Investment Reform Working Group “Government Policy & Joint Procurement” Steve Patterson Procurement Development Manager Scottish Procurement Directorate.

Investment Reform Working Group

“Government Policy & Joint Procurement”

Steve Patterson

Procurement Development Manager

Scottish Procurement Directorate

Agenda

• Procurement reform : McClelland Report & Conclusions– Vision– Major challenges, key enablers & critical success factors– Structure SPD & Programme Governance Structure– Major challenges

• Enabling the strategy – Centres of Expertise – Policy & Guidelines– Professional People & Training– Tools

• Best Practice• Technical Enablement & Management Information

– Competitive Supply Base

• Questions» 20 minutes

Public Procurement Reform in Scotland Report & Recommendations, John McClelland CBE,

Observations: • Significant room for VFM improvement;• Opportunity to redirect savings to front line services;• Better procurement would drive better quality goods / services & reduce risks;• Potential to increase collaborative procurement.

Summary Conclusions• Ministerial support a prerequisite;• Programme board to support implementation of change programme;• Some progress made but not consistent across public sector;• Governance issues require urgent action:

– All procurement activity by staff in procurement team or with specific delegated authority to procure;• Procurement needs a higher priority;• Need for greater collaboration; (not just in joint contracting).• Investment required on resources and skills;• Central leadership needed with procurement policy being mandatory;• eProcurement Scotl@nd is a fundamental platform – accelerate implementation.

McClelland Report: http://www.scotland.gov.uk/Publications/2006/03/14105448/24

Context: Public Sector Procurement Vision

• Public Sector spend on goods and services ~ £8bn

• Procurement Scotland focus on national (Category A) commodities ~ £1bn

Category A

Category B

Category C1

National Procurement

Single interface with public sector facilitates

efficiency/competitiveness of suppliers. e.g. IT HW, SW,

Telecoms, Utlities, Professional Services, Corporate Services.

Sector Specific CGCoPE

APUC; Scotland Excel; NHS National Procurement

Regional Collaboration at local levele.g. Tayside Consortium

Interface via sector Centres of Expertise.

e.g. Social Care, Medical Equipment.

Category C

Interface coordinated via regional hub e.g.

Printing (collaboration across organisations)

ProcurementScotland

Local 185 Major procuring organisations;

In excess of 900 in total; Many, many local purchasers/requisitioners….!

Many contracts will exist at a local level.

Cat A –National Contracts

Cat C –Local Contracts

Cat B –Sectoral Contracts

ReformProgramme

ReformProgramme

People& Skills

Manage-mentInformation

Best Practice

Policy &Guidance

CompetitiveSupplyBase

e-Tools

HealthBoards Central Government

LocalA

uthorities

Fire & Rescue

Servic

es

PoliceServices

Uni

vers

ities

& C

olle

ges

NHSNational

Procurement

Fire

ScotlandExcel

APUC

CGCoPE

Police

Cat A –National Contracts

Cat C –Local Contracts

Cat B –Sectoral Contracts

ReformProgramme

ReformProgramme

People& Skills

Manage-mentInformation

Best Practice

Policy &Guidance

CompetitiveSupplyBase

e-Tools

HealthBoards Central Government

LocalA

uthorities

Fire & Rescue

Servic

es

PoliceServices

Uni

vers

ities

& C

olle

ges

NHSNational

Procurement

Fire

ScotlandExcel

APUC

CGCoPE

Police

Vision : Public Procurement Reform Programme

Scottish ProcurementDirectorate

Scottish ProcurementDirectorate

Scottish Procurement Directorate

Procurement Policy & Development

Construction Advice & Policy

CGCOPEeProcurement

ScotlandProcurement

Scotland

Chair John Swinney MSP,

Cabinet Secretary for Finance and Sustainable Growth

Chair John Swinney MSP,

Cabinet Secretary for Finance and Sustainable Growth

Chair Jim Mather MSP,

Minister for Enterprise, Energy and Tourism

Chair Jim Mather MSP,

Minister for Enterprise, Energy and Tourism

Public Procurement Reform Governance Structure

Procurement Scotland

ePS CGCope

Scottish ProcurementDirectorate

FirePolice

ScotlandExcel

APUCNHS

Nat. Proc.

