PowerPoint Presentation Firebuy Relationships with Regions within the National Procurement Strategy

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WELCOME
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CHAIRMANS OPENING ADDRESS
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Peter Howarth Managing Director of SBV Ltd and
Chief Executive Officer of SOPO
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Selling to Local Government2007

• The Local Government procurement landscape.
• What drives the value for money agenda
• Peter Howarth
• CEO SOPO
• MD

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Selling to Local Government

• The Landscape
• The Efficiency Review
• The National Procurement Strategy
• Local Government Acts
• White Paper Strong and prosperous communities
• FOI
• EU Consolidated Directive
• ( Public Contract Regulations 2006)
• Sustainable Procurement
• Whats in it for you

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Local Government Landscape

• Local authorities consist of over 400 councils
• County councils
• Metropolitan councils
• Unitary Councils
• London Boroughs
• District / Borough
• plus 1000s of Parish councils
• Not to mention
• Police ,Fire, Housing and numerous other
  
• local public sector bodies

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Local Government Landscape

• The main services provided include
• Social Services
• Education
• Transport
• Housing/ Benefits
• Leisure /Museums /Libraries
• Economic Development
• Trading Standards /Environmental Health
• A host of other activities from Archaeology to
  Zoology

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Local Government Procurement Spend
40bn Procurement Spend 4bn cost of procurement
Local Government
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Analysis of typical County Council spend as a
of contract type
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Drivers in local government Procurement
NATIONAL/INTERNATIONAL GOVERNMENT
Sustainability Agenda
e-Government
Best Value CPA
OCLG
National e-procurement project
National Procurement Strategy
Regional Centres of Excellence
Delivering Efficiency In Local Services
EU Directives
Peter Gershons
Efficiency Review
Local Government Acts/ Guidance
EUTreaty
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The Efficiency Review

• Background
• Review by Peter Gershon /OGC
• Affects whole of public sector
• 40 billion local gov procurement expenditure
• Target 2.5 efficiency savings for 3 years to
  2008 (50 Cashable) 6.45 billion
• 3 from 2009 All Cashable

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Efficiency gains - three kinds of projects
Investing for Results
Improving Outputs
Reducing Inputs
Outputs
Outputs
Inputs
Baseline 2004/5
Inputs
Outputs
Inputs

• re engineering
• processes

• PFI
• New Technology

• use of p cards
• reduced prices

E.g.
No reduction in output levels is allowed
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The Efficiency Review

• Procurement
• Enhance scrutiny,monitoring and accountability of
  procurement
• Improve strategic management of major supply
  markets
• Better leadership of procurement
• Improved professional support and capacity
• Improved procurement of professional services

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The National Procurement Strategy

• Objectives
• Better quality public services
• Mixed Economy of Service Provision
• Continuous improvement
• Greater Collaboration
• Community Benefits
• Equality and Opportunity for staff ,service users
  and suppliers
• Market Stimulation and Innovation

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The National Procurement Strategy
Partnering collaboration
Providing leadership Building Capacity
Doing business electronically
Stimulating markets achieving community
benefits
Cultural shift

• Strategy,
• Policies
• Implementation

• Leadership,
• People
• Skills

Partnering Collaboration including stimulating
the market
Processes Systems including doing business
electronically
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The National Procurement Strategy

• Who is the Strategy aimed at
• Elected Members
• Senior Officers
• Procurement Officers
• Third Sector
• Partner Agencies
• Suppliers

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Local government Acts and Guidance

• Recently the most pertinent was the 2003 Act
• Opportunity for Prudential borrowing
• Trading powers in ordinary services
• Charging for discretionary services
• Comprehensive Performance Assessment (CPA)
• Update on Best Value and options
• Workforce issues
• Race relations implications
• They have changed the way many local authorities
  go about their business

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White Paper- Strong and Prosperous Communities

• Reinforces many issues relating to procurement,
  calls for
• A more radical approach to value for money
• Increased Collaboration
• Wider adoption of new business processes and
  technology
• Greater contestability fair and open competition
• Additional professional support

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CPA

• CPA (comprehensive performance assessment)
  introduced by Audit Commission in 2002
• Generally measures how well councils are
  delivering services
• Now introducing CPA the Harder Test with greater
  emphasis on service users, use of resources and
  value for money
• How well do councils achieve VFM and how well
  does they manage and improve it
• It has had a positive affect.

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Best Value

• The Best Value regime was introduced in 1998
• Based on principles of 4Cs, challenge, compare,
  consult and compete
• Resulted in considerable outsourcing of council
  services.
• Mixed economy approach to provision of services
• Best Value is still a very important element of
  the efficiency campaign If others can do it
  better then it is likely that an activity will be
  outsourced

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Workforce Issues

• The circular recognised the rights of workers
  in the contract procedure for example in regard
  to
• TUPE
• Information
• Involvement of Unions
• Workers rights

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Race Relations

• The Amended Race Relations Act gives
• councils a duty to
• Have due regard to
• Eliminate unlawful discrimination
• Promote equality of opportunity and good
  relations between people of different racial
  groups
• This duty applies to procurement and functions
  delivered by suppliers under contract
• A guide has been produced by CRE
• www.cre.gov.uk

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Freedom of Information Act

• The general right of access came into force
• 1st January 2005
• A public authority will be obliged to disclose
  that information in response to a request,
  regardless of the terms of any contract
• Public authorities have been told to reject
  confidentiality clauses wherever possible
• Public authorities will not be able to give
  guarantees of confidentiality which have
  previously featured in public procurement.
• Whilst certain types of information are
  exempt, the Freedom of Information Act contains a
  presumption of disclosure.

