Local Government Procurement – a good news story from Hampshire

We’ve got a lot of readers in UK central government, and we cover that sector pretty thoroughly. One of our objectives for 2012 however is to feature more from the devolved public sector – local authorities, health, police, education...etc.  And if you are already a reader from any of those sectors, we’d be delighted if you tell your friends and colleagues about Spend Matters.

Anyway, to kick off our coverage for 2012, we have a positive story from Hampshire, where a collaborative venture has paid off for a number of councils.

This is more important than ever at the moment. Much of the funding that was supporting collaboration around the wider public sector has gone since the 2010 election, so the onus now is on councils to drive things in a bottom up manner – there isn’t going to be a major top-down push because the funding for bodies like the old RIEPS has pretty much gone.

Getting councils to work together in an area or region seems a no-brainer but is surprisingly difficult. At a conference a while ago, I sat next to the very pleasant and seemingly smart CFO of a small district council in one of the most remote parts of England. Let’s call it “Barsetshire”. Barsetshire has a County Council, and just two District Councils, West Barsetshire and (believe it or not) East Barsetshire.

“Well,” I said naively. “I guess you two Districts work together with your County Council when it comes to procurement?”

“You’ve got to be joking”, he said. “We don’t trust those b****ds, and they don’t trust us”.

So he had his own team of three procurement staff, and while there was a bit of regional collaboration, much was still done at a highly local level.

So the success story in Hampshire is impressive, where the County, 11 district and borough councils and three unitaries have worked together to drive collaborative procurement.  To get more insight, we spoke to Debbie Parin, who is Procurement Manager – Partnerships for the County Council.

The venture is known as the Hampshire and Isle of Wight Procurement Partnership (HIOWPP), and has saved £2 million in a couple of years through working collaboratively in areas such as play equipment, protective clothing and tree maintenance.  This SOPO* award-winning work has been done without much external investment, largely using existing resource.

It’s been sponsored by the Hampshire Head of Corporate Procurement, Shaun Le Picq. “The Partnership came out of a procurement networking group. Some money was found – to pay for my time – then we started with an opportunity assessment, informed by Spikes Cavell analysis of spend data”, says Parin.

Various councils led on different spend areas, based on their spend, interest and capability in that category, with Parin taking on some contracts herself directly – “we started with the easy stuff” as she explains.  She worked hard to get buy-in from senior managers, and the fact that it was a truly collaborative venture, without anyone imposing from above, seems to have helped the different participants to feel involved and take ownership.

There is no real push to move it beyond Hampshire - the team see their role as focusing on spend categories that area best handled at local level (there are some parallels with the Scottish strategy we featured last week, which has clear de-lineation between national, regional and local categories). Tree maintenance is a good example of a “local” category where responsiveness is key and local contracts / suppliers make sense.  And even within the County, some requirements have been divided into local “lots” to give truly local suppliers a chance to compete and win.  But there are also some economies of scale – and a sharing of workload at a time when skilled procurement resource is at a premium.

Now central funding is even harder to find, can the work continue? It looks promising.  Councils are agreeing to put in some relatively small amounts of money each to keep the work going, Parin says.

So let’s hope this is a sign that “bottom up” collaboration can work even without much top-down funding or pressure.  Of course political differences can come into play – within some counties for instance you may find very competitive elections with three or four different parties winning in different local councils, which sometimes works against the cause of collaboration. Hampshire isn’t like that, but neither is it a “one party state”, so it is good to see this programme succeeding with council and councillors working together for the common good.

Well done to those involved - and happy to hear about other interesting stories from "devolved public-sector land"!

*SOPO – Society of Purchasing Officers in Local Government

Voices (7)

  1. David Orr:

    Peter: Why not interveiw on of the new large unitary Councils (like Wilstshire or Cornwall) to see if, having got rid of two-tier local government and hopefully some of the “parochial issues” between Councils, they are any better at realising cashable procurement savings.

    Down here in Somerset, the 75% IBM-owned & controversial joint venture South West One (SW1) was supposed to act as a “virtual unitary” across the.two tiers of local government .