Delivery Group

Advisory Group

Reform Board

Major Challenges

• Major change programme; • Evolving governance;• Organisations at different stages of development;• Conflicting priorities;• New terminologies / ways of working;• Resource constraints, changing roles & expectations;• Political & media focus; • Differing perceptions/expectations on vision, progress and timeline;• Need to parallel process ‘set up/development’ with ‘delivery’;• Ensuring appropriate engagement and communications in complex

stakeholder environment.

Key Enablers & Critical Success Factors

• Ministerial endorsement and direct support;

• High level sponsorship and champions at the top and locally;

• Increased visibility/expectations of procurement and its contribution;

• Investment in procurement skills development;

• Common vision & approach;

• Key enabling platforms! (MI, toolkits, collaborative tools/systems);

• Agreed ways of working/protocols & stakeholders willingness to engage & interact constructively; and

• Passion and enthusiasm for driving the programme, upskilling and sharing learnings openly.

Enabling the Strategy - Centres of Expertise

• To enable and drive procurement capability and expertise;

• To facilitate and drive best practice:

– Adherence to legal, EU and policy requirements;

– Benchmarked and consistent strategic procurement processes (toolkits);

– Responsible procurement;

– Process efficiency & eEnablement;

– Performance management;

– Supplier engagement / SRM / supply chain management; and

• To deliver collaborative national/sector procurement strategies and contracts that deliver best value for Scotland/sector for assigned commodities.

Enabling the Strategy - Procurement Policy & Guidance

• Procurement governance, basic standards and legal/EU obligations at the heart of effective procurement;

• Importance of central procurement body to support policy development and future direction of procurement;

• Understanding and commitment across the business:– Documented basic or acceptable standards– Audit/Review Function – Capability Assessment Tool Deployed – Improvement/Development Plans

• Procurement – Procurement Regulations (EU, Legal, Treaty, Case Law)– Procurement Policy & Practice (Policy Hand Book, Policy Guidance Notes, CSR/Ethical

considerations, Best Practice Toolkits, Sustainable Procurement Action Plan)– Procurement/Spend Controls & Supporting Governance, DPA.

• Suppliers– Commitment to suppliers (Suppliers’ Charter, 6 Step Plan)– Right of supplier re-dress on policy/practice

(i.e. Single Point of Enquiry, Courts, Legal, Press, Ministers....)

Enabling the Strategy (The Tools)- Best Practice & Ways of Working

The Toolkit: • is online facility with key steps, supporting tools & templates to support effective procurement;• does not replace need for investment in skills development;

Supports procurement process and how to build an understanding of:- Market, supply and political drivers;- Product and supply chain characteristics;- Opportunities for innovation;- Total cost analysis- Opportunities to add value & support economic, environmental or social considerations.- Risk management and mitigation

Better enables:- EU/legally compliant procurement with adherence to policy- Robust tender evaluations - Effective communication & implementation

Toolkit is key but success determined by:=> Understanding of procurement, effective communication, information sharing…

Enabling the Strategy - Professional People & Skills

- Scarcity of good procurement skills

- Job descriptions and adverts call out requirement for CIPS, or equivalent, qualifications;

- Competency based framework

- Pay course fees and allow study time for people to obtain qualifications;

- A key performance indicator;

- Developed a close working relationship with CIPS, viewed as a key partner

- Increased training for people involved in procurement across Scotland

http://www.scotland.gov.uk/Topics/Government/Procurement/npcoe/Capability

Enabling the Strategy (eTools)- Technical Enablement & Management Information

• Scotland rolling out common eProcurement platform– And supporting eEnabling tools (e.g. eTendering, eAuction);

• Developed national information Hub: – Extract spend information from every organisations’ accounts systems on annual

(or quarterly) basis;

– Hub cleanses, manipulates & classifies information enabling national, sectoral and local reporting;

– View of spend across the whole public sector and with whom;

– Most successful spend analysis project in the public sector in Europe;

• Developed and agreed national performance indicators – uploaded and tracked on the Information Hub; and

• Ongoing developments to further improve and simplify reporting.

