Value for Money and the Sustainability Agenda

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Value for Money and the Sustainability Agenda

• CIPFA NE Branch
• Thursday 12 July 2007
• Gateshead
• David Wright, NE Centre of Excellence
• 0191 4332230
• davidwright_at_gateshead.gov.uk

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Presentation Outline

• What is Sustainable Procurement?
• Can EFFICIENCY and SUSTAINABILITY be reconciled?
• Why Sustainable Procurement in LG sector?
• Sustainable Procurement activity in the NE
• Sustainable Procurement Task Force
• Draft Local Government Sustainable Procurement
  Action Plan

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Definitions

• Sustainability social, economic and
  environmental well-being.
• Sustaining assuring and maintaining a
  commitment and provision.
• Procurement a process whereby organisations
  identify and meet their needs for goods,
  services, works and utilities in a way that
  achieves value for money.

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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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Efficiency v Sustainability?

• Can EFFICIENCY and SUSTAINABILITY be reconciled?
• Does SUSTAINABILITY have to cost more?
• Does value lowest cost?
• Are non-cashable EFFICIENCIES still of value?
• Is one departments added SUSTAINABILITY value
  anothers cashable EFFICIENCY?
• Is one partners added SUSTAINABILITY value
  anothers cashable EFFICIENCY?

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Why Sustainable Procurement in Local Government?

• 40bn LG sector annual procurement spend
• National Procurement Strategy for LG 2003
• Corporate Procurement Strategy aligned to
  Sustainable Community Strategies
• Gershon efficiencies - cashable and non cashable
• SPTF Action Plan
• 3rd Sector future public service delivery
• LGWP, LSPs, SCSs, LAAs and CAA
• ONE PLANET!

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National Procurement Strategy for LG 2003 -
Sustainability Drivers

• Corporate Procurement Strategy aligned to
  Sustainable Community Strategy
• Achieve community benefits
• Improve supplier engagement
• Establish agreements with the SME and 3rd sectors
• Encourage effective supply chains development
• Assure equality diversity
• Evaluate whole life costs
• Stimulate markets

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Sustainable Procurement Potential

• Community Benefits Enhancing Wellbeing
• Collaboration, Partnership Use of Resources
• Healths Corporate Citizen agenda
• Business Sector - Corporate Social Responsibility
• Economic, Regeneration Sustainability
  strategies
• Social Cohesion, Equality Diversity
• 3rd sector public service delivery
• Climate Change
• Environmental, Spatial and Rural strategies
• Waste strategies
• Health Improvement strategies
• Public Sector Food Procurement Initiative
• LAAs, LSPs and LEGIs

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Harnessing Participants

• Public Sector policy, strategy, service,
  procurers scrutiny, LSP/LAA partners
• LG Professional Organisations
• Audit Commission
• IDeA
• GOs, Government departments and agencies
• RDAs
• Environment Agency
• Procurement Consortia
• Business Sectors 3rd Sector
• Business Support Sector
• Academia

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Importance
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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
• Thanks to LB Camden

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Evidence from pathfinders

• Commitment from the top and to sustainability
  generally.
• Corporate approach related to LAs priorities and
  engaging range of services.
• Lead by example
• Use the SPTF Flexible Framework
• Plan, prioritise and set targets
• Be imaginative
• Build interest, capacity and enthusiasm
• Understand change management
• Identify and remove barriers
• Emphasise the positive
• Promote champions
• Engage with suppliers
• Provision of coordinator to unlock greater
  potential.
• Whole life costing but evidence shows short term
  costs also competitive!
• Kudos and improved reputation.

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Which of these three options is closest to your
desired proportion of cashable gains, relative to
economic, social and environmental benefits?
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14
14
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No. of Responses
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6
4
2
0
0
80 cashable, 20
50 cashable, 50
30 cashable, 70
economic / social /
economic / social /
economic / social /
environmental benefits
environmental benefits
environmental benefits
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What is your desired proportion of economic,
social and environmental benefits relative to
each other?
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NE Sustainable Procurement Activity

• Spend Analysis
• Harmonisation of Documents Procedures
• LM3
• Portal development
• NE Procurement Forum
• Newcastle City Council SP Action Plan and
  regional role
• Supplier engagement support
• Public Sector Food Procurement project
• Third Sector engagement capacity-building
• LEGI development implementation
• TW Construction
• Durham County Sustainable Manufacturing focus
• TW Step Change
• Tees Valley SMEs
• Easington Hartlepool 3rd sector feasibility

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NE Collaborative Procurement

• Understanding spend and suppliers
• Identifying non-contracted areas
• Identifying contract programmes
• Establishing coherent portals
• Identifying collaborative opportunity
• Harmonising documents and procedures
• Improving supplier engagement and visibility
• Complimenting sustainable community strategies
• Harnessing intelligence

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Value forMoney, People Place
Social, Economic Environment Wellbeing
Lowest Cost
People Place
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Value forMoney, People Place
People Place
Social, Economic Environment Wellbeing
Lowest Cost
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Value forMoney, People Place
Lowest Cost
Social, Economic Environment Wellbeing
People Place
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RCEs Sustainable Procurement Plan

• To assist and encourage local authorities to
  understand and optimise the whole life
  environmental, social and economic impacts of
  their procurement decisions, in order to improve
  the vitality and wellbeing of their communities
  in line with their Performance Plans and
  Sustainable Community Strategies.

