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DCLG Select Committee inquiry into Local Government Procurement

 

Written evidence submitted by the West London Alliance

 

Background to the West London Alliance

 

The WLA is a partnership of six West London councils - Barnet, Brent, Ealing, Harrow, Hillingdon and Hounslow.

 

These councils serve a population of 1.8 million people and have a joint annual expenditure of £3.8bn a year. There are over 77,000 VAT registered business and nearly 700,000 employees active in this West London area.

 

The WLA aims to: promote the interests of West London residents and businesses; improve and develop public services; and to reduce their costs through collaboration. In addition to representing the interests of West London in terms of economic development, transport and spatial planning policy, the WLA facilitates a number of major improvement and efficiency programmes.

 

The WLA is also a founder member of the West London Partnership (WLP) which brings together the public, private and voluntary sectors in West London to promote the economic, social and environmental interests of West London businesses and residents.

 

Executive Summary

 

The West London Alliance coordinates collaborative procurement activity with and on behalf of member boroughs

 

There are currently seven major improvement and efficiency programmes in which WLA members collaborate when programmes align with their council’s objectives and plans.  Some programmes also involve working with other councils in London, particularly the Tri-Boroughs (Hammersmith & Fulham, Westminster and the Royal Borough of Kensington & Chelsea). 

 

The seven programmes are;

 

  1. Adults’ Services Improvement and Efficiency Programme
  2. Children’s Services Improvement and Efficiency Programme
  3. West London Passenger Transport Programme
  4. West London Property and Asset Management Programme
  5. West London Procurement Board and Hub
  6. West London Housing Partnership
  7. Public Health Board

Further programmes are in development.

 

As well as improving services, the aim is to achieve savings and/or avoid costs. The area target for this is at least £57m in the period up to 2016/17.  Programme delivery has been supported by grant aid from a number of sources, particularly Capital Ambition.  DCLG grant was awarded to LBH&F on behalf of the WL Housing Partnership, while the WestTrans Partnership secured grant from the TfL Sub Regional Fund.

 

NB: Due to the nature of the WLA’s Collaborative Procurement activities this submission to the CLG select committee focuses mainly on questions 2 and 3. Accordingly Boroughs themselves will respond on the other four CLG questions directly.

 

Collaborative Protocol

 

In managing WLA multi borough procurements we adopt a protocol that requires the nomination of a lead borough for; procurement, legal service, financial advice, technical specification, HR, TUPE, IT, quality, safety and environment.  The lead borough may be different for each discipline and each project.

 

The protocol requires that we place our collective trust on the integrity and robustness of the lead boroughs internal policies, processes and people to ensure rectitude.

 

  1. Highlights of successful WLA activity

 

The following extracts from the WLA’s annual report highlight some WLA partner boroughs successes.

 

  1. Adults’ Services Improvement and Efficiency Programme

Participating councils: Barnet, Brent, Ealing, Hammersmith and Fulham, Harrow, Hillingdon, Hounslow.

 

Key procurement achievements in 2012/13

 

 

  1. Children’s Services Improvement and Efficiency Programme

Participating councils: Barnet, Brent, Ealing, Hammersmith and Fulham, Harrow, Hillingdon, Hounslow, Kensington and Chelsea, Westminster.

 

Key procurement achievements in 2012/13

 

•        Savings of nearly £1m through negotiation with providers of children’s care services.

•        Procurement of an Independent Fostering Agency Framework agreement

•        Scoping of a block contract for residential care homes in west London

•        Approval by DCSs to deliver a Select List of Semi-independent care services

•        Work with west London children’s home providers to develop the market

•        For every £1 invested by participating boroughs the more established programmes have returned £36.92

 

  1. West London Passenger Transport Programme

Participating councils: Barnet, Brent, Ealing and Hounslow.

 

This programme aims to offer a single, integrated passenger transport service by the end of 2013, to improve choice for users.  The service will incorporate passenger transport, fleet, concessionary travel and independent travel. 

