Procurement Strategy 2019 to 2024

Foreword

This strategy explains how we will continue to develop and benefit from the professional expertise of our Procurement and Commercial Services team over the next five years and the systems they use to make sure Leeds City Council delivers on its value of ‘spending money wisely’.

Whether you are a councillor, senior manager or budget holder at the council, or one of our suppliers or partners, reading this strategy will help you understand what the council is setting out to achieve through how we procure goods and services – and how this affects you. For everyone else, including Leeds residents and council employees, it is a reassurance that we will continue to spend public money in a way which is fair, accountable and gets the very best value.

We believe ‘spending money wisely’ is about more than efficiency, savings and managing risk. For example, the council spent in excess of £800 million during 2017- 18 on the procurement of its goods, works and services. That level of spending each year can have a massive influence on the big issues that face the city, as outlined in the Best Council Plan, and city strategies for Inclusive Growth and Health & Wellbeing.

Leeds is a compassionate city, based on a strong economy. Our refreshed procurement strategy aims to support both of those sides to the city. The goods and services we chose to buy and commission, the suppliers we select, the influential relationships we maintain with those suppliers, and the commercial opportunities we offer can strengthen the local economy and improve the wellbeing of local people.

As well as the expertise and experience of our successful team, we have used the National Procurement Strategy for Local Government in England 2018 toolkit to put together a strong 5-year plan. This combined expertise and good practice has allowed us to identify five areas of focus. Putting our energy into these areas will have the biggest impact on supporting the city’s aims and ambition. These areas of focus include the two which have been the cornerstones of our success in recent years:

• Value for money, and efficiency
• Governance – legal compliance and managing risk

and build on these with three more, designed to get the most ‘social value’ from our spending power, supporting a thriving city that truly cares about its people:

• Social Value and the Foundation Living Wage
• Commercial opportunities
• Supplier engagement and contract management

We have also used the National Strategy toolkit to identify which parts of our own service and systems to strengthen, in order to get the best results for the city from our strategy. These so-called ‘enablers’ include:

• Developing talent – procurement professionals
• Exploiting digital technology;
• Enabling innovation;
• Embedding change

All the detail about our plans in these areas is in the strategy document.

Finally, the toolkit has given us ways to measure our strength in the areas of focus and the enablers, now and in the future. This will allow us to set realistic targets and measure and report on our improvement.

1. Introduction

1.1 The council’s successful procurement strategy has focused on:

• Efficiency - improve outcomes and value for money from the goods, works and services that it buys; and
• Governance - ensuring the council has appropriate and proportionate controls, systems and standards to manage procurement risk and to comply with legal requirements.
  

1.2 Success has been strengthened by focusing on category management and a whole lifecycle approach, with clear accountabilities, openness and transparency.

1.3 Category management is still considered the best approach as a starting point for procurement activity within the council. Category management allows procurement resources to focus on specific areas of spend which enables category managers to focus their time and conduct on in depth market analysis and decisions on behalf of the whole organisation.

1.4 However, this focus on efficiency and good governance needs to be complimented going forward with a much greater focus on delivering maximum social benefits locally from council spending thereby helping the council achieve its overall strategic objectives set down in the Best Council Plan.

1.5 This document sets out the council’s procurement strategy for the next 5 years (2019-2024) and is centred on our findings using the National Procurement Strategy for Local Government in England 2018 toolkit. Building on the previous strategy, it identifies 5 “key areas” of focus. In addition, it identifies four “enablers” which are necessary if we are to achieve the ambitions identified in this strategy. Full details are set out in Appendix 2.

1.6 Over the life of this strategy we will review progress towards the stated goals and consider key issues that may arise (e.g. Brexit) so comments, queries, or suggestions for improvement are welcome. Please send an email to PACS.Administration@leeds.gov.uk.

2 Background

2.1 The council spends approximately £800 million externally each year, across both revenue and capital. We use a variety of contracts, from simple purchase orders to long-term partnership agreements. Some contracts are with a single provider, others are frameworks or dynamic purchasing systems with multiple providers.

2.2 The council procures a very wide range of goods, works and services, including front-line services and back-office support. Examples include foster care, home care, homelessness support, energy, vehicles, seeds, catering products, building works, highways repairs and IT software.

2.3 As noted at paragraph 1.2, the council utilises a category management approach to procurement. A map of our ideal procurement categories is included at Appendix 1. Unfortunately, resource implications mean we are currently not able to concentrate on all categories as much as we would like. This may have an adverse impact on the council’s ability to obtain value for money in terms of both costs and in respect of fully delivering the wider outcomes that could be achieved through increased social value. Our ambition over the life of this strategy is to fully resource each of these categories – see section 6.

