Procurement, Capital and Shared Assets Productivity Workstream by 25S7mJ


									Procurement, Capital and Shared Assets
Productivity Workstream

Big Wins Strategy
                         "Our councils are all facing unprecedented financial challenges. The need
                         to balance budgets at the same time as supporting our communities has
                         always been a challenge to which local government has risen. Never has it
                         been more necessary. However, over the last few years, particularly with
                         the support of the Improvement and Efficiency Partnerships we have
                         developed a number or solutions to these challenges.

                         The Local Government Group, supported by the IEPs has brought
                         together the Local Productivity Programme to help support councils. In
                         the Procurement, Capital and Shared Assets Workstream we have already
                         published a selection of Quick Wins; a selection of tried and tested ways
                         to release cash quickly. We are now very pleased to offer you our
                         suggestions for Big Wins; ideas, some tested and some new, that will
                         release significant savings for our councils. I hope that you find this
                         document useful and that you will engage with me in taking forward this

                         Councillor Paul Bettison
                         Leader, Bracknell Forest Borough Council
                         Lead Member for Procurement, Capital and Shared Assets Productivity

Leads for Procurement, Capital and Shared Assets Workstream:

Lead Member
       Councillor Paul Bettison
       Leader, Bracknell Forest Borough Council
       Telephone: 01344 352041

Lead Chief Executive
       Andrew Smith
       Chief Executive, Hampshire County Council
       Telephone: 01962 845252

Project Manager
       Michael Lee
       Senior Programme Manager, Hampshire County Council
       Telephone: 01962 845044

Lead IEP Support
       Andrew Larner
       Managing Director, iESE
       Telephone: 01883 732706


In response to the Comprehensive Spending Review last             This collective effort represents a golden opportunity to
autumn, the Procurement, Capital and Shared Assets                illustrate the power of local government to work together
Workstream created the Quick Wins Strategy. This                  to produce ground up solutions at this difficult time.
identified 10 key actions that individual councils could
take to help them meet this challenge. The focus here             15 key Big Wins have been proposed within this strategy
was to identify tried and tested examples of current best         document. These have been drawn from across all
practice, drawn from across English councils, that could          suggestions, based on net savings potential and
be implemented within a three month period.                       scalability. In practice, each represents a combination of
                                                                  many individual suggestions under a common idea. The
Since this was created, at a programme level the overall          15 Big Wins have been presented under two themes –
Local Government Group Productivity Programme has                 strategic and category specific. The former are applicable
consolidated its work down from nine national                     across all procurement spend, whilst the latter focus on
Workstreams to three: Procurement, Social Care and                the five key spend categories of property, highways,
New Ways of Delivering Services. It has also positioned           waste, social care and corporate services.
its next phase of the programme to focus on developing
key efficiency big wins and achieving the practical               The next steps are for the proposed 15 Big Wins to be
adoption of these by local government.                            developed in detail by Workstream task teams. These
                                                                  teams would then lead the development of new
In order to effectively contribute to this next phase, our        procurement service models over the longer term and
Workstream has developed the Big Wins Strategy. This              together with the Workstream, seek to facilitate adoption
covers the transformational opportunities that may be             across local government. It is proposed that this local
harder to reach for individual councils, yet should yield         adoption and adaption would be assisted by a network of
them the greatest and most sustainable efficiency prizes.         geographic clusters. Critically, adoption would be
By definition, some of the proposed Big Wins don't                voluntary and through a “compelling not mandating” style,
currently exist; others are in development or in use by           aimed at providing practical help to local councils.
only some councils. Many proposals will involve councils
procuring in a new way and relating differently to each           I hope that you will find this Big Wins Strategy of real
other and the private and third sectors.                          value to your council and would welcome your comments
                                                                  and feedback.
We have developed the thinking jointly with the sector,
having received in excess of 100 Big Win suggestions,
including 20 from private sector partners. We have also
worked closely with central government colleagues to
align our thinking where possible, particularly in the area
of supporting local and small businesses.                     3
Foreword                      3

Big Wins:
 1   Strategic                8–9

 2   Property                 10 - 11

 3   Highways                 12 - 13

 4   Waste                    14 - 15

 5   Social Care              16 – 17

 6   Corporate Services       18 – 19

Key Contacts                  20

                Adoption routemap for Councils

Procurement                         Council Budgets
Workstream output
                     2010/11       2011/12   2012/13   2013/14