 

Key achievements in 2012/13

 

•        Five Council joined programme - Barnet, Brent, Hounslow, Ealing and Harrow

•        Out of Borough Route Sharing (OOBRS) started

•        Phased implementation of Transport Bureau commenced

•        Regional framework for contracted passenger transport complete

•        Mobility assessment arrangements in place in each borough

•        Regional framework for mobility assessments complete

•        Regional draft eligibility policy for adults complete

•        Regional draft eligibility policy for children complete

•        Collaborative work to bring in other partners commenced

•        ROI of £7.2m savings over 4 years

 

  1. West London Property and Asset Management Programme

Participating councils: Barnet, Brent, Ealing, Hammersmith and Fulham, Harrow and Hounslow.

 

Key achievements in 2012/13

 

•         Completion of a Carbon Reduction study which identified the potential financial savings and cost avoidance opportunities through collaborative action to retro-fit with energy conservation measures the local authority estate

•         An innovative agreement for shared development of additional school places between Ealing and Brent Councils in place - less requirement for new schools building procurement

•         An outline business case for the delivery of shared residential children’s home provision in West London to meet the needs of the Children’s services prepared

•         Mapping of the public sector estate in West London completed and an agreement reached to produce a West London Property Strategy

•         Line by line analysis of the supply chain spend on property and assets by the six boroughs completed

 

 

 

  1. West London Procurement Board and Hub

Participating councils: Barnet, Brent, Ealing, Harrow, Hillingdon, Hounslow with participation on the Board by Westminster, Hammersmith and Fulham and Kensington and Chelsea.

 

Key achievements in 2012/13

 

Hounslow) saving £7.2m across three boroughs

 

  1. West London Housing Partnership

Participating councils: Brent, Ealing, Hammersmith and Fulham, Harrow, Hillingdon, Hounslow, Kensington and Chelsea.

 

Key procurement achievements in 2012/13

 

•         On-Line Applications costs savings project implemented for all housing applicants

•         Out of London Temporary Accommodation Procurement framework set up

•         Joint Stair Lift and through floor lift contract awarded

•         Mutual exchange pilot project completed resulting in significant increase in mutual exchange activity

•         Empty Homes contract with GLA re-negotiated successfully

 

  1. Public Health Board

Participating councils: Barnet, Brent, Ealing, Harrow, Hillingdon and Hounslow.

 

In early 2012 the WLA boroughs agreed to explore the potential for collaboration on the procurement of public health services in the light of the transfer of these services to local government. A detailed analysis of the business case for collaboration and a business proposition for the creation of a public health procurement hub was produced, demonstrating potential efficiency savings.

 

Key achievements in 2012/13

 

•        Developed an agreed proposal for collaborative procurement for public health services

•        Collaboration on the procurement of the GUM services from West London providers

•         Developed the basis of a commissioning programme to be delivered in 2013/14 onwards

 

  1. Sharing Knowledge and Networking

The West London Alliance supports and facilitates a considerable amount of knowledge sharing and networking activity which supports council services in future planning through the provision of intelligence, learning and benchmarking and provides opportunities for joint procurement activities and collaboration.

 

The key officers groups which meet on a regular basis are the West London; Treasurers, Environment Directors, Planning Policy Officers, Regeneration Officers, Heads of Procurement, Property and Estates Managers, Leisure Officers and Information Managers. 

 

The WLA also facilitates two Improvement and Efficiency Network events each year. These bring together council officers to discuss common issues and challenges and share best practice.

 

In addition to networking within West London, the WLA has been contributing to and learning from the experience of other councils in London and beyond. Since 2011 it has chaired the London Collaborative Efficiency Network (LCEN) and the London Economic Development Sub-Regions Group.  The latter discusses key issues affecting procurement in London such as; employment, funding opportunities and wider strategic economic development issues.

 

The West London councils are represented on the London Procurement Strategy Board by representatives from the Heads of Procurement and Treasurers Groups. They have been developing important linkages between the London-wide programme and the West London Procurement Board and Hub. 

 

WLA observations specifically related to cross borough procurement projects

 

Some points worthy of further exploration;

             

  1. What is the level of local political commitment to collaboration?

Most boroughs are very supportive of collaboration at the top level of the political and administrative strata.  It makes sense after all to seek economies of scale and to reduce management overheads for both the contracting entities as well as the client organisations.