2.4 This strategy builds on the council’s achievements under its previous procurement strategy, a major part of which was focussed on making savings. Whilst we operate in a challenging environment, in which savings will always be a factor for consideration, we need a strategy which also focuses on achieving additional outcomes from our procurement activity, at no extra cost. By leveraging our procurement expenditure and engaging with suppliers we can help the council enhance our communities through increased social value.

3. Our approach

3.1 This strategy is not simply about continuing along the same path. All procurement activity (especially re-procurement of an existing contract) should begin by asking the question – “why?”

Why are we proposing to undertake this procurement? All procurement activity should help the council achieve its vision:

“…for Leeds to be the best city in the UK: one that is compassionate and caring with a strong economy, which tackles poverty and reduces inequalities. We want Leeds to be a city that is fair and sustainable, ambitious, creative and fun for all with a council that its residents can be proud of: the best council in the country”

and help deliver the council’s strategic ambitions detailed in the Best Council Plan, namely:

• Inclusive growth: We will use the procurement and commissioning process to embed the twelve big ideas set out in the Leeds Inclusive Growth Strategy – 2018-2023
• Health & wellbeing: We will use our contracting opportunities to support healthy, physically active lifestyles allowing more people to manage their own health conditions in the community and by enabling people with care and support needs to have choice and control
• Child-friendly city: We will work with businesses and employers to encourage investment and provide opportunities to children and young people, developing their skills and education through improved careers advice, mentoring and work experience
• Safe, strong communities: Through robust contract management we will ensure our contracts deliver quality services to end users and have built-in flexibility so that we can respond to changing local needs quickly and efficiently
• Housing: The council has adopted an ambitious house building plan and is committed to delivering sustainable development through the future construction procurements we undertake
• Climate change: In order to combat climate change in line with the city’s commitments
• Culture: We will contribute to growing the culture and creative sector through effective procurement in support of major events and attractions at various venues throughout the city
• Age-friendly Leeds: We will help make Leeds the best city to grow old in by focusing on delivering accessibility to older people in the works and services being procured

Why are we procuring in this way? The answer should not be “because we always have”, but should consider the best and the most efficient way to achieve the outcomes we are seeking.

3.2 In order to help the council achieve its vision and strategic ambitions we will concentrate on the five key areas identified below and break them down into a number of priority deliverables, against which we will measure progress and achievements.

3.3 The key areas for this procurement strategy are:

• Value for money and efficiency. We will: ask “why?” and challenge whether procurements align with the council’s vision and ambitions; seek to ensure the council gets maximum value from every pound that is spent through best value and innovative procurement practice; adopt a consistent corporate approach to commissioning; adopt a clearly identified savings strategy; and continue a category management approach to procurement
• Governance. We will ensure compliance with the Contract Procedure Rules, the council’s Constitution and public procurement law (including the Public Contracts Regulations 2015) in order to manage procurement risk and to comply with legal requirements
• Social value and Foundation Living Wage. We will seek to improve economic, social and environmental wellbeing from our contracts, over and above the delivery of the services directly required, and at no extra cost. In addition, Leeds City Council has committed to paying the Real Living Wage promoted by the Living Wage Foundation to all its employees since April 2018. The Council is committed to promoting the Real Living Wage across the city not only through its example but by using its influence with businesses in the city. To this end we will seek to implement a procurement policy that explicitly encourages businesses to pay the Real Living Wage to all their employees as a minimum
• Commercial opportunities and innovation. We will seek new ways to develop and create commercial opportunities through procurement and commissioning activities, not just by promoting revenue generation, but by looking at how we engage with, and influence, the marketplace and potential suppliers in order to drive innovation and develop new ideas around service delivery
• Strategic supplier engagement and contract management: We will manage our strategic supplier relationships through continuous engagement with them. We will also ensure effective management of all contracts from beginning to end in order to control costs, obtain the quality outcomes and performance levels set out in the contract, and minimise the level of risk

3.4 The above are all areas where we believe Procurement and Commercial Service (PACS) can make a major contribution. This will be achieved:

• through strong leadership and best use of resources;
• by working closely with commissioners, budget holders, and suppliers; and
• through working in collaboration with our partners in the wider public sector and other stakeholders

4. Our strategy – key areas

4.1 We will build on our strong foundations: quality and value through efficient and effective procurement, and best practice in governance.

