Docstoc

ProcurementReport Durham University

Document Sample
ProcurementReport Durham University Powered By Docstoc
					Procurement
  Service

Annual Report
    2009
Procurement Service
TABLE OF CONTENTS

                                                                                       Page
1        Management Summary                                                                3
2        Introduction                                                                      3
3        eProcurement                                                                    3-5
4        Sustainability and the Environment                                              5-9
5        Procurement Best Practice                                                      9-18
6        Central Core Procurement Team (CCPT)                                          18-27
7        Faculty / Divisional Purchasing Team (F/DPT)                                  27-28
8        Conclusion                                                                       28
9        Appendices                                                                    29-30
10       References to Diagrams, Figures and Tables                                       31

DOCUMENT CONTROL

Key Personnel

 Role              Name                                        Signature        Date
 Author:           Laura Watson                                                 27/01/10
 Approver:         Alison Holmes                                                01/03/10
 Stakeholders:     Paulina Lubacz                                               22/04/10

Summary

This report looks to summarise the activities of the Procurement Service over the
calendar year 2009, and looks to the activities required throughout 2010.

Status

Draft.

Version Control

 Version             Date Issued            Reason for Issue
 0.1                 27/01/10               First draft to Alison Holmes.
 1.0                 01/03/10               Second draft to Paulina Lubacz.
 2.0                 27/04/10               Approved report.




                                    Page 2 of 31                              Version 1.0
Procurement Service
1   Management Summary

1.1 Achievements in 2009

       Successful business cases approved for:
           o eProcurement;
           o Insurance Assistant.
       Implementation of eSourcing;
       Successful completion of 2 eAuctions, with impressive savings;
       Increased communication with both internal and external customers;
       Increased collaboration with contracted suppliers, through the introduction of
        Contract Improvement Plans;
       Increased collaboration with non-contracted suppliers through the successful
        “Meet The Buyer” event;
       Maintained level of service despite significant staffing issues.

1.2 Plans for 2010

       Implementation of eProcurement in to pilot sites then roll out to all current
        phases of the P2P project;
       Commence roll out of eProcurement to the Faculty of Science;
       Continue to implement strategic contracts;
       Utilise the skills of the procurement staff in core procurement roles.


2   Introduction
    This report is provided to give information on the activities of the Procurement
    Service throughout 2009 and the projected activities required for 2010.

    The year has seen the commencement of the eProcurement project, and some
    successful eAuctions that have generated savings for the University.

    Procurement activity is undertaken by the Procurement Service for the majority
    of University Departments and Colleges, with the only exception being non-
    capital purchases sub-£25K for the Faculty of Science.

    The Procurement Service is now a separate department within the Treasurer’s
    Division, and has its own budget.


3   eProcurement
    Following approval of the business case submitted to the 2009/10 planning
    round, funding was approved to purchase the eProcurement software from Wax
    Digital. After a competition and discussion with marketing, it was agreed that
    the name of the software, for both sourcing and Purchase to Pay (P2P) would
    be acquire.



                                  Page 3 of 31                                Version 1.0
Procurement Service
3.1 eSourcing

    As eSourcing only directly affects staff within the Procurement Service (end
    users are indirectly affected), it was decided to go-live with this much sooner
    than with P2P. Training was provided to the Strategic Contracts Managers and
    Purchasing Team Leaders and two tenders were started, with assistance from
    Wax Digital, through the eSourcing tool, for Uniforms and Facilities
    Management.

    After a month, it was decided that all new tenders over £25K should be procured
    through the eSourcing platform. The benefits of this are that tenders are not
    sent out and received on paper (therefore saving money on paper, ink and
    postage, as well as the environmental benefits this brings) and the quantitative
    questions can evaluate themselves, ensuring the Strategic Contracts Managers
    can add value to the more complex areas of evaluation.

    To date, there having been 22 completed processes in acquire, as shown in
    Table 1, with end users in the Departments and Colleges being responsible for
    reviewing the technical submissions. The most successful to date has been the
    Facilities Management (FM) tender, see section 5.3.