Quick Wins

Big Wins

Social Care &
New Ways of

        1                     Strategic
                              Big Wins

  Local government’s procurement challenge is threefold:                     Current Model                        Transformation

  firstly, to contribute powerfully to the demands of the deficit
                                                                    Procurement Workstream                   Being fit for purpose
  reduction programme; second, to do this in a way that             Action on current delivery models        Responding to localism
                                                                                                             Joining up the client sector
  supports political policy direction; and third, to use these                                               Improving commercial acumen
                                                                                                             Becoming more strategic
  two pressures as a catalyst for creating real improvement
  in the underlying effectiveness of local government                       Adults and Childrens Social Care Workstream
                                                                            New Ways of Delivering Services Workstream
  procurement. Key transformational themes for Procurement
  are illustrated by the diagram on the right:

  In order to help drive this transformation whilst also delivering savings from current models, the following Big Wins themes have
  been developed. These are relevant across all spend categories. In some cases a specific category will act as the pathfinder for
  the strategic Big Win:

Big Win 1:                                                                   Big Win 2:
Being fit for purpose                                                        Responding to localism
In essence, local government procurement needs to be fit                     In addition to responding to the government’s economic
to respond to the government’s economic policy. Central to                   policy, local government also has the challenge of
this policy is the deficit reduction programme, whose scale                  delivering this response in a manner that reflects the
and pace will require new approaches in delivering the                       government’s political direction. Key to this will be the
required savings. The following strategic actions will be                    promotion of localism in how procurement operates in the
developed by the workstream to facilitate fitness for                        future. Balancing the need for local control and the
purpose:                                                                     development of local economic benefit with scale driven
 Create a vanguard of council Members and Chief Executives to               leverage will be critical to success. Equally, the
  provide local leadership and strategic direction                           development of the role of the third sector and the
 Develop a cluster network with national category leads to help             increasing need for more public visibility and personal
  drive adoption
                                                                             involvement in procurement, will be key. The following
 Manage down demand and design new service models in
                                                                             strategic actions will be developed by the workstream to
  collaboration with other workstreams
                                                                             facilitate responding to localism:
 Explore alternative funding models in collaboration with the
                                                                              Develop models that provide leverage whilst promoting local
  private sector
                                                                                decisions and economic benefit
 Create models to share and improve procurement skills,
                                                                              Create a spend segmentation guide and best deals portal jointly
  promoting a balanced approach to efficiency, localism and
                                                                                with central government to help councils know where the best
  sustainability in decision making
                                                                                deals are
 Learn from the Scottish and Welsh efficiency programmes
                                                                              Develop business portals that standardise pre-qualifications and
Click to view:     Strategic Big Wins 1
                                                                                help SMEs win work
                                                                              Reduce the burden of unnecessary EU regulation
                                                                              Create new commissioning models that promote the third sector
                                                                              Shape the social care personalisation market

