Report of the Interim Divisional Director, Commercial & Procurement.
Minutes:
The Corporate Director of Resources presented a report which set out the progress in advancing the Council’s Procurement Transformation Programme since its launch in October 2010. The Corporate Director highlighted the following areas of the report:
· £4.6m of savings had been achieved in 2011/12 from procurement activity, both in terms of revenue and capital and in the Housing Revenue Account;
· a sustainable procurement policy which included local business and community and regeneration goals had been implemented.
She added that the following improvements had been implemented with regard to the SAP system:
· better governance through the Strategic Procurement Board and greater enforcement of compliance with corporate procedure rules;
· greater involvement of the Central Procurement Team to engender a culture change among managers andrequisitioners;
· training to raise awareness of best practice and a reduction in the number of requisitioners;
· a streamlined waiver process;
· a procurement toolkit would be rolled out shortly;
· a greatly expanded contracts register.
The interim Divisional Director, Commercial and Procurement added that:
· progress on phase two of the transformation programme which began in November 2012 had been variable;
· supply chain management processes had been improved;
· a consultation exercise was underway regarding a new permanent structure for the Central Procurement Team and a new post of Divisional Director of Commercial and Procurement was being created;
· the case studies included in the appendix to the report relating to procurement activity were good examples of the savings achieved during phase 1 of the procurement transformation programme.
A Member asked about the number of procurement waivers and whether these were expected to reduce. The Interim Divisional Director responded that the system had highlighted that in the past, the Council had not recorded these fully but that this would be done in the future.
A Member stated that the figures quoted in case study 3, which related to the Leisure contract were unclear. She stated that a previous report submitted to the Sub-Committee had indicated that although income from the leisure centre had reduced the level of services and visitor numbers had improved. The case study contradicted the Quarter 2 report which indicated that Community and Culture were reporting an adverse variance of £0.27m which principally related to a shortfall in leisure centre income.
The Interim Divisional Director advised that the case study had been compiled in June 2011 when the contract had initially been awarded to GLL, since which time there had been a shortfall in income and some unanticipated costs at the leisure centre. A Member asked whether the income levels were expected to increase under the new contract. The Interim Divisional Director stated that the possibility of a tri-borough libraries and leisure services contract was being considered and initial reports suggested that both income and service levels would improve under this proposed scheme. The Corporate Director of Resources added that under the GLL contract there had been some improvement in visitor numbers, pricing and income.
A Member asked what risks were associated with the proposed tri-borough scheme and what measures were envisaged to mitigate against these. The Interim Divisional Director advised that the figures given to the tenderers had been thoroughly costed, and that some of the risk would lie with the successful contractor. The Corporate Director of Resources added that there was a savings target in the MTFS in relation to the contract, which had been calculated on the basis of market forces. As with all budget savings, a risk assessment had been carried out and some contingencies had been built into the budget accordingly. The Member asked whether the savings targets were sufficiently realistic, for example, income from the dry recyclables market, which was subject to seasonal and market forces had not lived up to expectations. He asked what the uncontrollable variables with regard to the leisure contract were.
The Corporate Director of Resources advised that the savings targets were realistic and were based on the expertise and knowledge of procurement professionals. The Interim Divisional Director added that this was a new area for the council, with managers increasingly being expected to focus on income generation rather than simply cost management and would require a culture change.
A Member stated that the success of case studies 4,5,6 and 11 which related to dry recyclables, housing capital programme procurement and housing and corporate repairs and maintenance respectively were due to advantageous opportunities in the market rather than due purely to enhanced procurement activity. He asked whether the savings achieved in these areas would impact on service delivery and whether the management of an increased number of smaller procurement contracts would lead to increased workloads and whether there was a process for monitoring these. The Interim Divisional Director stated that this would be managed through better governance of procurement activity and staff training to ensure better commercial understanding. Smaller contracts with local providers would be easier to manage, for example, recent bid submissions from housing contractors had taken into account residents needs and the future performance of successful bids would be monitored against these criteria. The Corporate Director of Resources advised that spending fell into the following categories, core, semi?core and non-core. The cost of managing a contract was being built into the overall cost of the service when calculating the net procurement savings.
A Member asked whether the savings made as indicated in case study 10, which related to the Child and Adolescent Mental Health service had reduced the quality of the service. The Interim Divisional Director stated that he did not have this information to hand and undertook to circulate this information to Members after the meeting.
A Member asked whether other public sector bodies such as the West London Alliance had been consulted regarding the future of shared services. He added that the report did not provide information regarding social care, specifically the personalisation of budgets, the pressures on day care centres and asked how this information would be captured. The interim Divisional Director advised his service area did not have this information and that the personalisation of budgets was currently being reviewed by those responsible for commissioning. The Corporate Director of Resources added that in order to ensure services bought by residents were value for money, the council would negotiate the best possible pricing arrangements with its suppliers and those with personal budgets may choose to top up for the extra cost of additional care, or alternative provision, if that was what they preferred.
RESOLVED: That the report be noted.