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RESOURCES SELECT COMMITTEE- 6 DECEMBER 2004 PROCUREMENT OPPORTUNITIES REPORT OF THE
PORTFOLIO HOLDER FOR RESOURCES |
REASON FOR SELECT
COMMITTEE CONSIDERATION
1.
This report assists
the Committee in understanding the Council’s procurement spending. As such it gives Members the opportunity to
identify potential reviews of specific procurement activities with a view to
improving efficiency and value for money.
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ACTION REQUIRED BY THE SELECT COMMITTEE 2.
To consider
the Council’s procurement spending as analysed in this report and to indicate
which items the Committee believes would benefit from further scrutiny. |
BACKGROUND
3.
Members will be
aware that a significant amount of attention is being directed towards the
subject of procurement. At its meeting
of 1 November, the Committee received a progress report on developments at this
Council, all of which are relevant to this report.
4.
The headline
issues which are relevant from that report are :
(a)
The National
Procurement Strategy which raises the expectation that local authorities will
improve their procurement performance; and
(b)
The outcome of the
Gershon review which requires local authorities to achieve “efficiency” savings
including those from improved procurements.
5.
Clearly, the
Council seeks to achieve best value for its stakeholders (indeed it is a
statutory requirement). This means in
effect, choosing the most economic, efficient and effective way of achieving
the Council’s objectives. The largest
element of expenditure by the Council is of course staff – accounting for some
55% of the Council’s gross spending. (This calculation excludes expenditure on
Housing Benefits.) Of the remainder a
significant proportion is what can be described as ‘procurement’ spending.
6.
The Council
spends approximately £73m each year on procurement from its revenue account,
and a further £16m is invested in capital assets. The nature of the Council’s business dictates that there is
enormous variety in the Council’s spending, from the every day stationery
needs, through street cleansing contracts to a £5m Waste Management
Contract. Its nature also varies – it may
be consultancy services, social care or ICT software – or a whole range of
supplies and services.
The chart below gives a very high level summary of the Council’s
procurement spending.
7.
Appendix A
provides a more detailed breakdown of non-pay expenditure. Nearly £40m of this is in respect of Housing
Benefit, and there is another £22m which cannot really be classified as
“procurement” or simply represents internal recharges. This still leaves a total of £73m of
“procurement” type spending.
8.
As can be seen
from the analysis a significant proportion is covered by contractors,
reflecting perhaps the scale of compulsory competitive tendering during the
1980s and the “mixed economy” that the Council now has. Appendix B itemises the major contracts
which the Council has. Much of what is
included will be very familiar to the Committee. It is worth noting that two areas, Care (£25m) and Supporting
People (£7m) account for 60% of “contract” spending. Members can find out more about the Council’s contracts if they
visit the Council’s website:
www.iwight.com/council/procurement/.
9.
The Committee
has previously identified printing procurement and more recently, graphic
design, as areas where it would like further research to be undertaken. Appendix A provides members with the
opportunity to examine the totality of the Council’s non-pay spending and to
indicate which items they believe would benefit from a detailed scrutiny. The Committee should be mindful of the resource
implications involved in such reviews, since it is only possible to conduct one
review in each six month period based on existing resources within the
Compliance and Risk teams. It should
also be noted that most of the Council’s procurement spending will be the
concern of the other Select Committees.
RELEVANT PLANS,
POLICIES, STRATEGIES AND PERFORMANCE INDICATORS
10.
The following
are relevant to this report :
·
Procurement
Strategy (November 2002)
·
Best Value
Review of Procurement – Improvement Plan (April 2004)
·
CPA Improvement
Plan (April 2003)
·
Contract
Standing Orders (March 2002)
·
Council Budget
2004-05
There are as yet no specific performance indicators in respect of procurement per se, although they are planned for the future. Value for money will be a key issue in next year’s comprehensive performance assessment.
CONSULTATION
11.
There has been
very limited consultation involved in preparing this report as it principally
involves an analysis of the Council’s budget.
FINANCIAL, LEGAL,
CRIME AND DISORDER IMPLICATIONS
12.
There may be
significant financial benefits from a review of individual expenditure items,
especially where there are opportunities to aggregate spending to achieve
greater spending power. Savings may
also arise through a requirement to introduce greater competition into the
procurement process.
13.
There are no
significant legal or crime and disorder implications arising from this
report. Clearly, where the council has
existing contracts, the opportunity to influence them may be limited until the
expiry of the current contract period.
APPENDICES
ATTACHED
Appendix
A – Detailed Analysis of the Council’s Non-Pay Spend
Appendix
B – Major Contracts of the Council
BACKGROUND PAPERS USED IN THE PREPARATION OF THIS REPORT
The
Council’s Budget 2004-2005
The
Council’s Website www.iwight.com/council/procurement/
Contact Point : Bob Streets, Compliance And Risk Manager, ( 3622, e-mail bob.streets@iow.gov.uk.
COUNCILLOR REG BARRY
Portfolio Holder for Resources