What can we learn from UK Local Government Procurement? Part 1.
Ever since I attended the Scottish Procurement Awards in 2016 I have gone on about how public procurement in the UK such an inspiration. In this series of posts I will share insights from procurement strategies of six cities to highlight issues that will be of interest to anyone interested in public procurement, government innovation and local economic development.
A Really Short History of UK Public Procurement Reform
In the UK three major trends coincided that shape public procurement today. First, there have been fairly coordinated reform efforts such as the Scottish Procurement Reform from 2006 leading to a strategic and collaborative approach to deliver better public services — with investments in professional skills and identity of government leadership as compared to a legacy of ‘back-office’ functions.
Second, the financial crisis had a devastating effect on local government finances in the UK with funding cut by almost 50% on average even as society needed more services due to the economic stress. By comparison, US local government been cut by about 2% in the same period.
Thirdly, localism policies have coincided with this tumultuous time, meaning that responsibilities for services like adult social care have been transferred to local councils and opened to new delivery partners, whilst regions like Scotland and Wales built their own reform programs.
This fast-changing environment generated relentless pressure to save without reducing service levels — driving focus on outcomes, innovation and new business models. Procurement took on a central role in running local governments — effectively tasked with carving out efficiencies from shrinking budgets whilst keeping the service lights on.
Six City Procurement Strategies
I reviewed these procurement strategies because outside the UK most cities rarely publish procurement strategies. I picked Nottingham ($100M annual procurement spend), Wakefield ($300M), Harrow ($200M), Liverpool ($700M), Cardiff ($500M) and Edinburgh ($600M). To start with, I chose strategies for local authorities of varying sizes with a reputation for excellence, great teams, and quirky features.
Most procurement strategies cover a five-year period, with the exception of Wakefield which opted for a 15 month period in line with its agile approach to procurement of monthly measurement and improvement. Strategies generally outline a series of aspirational goals for procurement, linking it to tangible city outcomes like better public services, sustainability, inclusion and local job creation.
Part 1. Common Goals and Aspirations
I will start out with the three priorities common to all six cities — not only by being listed as aspirations, but by having the most detailed action plans.
Local Employment and Economy
All cities put in place tangible measures and action plans to maximize local spending and job creation. Common measures included implementation of fair employment (wages, benefits, terms), measures to promote apprenticeships, training and job creation. These cities achieve an average of about 50% local spending today and measure their success in local spend, jobs and apprenticeships created.
- Level the playing-field for small business participation;
- Publish and socialize forward procurement plans;
- Increase Third Sector opportunities and participation;
- Pay promptly, collect supplier feedback and simplify processes;
- Proactive outreach, training and support for small & disadvantaged businesses.
- Wakefield embeds ‘Social Value’ at minimum 5% weighting in evaluation;
- Nottingham City Council introduced a 1% levy on city contracts that contributes to the local Jobs Fund and using LM3 to calculate local economic impact;
- Nottingham requires at least one local business to be notified for contracts below $60,000;
- Edinburgh, Liverpool and Cardiff encourage R&D and innovation from participating vendors to contribute to an overall more competitive economy;
- Wakefield reports local spending metrics on a monthly basis, where other cities do this annually.
Innovation & Improvement in Procurement
All cities made innovation a central pillar of their procurement strategies — mostly driven by cost savings, efficiency and service improvement. Innovation is applied to three main areas: 1. creating a culture that challenges the status-quo; 2. finding smart new ways deliver services (and cut spending), 3. improve procedures and procurement experiences.
- Identify innovative solutions and opportunities for revenue generation;
- Encourage early engagement (by service departments) with procurement team;
- Engage citizens and suppliers in solution design;
- Measure service performance and use evidence-based approaches to prioritize and inform decisions.
- Liverpool and Wakefield provide proactive market intelligence to departments / service areas to educate them about new models of service delivery and other innovations;
- Nottingham prioritizes early intervention spending or project design measures to reduce demand for costly specialist services and targets 10% of prevention spend for adult services;
- Wakefield introduced “Agile Procurement” to be more responsive of needs of city hall, citizens and businesses creating procurement toolkits and using monthly data on all key procurement metrics for rapid improvement;
- Liverpool and Wakefield use innovative procurement procedures to deliver better outcomes.
Capacity & Skills for Outgoing Teams
A key priority of procurement reform in Scotland was to take procurement from a clerical back-office function to an effective force for change in government. All procurement strategies invest in team skills, capacity and resources to create a professional identity and culture, positioning the team as an attractive resource for service areas.
- Invest in procurement team, capabilities and team culture;
- Specialize teams around key categories to grow excellence and professionalism in high impact areas;
- Collect vendor feedback and aim for high service ratings;
- Proactively network and provide procurement training to colleagues outside the procurement department;
- Build an outgoing and engaging team culture that makes itself useful to and trusted by internal and external stakeholders.
- Edinburgh and Liverpool proactively provide procurement training to stakeholders and colleagues outside the procurement department;
- Wakefield and Edinburgh track the number of training workshops and category meetings their teams run with businesses and others stakeholders;
- Edinburgh and Liverpool benchmark their team skills and performance against other organizations;
- Liverpool invests in contract management capacity and skills to harness the full procurement lifecycle more effectively;
Please share any corrections or feedback you might have. In my next post I cover the concept of “Commissioning” — so central to public procurement of services in the UK.
If you are interested in speaking to us about our experience implementing procurement innovation in 100+ cities in 35 countries, including the talented procurers in the UK, get in touch!
Originally published at http://blog.citymart.com.