Local government must 'step up to the mark' and secure a better deal from annual £45bn spend on procurement, a panel of MPs has recommended.
A report issued today by the Communities and Local Government Committee calls on councils and the Local Government Association (LGA) to boost the commercial skills of all staff responsible for designing, commissioning and managing services – not just procurement officers.
Chair of the Committee, Clive Betts, said: ‘Procurement is too important to be viewed as a niche function conducted in back offices.'
‘It is central to delivering and managing the services that people rely on every day, from having their bins emptied to receiving social care,' Mr Bettes said. ‘Without effective procurement local government will cease to operate,' he added.
Councils could release an additional £1.8bn of savings if they improved joint-procurement and made collaborative purchasing the default option for some items, procurement expert Colin Cram told the MPs.
But the MPs also warn such savings should not come at the expense of preventing councils from supporting small local firms, and asked the LGA to issue guidance on how authorities could voluntarily joint forces to both make procurement savings and deliver social value.
This latter aim could involve stipulating in contracts a set number of apprenticeships or trainee opportunities for landing council business.
According to the report, local authorities must reduce burdens on firms bidding for council contracts by applying a proportionate and less zealous approach to meeting EU procurement guidelines. Councils should also standardise pre-qualification questionnaires across the sector to make it easier for firms seeking to win business from different authorities.
The Committee found little evidence of significant fraud in local government procurement. ‘But councils must not become complacent,' Mr Betts said.
He warned unless those managing contracts were adequately trained, the risk of fraud would increase as council services are increasingly put out to tender.
‘Those within an organisation often know more about what is really going on than external agencies,' Mr Betts said. ‘More must be done to support whistleblowers as it is one of the most effective way of tackling procurement fraud,' he added.
Mr Betts also warned outsourcing and the use of commercial confidentiality clauses could dilute transparency.
He suggested recent failures of outsourcing arrangements across central and local government raised questions as to whether all councils were taking adequate steps to monitor contracts.
‘In outsourcing a contract councils must ensure they do not outsource responsibility for the quality of local services,' Mr Betts added.
Authorities should take account of supplier policies on employment issues and the use of zero-hour staff contracts when assessing bids, the committee said.
In response, Cllr Peter Fleming, chair of the LGA's Improvement Board, said councils were ‘already getting for good value for money from their procurement and are achieving savings in difficult financial times'.
‘Councils do need to get the best value for money from procurement and that's why the LGA has drawn up a National Procurement Strategy and which will help guide councils to get even better value for money than they do currently,' Cllr Fleming said.
Kristian Smith, director of procurement at public buying organisation ESPO said the report recognised ‘that procurement can no longer be a niche role in local government service delivery' and must become ‘one of the foundations of effective local service design and delivery in the future'.
He also approved the call for councils' lead cabinet members, senior officers and councillors to assume clear roles in scrutinising procurement.
‘The LGA is not alone in seeking to put ‘procurement at the top table' but many local government stakeholders' efforts must be harnessed to ensure that this goal is delivered,' Mr Smith said.