    It ended up in “real tears” and none of the other 4 District Councils in Somerset have joined Taunton Deane in SW1, even after 4 years waiting to see how it turned out – badly sadly.

    Tonight Taunton Deane’s Exec Committee has to vote to continue funding the borrowing for IBM/SW1 and their expensive £30m SAP implementation; to continue paying capital and interest on their loans long beyond the time when IBM/SW1 said that procurement savings will have paid it off.

    They are relying now on what IBM/SW1 euphemistically call “pipeline savings”. Will they fail to materialise too?

    1. Liz Calcutt:

      I think the Hampshire and Camden initiatives are both commendable. It isn’t easy to make this happen and get the sort of cooperation needed and break through the barriers of existing contracts with out of step arrangements.

      I’m Head of Procurement down in Cornwall, which David Orr mentioned. We brought together the County and 6 Districts into a new unitary authority in April 2009. We started a category management approach and set up a new central Procurement team at the same time and delivered £2.9m in the first part year, while we were setting things up and with only a partially resourced team. Last year we have delivered £9.9m in savings and this year £10.5m so far. So over £23m in 2.5 years. Or just over 5% of the total external supplier spend of £436m. Hopefully the new ERP system in April will mean we can identify more and keep this going, with better intelligence and control over the lower value spend too. We’re now working on some big and complex contracting initiatives having done most of the “low hanging fruit”. Its getting tougher, but lots of exciting opportunities. Stakeholder engagement is key. Its not something we can do on our own.

      But good procurement isn’t about just savings, its also about working on the organisation and grinding out the change management initiatives, so we can bring together services and work in new ways, before the Procurement opportunity can become a reality.

  2. Frank Tapler:

    Peter, do we really think a saving £2m over a few years across a County and its Districts is significant? Externally, the County Council spends in excess of £630m pa according to their Procurement Strategy doc and 11 Districts probably spending circa £10m pa each, along with 3 Unitaries probably spending £100m pa each being annual influenceable spend of £1.1bn. That’s approx 0.00606% saving … name me a CPO who’ll mention that on his CV. Hampshire should be embarrassed.

    Anwen – out of transparency, it would have been beneficial if you’d mentioned your interest in Hampshire. Given that Unit 4 Agresso Business World is the SOAS solution providing a new finance/procurement portal for the region.

    1. Debbie Parin:

      Frank,
      This initiative concentrates purely on general goods and services and an agreed workplan of projects. Our remit is not “All the spend potential of 15 Councils”. The Councils of Hampshire work together on a array of other collaborative initiatives across all aspects of procurement and commissioning that generate impressive cost savings, including our work nationally with Pro 5 and the Central Buying Consortium.
      This partnership focuses on locally based, procurement officer collaboration which is in addition to the normal day job. We have a number of District Councils in this group with no procurement resource at all, with officers from other Councils providing the lead to bridge this resource gap.
      Funding was made available to employ one extra member of staff to co-ordinate a procurement programme of mainly District focussed projects and we have achieved an improvement to the tune of £2 million from November 2008 to March 2011. Not a bad return and one that I am proud to put on my CV rather than embarrassed. Perhaps what is required is a bit more positive thinking…

  3. Anwen Robinson:

    Agreed Ken.
    Thought you would also be interested in the NHS Camden Procurement initiative http://www.logisticsbusinessit.com/vertical/healthcare-pharmaceutical/NHS%20Camden.pdf – equally impressive results delivering £2.7M of savings in first year alone.

  4. Ken Cole:

    It is good news that the County has acted as a catalyst here. The main issue is going to be making it stick. I was involved in setting up a similar arrangement in Essex back in 2003/4. It did a lot of good work as the Procurement Agency for Essex, and was positively and actively supported by the County until about 2009 when it had the rug pulled from under it – surprisingly by the County. They will need to restate the case all the time as with civil government good initiatives / projects often disintegrate when the architects move on. Well done to them for what they have achieved to date!

    1. Final Furlong:

      I don’t think the rug was pulled – more the plug.

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