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Freedom of Information Act

• Local Authorities have been advised to
• 1. Inform all suppliers at the outset
• a) about FOI when issuing requests for
  tenders or
• placing advertisements in the
  newspapers and
• b) of the authority's policy regarding
  information it
• intends to release outside of the FOI
  Act
• 2. Ask suppliers to identify sensitive
  information, when forwarding material to them and
  advise them where disclosure of information is
  being considered under the FOI Act.
• 3 Public Interest Test in most instances
  authorities will only be able to withhold
  information if they are satisfied that there is
  an overriding reason not to provide access to
  specific information.
• 4. This opinion can however be challenged by the
  Information Commissioner

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Freedom of Information Act

• You should look on the FOIA as an opportunity
  to gain additional information about the public
  sector markets you operate in e.g. with regard
  to procurement policy and decisions
• L As will be happy to co-operate providing the
  requests are reasonable and fair and not vexatious

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New EU Consolidated Directive

• The main new procedures include reference to
• Framework Agreements
• Competitive Dialogue
• Dynamic Purchasing systems
• Reverse auctions
• Information Provision
• Social /Environmental issues
• Qualification
• Host of other changes
• The European Directives will be covered in some
  detail by later speakers

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New EU Consolidated Directive

• The Directive has been incorporated into UK law
• under the following regulations
• The Public Contracts Regulations 2006
• for England Wales and N Ireland
• The Public Contracts (Scotland) Regulations 2006
• If you are exporting to Europe you need to be
  aware
• that each nation may have a slightly different
  version dependent on national law

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The Sustainable Procurement Agenda

• The sustainable procurement task force report
• Will be covered as a separate item but it is
  important that you understand how this fits into
  Local Government policy
• It is designed to help the Business Community as
  much as the environment
• It is a hot topic and will get hotter

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Look Out For

• Lyons report on L G reorganisation
• Varney report Service transformation A better
  service for citizens and businesses, a better
  deal for the taxpayer
• Comprehensive spending review (CSR2007)
• Move to Shared Services
• PAG (Procurement Action groups)
• Treasury Review of procurement costs

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What does it all mean for you

• New Market Opportunities and Access
• Partnering Opportunities
• Greater Transparency
• Better Contract relationships
• E commerce benefits
• Requirement for Continuous improvement
• Better Information provision and access
• Sustainability of Business

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What does it all mean for you

• Improved professional relationships
• Opportunity to be innovative
• Improved transactional interface
• Share of some efficiency gains
• Greater scrutiny by and involvement of elected
  members
• A need to keep abreast of changes
• Lower business Rates !!!

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What does it all mean for you

• Today is an opportunity to get a better
  understanding of local government and its
  business culture and an opportunity to increase
  your competitiveness

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John Scowen Corporate Procurement Manager, London
Borough of Havering
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• SELLING TO THE PUBLIC
• SECTOR
• LOCAL AUTHORITIES
• Harnessing the power
• enhancing efficiency in local
• government procurement

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• METROPOLITAN 38 BIRMINGHAM
• COUNTY 34 SUFFOLK
• UNITARY 46 SLOUGH
• LONDON BOROUGHS 32 HAVERING
• BOROUGH/DISTRICT 238 BRAINTREE
• PARISH/TOWN 1000s HARKSTEAD

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• Goods and Services Cost of
  Purchasing
• 40 BILLION 4.5 BILLION

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• Buying Consortia CBC, LCSG
• Supply Side Consortia ESPO, YPO
• Central Stores Kent, Hertfordshire
• Central Purchasing Dept Essex, Havering
• Departmental Purchasing Officers

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• Office of Government Commerce OGC
• Privatised Central Stores The
  Consortium
• Distributors DBC
  (Food)
• Brokers CDS (Print)
• Other Public Sector Bodies NHS
• Council Contractors
  Capita

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• European Procurement Directives
• National Regulations and Policy
• Council Procurement Rules and Policies

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• OJEU Notices
• Public Notices
• Trade Magazines
• Specialist Magazines Contrax Weekly
• SOPO Website
• Council Websites
• Selling to Booklets
• Library
• Department of Trade and Industry
• Chamber of Commerce
• Business Link

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• Advertisement
• Letter of Invitation
• Instructions on how to respond
• Terms and Conditions of Tender
• Specification
• Pricing Schedule
• Contract Conditions
• Tender Evaluation Mode
• Interview/Presentation Arrangements
• Evaluation Tenders
• Debriefing

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• Contact relevant council department or officer
• You may be asked to fill in a Pre-Qualification
  Questionnaire (PQQ)
• Provide Financial information about your company
• Comply with Councils insurance requirements
• Provide details about your Race, Equalities and
  Health and Safety Policies
• Work within the Councils own Policies
• Proof of experience and technical ability

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• Consumables
• Indirect Services
• Capital Equipment
• Major Project Purchases
• Purchase of Direct Services

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• Government Targets
• Marketplaces
• Financial Systems
• Supplier adoption of E-Commerce