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RCE National Strands

• Adult Care Services - SE
• Supporting People - NE
• Corporate Transactional Services - YH
• Productive Time - London
• Social Housing - London
• Fire Rescue Services - SW
• Waste Environmental Services SE
• Commodities, Goods Services National
• Construction (inc Housing, FM, Highways civils)
  - EM
• Childrens Services - WM
• Education - NE
• Culture Sport - NE
• Integrated Local Transport - NW

SUSTAINABLE PROCUREMENT
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Sustainable Procurement Task Force Action Plan

• Identified three building blocks for sustainable
  procurement
• Flexible Framework approach
• 5 key themes
• People
• Policy strategy communications
• Procurement process
• Engaging suppliers
• Measurement results
• Setting priorities
• Toolkits for procurers

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Flexible Framework
Ambition
All public sector organisations to reach Level 1
(or above) of the Flexible Framework by end April
2007 and Level 3 (or above) and Level 5 in at
least one area by December 2009
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Flexible Framework
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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 (tollgates),
  implement Flexible Framework
• Remove Barriers Budget arrangements
• Capture Opportunities Address priority areas
• Underpinned by effective MEASUREMENT and SCRUTINY

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10 Priority Spend Areas

• Construction
• Health and Social Care
• Food
• Uniforms, clothing and other textiles
• Waste
• Pulp, paper and printing
• Energy
• Consumables office machinery and computers
• Furniture
• Transport

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Top 30 spend categories for all council spend
These 4 cover 64 of the total 42 Billion
external spend
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A few examples

• Sourcing green energy
• Proactive, corporate supplier engagement
• Social Enterprise to tackle social exclusion in
  employment services
• Banning use of environmentally damaging products
• Adopting BREEAM requirements in buildings
  construction
• Increasing recycled content in construction
  projects
• Specifying and sourcing local, seasonal food
• Specifying ethical products
• Improving employment and training opportunities
• Improving specifications of vehicles
• Reducing harmful packaging
• Engaging neighbourhood-based organisations

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Draft LG Sustainable Procurement Action Plan (1)

• Councils, working with local partners, will
  pursue the achievement of social, economic and
  environmental benefits through the Sustainable
  Community Strategy, Local Strategic Partnership
  and Local Area Agreement. This will include
  leveraging the purchasing power of the partners.
• We will award contracts on the basis of whole
  life costs and benefits.
• By April 2008 we will review and, where
  necessary, reset our strategies, policies,
  priorities and targets for sustainable
  procurement and asset management against the
  Flexible Framework and we will measure progress
  through the councils performance management
  system.
• We will encourage ownership of our commitment by
  the political and managerial leadership of the
  council and engage scrutiny in the search for
  more sustainable solutions.
• We will secure appropriate training and
  development for councillors, senior managers,
  procurement, asset management and other
  professionals, and service managers.
• We will mainstream sustainable procurement and
  asset management into all of our activities
  including those carried out at arms length and
  through strategic partnerships.

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Draft LG Sustainable Procurement Action Plan (2)

• Acting collectively, councils will take the
  following action -
• We will prioritise action on construction and
  facilities management - the largest category of
  procurement expenditure in the sector followed
  by waste management, energy, transport and food.
• We will collaborate locally, regionally and
  nationally, using our purchasing power to
  transform these key markets including the
  stimulation of innovation.
• We will work together to agree a clear set of
  standards for the sector linked to corresponding
  standards under development for the rest of the
  public sector.
• We will identify exemplars of good practice
  (against the Flexible Framework) and challenge
  ourselves to raise our own performance.
• We will expect our achievements to be measured
  and recognised through the new performance
  management framework including our use of
  resources.

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Draft LG Sustainable Procurement Action Plan (3)

• We will take account of the recommendations of
  LGAs Climate Change Commission in our local and
  regional strategies.
• We will expect Government to put enablers in
  place in a timely manner to help us achieve the
  shared goal.
• We will look to the joint National Improvement
  Strategy to mobilise sector resources in support
  of this agenda including through the regional
  Improvement Partnerships/ Regional Centres of
  Excellence.
• We will ask CIPFA, together with LGTF and 4ps, to
  review guidance for local government, including
  budgeting, investment appraisal and tender
  evaluation, with regard to the consideration of
  whole life costs and benefits.
• We will invite the LGTF to play a leading role on
  sustainability in the construction and facilities
  management priority area together with 4ps.
• We will invite 4ps to examine how the focus on
  sustainability within the local government
  gateway review process can be enhanced.
• We will expect IDeA to develop the national
  programme on third sector commissioning through
  a dialogue with councils, the wider public sector
  and third sector and as an integral part of the
  sustainable procurement agenda.
•