Here at the Centre, we’re examining the evidence on public procurement, and aiming to publish some succinct reports in early 2019. Collaborating on procurement – joining forces to pool and strengthen in-house expertise or to access economies of scale – is an emerging theme. So, as part of our research process, we’ve been building a picture of the kinds of collaborative procurement that currently exist in Wales. Here we share our findings so far.
What is procurement?
On one level, procurement simply means buying goods, services or works. It’s a core function of how public services in the UK are currently managed: today, the Welsh public sector spends around a third of its annual budget via procurement (c. £6 billion a year). A huge array of public services are affected by how well our procurement services work: from school catering to ambulance maintenance; from buying laptops to building fire stations; from drug and alcohol services to much of the IT that supports our NHS.
Key collaborative procurement organisations in Wales… currently
Traditionally there have been two main ways in which collaborative procurement takes place – through public buying organisations and purchasing consortia. Public buying organisations offer their members formalised packages of contracts with specific businesses which detail the terms of future contracts, known as framework agreements. A purchasing consortium is where independent organisations join together, either formally or informally to combine their requirements and purchasing power.
At first, these collaborative procurement arrangements largely focused within sectors. There are currently two large sector-specific purchasing consortia in Wales: the NHS Wales Shared Services Partnership (NWSSP) in the health sector and the Higher Education Purchasing Consortium Wales (HEPCW). Both are reported to generally reduce procurement costs and improve compliance with EU legislation, but there is disagreement about the extent to which they manage to benefit local communities and small and medium sized enterprises (SMEs).
More recently, there has been a move towards procuring across sectors for common and repetitive goods and services. This category management approach to procurement underpins the main public buying organisation in Wales, the National Procurement Service (NPS). It’s notable that local authorities account for over half of the total procurement spend by public bodies and almost three-quarters of spend through the NPS has been by local authorities. Formed in 2013, the NPS was partially established under a Welsh Government Invest to Save loan but use and savings have not lived up to expectations, and earlier this year it was announced that it NPS would be closed over time, as part of a new national policy approach. A survey by the WAO found that most public bodies had since 2013 also used other procurement consortia, with around half of those suggesting they were frequently buying through other means. A whole range of public and private purchasing consortia and buying organisations were cited, with reference to the purchase of utilities, vehicles, footwear, construction, consultancy, and food waste sacks among other goods and services.
Some examples of creative collaborations
Far removed from the from the large-scale formal structures outlined above, public bodies are coming up with some creative ways of joining forces to procure more effectively. Approaches vary considerably and can be ad-hoc and informal; the following examples provide a taster of this diversity.
Some collaborative procurement arrangements focus on particular areas of social need, such as the Adopting Together project which aims to improve how adoption services in Wales are procured, with a focus on children that have to wait longest to be adopted. Led by Dr Jane Lynch from Cardiff Business School, the project brings together charities and government-funded organisations under formalised joint relationship management plans and service level agreements. The project emphasises that community benefits can be an integral part of procurement processes that deliver better value for money in the long term. A similar subject but a very different approach, the Children’s Commissioning Consortium Cymru (4C’s) is membership organisation hosted by Rhondda Cynon Taf County Borough Council that supports local authorities in developing strategic commissioning plans for services for looked after children. It also manages frameworks of providers for both independent fostering and residential care and an online resource to support local authorities to identify suitable available placements for children in their care.
Arrangements also exist to share procurement knowledge and expertise amongst public sector organisations, such the procurement consultancy firm Atebion Solutions, which was created by Cardiff Council in 2016. Atebion staff are Cardiff Council employees, who work both for their own employer and for other public bodies, allowing the council to retain procurement expertise that might otherwise be lost. Atebion has recently entered into its own collaborative arrangement with the private sector consultancy firm Bloom to provide a digital and IT four-year framework agreement.
Another approach is apparent further west, where Pembrokeshire and Carmarthenshire County Councils have entered into a procurement shared service arrangement. Public Services Boards (PSBs) are also emerging as vehicles for procurement collaboration in the region. Carmarthenshire PSB for example is embarking on an initiative to reimagine the local food system. By bringing together college and university campuses, the council and other partners to aggregate demand across catered education and health settings in the county they hope to stimulate opportunities to develop and sustain high quality local food production. The ambition is that joined up procurement will better guarantee sufficient demand and supply and so will better support the local economy, particularly agriculture and horticulture, as well as contribute to addressing food poverty, waste and climate change, and promote health and wellbeing.
An interim reflection: trying to find out about procurement practices hasn’t been easy…
At a time when public resources are stretched further than ever, public bodies are expected to achieve ever more value from every procurement exercise. A procurement process is now expected to balance cost against opportunities to deliver community benefits, support local economies, rewarding fair work, fair trade and ethical supply chain practices, and reducing environmental life-cycle impacts – in essence fulfilling the principles of the Wellbeing of Future Generations (Wales) Act.
Building even this limited snapshot of collaborative procurement in Wales has however been far from easy. The examples above show that promising approaches to collaborating with suppliers and across the public sector are available. However, it took time to search these out – drawing on a limited number of key reports, and on contacts across public services and academia (our particular thanks go to colleagues at the WAO, WLGA, and Cardiff University). For time-stretched public services colleagues looking to improve their procurement practices fast and overcome narrow interpretations of cost and value. a more comprehensive record of the forms of procurement and outsourcing under way in Wales would be valuable.
We will publish the Centre’s evidence reviews on strategic, sustainable and innovative procurement early in 2019. Our aim is for these reviews and blogs on public procurement to contribute to civic debate, and to inform the development of the future national procurement strategy. If you have a comment or question, please don’t hesitate to get in touch.
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