                                                                             Click to view:      Strategic Big Wins 2
Big Win 3:                                                                 Big Win 5:
Becoming a more joined up client sector                                    Making procurement more strategic
Although collaboration does exist, the local government                    Finally, procurement can contribute even more by raising
sector collectively represents a very large procurement spend              its game and becoming a strategic enabler of service re-
but one that is delivered through a fragmented structure. In               design. Historically, purchasing or procurement was
many cases, councils share the same key supplier and yet                   essentially seen as a transactional buying activity. The
miss opportunities to become a more intelligent and powerful               private sector has seen the financial benefits of having a
client by joining together with their local government                     stronger procurement function that can contribute at
colleagues. More joint working and less sovereignty can                    Board level. This thinking is also becoming more
release hard to reach efficiencies whilst promoting local                  common in the public sector, although is less mature.
communities. The following strategic actions will be                       Given the efficiency challenge, the procurement prize will
developed to facilitate local government becoming a more                   increasingly be around constructively challenging the
joined up procurement client sector:                                       business need and working with colleagues to design
 Create an integrated leadership model based on a small national          new service models, rather than transactional buying.
  procurement hub, a network of geographical clusters and local            The following strategic actions will be developed by the
  councils                                                                 Workstream to facilitate making procurement more
 Develop a cluster approach that includes a national category lead
                                                                            Developing Member and Chief Executive support for more
 Develop best practice collaborative procurement hubs that include
                                                                             strategic contribution
  skills sharing
                                                                            Provide the link to best practice category management
 Promote key collaborative frameworks and models
 Disseminate learning from the cross-agency DCLG Capital and
                                                                            Ensure category management specifically covers:
  Assets Pathfinders
                                                                             - A focus on options appraisal to meet business needs
 Develop improved spend data models and analysis skills
                                                                             - A need to review total costs of ownership, balancing cost
Click to view:     Strategic Big Wins 3                                         with quality and sustainability
                                                                             - An emphasis on supplier management and development
                                                                             - A focus on commercial acumen
                                                                            Create models to deliver shared services and practical help
Big Win 4:                                                                 Click to view:   Strategic Big Wins 5
Improving our commercial acumen
Local government balances many competing forces
effectively in its procurement thinking. Given the                         Balancing the need for local
unprecedented financial pressures, however, significantly                  control and the development of
increased commercial skills could strengthen its capability.
Less focus on EU regulation compliance and more thinking
                                                                           local economic benefit
on creative commercial opportunities could unlock new                      with scale driven leverage
efficiencies The following strategic actions will be developed             will be critical to success
by the workstream to facilitate improving our commercial
                                                                             Thank you to the following contributors:
 Build sustainable engagement with key suppliers through a Top 10
                                                                             Aylesbury Vale DC, Buckinghamshire CC, Capita,
  Supplier Programme and models that integrate supplier input
                                                                             Charnwood BC, Dorset CC, Hampshire CC, iESE,
 Create greater upstream opportunities for private sector
                                                                             KPMG, Local Government Group, Merseyside IEP,
  involvement through JV and strategic joint working
                                                                             Middlesbrough Council, NEPO, Newcastle Upon Lyme
 Focus Big Wins on key spend areas – follow the money
                                                                             BC, North East IEP, Northamptonshire and
 Work with the private sector to explore alternative funding models
                                                                             Cambridgeshire CC, North Somerset Council, North
  – See Big Win 1
                                                                             West IEP, North Somerset Council, Peterborough CC,
 Seek to reduce EU regulatory bureaucracy and local government
                                                                             Swale BC, Surrey CC, Trillium and Waverley BC and
  over caution – See Big Win 2
                                                                             West Midlands IEP
Click to view:     Strategic Big Wins 4

      2                   Property
                          Big Wins
                                                                                Current Model                        Transformation
Property is typically the highest spend category for
councils, yet in house client skills are increasingly variable.                                                 Leverage with Localism
The category offers real opportunities to improve                      Action on current delivery models        Capacity Building
                                                                                                                Improving Sustainability
commercial leverage whilst helping local economies and to
                                                                                                                Total Ownership Cost Focus
improve public services and save significant costs through
                                                                                                                Integrating Capital and Assets
intelligent asset management.
Key transformation themes are illustrated by the diagram
                                                                                         Social Care
on the right:                                                                            Corporate Services

In order to help drive this transformation whilst also delivering savings from current models, the following Big Wins have been

Big Win 1:
Public Sector Asset Management
Join together with other authorities and agencies and                  The Pathfinders and other examples of cross-agency
establish locality based shared governance and asset                   collaborations will encourage:
management arrangements; through this partnership                           flexibility in the use of assets
consider the total cost of ownership and long term needs of                 reduced surplus assets, retaining and investing in core
your community. Start planning the sharing of                                freeholds
accommodation, management, assets, people and services.                     avoidance of leases between public bodies
Understanding the scale of the estate, how well it is                       reduced duplication and inefficiencies in service delivery
performing, where services are needed and where capital                     released assets leased from third parties
should be invested is the first step in developing a pan-public             reduced footprint, energy costs, leading to carbon reduction
sector strategic asset management plan.                                     improved service delivery for the community

Adopting a demand led approach to services and integrating             Where there is limited capital to make best use of core assets,
capital and assets across a place creates multi-layered                authorities can work with the private sector to access funding
benefits as services become co-located with greater                    through alternative private-public partnerships and funding
opportunities for integration, as has been demonstrated by             models. This approach can be applied across all spend
the findings of the DCLG’s Capital and Asset Pathfinders.              categories. Pooling of receipts through shared governance and
The NIEP is working with the DCLG to harness the results               asset management models can provide the necessary capital to
and learning from the Pathfinders to ensure these are                  jointly invest in place based assets, the procurement of which
disseminated to the wider public sector which will build               can be delivered most effectively through managed
capacity and knowledge transfer in the sector.
                                                                       frameworks. Click to view:          Property Big Wins 1