    Table 1 – Completed Processes in acquire

     Process                                                                Number of
                                                                              Awards
     Mini Competition (MC) - from Framework Agreements                              1
     Request for Quotations (RFQ)                                                   0
     Request for Tenders (RFT)                                                      7
     Invitation to Tender (ITT)                                                   11
     EU Advertisement (EU)                                                          1
     eAuctions                                                                      2

3.2 Purchase to Pay (P2P)

    Various activities have been taking place on this part of the roll-out, with a lot of
    data collected so that the system build can commence. Several workshops
    have taken place with Wax Digital, and “webinars” which have allowed
    Implementation Team chance to view the system have been especially useful.

    As per the business case, the roll-out of P2P will be on a phased basis,
    commencing with the pilot sites:

       Estates and Buildings;
       The Trevelyan College community;
       Geography;
       Finance Department;
       Procurement Service.




                                   Page 4 of 31                                Version 1.0
Procurement Service
    It is believed that these pilot sites give a good representation of University
    procurement, and work will commence in earnest with these Departments from
    March 2010. Process maps, test scripts and training material is being
    developed, with system testing taking place from February 2010.

    Roles and responsibilities within the Procurement Service have been amended
    as a result of the change in job roles due to the software, and this re-structure
    has been approved by the Treasurer, the HERA team and delivered through
    close working with Human Resources and the Unions. The staff consultation
    has now concluded. See Appendix A for the structure that will take effect from
    1st June 2010.


4   Sustainability and the Environment

4.1 Sustainable Procurement

    A new Sustainable Procurement Action plan was created by the Procurement
    Service for 2008/2009 which like previous years continues to focus our
    development in the five areas set out in the Government’s flexible framework.
    The flexible framework has been developed to assess the quality of
    procurement activity and provide a clear route to better performance. It covers:

    1.   People
    2.   Policy, strategy and communication
    3.   Procurement process
    4.   Engaging suppliers
    5.   Measurement and results

    Following discussions with colleagues in other institutions and meeting with the
    Sustainable Procurement Centre of Excellence for Higher Education (a HEFCE
    funded project), it is clear that we are continuing to lead the way in sustainable
    procurement within the Higher Education sector. It is through this success that
    we were invited to host a workshop at the bi-annual Conference on University
    Purchasing (COUP) and deliver presentations to the North Eastern Universities
    Purchasing Consortia (NEUPC) and the Southern Universities Purchasing
    Consortia (SUPC).

    Contracts that have significant environmental benefits have been implemented
    through this period, covering:

        Skip Hire:
         o Contract ensures waste is:
             Disposed of correctly;
             Diverted from landfill where possible;
             Segregated to be recycled or composted.
         o Considerations in the tender process made to:
             Age and conditions of vehicles with a view to pollution;
             Compliance with all applicable legislation to avoid such malpractices
               as burning and fly tipping.


                                  Page 5 of 31                               Version 1.0
Procurement Service

       Catering Contracts:
        o New contracts put in place for:
            Fruit and Vegetables, Dairy and Sliced Bread;
            Frozen and Fresh Fish and Seafood;
        o Contracts have demonstrated numerous benefits, e.g.:
            Reducing food miles through using local small and medium sized
              suppliers;
            Focusing on local, fresh and seasonal produce;
            Please see Section 5.2 for further information.

    Fairtrade Accreditation was retained, as the university continues to show year-
    on-year improvements. The process for re-application will commence in May
    2010 and this year will be undertaken by the Environment Team.

    All procurement staff continue to produce a monthly savings log which not only
    highlights financial savings but also lists the social and environmental benefits
    attached to the purchase. This may include the likes of reduced or combined
    deliveries, using local suppliers and buying environmental or Fairtrade certified
    products. In addition to this as part of the tender award process the Strategic
    Contract Managers demonstrate what considerations have been made in terms
    of the environment and CSR and what benefits are to be gained.

    Contract Improvement Plans (CIPs) were also introduced in 2009. A CIP is to
    act as the source, driver and baseline, against which to monitor any future
    contract change, thus it is to bring about an acceptable and beneficial change to
    the contract. This applies to both parties so as well as the supplier improving
    the onus is also on the University to make changes where possible. Not only do
    the CIPs capture quality and service level improvements but they are used to
    facilitate further environmental and social benefits which can be gained from the
    contract.

4.2 Poverty Aware Procurement

    Liam Glasper, Strategic Contracts Manager started work on an EAUC project in
    2008 which is to promote more poverty-aware procurement in Universities and
    Colleges. Due to factors outside of our control this project has been put on hold
    and we are awaiting a revised timetable and action plan. The project is aimed
    at responsible institutions and at people in other organisations who want to
    reduce Third World Poverty. The project is funded from the UK Department for
    International Development’s (DfID) development awareness fund and was
    originally intended to run until 31st March 2010.