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• Need to
• Be proactive in their reaction to eProcurement
• Prepare their own eStrategy
• Consider how they can best use the eTools
  available
• React positively to their customers needs

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• To prepare and equip themselves for eProcurement
• To transform their own processes
• To respond and take advantage of new trading
  methods and opportunities
• To challenge their own suppliers
• To increase their competitiveness
• To be prepared to share the benefits

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• Stationery Advertising
• Computer Equipment/Consumables Agency Staff
• Furniture Car Leasing
• Telecommunications Vehicle Hire
• Audiovisual Maintenance Services
• Office Equipment Utility Services
• Cleaning Equipment Energy
• Rehabilitation/Special Needs Travel
• Catering Equipment Hotels
• Food Safety Services
• Electrical Goods Hygiene Services
• Clothing Office Services
• Tools and Hardware Financial Services/payroll
• Gardening/Horticulture Insurance
• Sports Banking
• Vehicles Care Contracts
• Books Teaching staff
• Building Materials Consultancy

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Terri Hudson Corporate Manager, London Borough of
Merton
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Understanding the Procurement Process in the
Public SectorPresented by Terri Hudson
MCIPSCorporate Procurement ManagerLondon
Borough of MertonTuesday 1st May 2007SOPO
Selling to Local Government
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Introduction and Overview

• The annual purchasing spend of the public sector
  in the UK is estimated at 450 billion
• Local Authorities in England Wales spend 25
  billion each year on bought in goods and services
  2.5 billion is spent on purchasing itself

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Value for Money Best Value

• The definition of Value for Money is the optimum
  combination of whole-life cost and quality (or
  fitness for purpose) to meet users requirements.
  This is rarely synonymous with price
• Local authorities are subject to the Best Value
  guidelines which embraces the concept of the
  price-quality relationship.
• Making decisions and selecting suppliers based on
  the most economically most advantageous tender
  (MEAT) rather than price alone.

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The Directives

• The EU Procurement Directives set out the legal
  framework for public sector procurement
• They apply to public authorities and utilities
  seeking to acquire goods, services, civil
  engineering or building works
• They set out procedures which must be followed
  before award of contract when its value exceeds
  set thresholds (unless the contract qualifies for
  specific exemption, e.g. on grounds of secrecy)
• The Directives have been implemented into
  national law in the UK by Regulations.
• Revised Regulations came into force on 31 January
  2006 to implement the new Procurement Directives
• These new Directives seek to clarify, simplify
  and update the previous regime and introduce a
  number of new provisions.

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The Directives

• There are now only two Directives instead of
  four these being
• Public Authorities (the State, Regional and Local
  Authorities and other public bodies)
• The Public Contracts Regulations 2006 (SI 2006
  No 5).
• The Consolidated Directive replace the previously
  separate Supply, Works and Services Directives
• Utilities (i.e. certain operators in the water,
  energy, transport and telecommunications sectors)
• The Utilities Contracts Regulations 2006 (SI
  2006 No 6)

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The Directives

• Purpose
• The purpose of the EU procurement rules is to
  open up the public procurement market to members
  of the EU
• To ensure free movement of goods and services
  within the EU
• Encourages fair and transparent competition
• To reflect and reinforce that procurement must be
  based on vfm (defined as the optimum combination
  of whole-life cost and quality to meet the users
  requirement)

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New Provisions

• The main changes are
• The previously separate public sector
  supply,works and services Regulations are
  consolidated into a single set of Regulations
• The public sector Regulations expressly provide
  for framework agreements and electronic auctions
  for the first time
• New competitive dialogue procedure allowing
  dialogue with bidders before seeking final
  tenders from them.
• Introduction of rules for Dynamic Purchasing
  Systems
• Contracts may be reserved to supported factories
  and businesses
• Provisions for Central Purchasing Bodies
• Clarification on the use of social and
  environmental issues
• 10 day standstill period (Alcatel) for
  unsuccessful tenderers to challenge contract
  award decision

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Framework Agreements

• Making explicit what already is permissible
• No volume/spend commitments but an agreement to
  use contract as and when the need arises.
• Maximum contract length 4 years
• The new Directive clarifies that contracting
  authorities may establish Framework Agreements
  either with a single undertaking, or with several
  undertakings in which case there must be at least
  three, if available.

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Electronic Auctions

• Precise specifications are required
• Definition An electronic auction is an
  electronic repetitive process used for the
• presentation of new prices during a tendering
  process.

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Competitive Dialogue Procedure
Old
New
Negotiated Procedure
New Negotiated Procedure
OR
New Competitive Dialogue
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Competitive Dialogue When to use it? (Art 29)

• Particularly complex contracts
• Authority considers that open or restricted
  procedures will not allow the award of the
  contract and
• Authority is not objectively able to define the
  technical means of satisfying its needs and/or it
  is not objectively able to specify the
  legal/financial structure of a project
• Authority is concentrating on the outputs of the
  contract and allows innovation from the market as
  to the methods of delivery through a dialogue
  process