20% saving in
construction costs
and a    15% saving in

 Big Win 2:
 Build Using a Managed Framework
 Use managed frameworks as a basis for construction
 procurement. This approach offers authorities the dual benefits of
 both extra market leverage and localism, as managed frameworks
 provide the long term competitive vehicle for influencing local
 economic benefit to SMEs, apprentices and improved carbon
 reduction. The NIEP is proposing to provide a common
 framework procurement model which would cover the core design
 with sufficient flexibility to allow for local adaption.

 By adopting an integrated approach to capital and assets, the             Thank you to the following contributors:
 NIEP believes that Big Wins 1 and 2 will collectively deliver both        Aylesbury Vale DC, Brighton & Hove City Council,

 a 20% saving in construction costs and a 15% saving in assets.            Birmingham CC, Capita, East Midlands IEP, Greater
                                                                           Manchester Fire & Rescue Service, KPMG, London Borough
                                                                           of Hammersmith & Fulham, Merseyside IEP, NIEP,
 Finally, the East Midlands Property Alliance have developed
                                                                           Northumberland CC, North Somerset Council, North West
 a framework model with a standardised design approach for                 IEP, Staffordshire CC, Telereal Trillium ,Warwickshire CC,
 new primary schools with estimated cost savings of 25%.                   Worcestershire CC and West Midlands IEP

 Click to view:   Property Big Wins 2
        3                    Highways
                             Big Wins
    It is estimated that in recent years local authorities                    Current Model                    Transformation

    have spent on average £4bn per annum on highways                                                      Understanding the asset
    maintenance. In terms of performance, however, the              Highways                              Public & Private Sector Business
                                                                    Action on current delivery models     Models
    recent Infrastructure Cost Review highlighted a                                                       Increased Collaboration
    number of factors which contribute to relative                                   Property
    inefficiencies in the UK Highways sector compared to                             Waste

    other parts of Europe.                                                           Social Care
                                                                                     Corporate Services

    Key transformational themes are illustrated by the
    diagram on the right:

    In order to help drive this transformation whilst also delivering savings from current models, the following Big Wins
    have been developed:

Big Win 1:
Create a national highways efficiency                                     From local political leaders to senior decision makers to
programme                                                                 practitioners to the local public, establishing the purpose of
Central government has committed £6m to supporting local                  the highway network is fundamental. What is the social
authorities to deliver greater efficiencies in highways                   and economic value? Is maintenance investment based on
maintenance. A predominantly sector led – local authority                 road condition or the purpose it is intended to serve?
and contractors/suppliers – efficiency programme has been
established. The intention of the programme is to provide                 In addition, the lack of integration between the public and
local authorities with a range of practical, usable and                   private sectors in developing contract requirements and
adaptable products. Those products being:                                 delivery needs to be removed. A partnership approach
 Standard procurement contracts                                          with healthy commercial tension represents good practice.
 Set design standards                                                    By understanding the asset this empowers authorities to be
 Models of best procurement practice                                     clear what it wants from a contract and how much it
 Asset management guidance                                               prepared to pay. Currently that lack of understanding leads
 Governance models                                                       to high values of risk being costed into contracts and
 Lean management techniques
                                                                          uncertain delivery plans.
 Shared service provision
 Benchmarking of cost and performance
                                                                          Finally, without compromise to local decision making, local
 Skills development
                                                                          authorities can typically achieve more by working with
                                                                          neighbouring authorities. Greater negotiating power,
Although highways maintenance has benefited from high
                                                                          sharing of expert resource, sharing of services, sharing and
levels of funding in recent years to reflect the importance of
                                                                          the impact of collective knowledge are all resulting benefits.
the road network to the community and economy, the pace
                                                                          The above programme themes will take time to develop.
of thinking around delivery has often lagged behind. The
                                                                          However, many benefits can come from forming a local
programme seeks to lift up the covers and challenge
established ideas.                                                        collaboration. Click to view:   Highways Big Wins 1