4.2 However, through our review of the council’s procurement maturity described in section 5, we have recognised other key areas that we need to address in order to achieve the priorities set out in section 3.

4.4 Value for money and efficiency

We will ensure the council gets maximum value from every pound that is spent through best value and innovative procurement practice; we will continue to apply a consistent approach to commissioning and category management where related purchasing is grouped together to take advantage of better intelligence of our buying needs and of what providers have to offer, and to support bulk buying where appropriate, in order to improve quality, savings and efficiency.

In addition, we will continue to adopt a whole lifecycle approach, which starts from asking “why?” We will support commissioners to assess needs and analyse options to ensure that procurement activity aligns with the council’s values and ambitions (e.g. asking whether we need to procure this service and, if we do, are we procuring it in the best, most cost effective way?). This support continues, through preparation and procurement, to mobilisation, contract management and exit, to ensure quality outcomes and value for money are achieved.

To identify procurement savings we will be working closely with Corporate Finance, internal audit and service areas to create a realistic methodology and to define responsibilities for the tracking and recording of savings both in terms of value and social outcomes. This will be achieved through monitoring budgeted values against actual tendered contract values, monitoring contract expenditure and volumes, with contract managers routinely reporting on savings, including social value outcomes.

4.5 Governance

We will comply with legal requirements through our Contract Procedure Rules, the council’s Constitution and public procurement law (including the Public Contracts Regulations 2015). We will keep up to date with relevant legislative changes, procurement case law and other evidence of best practice. We will ensure that all council officers involved in procurement activity are aware of their obligations in this regard. We will take pro-active measures to protect against fraud.

In addition we will ensure compliance with the council’s financial regulations, budgetary control mechanisms (such as “no purchase order, no pay”) and officer schemes of delegation for the procurement of all goods, works and services. Further, we will continue to engage with members and senior managers by championing the impact of good procurement practices, developing and maintaining the council’s Contracts Procedure Rules and together ensuring a professional and consistent approach through the continued development of good practice documents and toolkits.

We will facilitate cross-council discussions relating to procurement through the Corporate Procurement Group, Procurement Practitioners Group, attendance at various board meetings and commissioning groups particularly in relation to sharing lessons learnt, best practice and innovations, and we will facilitate access to appropriate training. On a regional level we support programme management of, and participate in, the Strategic Procurement Group (SPG), which is attended by the Heads of Procurement from public bodies through the Yorkshire and Humber region, and which provides a forum and voice for regional procurement collaboration. Collectively the SPG feeds back into the National Advisory Group for Local Government Procurement, which in turn reports to the Local Government Association. Category Mangers will also attend category sub-groups (such as Adults and Health) set up via the SPG.

We will ensure we have effective risk management processes in place. New legislation may provide additional challenges and most notably Brexit will require amendments to the Public Contracts Regulations 2015, but these are not expected to be radical. It is anticipated that the key challenges in this area over the coming few years will be managing supply chains and we will be looking at ways to deal with these going forward.

4.6 Social value and Foundation Living Wage

We will seek to improve economic, social and environmental wellbeing from our contracts, over and above the delivery of the services directly required by exploring how those activities can deliver the council’s wider strategic outcomes at no extra cost. Such activities will include maximising local employment opportunities, helping to raise skills, improving pay and aligning contractors to our broader strategic goals, such as tackling climate change.

We will seek to influence our suppliers to pay the Foundation Living Wage to all their employees working on our contracts as a minimum. It is recognised that pursuing such an initiative may mean increased costs to the Council as contractors could seek to incorporate such increased costs as part of their bid. However, it is anticipated that paying the Foundation Living Wage will increase employee motivation, improves retention rates and keeps staff healthy, which in turn improves the service provided to the Council and positively impacts demand on health and care services, and welfare claims.

We will support the local economy by ensuring tendering opportunities are made more attractive such that local, small and medium sized enterprises and voluntary, community and faith organisations can bid for work either individually or as part of a consortium. We will also provide support to small and medium sized enterprises and voluntary, community and faith organisations, including regular market engagement sessions, training and greater publication of tendering opportunities.

