Decision details

Update on the progress of the actions from the contract management and PSO audits

40.1     The Chief Operating Officer introduced report and Ross Duguid, Procurement Category Manager, to the Committee. The restructuring of the Procurement Team, into the new target operating model of four key work areas, has been completed. The report outlines the efficiency savings and cost avoidance achieved through the work of the Procurement Team. The Team have also been working to deliver social value from key contracts.

40.2     The Committee asked for clarification on the achievement of revenue and capital savings targets and whether the savings figures in the report are notional rather than real cash savings.

40.3     The Chief Operating Officer explained that the target for the current year (2016/17) was £6.1m and so far the Team have achieved £3.9m in savings across capital and revenue. The savings figures are mixture of cash and notional savings to try and measure the benefit of having a Procurement Team (i.e. the costs saved and avoided by the intervention of the Procurement Team, compared with not have a procurement function). On projects like Hastings Library the £426,568 savings is the difference between predicted cost (estimated by an external consultant) and what the project was delivered for. The Procurement Category Manager stated that Procurement Team could examine different ways of presenting savings information for future reports, if that would be helpful.

40.4     The Chief Operating Officer outlined that the Procurement Team were working on the savings forecast for 2017/18, which should be completed by Christmas. The Committee asked if it could have sight of the first draft of 2017/18 projected savings at RPPR Board in December. The Procurement Category Manager confirmed that it should be possible to share a first draft of the savings for 2017/18. Some of the procurement savings are hard to forecast and may be more speculative in nature when they are based on procurement exercises.

40.5     The Committee asked how the Council manages inflation in contracts and how this takes into account the market pressures on goods and services. The Procurement Category Manager outlined that the Procurement Team look at inflation projections for the various market sectors, and use market intelligence to try and mitigate inflationary pressures. The combined purchasing power of the Orbis Partners is having an effect and is helping to keep costs down. The Procurement Team is using market intelligence to examine different ways of procuring goods and services, and the Team is also working with contractors to achieve efficiencies in the cost of existing contracts.

40.6     The Committee cited an example of a school where it was paying for electricity on a base load estimate that appeared to be too high. It asked if this was commonplace across schools. The Procurement Category Manager said he would investigate and report back to the Committee.

40.7     The Committee asked why the Cradle Hill School development project did not include the provision of a safe road crossing point. The Chief Operating Officer explained that the Procurement Team is not involved in design of road safety measures, and would not alter the specification of such features. The Chief Operating Officer agreed to investigate and respond directly to Councillor Lambert.

40.8     The Committee RESOLVED to:

1)      note savings achieved by the Council through procurement activities in 2016/17, and the current forecast for 2016/17;

2)      note progress on other key activities within the Procurement Service; and

3)      request more contextual information in the savings tables presentation to include details of cost avoidance and cash savings; and

4)      receive the first draft of 2017/18 projected savings at RPPR Board in December.