Agenda item

A presentation on the Procurement Service by Ross Duguid, Acting Assistant Director, Procurement and Commissioning.

24.1     The Chief Operating Officer introduced the report and the Acting Assistant Director for Procurement & Commissioning. The Procurement Service is an integrated service which adopted a new structure in April 2017 and covers the procurement function for all three Orbis Partners. The restructure will deliver 10% savings on the operating budget, in addition to previous shared service savings.

24.2     The Acting Assistant Director Procurement & Commissioning gave a presentation to the Committee regarding the current Procurement Service activity. The key points of the presentation included:

• East Sussex County Council (ESCC) spends around £500million per annum and around 50% is spent with local suppliers (the bulk being for Adult Social Care). The Procurement Team is actively involved in 70% of contracts and over a third of expenditure is with the top 25 suppliers. The Procurement Team also aim to manage the expenditure with the ‘tail’ of a large number of smaller suppliers/contracts through the Sourcing Solutions team.

• The Orbis integration process has included appointing a joint Head of Service and there is now a joint management team and a single integrated structure. The structure is designed to ensure it is fit to operate across the three different organisations (East Sussex County Council, Surrey County Council and Brighton and Hove City Council). There are dedicated procurement leads in each organisation.

• The move to the revised structure has enabled the Team to deliver better value across the three organisations and to be more strategic. The Service has been able to develop a category management team and to start to routinely deliver longer term strategies for procurement. This is supported by better commercial analysis and information on contract coverage and renewal.

• The Procurement Team aims to be actively involved in each service area to improve contract management and performance monitoring. A dedicated contractor and supplier management team has been introduced to provide better contract management over the life cycle of a contract.

• The Team measure the value that procurement delivers through four types of value:
  • Cashable – reducing the cost of services
  • Financial - mitigating cost increases (i.e. not cost releasing)
  • Quantifiable - Social value (social value measurement charter) and value added
  • Non-quantifiable – where risks have been mitigated.

24.3     The Committee asked about the level of due diligence that is carried out when letting contracts. The Chief Operating Officer responded that the level of due diligence varies with the value of the contract and the risks associated with it. For higher value contracts there is a strategic sourcing plan and tenders are reviewed by a board made up of representatives from Procurement, Legal and Finance. The Sourcing Solutions team has been set up to manage the ‘tail’ of lower value expenditure with smaller suppliers.

24.4     The Committee asked what capacity the Procurement Service has to provide a service to other customers. The Acting Assistant Director Procurement & Commissioning explained that the Team already establish procurements and name other authorities so they can take part in joint procurement. The Team want to prove the service model and manage ‘business as usual’ services, before offering services to other customers. The Chief Operating Officer added that some procurement services are flexible which can allow for other customers to be served without an additional cost, and others would require additional resources.

24.5     The Committee asked what the impact of leaving the EU would be on procurement regulation. The Chief Operating Officer outlined that there will still be procurement regulation, but it may mean ESCC will need to work across a number of regulatory environments.

24.6     The Committee noted the resources that are required to efficiently manage the large number of small suppliers that account for a significant proportion of the Council’s expenditure. The Committee asked what opportunity is there to engage with larger suppliers to undertake more procurement across the Orbis partners.

24.7     The Acting Assistant Director Procurement & Commissioning responded that the Procurement Team is taking these issues forward through long term strategies for total expenditure in both high and low expenditure areas. Achieving economies of scale depends on the make-up of the market and what the sovereign authorities want in terms of procurement. The starting point is that Orbis can work across authorities and is doing so through work such as the construction framework tendered for use across Surrey County Council and ESCC.

24.8     The Committee asked about the procurement work that is taking place for Adult Social Care, and the partnership work with the NHS, where there are service areas in which ESCC dominates the market. The Acting Assistant Director Procurement & Commissioning outlined that the Procurement Team use market information and work with commissioners and finance to make sure the market is sustainable. The Chief Operating Officer added that there is a category lead for this sector and the Procurement Team is conscious of this pressure. Work is also underway with East Sussex Better Together to look at commissioning in the Accountable Care model.

24.9     The Committee asked to be kept abreast of how savings are being delivered by the Procurement Service and would like performance updates on the agenda at future meetings.

24.10   The Committee RESOLVED to note report and to receive update reports on procurement performance at future meetings.