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Competitive Dialogue How it works
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Dynamic Purchasing System
Electronic Open Procedure
Definition A dynamic purchasing system is a
completely electronic process for making commonly
used purchases, the characteristics of which, as
generally available on the market, meet the
requirements of the contracting authority, which
is limited in duration and open throughout its
validity to any economic operator which satisfies
the selection criteria and has submitted an
indicative tender that complies with the
specification
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Central Purchasing Bodies
Definition A Central Purchasing Body (CPB) is
defined in the Public Contracts Regulations as a
contracting authority which acquires goods or
services intended for one or more contracting
authorities awards public contracts intended for
one or more contracting authorities or concludes
framework agreements for work, works, goods or
services intended for one or more contracting
authorities.
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Social Environmental Issues

• Sustainability is used as basis
• for evaluation of tenders
• Exclusion for non-compliance
• with environmental or social
• legislation
• Award criteria can include
• environmental characteristics but
• must be linked to the contract
• must be compatible with EC law

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How the regulations apply to mixed Contracts,
e.g. supplies and services

• Although public sector Regulations have been
  consolidated some differences remain for works,
  supplies and services contracts
• e.g. contract for services and supplies can be
  determined by respective values of the two
  elements
• where it covers both works/supplies or
  works/services it should be classified according
  to its predominant purpose
• where contract provides for the supply of
  equipment with an operator, it should be regarded
  as a services contract
• contracts for software are considered to be
  supplies unless they have been written to the
  purchasers specification, in which case they are
  services.

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The OJEU advertising requirement

• Contracts covered by the Regulations must be
  published in a contract notice in the Official
  Journal of the EU (OJEU)
• Standard forms for OJEU are mandatory and are
  available at http//simap.eu.int
• Minimum time periods to be followed (depending on
  which procedure followed)
• Times can be reduced where
• A Prior Information Notice (PIN) has been
  published (must have be live for 52 days)
• If the documents was submitted electronically
• Where authorities offer full and unrestricted
  access to tender documents online or via an
  eTendering portal

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OJEU Procedures Timetable
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Choice of Procurement Procedure

• There are four procedures
• Open procedure
• Used in small, niche markets where all those
  interested may respond to the OJEU advertisement
  inviting tenders and tender for the contract
• Restricted procedure
• Used in large competitive markets when all those
  interested respond to the OJEU advertisement,
  submit a pre-qualification questionnaire and are
  short-listed before being invited to submit a
  tender
• Competitive dialogue
• On Particularly complex contracts, dialogue is
  entered into with bidders, following the OJEU
  notice and selection process, to develop one or
  more suitable solutions on which chosen bidders
  will be invited to tender.
• Negotiated procedure
• Under which a purchaser may select one or more
  persons with whom to negotiate terms of the
  contract. OJEU notice is normally required

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Stages in the Procurement Process

• The Regulations set out detailed criteria which
  are designed to avoid
• discrimination and to ensure that suppliers are
  treated on equal terms
• Specification stage
• use performance specifications, not technical
  specifications
• use equivalence, e.g. ISO instead of British
  Standards.
• Selection stage
• the rejection or selection of candidates, e.g.
  evidence they are unsuitable, economic and
  financial standing, technical capacity etc
• Award stage
• contracts awarded on either basis of lowest
  price or various criteria for determining which
  offer is the most economically advantageous
  (MEAT) (i.e. best value)
• Government policy favours the use of MEAT for
  contract awards

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Post Tender Negotiations

• Restrictions on the use of post tender
  negotiation under
• Open and Restricted procedures
• The European Commission has issued a statement on
  post tender negotiations in which it
  specifically rules out any negotiation on price,
  i.e.-

In open and restricted procedures all
negotiations with candidates or tenderers on
fundamental aspects of contracts, variations in
which are likely to distort competition, and in
particular on prices, shall be ruled out
however, discussions with candidates or tenderers
may be held only for the purpose of clarifying or
supplementing the content of their tenders or the
requirements of the contracting authorities, and
provided this does not involve discrimination.
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How you can win business?

• Always ensure that you complete all sections of
  the Business Questionnaire (or PQQ) and enclose
  supporting documents where prompted (e.g.
  Finances, Accreditations, Policies). Information
  asked for will be used to assess you against
  other companies.
• Where written policies and procedures do not
  exist, include a statement to support how you
  manage that activity in your organisation.
• This is your opportunity to sell yourself to us.
  Think if it as a job application. In order to get
  to interview stage, you need to sell yourself on
  the application form.
• Dont be afraid to ask for help if you are not
  sure, but ensure your queries are submitted in
  writing.

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Available Help

• Tendering
• www.sbs.gov.uk - Tendering for government
  contracts
• www.sell2wales.co.uk Free Guide to Tendering
• SME Support
• http//www.supplylondon.com/
• http//www.businesslink.gov.uk/
• Policies
• http//www.haringey.gov.uk/equal_opps_workbook.pd
  f
• http//www.haringey.gov.uk/health_and_safety_work
  book.pdf
• http//www.haringey.gov.uk/quality_workbook.pdf
• http//www.haringey.gov.uk/sustainability_workboo
  k.pdf

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Some useful websites.