  The Midlands Highways
  Alliance aims to save

  over £30m by the end
  of 2011

Big Win 2:
Join a highways alliance
Join or create your own highways alliance with local neighbours          The Midlands Highways Alliance aims to save over £30m
and work with the national programme described in Big Wins 1             by the end of 2011. Through its collaborative approach,
to accelerate improved local highways procurement and reap               London has been able to improve its commercial
the benefits. The Midlands, East of England, London and the              leverage and secure cashable savings of 10-15% on its
South East have already been developing collaborative, cross             annual maintenance spend. Early research from the
authority ways of working. At various stages of development,             South East indicates a saving of £15m on road
there are emerging results this way of working is delivering real        maintenance through use of joint contracting.
                                                                         Click to view:   Highways Big Wins 2

                                                                           Thank you to the following contributors:
                                                                           Capital Ambition, DfT, East Midlands IEP, LGG, Local
                                                                           Partnerships, Staffordshire CC, Walshall Metropolitan
                                                                           Council and West Midlands IEP

          4                      Waste
                                 Big Wins

  Waste management is one of the four highest spend areas                        Current Model                       Transformation
  for local government. Volumes of waste appear in recent
  years to be stabilising, but the unit cost of waste collection is        Waste                               Partnership development
  increasing and a combination of EU targets, landfill tax                 Action on current delivery models
                                                                                                               Knowledge transfer
  increases and lack of capacity means that disposal costs are                                                 VFM procurement of commodities

  also escalating. Innovative methods of procurement and                                                       VFM procurement of services
                                                                                                               Zero waste to landfill
  service delivery are required if local authorities are to achieve
  the required efficiency savings while improving service                                Highways
  delivery, quality, standards and performance.
                                                                                         Social Care
                                                                                         Corporate Services

  Key transformation themes are illustrated by the diagram on
  the right:

  In order to help drive this transformation whilst also delivering savings from current models, the following Big Wins have been

Big Win 1:
Use a waste collection framework
Waste collection contracts are procured infrequently in local         As an illustration, iESE has identified that by combining the
authorities (usually once every 7 years) and therefore the            procurements for waste collection between 2012 and 2014 for
capacity to procure a good quality waste collection contract is       London and the South East, the potential value of the
often limited. This can result in contracts which offer scope for     framework contract would reach nearly £1bn and cover over 32
improvement. Often bidders have no real incentive to be open          authorities. This is the size of framework contract that could
about pricing of the service offering and transparency on this        really get the market to deliver cost effective and transparent
can only be achieved using the Contract Framework                     contracts that deliver high quality service.
                                                                      A common core design framework model that is tested in one
                                                                      region and then made available nationally could improve
As an example, the private waste management industry in
                                                                      benefits by reflecting the best practice and assist in
South East England now controls around 60% of the
                                                                      encouraging adoption. Benefits of such a framework include
municipal waste market. The industry is dominated by 4
                                                                      significant OJEU procurement cost avoidance for both
companies, collectively turning over more than £3bn per
                                                                      authorities and contractors, due to a one-time-only procurement
annum. Whilst this includes long term, high value disposal
                                                                      and ongoing savings through the use of standard conditions of
contracts, it also includes numerous waste collection
                                                                      contract for call-off contracts.
contracts managed locally by the suppliers, which
                                                                      Click to view:     Waste Big Wins 1
undermines the opportunity for more corporate led market
improvement initiatives.

£40m of savings from
8 partnerships nationally

Big Win 2:
Form a Waste Partnership
In an advanced waste partnership, waste collection authorities (for        In addition to potential direct service cost savings,
collection and disposal authorities) come together to work in a            partnership working has also delivered savings through
formal partnership to deliver efficiencies while improving/maintaining     reducing capital expenditure through shared assets;
quality services. For example, DEFRA and iESE have been running            reduction in support costs through shared back office and
the Joint Waste Authority and Advanced Waste Partnership                   reduction in CO emissions. Setting up advanced waste
programme for the last 3 years, and the Dorset Waste partnership is        partnerships is no trivial matter and structured support
the most recent partnership to result from the programme. The              during the process can be invaluable. This can cover:
West Midlands IEP has also developed successful local waste                strategic support in considering options; project
partnerships.                                                              management; partnership forums giving access to shared
                                                                           learning; and access to the Waste Partnership Routemap -
The benefits are significant, with an opportunity to reduce the overall    an on-line programme which offers authorities the tools to
cost of waste services for local authorities by around 10-12%. iESE        manage the majority of the process themselves.
has identified over £40m of savings over the CSR11 period from 8           Click to view:   Waste Big Wins 2
partnerships it is working with nationally. Short-term gains can be
achieved, for example through materials marketing, however, the             Thank you to the following contributors:
major saving is through a single delivery partnership mechanism (in-        Aylesbury Vale District Council, iESE, LGG, Lichfield DC,