 

Political realities however have to be recognised and taken into consideration.

Boroughs will have their own individual Missions Statements, Visions and Policy Directives.  These will have been developed from manifestos and electoral promises with a view to delivering to residents outcomes that are politically desirable and that politicians are held accountable for.

 

When viewed across a multi borough environment, aligning procurement activity that dovetails these absolutes into collective deliverables is challenging.  There will always be borough specific imperatives from a local perspective that need to be understood. That said, the common theme across all public sector bodies is the obligation to operate as efficiently as possible, to seek and to gain best value, and to drive out excess costs.

 

It is arguably the job of procurement professionals and their client organisations to make the economic case for collaboration. To do this they have to understand how such a case may be constructed and where derived benefits will flow from.  This goes beyond simply specifying a requirement and multiplying this up across a number of boroughs. It is more about understanding from a bidding contractor’s perspective how they can be incentivised to reshape the way services are configured and delivered so that costs can be driven out and benefits delivered in parallel with enhancing the quality of the outcomes. These skills are and this knowledge is not always readily available in-house to boroughs.

 

It is often at this client / procurement level that collaborations become frustrated as there can be a disconnect between the high level political will and the ability of the departmental teams to; a) be able to see the benefits of such and make change happen, b) be able to and objectively assess and articulate upwards the benefits and risks involved with making such changes.

 

  1. What frustrates procurement collaboration?

As mentioned previously collaboration can be frustrated where it is not high enough on the agenda to bring it to the forefront of peoples thinking and more importantly their future planning. More often than not borough procurers are content with satisfying their immediate requirements, rather than planning for the future. They will often cite lack of resources, time or other priorities as matters that divert them from pursuing collaboration.

 

An underlying issue may be that collaboration threatens the status quo within an individual borough and individuals or the departments they work in may see it as portending the future and their control over it.   As with all change unless people can see their role in the future they may well challenge it or seek to frustrate it.

 

Other matters that can frustrate collaboration or procurement improvement can be;

 

•              Lack of vision / Apathy / Parochialism / Lack of confidence

•              Organisational inadequacy / inadequate skill base to take on new challenges

•              Limited capacity or confidence in dealing with a changed risk/ reward profile

•              Mistrust of partners in other boroughs / Political alignment

•              Fear of lack of control / individual budgeting / Poor understanding of risk

•              High staff turnover / churn / overabundance of interim staff

 

These matters can be overcome through dialogue and working with colleagues to share a clear vision of the future from senior levels downwards, however this takes time and care. Peoples concerns need to be aired and valued and they need to know that they will be supported in any new initiative.

 

Staff will need to recognise that the general direction of travel within the procurement fraternity is towards collaboration and that they will be given support to up skill and embrace this on behalf, not only of their own employers, but also the wider regional public sector community.

 

  1. Are procurement staff in boroughs sufficiently ‘commercially’ focused?

As previously discussed, many local authority procurement staff were traditionally recruited on the basis that they were required to understand the corporate and European procurement rules and are able to ensure control over and compliance with these strictly controlled requirements. This offers up a level of protection for Authorities from challenges from aggrieved bidders and also from the EU commission itself from charges of non-compliance. Both of which can incur costly remedies if a borough is found to be at fault.

 

This being the case then the room for a more entrepreneurial approach to procurement is not only limited but could be viewed as being positively discouraged by more risk adverse boroughs.

 

As a norm then it could be suggested that the staff that populate procurement departments may not have the incentive, aptitude or the proficiency to engage fully in what the private sector may classify as normal commercially lead behaviour. Negotiation and deal making may therefore not be familiar territory for them.

 

It is relatively easy to hide behind process and restrictive rules to avoid being commercial driven, however without challenging the status quo and testing the art of the possible the ability to drive through change and make value driven deals will be frustrated.

 

Training can be given to enhance commercial skills however instilling the confidence into individuals to plan for and to use these skill in a live procurement environment may be more of a problem if those staff are not naturally inclined to engage in this activity or do not believe they were recruited to do so.