• Supply 2 Gov www.supply2.gov.uk
• ODPM www.odpm.g2b.info
• OJEU http//ted.europa.eu
• Commission www.simap.eu.int
• EC law and case-law www.europa.eu.int
• BiP Solutions Ltd www.bipsolutions.com
• SOPO www.sopo.org
• OGC www.ogc.gov.uk
• LCSG www.lcsg.org
• Tenders Direct http//www.tendersdirect.co.uk/

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Questions?
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For more information

• Terri Hudson MCIPS
• Corporate Procurement Manager
• London Borough of Merton
• Civic Offices
• London Road
• Morden, SM4 5DX
• Tel [phone]
• Email terri.hudson_at_merton.gov.uk

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Richard Parsons Strategic Procurement
Manager, London Borough of Camden
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The Sustainability Agenda / CSR

• Richard Parsons
• Head of Strategic Procurement
• London Borough of Camden

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Defining Sustainable Procurement

• Sustainable Procurement is a process whereby
  organisations meet their needs for goods,
  services, works and utilities in a way that
  achieves value for money on a whole life basis in
  terms of generating benefits not only to the
  organisation, but also to society and the
  economy, whilst minimising damage to the
  environment.

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Alternative Definition

• Sustainable procurement in short using
  procurement to support wider social, economic and
  environmental objectives, in ways that offer real
  long-term benefits - is how the public sector
  should be spending taxpayers money. Anything less
  means that todays taxpayer and the future
  citizen are both being short-changed.
• Sir Neville Simms, Chair of the SPTF

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Corporate Social Responsibility

• the business contribution to our sustainable
  development goals. Essentially it is about how
  business takes account of its economic, social
  and environmental impacts in the way it operates
  maximising the benefits and minimising the
  downsides.
• CSR.gov.uk

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• the voluntary actions that business can take,
  over and above compliance with minimum legal
  requirements, to address both its own competitive
  interests and the interests of wider society.

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Sustainable Procurement National, Regional
Council Drivers

• National Procurement Strategy
• Chapter 6 Stimulating markets and achieving
  community benefits
• Securing the Future delivering UK sustainable
  development strategy, DEFRA (March 2005)
• Sustainable public procurement aims.
• Sustainable Procurement Task Force
• Action plan launch 12th June 2006
• Central / Local Government responses
• Achieving Council Objectives
• Community Strategy, Environmental Policy,
  Corporate Procurement Strategy, Equality Scheme,
  Neighbourhood Renewal Scheme

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Local Authority Powers to Promote Sustainability

• Best Value Local Government Act 1999
• Non-commercial considerations Exclusion Order
  2001 to the extent that a best value authority
  considers it necessary or expedient to facilitate
  compliance with best value
• Power of well-being Local Government Act 2000
  action results in a benefit to the community but
  doesnt directly benefit the contracting
  authority
• Community Strategy authoritys overarching plan
  on sustainable development
• Case Law Finnish Bus Case (2002)
  environmental criteria permissible in award of
  contract

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Powers to Implement Sustainable Procurement

• Key Points
• Environmental and social issues must be relevant
  to the subject matter of the contract
• Are they a core requirement of the contract?
• Consider at the earliest stage business
  case/contracting strategy
• Actions must be consistent with Government
  procurement policy based on Value for Money and
  be proportional to the value of the contract and
  the impact
• Most economically advantageous tender which meets
  the users requirement
• Use Whole Life Costing

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Sustainability in the Procurement Process
Integrating sustainability at every stage of the
process not a bolt on or an after
thought
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Environmentally and Socially Responsible
Procurement Policy

• 10 key objectives covering all elements of
  procurement
• Compliance with legislation
• Research promote best practice in sustainable
  procurement
• Sustainability appraisal and qualification of
  vendors
• Environmental social specifications
• Sustainability considerations in tender
  evaluation
• Sustainability considerations in the supply chain
• Minimise environmental impacts of contracts
• Sustainable procurement awareness raising and
  training
• Sustainability considerations in monitoring and
  review
• Promoting local BME businesses, SMEs,
  social/voluntary enterprises

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SPTF Action Plan Key Themes

• Lead by Example Managers must enforce minimum
  standards and make it clear that value for money
  is linked to sustainability
• Set Clear Priorities Define objectives, targets
  and monitor / report
• Raise the Bar Working with suppliers and
  collaboratively in regions
• Build Capacity Establish effective management
  information systems, provide training, include
  sustainability into Gateway reviews, implement
  Flexible Framework
• Remove Barriers Budget arrangements
• Capture Opportunities Address priority areas

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Prioritise Action - Spend
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Prioritise Action Scope to do More
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Prioritise Action Procurer Influence
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Flexible Framework

• People
• Policy, Strategy and Communications
• Procurement Process
• Engaging Suppliers
• Measurement and Results

• Level 1 Foundation
• Level 2 Embed
• Level 3 Practice
• Level 4 Enhance
• Level 5 - Lead

Level 1 (or above) by end April 2007 Level 3 (or
above) and Level 5 in at least one area by
December 2009
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ECA Findings

• Sustainability environment
• Policy not an indicator of engagement
• Compliance not conviction
• Accreditation drives policy
• Participation varied among sectors Construction
  most participative
• Suppliers want Council to lead
• Costs dont have to increase
• Positive about collaboration

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Whats In It For You?

• Its good for business
• Corporate reputation
• Better use of resources
• Legal compliance
• Preferred employer

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Issues

• Supply chain
• Moving goalposts
• Reality vs rhetoric
• Cost vs quality
• Womb-to-tomb / disposal etc.