house or contract) and cost-sharing where 2-tier working is in place.       Tamworth BC and West Midlands IEP

        5                   Social Care
                            Big Wins
  Social care is a highly complex service, often driven by                    Current Model                    Transformation
  external performance measures. Moreover, the
  demographics of an ageing population and more people
                                                                       Social care                          New models of social care
  with higher level needs surviving into adulthood, is                 Action on current delivery model
  impacting enormously on budgets. Residential care for
                                                                                                            Buying for a different customer
  older people accounts for 57% of adult social care budgets,
  whilst residential care for people with learning disabilities                                             Managing the market

  accounts for a further 23% of budgets. Tackling the costs
  of residential care alone, therefore, will have significant               Highways

  impact on spend levels. The move to use of personal                       Waste
  budgets also means that markets can no longer be                          Property
  managed as effectively through traditional methods such as                Corporate Services
  block purchasing.

  Key transformation themes are illustrated by the diagram
  on the right:

  In order to help drive this transformation whilst also delivering savings from current models, the following Big Wins have been

Big Win 1:
Manage the whole market place for social care                                 Newer models of care can give greater client choice
Personalisation of services and real choice for clients will                  and improved outcomes as well as being cost effective
necessitate a new model in the social care marketplace.                       in delivery. Consider using innovative models such as
                                                                              Shared Lives, which can reduce the cost of traditional
As more people have their own budgets, they will need to                      residential care by up to 60%, whilst providing higher-
know where to go to buy services. In addition, self-funders                   quality, community-based care.
currently account for about 60% of the social care spend,
much of which is not managed wisely due to lack of good                       To drive costs down it is necessary to work with
information. Current solutions in the market only meet a part                 providers and to adopt an open approach. Use a tool
of the anticipated need, for example, targeting council buyers                such as a Care Funding Calculator to give
only, or a small segment of the market who are interested in                  transparency on placement costs –Savings of 13%
time-sharing. An online e-marketplace for social care could                   have been typically achieved on high cost
provide invaluable information and access to services for a                   placements. Work with providers to drive down their
variety of clients, whilst helping to shape the market.                       costs, for example by giving them access to public
                                                                              sector “best deals”. Click to view:   Social Care
                                                                              Big Wins 1

Personalisation of
services will require a
new model in the marketplace

 Big Win 2:
 Collaborate on commissioning
 Use managed frameworks as a basis for social care                   Examples are pan-regional commissioning hubs for social care,
 commissioning. This approach offers authorities the dual            or teams of specialist negotiators . This approach is taking
 benefits of both extra market leverage and localism and is          place in London through specialist negotiators who are
 equally applicable to adult’s and children’s services.              operating with Department of Health funding to improve
 As an example, The North West Foster Care Contract was              negotiation and is proving successful so far. The West
 launched in 2010 and gives local authorities the chance to          Midlands Commissioning Partnership has developed a strong
 buy external foster care placements with clearly defined and        partnership amongst 14 local authorities and their key suppliers,
 common levels of service specification. Savings of around           delivering £4m in savings to date. Click to view:   Social
 12% per annum are expected.                                         Care Big Wins 2

 Collaborate also in specialist procurement management –             Thank you to the following contributors:
 centralised procurement hubs to manage specialist low               Capital Ambition, iESE, KPMG, Merseyside IEP, Newcastle
 volume, high cost areas of social care purchasing, where            Under Lyme Borough Council, North West IEP, South Tyneside

 expert skills and knowledge are needed but low volume               Council, Surrey CC, Warwickshire CC, West Midlands
                                                                     Commissioning Partnership West Midlands IEP and
 precludes every local authority from developing the optimum
                                                                     Worcestershire CC
 skills base.

