Best Practice Procurement Will Help Deliver Government’s Austerity Goals

Cutting costs with hand and scissor

We are pleased to bring you this very timely post by Mark Ewen, Head of Procurement & Compliance at ESPO, a customer-focused, not-for-profit, public sector buying organisation owned by six member authorities.

It didn’t come as any huge surprise, but local government was recently dealt a further blow as the Government announced in its Spending Review that it will have to make further significant cuts over the next four years.

Local government has adapted outstandingly well to the austerity measures so far but many councils are struggling financially. There is an ever-growing need for new approaches and alternative procurement strategies. In some areas, Government is taking a more direct role, promising legislation to allow the police and emergency services to collaborate (see Public Spend Matters: here) more closely on procurement for example, but there are other initiatives that could be ramped up too:

  • Smarter procurement of equipment and services to harness local government’s buying power to help drive long-term savings
  • Collaboration between councils and partners like police, NHS trusts/CCGs/police/schools on commissioning of services and procurement to make up for shrinking resources
  • Better consolidation of procurement professionals’ know-how and commercial skills (especially in areas like frameworks) to help procurement teams cope with the pace/scope of public sector change (councils downsized, housing associations making savings, schools converted to academies, etc.)
  • The realisation that in a litigious world, professional buying organisations (PBOs) offer a compliant way to do collaborative procurement

In the run-up to the Government’s Spending Review many public sector organisations were invited by the Government to take part in the Public Sector Efficiency Challenge giving workers the opportunity to tell central government where and how things could be done better or more efficiently. Although there have been huge improvements in procurement processes throughout the public sector over recent years there are always areas for further efficiencies particularly in supply chain and contract management.

As a professional buying organisation that exists with the sole purpose to help public sector organisations access the goods and services they need, we would like to see the Government better support ‘professional procurement’ in the public sector and encourage the wide scale use of smarter, outcomes-focused buying strategies as a cost-effective and compliant route to market.

We’ve been working with public sector organisations for over 30 years yet it’s clear that framework agreements could be used much more by some organisations and contribute towards making substantial savings, particularly with increased focus on post-call-off supply chain and contract management.

We run procurement workshops throughout the UK and it’s become obvious that some areas of the public sector need further guidance with procurement and supply chain best practice. Through the research we do and from much of the feedback we receive, particularly from those in education sector, we know that they require further support when utilising frameworks. And of course there are those who have recently made the transition to an academy school and for the first time having to make all their own procurement decisions, something many of them feel ill-equipped to do. PBOs work hard to make frameworks accessible for users and take the hard work and effort out of procuring often complex goods and services.

Some of our most successful frameworks to date are great examples of how they can help the public sector make significant savings in traditionally hard-to-engage markets. For example our Banking Services and temporary staffing (MSTAR) frameworks are being used throughout the UK and feedback on savings and ease of use from customers is extremely positive.

Greater collaboration in purchasing is needed in the public sector and it’s something we’ve seen evidence of working well in both the education and health care sectors. When the House of Commons CLG Committee’s inquiry into local government procurement reported in 2014 it called for collaboration to be the default between different organisations. Not only will this allow for greater efficiency from aggregating buying power but also that there will be aggregation of procurement professionals’ know how.

Further cuts are coming whether we like it or not, and the procurement expertise that PBOs have to offer could be a significant factor in assisting the public sector to collaborate to deliver further sustainable savings.

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