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Presented by

• Richard Parsons
• Head of Strategic Procurement
• London Borough of Camden

nicole.fletcher_at_camden.gov.uk www.camden.gov.uk
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Mike Phillips Managing Director, West Mercia
Supplies
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SELLING TO CONSORTIA Mike Phillips Managing
Director West Mercia Supplies National
Executive Committee Member Society of Procurement
Officers in Local Govt. (SOPO)
104
Consortia?

• Only talking about Local Government
• Covering those which act as large trading
  operations only
• Large warehouses
• Significant fleets to enable close control of
  logistics
• Fully functioning commercially run business but
  owned by the Public Sector
• Take in bulk product, store, pick and pack and
  deliver to site

105

• The main Consortia are
• Yorkshire Purchasing Organisation -Wakefield
  (YPO)
• Eastern Shires Purchasing Organisation-Leicester
  (ESPO)
• West Mercia Supplies -Shrewsbury (WMS)
• The Consortium Ltd- Trowbridge now a private
  sector operation
• NEPO

NEPO CBC Central Buying Consortium KCS (Kent
County Supplies) Hertfordshire Supplies

106

• Nearly all England and most of UK covered
• Some regional focus but significant trading in
  areas between the main regional centres
• South West England has no public body Consortium
• Consortium growth is at the expense of the
  private sector and single Authority contracts
  which are seen as remote

107

• CONSORTIA - MAIN FEATURES
• A collaborative venture bringing together the
  purchasing requirements of a number of
  authorities
• Operate from large warehouse premises usually
  owned by the Joint Authorities engaged in the
  consortium
• Staff are employed by the Consortium
• They own and operate their own distribution fleet
  with their own operators licence (CPC)
• They are large mail order operations with highly
  developed logistics and distribution operations
• They have sophisticated marketing and selling
  skills and work to best industry practices

108
Why have Consortia?

• Collaboration is the new buzz word in the LG
  procurement space
• Allows significant buying opportunities to be
  developed
• Generate significant savings - cash and process
  (NAO cost of each transaction is 28!)
• The preferred route to market for most education
  suppliers

109

• COMMON MYTHS
• They are heavily subsidised by their parent
  Authorities
• There are no profit drivers
• Standard business costs are not paid (rates,
  rent, cost of capital)
• Staff are seconded from the parent authorities at
  no or minimum cost
• Support functions are provided at no charge
• Any losses are written off by the owners
• Their main customer groups are mandated to use
  them

110

• SIMILARITIES AND DIFFERENCES
• No 2 Consortia have the same Business Model
• Most operate as large mail order operations with
  a product emphasis directed at the education
  sector
• YPO operates a large food buying, storage and
  distribution facility including frozen foods, but
  has only recently moved into strategic
  procurement- they do have very significant call
  off contracts and are the largest public sector
  supplies operation in the UK
• ESPO are class leaders in Strategic Procurement
  with their trading arm being a smaller part of
  their business
• WMS concentrates on being the leader in
  transactional procurement, and has developed a
  significant expertise in Energy buying

111
New EU Directive recognises Consortia (2006)
Ability to combine to provide goods and services
Consortia established in law (UK)
Local Govt Goods and Services Act 1970
Education main market but other public bodies
able to join in
Enabling Act
112

• THE GROWTH OF CONSORTIA
• From small beginnings the Consortia grew into
  multi-million pound businesses
• Current T/O pa on transactional trading is
• - YPO 100 million
• - ESPO 25 million
• - WMS 15 million
• YPO and ESPO have annual T/O of 300 and 400
  million respectively
• Developing sales outside Owning Authorities
  territories helped to generate significant
  turnover growth

113
Thatcher Govt 1988 Education Reform Act
Central Govt. expected the private sector school
supply operations to move in
?
Limit Town Hall intrusion
Mandated use of in house operation now unlawful
Schools able to leave LA control (Grant
Maintained)
Private Sector expected to see dramatic growth
114

• POST EDUCATION REFORM ACT REALITY
• Private sector competitors to the Consortia hoped
  to grow under the new freedoms given to schools
• The Consortia, with their one stop shop
  facility, were ideally placed to exploit the new
  opportunities
• Schools took time to adjust to their new
  freedoms, changing only the things which had the
  greatest impact and leaving those things which
  worked for later action
• There was little motivation to move away from
  established systems of buying
• Even the poorest performing in-house supplies
  operation seemed to provide a good enough service
• Private sector educational suppliers with similar
  product portfolios to those offered by Consortia
  watched as Consortia sales outside their
  traditional territories grew substantially

115

• BESA COURT ACTION AGAINST YPO
• The British Educational Supplies Association
  undertook legal action against YPO, the largest
  of the Consortia, referring to the size and scale
  of YPOs trading in February 1996
• BESA argued that YPOs trading was now so large
  as to fall outside the 1970 Goods Services Act
• Judicial review action was against YPO but it
  threatened the commercial existence of all local
  government Consortia
• Suggestion by some BESA members is that the
  action didnt represent all BESA members

116

• THE OUTCOME OF THE COURT CASE
• His Honour, Mr Justice Owen, commented as
  follows
• It is ironic that in 1970 a Parliament........not
  averse to protection for local authority or
  state enterprise, gave local authorities powers
  which in 1996 are challenged in a free enterprise
  economy by a body representing private
  enterprise
• Ruling found in favour of YPO
• Ruling established that there could be no
  geographic limitation provided actions fell
  within the 1970 Act
• BESA appealed the decision
• June 1997, Lord Justice Brown upholds the
  previous decision

117

• NEW POWERS UNDER LABOUR
• The Labour Government has taken a much wider view
  than the Goods Services Act
• Authorities should be at the heart of their
  communities and to have powers to deliver
  community benefit
• Wellbeing Powers introduced in 2000. Authorities
  free to take any action they felt had the effect
  of improving the lot for the local citizen
• No general power of trade under the Wellbeing
  Powers
• July 2004, a new Power to Trade Act became law,
  allowing Authorities to do anything incidental to
  statutory powers they wish
• Consortia now able to deal with the voluntary
  sector and even the general public?

