PAPER C

 

RESOURCES SELECT COMMITTEE - 18  DECEMBER  2003

 

PRINTING PROCUREMENT

 

REPORT OF THE COMPLIANCE & RISK MANAGER

 

 

REASON FOR SELECT COMMITTEE CONSIDERATION

 

At its meeting of 23 October, the Committee expressed its continuing concern that the Council’s printing requirements were still not being met in the most cost effective way and asked for a further report on the Council’s printing arrangements.

 

ACTION REQUIRED BY THE COMMITTEE

 

To note the content of this report and to recommend to the Council’s Executive and Directors what action it would wish to see taken.

 

BACKGROUND

 

1.      In January 2002, this Committee identified that a considerable amount of work appeared to be ‘lost’ to outside printers. This had the potential to undermine the financial viability of the Council’s Print Unit, and at the same time represent a failure to achieve the best value for money for the Council and its tax payers. The Print Unit’s viability would be affected because it might not have been operating at its full capacity as a result of work which it could have done, being done elsewhere. As a consequence, it would appear less competitive because its recharges to internal users would need to be that much higher in order to ‘recover’ all its costs. In theory at least , one would expect the Council’s in-house print unit to be price-competitive if only because it is not charging to make a profit, merely to recover costs.

 

2.      The Committee recommended that all printing orders should be sourced through the Print Unit. This recognised that it was not feasible for the Print Unit to meet every printing need of the Council – that would have investment and staffing implications for the Unit, and some of the work at least was beyond the technical capability of the Unit. The Committee recommended, and the Executive subsequently resolved at its meeting on 26 March 2002, that all printing orders would be routed through the Print Unit Manager who would decide whether the proposed method of meeting the Council’s needs was the most appropriate, taking into account the Print Unit’s capacity and capability to do the work and the comparable cost of having it done ‘outside’. The object was not therefore to stop all use of external printers, but rather to ensure that the amount of printing work which could be done in-house at a competitive cost was maximised.

 

3.      Since that decision by the Executive in March 2002, there has been continuing concern expressed by both members and senior officers that the requirement to route all orders through the Print Unit Manager had not been followed. As a way of identifying which departments were using external printing, the Chief Financial Officer implemented a system with effect from January, 2003 which provides the Print Unit Manager with copies of all invoices for printing work. Research into the estimated value of externally sourced printing work indicated that its scale had not declined significantly and although this was not in itselfthe aim of the revised arrangements, one might have expected a reduction. The following table illustrates the pattern of in-house compared to externally sourced printing.

 

Table 1 – Pattern of printing – In-House v External

 

 

In House

External

 

Financial Year

In- house Work (Value)

 

£

Work for non-IWC customers

£

In house work for IWC

 

      £        (%)

Estimated  outsourced

Value

    £          (%)

Total

Estimated

Value

£

2000-01

    264,092

     40,708

223,384   (40)

337,017   (60)

     560,401

2001-02

    251,191

     42,753

208,438   (36)

376,185   (64)

     584,623

2002-03

    226,678

     21,854

204,824   (33)

424,648   (67)

     629,472

2003-04 (7 months only)

   

     152,661

 

     17,600 est

 

135,061   (41)

 

192,025   (59)

 

     327,086

 

4.      The above table illustrates that despite having a policy to route all printing through the Print unit, the policy had little effect on the scale of external printing throughout 2002-03 and if anything more printing was done outside than before. The common belief is that the expected change in behaviour did not materialise because the decision made by the Executive in March 2002 had not been effectively communicated to those who procure printing. This Committee again expressed its concern in April 2003, and a further instruction was issued by the Head of Policy and Communications (who since April this year has been responsible for the Print Unit) telling all departments that they must comply with the Council’s policy. However, this Committee’s recommendation that all orders for printing work should be counter-signed by the Print Unit Manager has yet to be put to the Executive and agreed.

 

5.      Table 1 above does, however, indicate that in the first seven months of the current financial year, the balance does appear to be moving again in the desired direction (suggesting that the in-house proportion could be as high as 41%). This is, however, a dangerous assumption to make as the figures, especially for external work, do not follow a ‘straight line’ through the financial year and the Council has great difficulty in identifying with any real precision how much it spends on printing. The anticipated outturn for the year might be a low of 34% or a high of 40%.

