Agenda item

To consider a report by Councillor Julian Thompson-Hill (copy enclosed) which provides an update on the various procurement initiatives being undertaken as part of a wider Procurement Transformation Programme.

Councillor Julian Thompson-Hill presented the report, circulated previously, which provided an update on various procurement initiatives that were being undertaken as part of a wider Procurement Transformation Programme, and sought Cabinet approval to proceed with three Procurement projects outlined in the report.

RESOLVED:- that Cabinet approves:-

(a)  that Denbighshire becomes an official member of the Welsh Purchasing Consortium for the next 3 years up to 31^st March, 2016, with an annual contribution fee of £13,500.

(b)  the development of a Business Case for the creation of a joint service by merging the Strategic Procurement Units of Denbighshire and Flintshire County Councils, and

(c)  the development of a Business Case for the Three County Procurement Service involving initially Denbighshire, Flintshire and Gwynedd County Councils based upon a Category Management Structure.

Councillor Julian Thompson-Hill presented the report, circulated previously, which provided an update on various procurement initiatives that were being undertaken as part of a wider Procurement Transformation Programme, and sought Cabinet approval to proceed with three Procurement projects outlined in the report.

Councillor Thompson-Hill explained that Procurement had been perceived as the solution to a number of issues which had been identified in the report.  Competing demands had been set against pressures such as a focus on reducing the ‘back office’ functions of organisations and a relatively small group of staff nationally.  The proposals contained in the report were complementary and Appendix 6 identified how they would fit together.  The report would provide guidance through the upcoming changes, and as to how the Council should react to them.  Current key initiatives included:-

·           The creation of a new National Procurement Service, to be implemented by November, 2013, would address the 20% of the common and repetitive spend across the Welsh public sector.

·           The ending of the North Wales Procurement Partnership in June, 2013 and potential replacement by joining the Welsh Purchasing Consortium.

·           Ensuring the Welsh Procurement Policy Statement launched by the Assembly Minister for Finance and Leader of the House be incorporated, in order to promote SME friendly Procurement as well as realising Community Benefits.

·           Implementation and greater use of e-procurement solutions.

·           Incorporating the procurement actions arising from Denbighshire’s Economic and Community Ambition Strategy.

It had been anticipated that the Council’s new Procurement Strategy would be finalised in October, 2013.  In order to incorporate and reflect the new procurement initiatives the current Contract Procedure Rules had been reviewed and a draft set of CPR’s would be distributed for consultation within Service Area and presented to Council for approval. 

An Internal Audit Report on Procurement of Construction Services had highlighted that a number of improvements were required regarding the way construction procurement was undertaken.  The progression of the projects within the report would address many of the issues highlighted within the Internal Audit report.

Following the closure of the North Wales Procurement Partnership (NWPP) a letter of invitation had been received from the WPC Management Board, Appendix 1, in conjunction with the WLGA, inviting North Wales Councils to consider joining the WPC to create a Welsh Local Government Procurement Consortium involving all 22 Welsh Councils.  The NWPP had over 5 years realised cashable efficiencies of £2.4m across the 6 North Wales Councils, highlighting the benefits of collaborative procurement.  By joining the WPC Denbighshire would utilise a similar procurement solution on a national rather, however, the cost implications of joining as an individual Council would involve an annual membership subscription of £13,500 in comparison to £44,000 with the NWPP.  Denbighshire would also undertake to lead on an agreed number of contracts.  Cashable and non-cashable benefits arising from the WPC membership had been highlighted in Appendix 2.  The option of joining the WPC was currently being considered across North Wales Councils.  The WLGA were also considering bringing the WPC within its governance framework to enable it to become an all Wales Local Government Procurement Service.

The NWPP Management Board had commissioned CAPITA to produce a Business Case on North Wales Regional Procurement.  Following consideration of the Business Case it had been decided not to progress any further on the basis of six Local Authorities.  In order to progress Procurement Transformation on a sub-regional basis two new individual projects emerged out of the original Capita report.  The two projects, as detailed in the report, were both subject to a joint application for funding from Welsh Government Regional Collaboration Fund, Appendix 5.  Early indications had been encouraging that the bid would be successful on a reduced basis.

The Denbighshire Strategic Procurement Manager had been undertaking a part-time management role in overseeing and developing the Corporate Procurement Unit in Flintshire.  This highlighted the benefits that could be derived from the creation of a merged joint Strategic procurement Unit.  The benefits had been outlined in Appendix 4, and a detailed final Business Case would be presented to Cabinet in October, 2013.

Denbighshire, Flintshire and Gwynedd had established a new project to develop both outline and detailed Business Cases on the basis of a ‘Three County Procurement Service, based around joint Category Management which had been defined in Appendix 3.  The initial output from the project would include developing outline and final Business Cases by December 2013 and April 2014 respectively.

The possible implications on officers of the implementation of the project had been outlined.  Data gathering had identified the procurement roles, responsibilities of staff and to what extent this would transpose to a Full Time Equivalent (FTE) Assessment.  Details pertaining to the Corporate Priorities, cost and effect on other services, Consultations undertaken, Chief Finance Officer Statement and the risks and measures implemented to reduce them had been included in the report.

In response to concerns raised by Members it was explained that the procurement framework would not preclude from purchasing internally, provided this could be justified, and that successful contracts such as the lighting contract would not be adversely affected.

The HFA responded to issues raised by the Leader and explained that regional working would ensure dedicated specialists working on specific areas of work, and the development of a Business Case for the Three County Procurement Service, based upon a Category Management Structure Assist services within the Authority to collaborate with regard to procurement, would assist and address the objectives of local businesses.  

RESOLVED:- that Cabinet approves:-

(a)  that Denbighshire becomes an official member of the Welsh Purchasing Consortium for the next 3 years up to 31^st March, 2016, with an annual contribution fee of £13,500.

(b)  the development of a Business Case for the creation of a joint service by merging the Strategic Procurement Units of Denbighshire and Flintshire County Councils, and

(c)  the development of a Business Case for the Three County Procurement Service involving initially Denbighshire, Flintshire and Gwynedd County Councils based upon a Category Management Structure.