Town halls urged to boost procurement skills

13 Mar 14
Councils need to invest more in their procurement skills to ensure they get best value from the £45bn spent on good and services across local government every year, a committee of MPs has said.

By Richard Johnstone | 13 March 2014

Councils need to invest more in their procurement skills to ensure they get best value from the £45bn spent on good and services across local government every year, a committee of MPs has said.

In a report examining the effectiveness of town hall procurement, the communities and local government committee concluded the sector needed ‘to step up to the mark and get better value’ amid government funding cuts.

Committee chair Clive Betts said procurement was critical to delivering local services.

‘We need investment now so that staff right across councils gain the skills needed for effective procurement.

‘At times staff, unsure of the needs of local residents and business – especially small local businesses – fall back on wasteful bureaucracy. This has to stop.’

Today’s report estimated that around £1.8bn could be saved if councils increased collaboration on purchasing, and urged the Local Government Association to produce guidance on the most effective means of joining up.

‘Significant additional savings can be made if collaboration on procurement between authorities becomes the default for certain purchases,’ Betts said.

‘The LGA must take the lead and produce guidance on how councils can voluntarily join together to make savings in their procurement. Compulsorily centralising procurement operation would not only produce practical difficulties but also severely limit the flexibility of councils to deliver local objectives.’

Councils should also make greater use of procurement to deliver local priorities by letting contracts not just based on price, but taking account of wider social value, Betts added. This should include production of an annual report setting out their strategy for incorporating economic, social and environmental value into its procurement, with factors such as a bidders policy on zero hour contracts among those that should be considered.

‘When letting contracts councils must not only consider price, but how they can benefit the local area and support local small and micro-businesses,’ he added.

‘This can be achieved by including within contracts requirements that suppliers deliver a specified number of apprenticeships or trainee opportunities, for example. Precise methods must be for each local area to decide.’

Management of outsourcing deals must also be improved, he added, with recent failures of outsourcing deals, such as overcharging by Serco and G4S in electronic tagging contracts, highlighting the need for proactive controls.

‘In outsourcing a contract councils must ensure that they do not outsource responsibility for the quality of local services,’ Betts said.

‘If further failures are to be avoided, it is vital that local government is equipped to manage complex contracts.’

Responding to the report, Peter Fleming, chair of the LGA’s improvement board, said councils were already getting for good value for money from procurement and making savings.

‘Councils do need to get the best value for money from procurement and that’s why the LGA has drawn up a National Procurement Strategy and which will help guide councils to get even better value for money than they do currently,’ he added.

 

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