       6                    Corporate Services
                            Big Wins

                                                                              Current Model                 Transformation
    Current financial pressures together with increasing demand
    for some services are the main drivers for change in
                                                                        Corporate Services                   Leverage with localism
    corporate services. This coupled with the drive for greater         Action on current delivery models
                                                                                                             New models of service delivery
    partnership with the private sector, means that there is an
                                                                                                             Technology opportunities
    opportunity for a fundamental shift in the way that local
                                                                                                             Total supply chain approach
    authorities deliver and source their corporate services.                                                 Sustainable continuous
    Key transformation themes are illustrated by the diagram on                       Waste
    the right:                                                                        Social Care

    In order to help drive this transformation whilst also delivering savings from current models, the following Big Wins have been

Big Win 1:
Obtain and use the best deals
Around a third of local government external spend is on                Improve the deals available: improving our best deals requires

commodities. A reduction of 10% in these prices would                  us to improve collaboration. Collaborative procurement hubs

make savings of £1.5bn. To do this we need to ensure we                are a proven way to mobilise demand and better enable us to

have the best possible deals, make sure that we use them               manage categories of procurement. For example, in addition to

and work together to improve them.                                     quick wins from taking up best deals on managed energy
                                                                       contracts we can consider contracting with UK generators

Ensure that you get the best deals currently available,                directly for a portion of energy requirements as opposed to

whether they reside in local or central government. Develop            obtaining these through the wholesale market, and generating

a national Best Deals Portal linking current central and               electricity closer to where it is used through the use of local

local government portals to provide a one stop shop.                   distributed networks.

Such a portal would be dynamic continually updating on the
best deals available across the public sector. Examples of             Finally, use web based Business Portals to reduce transaction

current Best Deals Portal support available to councils                costs, make contracts transparent and make your requirements

include iESE and the West Midlands IEP.                                known to a wider supplier base. Assist your local economy by
                                                                       using a portal to adopt a standard prequalification process and

Once you have the right deal ensure that you use it:                   focus on making it easier and less expensive for local and small

in some cases spend through agreed contracts is as low as              suppliers to win work. Examples of current Business Portal

25%. The Government Procurement card and “Procure to                   support available to councils include iESE and the South West,

Pay” solutions, either as modules on your finance system               North West and North East IEPs.

or web services, are essential to ensure your spend is                 Click to view:    Corporate Services Big Wins 1
monitored and controlled.

                                                                                                Councils and
                                                                                                suppliers to co-design
                                                                                                service delivery models

Big Win 2:
Reshape the market for corporate services
Set up national managed frameworks for back office                      Accelerate the development and use of cloud applications

services, including legal; IT; finance; and HR, including the           and network infrastructure. The cloud is developing quickly

provision of practical help to councils considering new                 and potentially offers a low cost way of sharing services and

models of provision. Currently the market is fragmented                 accessing ‘applications’. Government ICT Strategy, released

with individual authorities going to market individually and            in January 2010, proposed that Cloud Computing could lead

tendering costs are high for both councils and bidders.                 to cost savings of up to £3.2bn a year. To make the most of
                                                                        the opportunity, the local government community should be

The framework approach would be a vehicle for both                      considering the development of common standards or

individual authorities seeking outsourced services but also             protocols and approaching the market in a co-ordinated way

groups of authorities who are seeking to share services                 so that it maximises both its influence and potential cost and

and looking to move away from traditional relationships                 consistency benefits.

with the private sector to more innovative ways of                      Click to view:   Corporate Services Big Wins 2
partnering. Additionally local authorities will be able to offer
their services to other authorities through the framework,              Thank you to the following contributors:

creating a local government delivery vehicle element.                   Buckinghamshire County Council, Capita, Capital Ambition,
                                                                        Central Bedfordshire Council, East Midlands IEP, iESE,
There is an opportunity for councils and leading suppliers
                                                                        Hampshire County Council, North West IEP, NEPO,
to co-design alternative and innovative service delivery                Northamptonshire County Council, Newcastle under Lyme
models to make the most of the opportunities in this                    Borough Council, Surrey County Council, Middlesbrough
market. Such an approach should enable savings of                       Council, Swale Borough Council, North Somerset Council
around 20% to be achieved.                                              and Worcestershire County Council

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For further information please contact:

                                                            Michael Lee
                                                            Project Manager
                                                            Telephone: 01962 845044


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