    As a result of the recession there was significant debate regarding what is
    poverty. It was determined that as well as considering developing countries
    there was also an increased duty of care to the UK and in particular for the
    Procurement Service to focus on regional suppliers. The work in this area is
    further explained in section 4.3.




                                 Page 6 of 31                               Version 1.0
Procurement Service
4.3 Local Sourcing

    Although the University does not seek to discriminate against any supplier
    regardless of their geographical dispersion, the Procurement Service recognises
    that there are benefits from utilising local resources. When using the term
    “local” it was necessary to identify what that is in definition and it was agreed
    that this would be those located in the North East Region. A significant amount
    of work has also been undertaken on SMEs (small and medium sized
    enterprises) which can be described in the following table.

    Table 2 – SME definition

     Name                         Employees                    Annual Turnover
     Micro Enterprise             Fewer than 10                Not exceeding £1.4M
     Small Enterprise             Fewer than 50                Not exceeding £6.8M
     Medium-sized Enterprise      Fewer than 250               Not exceeding £34M

    The advantages to local sourcing are numerous, but include:
       Keeping local people in jobs and promoting local business which ensures
        that this is good for the local community;
       Reducing the delivery miles which may not only reduce cost but also will
        serve to reduce the associated carbon footprint of the product being
        purchased;
       Offering good value for money, particularly where seasonal items are
        purchased;
       Increasing PR as suppliers often understand the area to which they are
        serving and can satisfy local preferences;
       Creating a shorter supply chain makes it easier to predict delivery and
        lower delivery costs.

    The university has an ethos which includes assisting SMEs and local suppliers
    and to help them to understand how they can identify and act on opportunities
    when they arrive. The Procurement Service has been proactive in helping
    suppliers throughout this period by:

        Membership of the North East Chamber of Commerce Buy North East
         Steering Group;
        Developing a “How to do business guide” to supplying goods and services
         to the University;
        Hosting a “Meet the Buyer” event to explain the EU legislation and tender
         procedures to local suppliers and SMEs;
        Providing information to suppliers to notify them of upcoming tenders and
         opportunities.

    Through research, it was found out that 70% of contracted suppliers were local
    (see Figure 1) and 37% of suppliers were SMEs (see Figure 2). Some
    examples of contracts that have been awarded to either a local supplier or SME
    are in the following table.




                                 Page 7 of 31                              Version 1.0
Procurement Service
    Figure 1 – Local Suppliers




    Figure 2 - SME




    The Procurement Service will not discriminate against large or national
    suppliers, and will seek to source the most appropriate solution.

    The following table details some recently awarded contracts and how they fit in
    with the local sourcing and SME agenda.




                                 Page 8 of 31                             Version 1.0
Procurement Service
    Table 3 – Local Suppliers

     Contract                   Supplier                   Contract Detail
     Skip Hire                  John Wade                  Local supplier and
                                                           medium sized company.
     Fruit and vegetables,      JR Holland                 Local supplier and
     dairy and sliced bread                                medium sized company.
                                                           An advocate of
                                                           Northumbrian Fields
                                                           and purchase from a
                                                           local dairy farm.
     Fresh and frozen fish      Taylor Foods               Local supplier and small
     and seafood.                                          sized company.
     Facilities Management      Mitie                      National supplier with
                                                           local offices.


5   Procurement Best Practice

5.1 Professional Services – tender process

5.1.1 Process

    The renewal of the Professional Services Framework Agreement for Estates
    and Buildings (E&B) gave the Procurement Service a valuable chance to work
    closer with the E&B Department and put in place a more workable framework
    than the previous one. The previous Framework, whilst used within its
    parameters had too many suppliers on it some of which were hardly utilised if at
    all.

    This is problematic for Public Sector Organisations as the challenge culture is
    on the increase. As EU tenders cost suppliers time and money to complete,
    where suppliers do not receive work, they are more likely to put in a challenge,
    or as a minimum a request for a full debrief.

    To address this and to deal with the likely volume of responses, and time
    needed by both Procurement and E&B to evaluate, the tender process began
    12 months before the OJEU advert due date.