Much progress has been made in respect of social value through procurement over recent years and the New Procurement Strategy provides us with an opportunity to go further and achieve maximum social value through the council’s procurement activity. There is already a positive commitment on behalf of directorates to obtain social value through their procurement activity and by increasing the coordination in our approach to social value across the council even greater achievements can be made. In order to achieve maximum social value across the council when procuring goods, works and services we have worked with colleagues in Communities and Environment to start development of a Commissioners Social Value Toolkit. The Commissioners Social Value Toolkit identifies employment and skill as a priority which is required to be considered as part of all procurements, alongside “good employer ambitions”. Two other priorities will be identified in due course. The Commissioners Social Value Toolkit will also provide ideas for commissioning economic, social and environmental added value – such as, increasing employment opportunities and routes into employment, spending the Leeds £ in Leeds, improving health and quality of life, building strong communities and reducing negative environmental impacts.

We will take the lead on coordinating and driving the council’s approach to seeking to deliver social value, including:

• further developing the Social Value Toolkit in order to improve the consistency and transparency of the council’s requirements for ‘added value’ from its procurement activity; and
• developing Social Value Guidelines for procurement/commissioning staff which will require consideration of the council’s wider ambitions when undertaking all procurement and commissioning activity

Such activity will complement the council’s commitments under the Social Value Charter.

4.7 Commercial opportunities

As funding shrinks we understand the need to explore new ways to maximise income. In order to protect valuable frontline services and ensure positive outcomes for local communities we will work with directorates to take a more commercial and entrepreneurial approach in the activities we undertake by using our assets wisely, offering our services to others across the public and private sectors and selling our commodities to generate income.

We will work with directorates to identify “gaps” in service provision and exploit any new commercial opportunities through market shaping and/or shared working with development partners.

Whilst this procurement strategy concentrates on the priorities that are important to Leeds, the council is committed to operating in an environment where all opportunities for efficiencies and economies of scale are considered and, where applicable, applied. This may include the sharing of resources and/or commitment to specific joint projects/contracts across Leeds and the wider Yorkshire and Humber region. In particular, we will continue to play an active role in SPG.

4.8 Supplier relationships and contract management

We recognise that effective management of strategic supplier relationships can deliver a range of benefits. We will undertake pre-market engagement, develop existing supplier relationships and engage with suppliers in areas of deprivation within Leeds.

We will analyse the data and intelligence collected to drive supplier performance and achieve improved outcomes for the public, added social value, reduced cost, reduced risk and innovation.

Effective contract management is key to ensuring that council contracts deliver the outcomes required, and provide a quality service at the right cost and minimal risk. Failure to manage contracts properly may lead to inefficiencies, poor contractor performance or commercial failure which can seriously damage the council’s reputation and its ability to deliver effective services and support to our communities. It is therefore essential to budget time and resources in this area and we will work with our commissioners to update the contract management toolkit to ensure it is fit for purpose, and provides the guidance and support required to effectively manage contracts.

5. Enablers

5.1 As noted elsewhere, the key areas of “Value for Money and Efficiency” and “Governance” have formed part of the council’s procurement strategy for several years. As such, work has been ongoing to recognise and deliver savings opportunities in respect of procurement. Similarly, the council has made great strides in adopting best-practice governance in respect of procurement, and this has supported the improvement in delivering spend which is “on contract” and reducing reliance on waivers of the council’s CPRs. As part of this strategy we will work with colleagues across the council to further improve in respect of these two key areas, and deliver the commitments at sections 4.4 and 4.5.

5.2 In order to understand areas where our procurement practices can be developed and enhanced we have worked through the themes and key areas set out in the National Procurement Strategy for Local Government in England 2018 (National Procurement Strategy) to identify the council’s current level of procurement maturity. Using the National Procurement Strategy toolkit has helped us to:

a) identify a further three key areas of focus for our procurement strategy (“social value”, “commercial opportunities” and “Supplier relationships and contract management”); and

b) identify the level of maturity we believe the council can realistically achieve over the next five years in relation to these areas.

5.3 In determining the council’s baseline level of maturity in these three areas, the Local Government Association indicated that scoring should be done on the basis of the weakest level of attainment in the council rather than attempting to arrive at an average. In order to determine where the weakest level lies within the council, we consulted with commissioning/procurement staff across the council and the current maturity level has been set at the weakest level within the council. The results are attached at Appendix 2.

5.4 Using our findings at Appendix 2 as a baseline, we have identified the maturity levels we realistically believe we can achieve in these three new key areas by 2024.

5.5. We have also devised a number of KPI’s against which to measure our progress towards our goals in respect of all five key areas. These KPI’s are set out at Appendix 3.