Public Sector Spend Segmentation

Spend with SMEs49% spend

by value with SMEs

Enabling the Strategy – Competitive Supply Base

• Impartial point of contact for advice/concerns on public procurement practices in Scotland:

– Provide businesses with advice on procurement legislation & practices; – Seek resolution of disputes regarding procurement practice;– Help improve the consistency of public procurement processes;

• Will operate with impartiality, fairness and objectivity and promote culture of openness and transparency in relation to procurement practice.

http://www.scotland.gov.uk/Topics/Government/Procurement/Selling/supplier-enquiries

• Ensuring fairness and transparency for all suppliers;• Identifying and reducing barriers to business; and• Specifically Commits to:

– Adequate publicity (facilitated by the national portal);– Use of core questionnaire (ensure proportionality, minimise burden);– Debriefing on request (transparency and supplier development).

http://www.scotland.gov.uk/Topics/Government/Procurement/SellingSuppliers Charter

Single Point of Enquiry

Enabling the Strategy – Competitive Supply Base

• Supporting Government’s wider economic agenda through procurement whilst adhering to legal & EU requirements:– Understand market dynamics;– Drive innovation;

• Ensuring a more equal playing field for suppliers of all sizes in all locations:– Innovative strategies to enable competition on ‘value add’ products and services;– Developing supplier/market capability; – EU prohibits protective policies;– Want sustainable & competitive local businesses;

• Increasing transparency & ease of doing business with Scottish public sector:– Supplier events & roadshows;– Supplier engagement throughout procurement process;– Info on web.

Enabling the Strategy - Competitive Supply Base

www.publiccontractsscotland.gov.uk

• A one stop shop for advertising public sector tender opportunities;• Increases transparency and opens up access to businesses;• Officially launched by the Cabinet Secretary for Finance and

Sustainable Growth in October 2009;• Over 40,000 suppliers registered on the portal since its launch;• Automatically sends e-mail alerts to registered suppliers when

opportunities they may be interested in are advertised; • Over 1 million alerts have been issued to date; • 160 public sector entities actively using the portal to advertise

contracts.

What does it do ?

It provides –

• information on contract opportunities,• e-mail alerts to suppliers,• helpful information to buyers and suppliers,• online Q &A facility,• online submission of tenders,• quick and easy online quotation service,

“Connecting public and private sector business”

Does Procurement Reform Work ?- Case Study (Procurement Scotland)

• Office Supplies (£43m Spend)– Secured cumulative savings of £24m by 2011, £7.6m p.a.;– Significant additional cost avoidance due to fixed price deals;– 3 Lots: General Stationery, Paper & IT Consumables;– 3 Year deal with optional 1 year extension;– Over 80% orgs already migrated to new arrangements & many more

committed;– Major focus on supporting government’s economic agenda. Examples include:

• Development of market/suppliers capacity/capability, ensuring equity and fairness;• Championing effective partnerships with Scottish providers/distribution partners that

‘add value’;• Suppliers commitment to Scottish job creation and new warehouse facility;• High % environmentally friendly products on core lists;• Social clauses to support Corporate Social Responsibilities through supply chain;

Procurement Reform Impact?

5% Increase in the amount

of common spend over the

three year period despite

5-10% fragmentation in the

overall supply base.

5% Increase in the amount

of common spend over the

three year period despite

5-10% fragmentation in the

overall supply base.

NHS Performance – Medical equipment

Continuous Progress in Procurement

Reform2004

20052006

20072008

20092010

20112012

2013

Efficient Government

Plan

Efficient Government

Plan

Mcclelland Report

Mcclelland Report

NHSNational

Procurement (Cat B)

NHSNational

Procurement (Cat B)

Procurement Scotland(Cat A)

Procurement Scotland(Cat A)

CentralGovernment

CGCOPE

EducationAPUC

Scotland Excel

CentralGovernment

CGCOPE

EducationAPUC

Scotland Excel

£300m saved, major

improvements made

£300m saved, major

improvements made

•Public sector deficit•Public sector debt •Demographics, Lifestyle & Expectations•Reduced revenues from taxation

•Public sector deficit•Public sector debt •Demographics, Lifestyle & Expectations•Reduced revenues from taxation

Requirement to accelerate benefits in even more challenging circumstances.

Questions