5.1.2 Benefits

    The formula and criteria used to evaluate the submissions was discussed at
    great length and all relevant parties were brought together to take part in
    evaluating both pre-qualification and tender submissions. The interview stage
    proved to be invaluable in maintaining momentum and interest in the project.

    Following evaluation, and during the mandatory standstill, unsuccessful
    suppliers were debriefed on the reasons that they had failed to be placed on to
    the framework. The de-briefs took a number of days to conclude, but no
    challenges were received.


                                 Page 9 of 31                              Version 1.0
Procurement Service
5.1.3 Summary

     E&B now ensure that the work is shared equally by ensuring mini-competitions
     are carried out and work awarded based on suitability to undertake.

5.2 Fruit, Vegetables, Dairy and Sliced Bread – tender process

5.2.1 Process

     An EU tender exercise was undertaken to renew the Fruit and Vegetable, Dairy
     and Sliced Bread contract. A detailed evaluation process was undertaken which
     initially looked at the supplier’s response in relation to the specification and their
     pricing. The top four suppliers were then invited to interview.

5.2.2 Benefits

     JR Holland performed best at interview, in particular scoring highly in terms of
     environmental factors such as food miles, local sourcing and the way in which
     they operate their fleet and premises. Site visits to the Team Valley Fruit and
     Vegetable Market were undertaken at 6am to view the wholesaler to JR
     Holland, followed by a visit to JR Holland’s premises to evaluate their production
     and packaging in process. The site visit raised no concerns. The evaluation
     panel were in complete agreement to award all lots to JR Holland.

     The aim of the contract was always to deliver quality, seasonal, fresh, local
     produce at the right price. As the contract had to be advertised in the EU it is
     difficult to stipulate local produce, but careful consideration has been given to
     the impact on the environment and the food miles have been taken into
     consideration. The benefits to this contract are detailed below.

        Fairtrade produce included which will help in the retention of Fairtrade
         status.
        Collaboration in producing menus to advise on what produce will be in
         season, to ensure that this will be within the University’s budget and to
         deliver nutritional menus to students.
        JR Holland will support the University’s chef development days and
         community work.
        Due to the volatile food industry particularly with fresh produce monthly
         pricing is to take place.

5.2.3 Savings

5.2.3.1 Efficiency Savings

        As the same supplier has been awarded all three lots this will significantly
         reduce the amount of administration for all departments involved in the P2P
         process.
        The estimated financial saving to the University in terms of staff time is
         £15,700 per annum, based on the current paper based requisition process.



                                   Page 10 of 31                                Version 1.0
Procurement Service
5.2.3.2 Environmental Savings

       There will be a significant reduction in deliveries.
       A reduction in food miles and carbon emissions as local and seasonal
        produce will be purchased in favour of imported cheaper or out of season
        produce which has been produced in energy intensive practices and shipped
        or flown into the UK.
       JR Holland has made a number of improvements to minimise the impact
        they have on the environment, such as purchasing green energy, upgrading
        the refrigeration units to cut down CFCs, harvesting the rainwater from the
        roof of their premises to be used for the toilets and washing of vehicles.
        Further improvements are also intended to be made during the contract such
        as a wind turbine to power the premises.
       All cardboard packaging is made from recycled cardboard, and will be
        recycled after use.
       JR Holland is a local medium-sized enterprise.
       JR Holland support Cyrenians (charity for the homeless).
       Where possible waste products from JR Holland are sent to a local animal
        sanctuary as opposed to being sent to landfill or composted.
       JR Holland is an advocate of Northumbrian Fields, which is a group of
        farmers based in Northumberland selling their local produce to commercial
        grocers and where possible this produce will be used to supply the
        University.
       JR Holland purchase their dairy from a local dairy farm, Embleton Hall
        Dairies, and will be providing a pergal machine for each college which will be
        branded with Embleton Hall, so students and guests can clearly see at meal
        times we are using a local County Durham product.
       Pre-prepared vegetables (washed and sliced vegetables and salad) are
        purchased through the contract. JR Holland is arranging for the local
        farmer’s produce to be dropped off at JR Holland’s so the preparation
        supplier will take with them on their return journey. The vegetables will then
        be prepared and returned to JR Holland. JR Holland are not charging the
        local farmers for this service, but the added benefit is increasing the income
        of the farmers as the vegetables used in preparation are class 2 or class 3
        items which would not fetch as much at wholesale and JR Holland are able
        to provide locally prepared products to their customers which is of benefit to
        the University.

