Getting better value for money from local government procurement

More and more, commissioning for social value is being hailed as a solution to delivering more effective, cost efficient, public services. But is this recognition shared by those that matter most, namely the hundreds of councils across England who are charged with procuring these services?

Well, the Communities and Local Government Select Committee think more could be done.

Last week the Committee reported on its inquiry into Local Government Procurement. It found that while local authorities  are aware of the need to adopt more effective procurement approaches – and that some councils are making progress in this respect – they are not doing  enough to secure maximum value for money through their annual combined spend of £45 billion on goods and services.

The Committee has called on more councils to adopt policies which allow them to,

‘maximise their procurement spend to deliver local priorities by requiring contracts to be let on the basis of wider best value, not simply lowest price … to support and improve communities’ long-term economic, social and environmental well-being’

This echoes concerns raised by NCVO in our written and oral evidence to the Committee last year. Despite the increased recognition of the social value agenda within the commissioning community, we continue to hear from our members and our voluntary sector partners that bottom-line price and cost continues to undermine social value objectives in public procurement.

The Committee also agrees with NCVO’s recommendation that government needs to do more to support and monitor the implementation of the Social Value Act by undertaking a comprehensive ‘post-legislative’ analysis of the effectiveness of the act before the end of 2015. This should consider whether the Act should apply to public service contracts below EU procurement thresholds (all the more important given the planned increase from 200k to 750k Euros later this year).

Other issues firmly in the Committee’s sights

  • Councils should address the ‘over-zealous’ application of EU rules by commissioners. This can result in prosaic contract specifications at the expense of more innovative service solutions that incorporate social value objectives.
  • Councils should split large contracts into smaller lots where possible. Large contracts often demand significant upfront capital and cash-flow which can prevent smaller organisations with local knowledge and expertise from participating in service delivery.
  • The Cabinet Office’s Commissioning Academy should be extended to a greater number of council staff. Procurement should not be viewed as a niche activity led by a handful of technical officers but as a cross-cutting activity which requires joined-up working between staff involved in designing, managing and commissioning services.
  • Public sector bodies within local authorities should join up their procurement activities to overcome potential silos. Community budgeting and greater collaboration between public bodies is essential for delivering the efficiency savings that reduced local authority budgets demand. It is also essential for commissioning for social value where outcomes accrue across multiple service departments.

Again, all these recommendations were made by NCVO in our evidence to the Committee last year.

Moving forward

The Committee concludes that the Department for Communities and Local Government (DCLG) should work with the Local Government Association (LGA) to establish a ‘taskforce’ with representatives of the private and voluntary sectors to ‘develop an action plan for improving council capacity to conduct effective procurement’. They also call on the Cabinet Office to provide resources to ensure lessons learned are shared between central and local government agencies.

While the Government is not obliged to adopt the Committee’s recommendations, their findings are influential and a welcome nudge to those local authorities that could be doing more to implement more efficient and effective procurement practice.

We expect the Government to respond to the Committee’s report within two months – we’ll keep you posted on what they have to say. In the meantime, please let us know what you think about the Committee’s recommendations or if you’ve been affected by any of the issues above.

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Paul Winyard Paul Winyard is NCVO’s policy officer. He covers issues around public services, improving commissioning and procurement practice, and advancing the Social Value agenda.

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