 

6.      The analysis shown below in Table 2 gives some indication as to which departments are the biggest users of external printing sources. The figures quoted are for expenditure to date this year with external printers by department (where known).

 

Table 2 – Spending to date on external printing, by department

 

Department

Value

£

Community Development

16,336

Wight Leisure

20,321

Tourism

49,552

Events

  1,725

Planning /AONB

  6,207

Education

  4,318

Policy (incl Wight Insight)

36,025

Human Resources

     467

Finance

    198

Corporate

  6,320

Social Services

  4,049

Fire & Rescue

  3,965

Crime & Disorder

     731

Coast Protection

  2,888

Highways

  3,157

Schools

  5,697

Total

   £ 161,957

 

7.      This table illustrates that, whilst there would appear to be significant sums finding their way to external printers, the departments which are the highest external users are those that tend to need promotional material printed with a good presentational finish. Although the Council’s Print Unit could handle such work, it does tend to be work which the Unit does not traditionally do for a variety of reasons. In addition, some of the volumes involved (600,000 plus for the Tourism pocket guide  and 267,000 copies of Wight Insight per annum) are beyond the current capacity of the Unit and their procurement lends itself very well to seeking competitive tenders to achieve the best outcomes for the Council. It is not therefore sensible or realistic to imagine that without extra resources, the Print Unit could cope with any significant increase in the demands made upon it. In discussion, the Unit’s manager has confirmed that the Unit is operating near to its  capacity already.

 

8.      Table 2 does indicate too the scope for doing more work in-house and it would appear that there is ample opportunity. It also suggests that there is enormous scope for achieving better deals for the Council by ‘shopping around’.  This could be managed by the Print Unit Manager if he was made aware of all printing work which is being procured. Until now, the policy of reminding departments of the policy (and then instructing them) has not achieved the desired result (many of those departments listed in Table 2 do not routinely contact the Print Unit), and the Committee’s recommendation that all orders should be countersigned by the Print Unit Manager has not yet been adopted. The latter measure might achieve the right response. The Committee needs to recognise that this would involve the Print Unit Manager spending time on the task of seeking better deals or on deciding that work should be undertaken in-house, and that this would have an adverse effect on the Unit’s productivity. In theory, however, it should be possible if some extra resource is provided to the Unit, for the Council as a whole to achieve a net benefit in financial terms, and all the evidence suggests that this would be relatively easy to do.

 

RELEVANT PLANS, POLICIES, STRATEGIES AND PERFORMANCE INDICATORS

 

Print Unit Service Plan

The Executive Committee’s policy that all printing should be sourced through the Council’s Print Unit approved on 26 March 2002.

 

CONSULTATION PROCESS

 

Consultation with the Print Unit Manager has taken place to extract figures from the Unit’s performance management system, to confirm Committee decisions and to clarify his role.

 

FINANCIAL, LEGAL, CRIME AND DISORDER IMPLICATIONS

 

The Committee should be aware that in making recommendations which affect the productivity of the Print Unit (that is if it recommends that the Unit’s Manager devotes some of his time to vetting procurement decisions) the viability of the Unit will in turn be affected because it will not be able to recover all its costs. However, it is very likely that any such adverse affect would be easily out-weighed by the Manager successfully achieving better value for Council departments by both diverting work towards the Unit and by simply obtaining better deals between external sources.

 

In keeping with all other Council services, there is a duty under the Local Government Act 1999 to achieve Best Value in procuring printing services, whether internally or externally sourced.

 

APPENDICES ATTACHED

 

There are no appendices to this report.

 

BACKGROUND PAPERS USED IN THE PREPARATION OF THIS REPORT

 

Agenda papers and minutes of the Resources Select Committee of  24 January 2002,  and 24 April 2003.

Agenda papers and minutes of the Executive Committee of 26 March 2002

 

Consultants report on the Operation of the Print Unit (2000).

 

Contact Point : Bob Streets, Compliance & Risk Manager,  ( 823622,

mail to:[email protected]

 

 

M J A FISHER

Director of Corporate Services