplier base identify areas where we use multiple suppliers, check the VfM and reduce the supplier base where necessary Work towards removing purchase order books entirely from the ordering process Work with KMC to implement the IDEA procure to pay system for KNH. In partnership with KMC, use the management information IDEA generates to identify areas of spend for review Ensure that all deals available from the purchasing consortia KNH belongs to are tested against our current deals and where necessary change supplier Aim to achieve and evidence 3% efficiencies through improved procurement practice annually Oct 09 Alistair Kimpton/Finance Manager Throughout Dec 08 Mar 09 CE/Director of Finance April 09 This section of the Procurement framework provides further detail on how KNH will work towards meeting its social responsibility objectives. It highlights the barriers to achievement and ways to overcome these barriers. Environmental sustainability Our aim is to reduce the negative impacts of the products and services that we buy. We will monitor the effects of our expenditure on the environment and encourage our suppliers to follow good practice in environmental management. Barriers The drive towards cash efficiencies may be a disincentive to buy environmentally friendly products There is a view that environmentally friendly products may be more costly, or of inferior quality and an

11 uncertainty on how to take account of non-cashable benefits KNH purchasers and those who purchase on our behalf may not always be committed to sustainable procurement Focus on lower up front costs with less analysis of whole life costing Action plan Lead Officer Target date Include the total cost of a product, from buying it to getting rid of it in more tenders Identify the most environmentally sensitive areas of our operations and work with and suppliers to reduce, reuse and recycle wherever possible. The list may include: construction and materials; transport; IT hardware, consumables and other electronic equipment; stationery and paper; furniture; clothing and textiles; cleaning products; electricity and renewable energy; white goods (household appliances); timber; oils and chemicals; food and catering; mechanical equipment; heating/cooling equipment and lighting Work with each supplier to identify improvements in energy efficiency Work towards embedding the flexible framework developed in Procuring the Future within KNH Raise awareness of and where possible move towards using fair trade products April 09 Dec 09 Alistair Dec 09 Kimpton/Chris Moorhouse Mar 10 Dec 09

12 Economic and social sustainability Encouraging small and medium-sized enterprises (SMEs), social enterprises (SEs), voluntary and community-sector suppliers, local suppliers, and black and ethnic-minority suppliers in the procurement process to support our objective of encouraging successful communities. Barriers to entry for SME s, SE s etc. not being able to find out about opportunities, procurements of lower value may not be widely advertised believing that the processes involved in bidding are unnecessarily complex and costly current trends in public sector procurement towards larger and longer contracts, and rationalising the number of suppliers, meaning that smaller businesses often find the resulting contracts too large for them believing that public sector procurers perceive a risk of contracting with diverse forms of business, like social enterprise, where their value can be misunderstood and overlooked. Barriers to procurers Lack of information/knowledge of the local economy Our ability to favour local and small business is limited by contract procedure rules Action plan Lead Officer Target date Divide large contracts into lots that can be bid for individually by smaller businesses whilst staying within aggregation rules Throughout Ensure that the 15, threshold for advertising on is well understood and being followed Work with Kirklees Council to Identify and map social enterprises, BME led businesses and SME s in Kirklees Sept 2008 March 2009

13 Where we identify social enterprises, BME led businesses and SME s that can fulfil a need, find out whether or not they are already on the approved suppliers list. If they are not, contact them, explain the benefits and invite them to apply. March 2009 Make sure the supplier approval process is friendly and open to new suppliers. Dec 2008 Work with support organisations and networks, as well as other business networks like the local Chamber of Commerce, to raise awareness of the opportunities for suppliers and encourage social enterprises, BME led businesses and SME s to bid for contracts or quote for work; Ensure that social enterprises, BME led businesses and SME s are aware of upcoming opportunities and encouraged to bid for advertised tenders. Participate in KMC s procurement open days for local businesses and other organisations Provide feedback to social enterprises that made it to the shortlist but don t win the contract Andy Selman March 2009 September 2010 As necessary As necessary Identify opportunities to support the development of social enterprises Andy Selman Ongoing Equality & Diversity The duty to promote race equality when procuring goods and services cannot be ignored it is not optional. We will use our influence to assist in improving community cohesion, creating a diverse workforce and encouraging others to use good practice in equalities. Barriers BME businesses are often small businesses and the same barriers and actions to address inequalities apply. Suppliers may not have a formal equality & diversity policy covering employment and service delivery issues Suppliers may not be aware of their duty to comply with equalities legislation

14 Suppliers may not fully understand the contract conditions or may find the tender process too confusing to bother with Action plan Lead Officer Target date Consider different packaging options rather than aggregating but remember that Value for Money must be the determining criterion Raise awareness of the impact of our procurement activity on community cohesion, both adverse and positive Consider longer contracts to give us the opportunity to work with suppliers to enhance their approach to equality & diversity Ensure that KNH s Equality Scheme covers procurement and identifies specific actions Reports to Boards from officers and senior managers which involve procurement decisions will demonstrate how equality & diversity objectives are being met Take into account in its tender evaluation and contracting processes a potential contractors approach to equalities in terms of its employment practices and service delivery. Ensure that the monitoring of contractor performance relating to equality is robust and proactive Encourage the entire business community to apply for our tenders through written information and through feedback following short-listing and contract award If bidding businesses do not have their own equality and diversity policies, ensure that they sign up to KNH s and monitor their compliance Ongoing Ongoing Ongoing Darren Wilson Apr 09 Managers Ongoing Ongoing Darren Wilson Apr 10 Darren Wilson Apr 09 Ongoing

15 Stakeholder Involvement We will continue to ensure that customers are involved in designing, delivering and improving the services they receive. We are committed to delivering community benefits and involvement in procurement processes, and working with stakeholders to improve the procurement process. Barriers A shortage of capacity in the KNH governance structure and the difficulty of supporting stakeholders through the procurement process, particularly as their support needs vary so much There are difficulties in identifying stakeholder representatives in all areas and who accurately reflect the diversity of our stakeholders When services are reviewed, procurement needs are sometimes not taken into account Action plan Lead Officer Target date Ensure that procurement is a part of the capacity building process for board members Enhance the understanding of procurement throughout our staff and increase the profile of procurement through team briefings and managers briefings. Advertise this strategy widely and ensure that appropriate support is given Identify what we spend and where we spend it and advertise this annually to improve staff and governance understanding of where they can effect outcomes Work with KC partner services to identify areas of mutual interest and good practice where we can work together to fulfil the aims of this strategy Andy Selman Apr 10 Noel Chambers Apr 10 Finance Manager Apr 09 Lead director depending on service area Apr 10