5.6 Finally, we have adopted the “enablers” identified in the National Procurement Strategy which need to be addressed and developed in order to support the council’s achievement of these ambitions and KPIs:

• Developing talent – see section 6 (Procurement professionals);
• Exploiting Digital Technology;
• Enabling innovation;
• Embedding change

5.7 As we did in respect of the three new key areas of this strategy, we have also utilised the National Procurement Strategy toolkit to identify our current maturity level as a council in relation to each of these “enablers”, along with how we can realistically improve over the next five years in our application of these “enablers”.

6. Procurement professionals

6.1 To deliver a world class procurement service requires appropriately skilled and experienced staff. We will continue to support the training and development of our staff to maintain and raise standards across the profession. This will include informal coaching and training, and more formal training and professional qualification through CIPS (the professional body) and QA (the council’s training provider).

6.2 Procurement and commissioning staff across the council will also continue to share issues, lessons, best practice and innovations.

6.3 There are clear accountabilities, and therefore roles and responsibilities, which will underpin successful working between the procurement and commissioning service and individual directorates:

• Each directorate remains accountable for the procurements and commissioned services that they need, to deliver the services and secure the outcomes that they are responsible for. In some cases this is joint procurement with partners such as the health service or procurement on behalf of other directorates, for example energy
• The directorates own the preparation of the specification and the evaluation criteria, and take all decisions in relation to the procurement, in line with the governance procedures and decision-making rules laid down in the constitution. This includes the proportion of the budget to be allocated to the contract, the decision to commence a procurement, and which organisation to award the contract to. The directorate is then accountable for mobilising, managing, and exiting the contract. PACS are accountable for providing a central source of expertise, advice and support and providing check and challenge as appropriate
• It is imperative that directorates involve PACS at the earliest opportunity to ensure the most appropriate procurement route is identified and used. PACS will work with directorate colleagues via the established category teams, to ensure consistency of approach and advice
• PACS will ensure that procurement staff have appropriate knowledge and experience in respect of the relevant category of spend. Each category team will include specialist staff with high levels of expertise who can provide support to directorates in developing strategic approaches and in delivering highly complex or sensitive procurements, in addition to staff who can support more straightforward procurements

6.4 As noted elsewhere, resource implications mean we are currently not able to concentrate on all categories as much as we would like, which may have an adverse impact on the council’s ability to obtain value for money in terms of both costs and in respect of fully delivering the wider outcomes that could be achieved through increased social value. We aim to address this by creating new category manager posts, and providing procurement training/ apprenticeship opportunities (as identified at sections 6.1 and 6.2) in order to provide staff with opportunities for career development.

6.5 The category teams will have access to specialist in-house commercial expertise (legal, financial and technical), and support in using the online tendering system.

6.6 The procurement function will act as a central source of management information for the council with respect to the council’s procurement activity and will report annually to the council’s Corporate Governance and Audit Committee, providing information and assurance on procurement policies and practices within the remit of the Chief Officer Financial Service, including spend analysis. It will be responsible for maintaining the council’s electronic tender system, and for publishing a register of contracts awarded and a calendar of the council’s planned procurement activities.

7. Implementation

7.1 The sections above describe the approach and proposed future shape of the council’s procurement activity.

7.2 It is anticipated that it may take two to three years to:

(a) achieve the maturity levels we have set ourselves at Appendix 2;

(b) ensure that the enablers set out at paragraph 3.4 above are embedded in day-to-day working practices, and achieve the further enabler maturity levels detailed at Appendix 2; and

(c) ensure the council as a whole has the capacity and capability to embed good procurement practice and be an exemplar council going forward offering assistance to other councils who may wish to improve their maturity levels.

7.3 We will monitor our progress in delivering this strategy and provide a review of the strategy, particularly of the KPIs set out at Appendix 3, in two years.

7.4 Independent audit and assurance will be sought to challenge and test on a sample basis both the system as a whole and compliance with it, in order to identify (and correct) any remaining weaknesses.

7.5 This procurement strategy will be reviewed annually by PACS in consultation with directorates, to ensure lessons learned and feedback from stakeholders continues to be captured. We will ensure the documents reflect any changes in legislation/case law developments, guidance and best practice, this will include any changes due to Brexit. The National Procurement Strategy for Local Government in England 2018 is a “living strategy” such that redundant maturity indices can be removed and replaced by new indices that reflect new or changed priorities, and this strategy adopts the same approach.

8. Contacting us

8.1 If you would like to read more about the council’s procurement activity, please visit our webpage www.leeds.gov.uk/commercial-opportunities

8.2 If you have any comments or queries, or suggestions for improvement, regarding procurement, please send an email to cpu@leeds.gov.uk

8.3 If you would like to tender for council contracts, please register at https://www.yortender.co.uk/