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Judy Terry is a marketing professional and a former local councillor in Suffolk.

Procurement isn’t a strong point in the public sector; few authorities have the knowledge (or time) to cope with all the legislation and conflicting demands, added to which is the problem of providing a detailed specification focusing on actual need, rather than gold plating with unachievable aspirations. The silo mentality doesn’t help, preventing shared expertise.

In some sectors there are few reliable providers of services and equipment and, sometimes, there can be a lack of will to achieve best value. Delaying tenders is a useful tactic to ensure that an existing provider ends up as the preferred bidder, despite a competitor with a greater understanding of the brief offering more imaginative solutions, at a better price! The logic being that it is easier to work with someone you know than have to develop a relationship with a new organisation, and adapting to fresh ideas. This is difficult to challenge when officers have the decision-making powers.

Some years ago, a Suffolk County Council report recommended that a single waste authority for the whole county would save £3m a year; some councils rejected it because they didn’t want to sacrifice their ‘local branding’. Given today’s budgetary pressures, it’s time to revisit the plan. I’m also aware that a local council paid £5m more than the under-bidder offered on a recent site acquisition, despite paying several thousand pounds for an ‘expert’ valuation. Sadly, this is not unusual.

Millions of pounds are wasted every year because the public sector fails to maximise its substantial buying power in negotiating deals, and different councils apply different rules. In particular, whether contracts should be subject to EU criteria; when the school where I’m a governor reviewed its catering contract, one authority in the Eastern region advised that EU rules applied (and wanted to charge us £6,000 to organise the tender) whereas another said they didn’t and gave free guidance on how we could manage the process ourselves.

In discussion about maximising value, they quoted several examples how the cost of simple everyday things varies enormously with little or no control over the quality; a proper purchasing policy for rubber gloves, alone, used in hospitals, the fire service, police, in schools, by catering and cleaning staff, etc. could save millions.

Maintenance is another issue – my school saved £2,000 on the £6,000 quoted by a council, which also wanted a two per cent commission, to repair a bike shed with asbestos roof, and we used the same specialist contractor. Following years of neglect, we have, ourselves, developed a £2m ten year repair and maintenance plan for the school, which is Listed; securing the right price and management will be crucial if we are to avoid the public sector curse of going over budget on building projects.

An example of poor value and popular during the 2000s, Private Finance Initiative (PFI) deals for a range of new build schools, hospitals, fire/police stations and roads, are now coming under detailed scrutiny. Originally designed to avoid piling debt and risk on the State’s balance sheet, under Labour, they have proved to be a mammoth financial burden within the public sector, especially hospitals, with excessive payments crippling budgets.

According to the Treasury, total capital of about £60 billion is linked to the 716 schemes, with whole life costs (25-35 years) many times that figure. Renegotiating or terminating these contracts is painful, with expensive penalties, but this is beginning to happen because they are increasingly unaffordable and don’t meet changing needs. It would have been much cheaper to borrow the money for buildings and have separate management contracts.

Everything, from fleet cars, mobile libraries and books, waste vehicles, safety equipment and clothing, grounds maintenance, energy, IT, and even small everyday items like stationery and pens is a huge cost to the taxpayer requiring careful budgeting, so there is no justification for failing to deliver top quality at the most favourable price. Co-operation is essential; in some areas a council will do the grounds maintenance on one side of a road, with a Housing Association having its own contractor on the other side. This cannot be value for money.

Too often ‘consultants’ are the fall-back position; when a problem is deemed too difficult by management failing to acknowledge the considerable specialist knowledge right under their noses but not co-ordinated.

Consequently, the solution is to identify and pool that expertise across local services by establishing (small) regional procurement teams, led by people who can demonstrate a track record in such a competitive environment. These experts have usually ‘earned their spurs’ in the private sector, bringing a fresh, flexible, approach to negotiating contracts, managing tenders and ensuring best value, avoiding wasteful duplication.

The secret of success lies with preparation: taking the time to create a detailed and accurate specification on which to seek tenders, and not altering the specification after a deal is agreed. All too often – especially with IT projects – objectives are subsequently changed, adding significant costs and making projects totally unviable, leading to cancellation and millions wasted. If something is very complicated, having an initial pilot can be invaluable, allowing adjustments to be made before rolling out more widely.

Essex County Council has a very impressive procurement team, which could be the model for the public sector as a whole. In a single conversation, one can get authoritative advice, giving considerable confidence to anyone unsure how to proceed and secure that elusive ‘best value’.

Having the knowledge and ability to negotiate means employing the power of multi-million pound budgets to support the local economy, by channelling contracts suited to small businesses in their direction, as well as to corral the competitiveness of the largest companies dominating specific sectors, preventing them from over-charging.

6 comments for: Judy Terry: Councils and schools need to take more trouble over procurement

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