118

• EU PROCUREMENT RULES
• All public sector buyers, including Consortia
  buyers, are bound by EU procurement rules
• These complex and prescriptive rules are being
  overhauled and a new Consolidated Directive is
  shortly to be introduced
• Sellers have important rights under the rules
  including the right to challenge key decisions
• General view that any challenge might jeopardise
  future trading relationship, but there is little
  evidence to support this
• January 2005, Freedom of Information Act became
  law. This has extended the right to know for
  suppliers.
• The release of any information likely to damage
  an authoritys commercial interest is likely to
  be exempt

119
Weve been here before!

• 1982 John Banham reviews Central and Local Govt
  buying
• Purchasing placed centre stage - but the real
  stars lose out

1
1.50
2.00
2.50
3.00
SUPPLIER

• All buyers are told to get the same price as the
  best buyers

120
The pie is only so big
Prices migrate to a standard level All deals
become visible Danger of a one off price setting
the price level for the industry The danger of
benchmarking to the top buyer cannot be
overstated
Someone forgot to tell the supplier
121
2005- Procurement tops the Agenda again

• Government looking for significant
• savings
• All sectors of Govt now need to
• demonstrate the maximum bang for
• each 1 spent
• Each sector now chasing efficiencies-
• but are we all chasing the same savings
• The price paid is now visible through
• benchmarking and other similar price
• comparison mechanisms

Regional Centres of Excellence
122
Supply Tensions?
Regional Centre of
Expertise?
Regional Centre of Excellence
Private Sector Competitors
Central Govt OGC OGCbs
Consortia
Single Authority Procurement Units
Local Authority Customer
123
Consortia- the real Centres of Excellence?/Experti
se??

• Central Govt recognises that, so far, the big
  picture procurement issues have not been tackled
• Saving targets have been met this year but the
  strategic issues still remain untouched
• New recognition that the Consortia could be the
  delivery mechanism needed
• RC of Es are change agents not the deliverers
  of procurement services

124
Strong and Prosperous Communities

• White Paper published by Ruth Kelly in October
  2006
• Aims to give local communities more control over
  their improvements
• New ambitious efficiency gains will be
  established for 2007 onwards
• Much greater drive for Councils to collaborate
  with each other and across sectors
• Procurement will be at the leading edge of this
  further transformation

125
West Mercia Supplies (WMS)
Yorkshire Purchasing (YPO)
Eastern Shires Purchasing Organisation (ESPO)
Pro5
Central Buying Consortium (CBC)
North East Purchasing Organisation (NEPO)
126

• LONG TERM TRADING RELATIONSHIPS
• The highly competitive nature of the Consortia
  requires specialist marketing strategies
• Main criticism - supplying companies assume one
  size fits all
• Successful companies have adopted intelligent
  marketing strategies which meet the needs of the
  individual consortium but dont de-stabilise
  trading relationships with other Consortia
• Each consortium is a direct competitor to the
  others as well as to the private sector
• The education market has matured into a highly
  service and price sensitive arena
• The problem for suppliers is greater in the
  geographic hot spots of competition

127

• SELLING SKILLS
• Establish the buyers timescales and key drivers
  and work to them
• Set clear objectives prior to any meeting with
  the buyer and marshall appropriate arguments
• Dont waste time
• Anticipate particular objections likely to be
  raised and have appropriate counters
• Have a clear view of what you want to achieve
  from the meeting and conduct an honest evaluation
  of your performance
• Buyers actually enjoy a challenging meeting with
  sellers who know their products and their
  markets, and who have arrived fully prepared and
  ready to do battle

128

• PRICING STRATEGIES
• Pricing, whilst confidential, is nevertheless
  highly visible
• There is a need to develop strategies which
  protect suppliers relationships with all the
  Consortia
• Volume related pricing strategies are too
  simplistic
• Need to look at the depth and range of products
  stocked and the motivation of the buyer to
  develop new sources of supply which could become
  long term competitors
• Consider production dead spots, value
  engineering, distribution economies and unique
  product mix offerings

129

• SMEs AND CONSORTIA
• Consortia need to seek out niche suppliers,
  typically with restricted capacity
• SMEs are ideally placed to offer this service
• SMEs which offer product and service offerings
  which are in direct competition with Consortia,
  particularly in the educational sector, will have
  difficulty in establishing a trading relationship
• Consortia are also significant users of
  specialist services needed to run their multi
  million pound businesses. This presents many
  SMEs with significant opportunities to work with
  Consortia

130
Any Questions?
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Martin Scarfe London Borough of Newham
133
Talk To Suppliers

• Martin Scarfe
• London Borough of Newham

134
Suppliers - A Councils Perspective

• What Are We Doing?
• What Are you Doing?
• The Future

135
What Are We Doing?

• Government Targets
• Efficiency
• eProcurement
• Collaboration
• Regional Centres

136
Council eProcurement

• 96 Councils are e enabled
• Purchasing Cards
• Electronic Orders
• email, XML
• Marketplaces
• New Contracts with e in them!!

