Minutes:
Councillor Richard Lewis was slightly delayed due to unforeseen circumstances and arrived part-way through the discussion on this item.
In respect of the Select Committee’s ongoing review, the Chairman confirmed that an independent consultation process had been initiated relating to procurement in the Council. This would run alongside the review and would feed into the work of the Select Committee. The Committee was committed to value for money and high value outcomes.
Matthew Kelly, Head of Procurement and Commissioning, was in attendance and provided the Select Committee with some headline ideas for potential recommendations:
1. Contract management – it was important to maximise value from contracts achieved. Suppliers were better at extracting value from contracts than the Council was at protecting it. The exact mechanism to achieve this had yet to be decided;
2. Improved planning – early visibility and action. 12 months to tender rather than 6 months would achieve better outcomes. It would also support the Council’s compliance with the new Procurement Bill which was likely to be going live in early 2024 and would require the local authority to publish plans for contracts over £2m occurring in the next 18 months;
3. Customer of Choice – Hillingdon aimed to be a customer of choice so companies would be keen to win contracts and work with the Council. Longer term contracts and a partnership approach would allow the local authority to build better relationships and drive value for money;
4. Improved engagement with local suppliers – it was important to achieve a balance between social value of local provision and financial value;
5. The new Procurement Bill would see a move to the most advantageous tender – which would provide an opportunity to place other criteria (such as environmental, social and governance) on a level with financial impacts. To achieve better social value outcomes in the tender process, a corporate social value policy would be required;
6. Increased strategic focus – with 100+ projects ongoing and a team of only 12, it was important to focus the limit resources on areas of greatest opportunity. Part of the need for an increased strategic focus was around delivery model and how the Council delivered (ie internal or outsourced)
7. Longer Term contracts – to remove administration and drive value for money through existing relationships but underpinned by benchmarking and value chain analysis
8. Maximum benefit from Oracle implementation – a new financial system was due to go live early 2024; as a minimum this would be an opportunity to tighten spend controls and improve spend reporting;
9. Environmental matters – aligned to the Council’s commitment to a carbon zero strategy, procurement had a role to play when commissioning managers etc. It was also important to be mindful of cost implications.
The Head of Procurement and Commissioning was thanked for his invaluable input and expertise.
With regards to the Council’s net zero target, Members noted that electric vehicles were preferable but were at times prohibitively expensive; particularly larger vehicles such as refuse lorries. However, there were other lower cost carbon-saving opportunities which would be built in whenever possible.
In respect of contract management, Members recommended a centralised approach and felt a team to oversee contracts would be welcomed. The importance of definitions was also highlighted in relation to terms such as ‘local’ (in the context of local suppliers) and ‘social value’.
In relation to recommendations, the Committee suggested some further points for consideration - how the Council championed quality, noting the importance of demonstrating to residents that quality was equally as important as value and capacity planning to ensure the Council did not lose out due to lack of resources. It was suggested that, where possible, projects be amalgamated to reduce them in number, with the caveat that they would need to be risk-rated prior to a decision being taken. The Council would always have a lot of projects on the go given the large number of suppliers it worked with; reducing the supplier base could be beneficial. Members also noted the importance of policy frameworks to ensure the longevity of the review.
The Committee felt a list of defining factors in relation to ‘value for money’ would be helpful and observed that working with local businesses offered both social and economic incentives in terms of added value. It was important to use new technology even though it was constantly changing and progressing.
The Head of Procurement and Commissioning informed Members that considerable progress had been made in terms of quality. In the past tenders had been evaluated based on 80% cost and 20% quality; this was now 50% cost / 50% quality and there was flexibility in this calculation to drive the right outcomes. The Committee heard that Hillingdon Procurement Team sought to reduce costs, improve quality and manage risk and worked closely with Councillors and stakeholders to get this balance right. It was confirmed that the Council built in evaluation for social value but a better understanding of the Council’s specific aims with regards to this would be welcomed and allow increased use of TOM’s framework.
Members were informed that the Council would be granted a period of six months to implement the requirements of the new Procurement Bill. It was acknowledged that contractors would need to be brought up to speed to ensure they were compliant. A recommendation in relation to the Council’s use of sub-contractors was suggested. The Committee also proposed a recommendation regarding collaborative work and training in respect of smaller businesses.
The Committee highlighted the fact that some recommendations would require ongoing work while others would be more practical and immediate.
RESOLVED: That the Committee noted the verbal update and discussed ideas for recommendations in relation to its review of Procurement within Hillingdon.