FINANCE

Bridging the procurement divide

Ministers have long been demanding councils make better use of their estimated £60bn annual procurement spend to drive efficiencies – and pressure can only intensify after the latest local government finance settlement. Kristian Smith outlines how buying organisations can reach across the re-shaped public sector landscape to deliver genuine savings.

While the Public Accounts Committee's report last June criticised government procurement, it nevertheless recorded written evidence from the Cabinet Office that stated: ‘Pockets of best practice exist that Government is keen to learn from… [through] engagement with Department for Communities and Local Government, the Local Government Association and local authorities.'

Local government has impressed the coalition with its response to austerity and willingness to make the most of available resources.

And in handling multi-billion pounds of expenditure, public sector buying organisations, together with councils are playing an important contribution in local government's cost reduction measures and their development of the type of strategic, and highly professional, buying practices that will be needed for our future public services.

These buying organisations are not only helping councils and their partners in education, health and policing to drive efficiencies; they are also frequently a bridge between public bodies and the private sector suppliers that are supporting economic recovery regionally.

MPs scratch their heads over the Government's perceived lack of nimble procurement but local government is making increased use of buying organisations' catalogues and frameworks for thousands of different goods and services.

These agreements cover hardware and equipment but also complex, long-term services such as ICT and facilities management. When a council department uses a buying organisation to achieve cashable savings of hundreds of thousands of pounds, this points the way for its peers to cut costs or re-think procurement.

New organisations such as NHS Clinical Commissioning Groups and academies can also make use of buying frameworks to pool their purchasing power and drive cost efficiencies.

While the Cabinet Office's Commissioning Academy is driving procurement skills, it's telling that local government buying organisations are quietly helping public buyers achieve practical improvements in procurement, sourcing and contract management, though much more remains to be done.

Although the coalition wants 25% of government to be supplied by small and medium sized business (SMEs) by 2020, buying organisations are already working closely with big companies to small specialist suppliers – to build long-term revenue models.

Our own organisation is already 55% supplied by SME partners. This ‘inclusive' approach will help private firms achieve growth in exciting markets such as training, consultancy services and care.

Public buying organisations give government, NHS and third sector organisations low-risk purchasing opportunities through their catalogues and innovative frameworks.

In addition, buying consortia's category management specialists can advise different private sector suppliers on marketing their goods and services to public sector buyers – or how to meet EU procurement standards when tendering.

But the most exciting opportunities for local buyers to harness their budgetary power and support service innovations lie in new frameworks that comply with the latest EU public procurement rules. That's because frameworks – whether for community care, mobile apps or locally-sourced school dinners – can help drive innovation and new service capabilities.

They set out appropriate standards in new goods and services that our future public services will need; and they also streamline the procurement process, freeing departments' time to focus on actual delivery of services.

New frameworks take the leg-work out of councils, schools and NHS groups' tendering processes.

They provide a level playing field for suppliers.  Our own buying organisation has over 260 frameworks, helping suppliers to open up commercial opportunities.

Working closely with the LGA and others, public sector buying organisations are rightly tasked with bringing together public and private sector, resulting in better procurement and ultimately, helping deliver better public services.

Kristian Smith is director of procurement at ESPO, a not-for-profit, public sector buying organisation
 

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