137
Council eProcurement

• eSourcing
• Tenders
• ALL Contracts Over 10,000
• RFQs
• ITTs
• Council websites

138
Council eProcurement

• Construction
• Social Services
• Education (non schools)
• Consultancy

139
What Are You Doing?

• Do you have a website?
• Do you use email?
• Can you receive orders electronically?
• Personal emails dont count!!
• Can you accept card payments?

140
What Are You Doing?

• Can you send invoices to customers as .pdf
  attachmentor better!!
• Have you seen Councils websites for Contract
  notices?
• Can you collaborate?

141
The Future

• ALL Council contracts over 10k electronically
• 98 of ALL transactions In/Out electronically
• Collaborative Contracts

142
Useful Information

• www.nepp.org.uk
• www.rcoe.gov.uk
• www.ogs.gov.uk
• www.YOURCOUNCIL.gov.uk

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Terry Brewer Head of Procurement, London Fire and
Emergency Planning Authority
145
Selling to the Emergency Services

• Terry Brewer Chief Executive Officer
• Firebuy

146
Outline of Presentation

• About Firebuy
• About PEPS
• Purpose of selling to guide
• Procurement processes rules
• Firebuy policies
• Tendering procedure
• How suppliers can apply
• Procurement opportunities

147
About Firebuy -1

• Audit Commission / Cap Gemini
• Step change through central focus
• NPS launched November 2005
• Firebuy responsible for implementation
• Work commenced on next strategy

148
About Firebuy - 2

• Formally commenced on 1/4/06
• Non-Departmental Public Body and company Limited
  by Guarantee
• Will be a public corporation from 1/4/08
• Chair 6 Directors Open appointment
• Ex-officio Directors CFOA, LGA LFEPA
• Funding position

149
About Firebuy - 3
150
About PEPS - 1

• What is PEPS?
• PEPS is the Centre for Procurement Excellence in
  the Police Service. Our purpose is to facilitate
  improvements in police procurement by promoting
  and facilitating collaborative working and best
  practice.PEPS Strategy
• PEPS will work with stakeholders to deliver
  procurement efficiency and value for money. and
  will develop capacity and capability to embed and
  sustain excellent procurement performance across
  the Service. In other words. we want to take the
  best of what we do in procurement and help
  everyone do it better everywhere in the Police
  Service.

151
About PEPS - 2

• PEPS High Level Goals-
• Coordinate the delivery of procurement value and
  efficiency targets across the Police Service
• Identify and implement opportunities to develop
  national standards, specifications and contracts
  
• Lead or promulgate the development of
  collaboration and aggregated procurement across
  the sector and beyond
• Reduce duplication of effort and transaction
  costs
• Develop and promote a vision for the organisation
  and management of procurement
• Identify and promulgate best practice in
  procurement processes, techniques and approaches
  
• Develop procurement staff capability and
  competence through professional development
• Coordinate an approach to management information
  and benchmarking that supports the commercial
  objectives of the Service.

152
About PEPS - 3
153
Selling to the Emergency Services

• Police forces or fire and rescue services will
  typically buy through the following routes
• Use of a OGC / purchasing consortium arrangement
  or direct purchase for commodities
• Use of a Firebuy contract or collaborative police
  force contract for specialist requirements
• However this is not a hard and fast rule!

154
Procurement Processes Rules

• Procurement activities reflect guidance from OGC
• All procurements comply with relevant EU or other
  international procurement rules
• Value For Money based on most economically
  advantageous tender
• For major procurements full options appraisal
  carried out including financial checks

155
Typical Tendering Procedures

• Current threshold levels
• Up to 5,000 minimum 1 quotation required
• 5,000 - 20,000 minimum 3 quotations required
• 20,000 - 75,000 minimum 3 tenders required
• 75,000 to EU threshold minimum 5 tenders
  required
• Over EU threshold full process compliance

156
Look for Selling to Guides

• One stop shop for suppliers
• Place for suppliers to find out information about
  future procurement opportunities
• Information about procurement processes and rules
• Explains tendering procedures
• Give details of how suppliers (particularly SMES)
  can apply
• Use supply chain for procurement solutions
• Encourages suppliers to contact with new products
  or innovations
• Details of procurement contacts

157
Policies that you need to be aware of

• Health Safety
• Equalities Diversity
• Environmental
• Sustainabilty

158
How Suppliers can apply

• Suppliers should view websites for future
  procurement opportunities
• In particular look at Blue Light Database
• Encourage smaller organisations to work in
  partnership with national suppliers
• Key factor is market awareness for both suppliers
  and procurers
• Procurers are seeking best value for money
  solution using the supply chain

159
Procurement Opportunities

• Spreadsheet with future opportunities
• Encourage suppliers to profile new products
• Key procurement contact listed
• Information on timescales/future action required

160
Summary

• Emergency services very similar to rest of public
  sector
• Similar needs plus specialist products

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Nicol Thornton East of England Regional Centre of
Excellence
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THANK YOU FOR ATTTENDING
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