 

4.              What Skills, Knowledge Training and Education are required?

 

For most borough staff multi borough collaborative procurement projects are novel. They tend to be ‘first off’ / ‘one off’ exercises for them. By necessity then the WLA training focus is in this area. Whilst not wishing to make collaborative procurement training an industry in its own right, there is an opportunity and benefits to sharing best practice between boroughs and between London borough regions on this topic.

 

Template and example documents are kept on the WLA knowledge portal - which is also a repository for lessons learned material, FAQ’s, do’s and don’ts, case studies and links to best practice. All material developed by our projects is recycled as learning material for others. We also maintain an ‘experienced practitioner’ network to act as a touch stone for future projects.

 

Collaborative Workshops (example)

 

In June 2013 the WLA ran a procurement workshop entitled Listening, Learning and Improving. This was chaired by one of our Chief Executives and peopled with strategic directors, procurement and delivery staff, as well as Legal, IT, HR and other representatives.

 

Objective; sharing experiences both good and bad and discussing solutions to problems and how resolutions were achieved, testing whether optimum solutions were found. Or how we could have done better? Thus building up a network of ‘people who can’ within our boroughs - such that they can be called on in the future to help, support and if necessary lead on future procurements. People who can are not necessarily procurement professionals.

 

We also run regular procurement learning workshop sessions for the WLA and other boroughs to attend. Each Worksop is themed and for each we invite guest speakers to discuss relevant procurement and supply issues.

 

Topics covered to date have included;

 

•              Green Deal / •              Eco / Fuel Poverty / London Living Wage / RE:FIT / RE:NEW

•              Social Inclusion / Third Sector engagement

•              SME / Cross River Partnership / Involving Local Suppliers

•              Collaborative Procurement

•              GPS initiatives - Contingent labour

•              Digital Inclusion / Pan London roads and highways framework - GLA

 

We have also had in attendance at our workshops representatives from; non WLA boroughs, London Councils, GLA, Central Government Departments, contractors, trade bodies, regional efficiency agencies specialist industry experts.

 

  1. How does the WLA successfully manage procurement collaboration?

Within the WLA we have created a formal network of boards, network groups, directors, senior staff and operational staff - flowing down from the Chief Executives - who meet every 4 weeks. To ensure ownership of all matters related to procurement and other collaboration.

See attached chart.

 

In terms of procurement the focus of this activity is the Procurement Board.  Which is the governing body for the WLA head of procurement’s programme and to which the annual business plan is presented, debated and signed off. This Board is chaired by the Chief Executive of Hounslow Council and it has wide membership across the WLA group of; Head of Legal Services (Brent), Director of Finance (Hillingdon), Members (from Hounslow and Barnet), Treasurer (Kensington and Chelsea), Head of Procurement (Ealing), Director of Environment (Harrow) and the Director of the WLA.

 

All spend categories are represented in the attached diagram, each having a board that looks for collaborative opportunities, be that Property, Estates, Children’s / Adult services, Transport, Environment, Highways, Waste, Parking, Customer Services, etc.

 

 

  1. Benefit Realisation - how is the success of collaboration measured and tracked?

Within the WLA we operate a standardised Benefit Realisation process. The concept is aimed at making the link between the cost savings and the benefits identified and established in a business case and secured from a procurement competition, to that which Finance Directors within a borough recognise as being delivered on the ground. Thus closing the budgeting / procurement cycle loop where historically there has been little or no correlation between the costs and benefits that are claimed as resultant from a procurement activity.

 

Whilst this requires extra work as it is a planned discipline within the procurement and finance departments of a borough – it is useful in that it helps in bringing credibility and corporate ownership to the savings claims.

 

The Benefits Realisation process if overseen by a Board made up of the Finance Directors from all of the boroughs, and is  chaired by an independent Treasurer from outside of the immediate WLA group.

 

For further information see the WLA annual report 2012/13

 

http://www.westlondonalliance.org/WLA/wla.nsf/Publications/WPB-474/$file/WLA%20Annual%20Report%202012-13%20-%20Final.pdf