5.2.4 Summary

    A reduction in the number of suppliers has not lead to any reduction in added
    value or environmental benefits associated with this contract.




                                 Page 11 of 31                              Version 1.0
Procurement Service
5.3 Facilities Management – tender process

5.3.1 Process

    Due to the value of the contract Procurement were obliged to undertake an EU
    tender through which:
     36 pre-qualification questionnaires (PQQ) were received;
     6 suppliers were invited to tender;
     3 suppliers declined to tender;
     The remaining 3 completed the online tender submission, participated in the
       eAuction and attended interview.

    This was the first tender to use the University’s eSourcing system, acquire.
    Feedback from suppliers suggests that this was an easy to use system and
    provided more visibility on the tender process than traditional tendering
    processes. This is of particular importance as this was a key area raised by
    suppliers during the ‘Meet the Buyer’ event in April 2009.

    Interviews were undertaken with all 3 suppliers invited to tender. Suppliers were
    given a topic for the presentation which encouraged an innovative approach to
    the contract. This was followed by a set of interview questions regarding the
    services to be provided.

5.3.2 eAuction

    The auction itself was split into 3 separate events which were run consecutively.

    Auction 1

    This auction was concerned with the daily management fee that would be
    applied to temporary catering and domestic staff. This was a reverse auction,
    i.e. supplier bids should decrease as the management fee becomes lower.

    Auction 2

    Suppliers were asked to detail the percentage reduction on fees they would
    offer the University if we employed temporary staff on a permanent basis. This
    was a forward auction, i.e. supplier bids should increase as the percentage
    reduction offered gets higher.

    Auction 3

    This was the most highly anticipated auction as this was relating to the
    management fee for the FM service and was considered to be the area where
    the highest level of saving could be made. Additionally, by undertaking this
    auction visibility would be given to the management fee applicable across the
    contract.




                                Page 12 of 31                              Version 1.0
Procurement Service
    This auction was extremely exciting to watch and the software package used
    showed the viewer what each supplier was doing, i.e. whether they were making
    a bid, in real time. In total, 20 bids were received resulting in the price quoted
    for management fees dropping from £204,060 (11% of current contract price) to
    £88,250, a saving of 56.75%.

5.3.3 Benefits

        The structure has provided visibility on all suppliers proposed profit margins;
         this is an element which has not been fully quantified in the past.
        It quickly became apparent that the auction would deliver the savings
         anticipated as the opening bids on the auction were lower than prices
         currently paid.
        In addition to the auction the e-system for submission has assisted the
         University in maintaining its own sustainability policy as no paper
         submissions were received. All evaluation has been completed ‘online’.

5.3.4 Savings

5.3.4.1 Efficiency Savings

     The successful supplier has identified several areas where they feel further
     savings could be made to the contract in year 1:

        Novation of optional contracts prior to end date;
        Move to output based specifications;
        Bundling further services.

     Anticipated savings can be found in the Table 4 shown below.

5.3.4.2 Environmental Savings

     The successful supplier have also identified areas where the services to be
     provided have an impact upon the environment. Suggestions for improvement
     can be seen below:

        Use of LPG vans;
        Web based reporting and MI;
        Use of local suppliers ;
        Use of microfiber and steam cleaning technology;
        Ethically sourced uniforms;
        Reuse of green waste;
        Low energy usage equipment.




                                   Page 13 of 31                              Version 1.0
Procurement Service
5.3.5 Summary

    Table 4 – Cash Saving Summary

     Description of Saving                  Amount per year      Contract Savings
                                                              (amount per year x 4)
     Reduction in contract price                   £358,869             £1,435,476
     Efficiency savings                            £110,000               £440,000
     Total                                         £468,869             £1,875,476

    To put this cash saving into context this should be compared to the historical
    price of the contract. Essentially it could be argued that by re-tendering this
    contract in the manner that it has been the University has achieved a year’s free
    service, based upon current costs.

5.4 Uniforms – tender process

5.4.1 Process

    The contract for Uniform, Work wear, Personal Protective clothing, Safety
    Footwear and Lab coat was due for re-tender in 2009. Due to the value of the
    contract the University was obliged to undertake an EU tender. As there were
    likely to be a high number of applications it was agreed to undertake an EU
    tender using the restricted procedure through which:

       38 suppliers expressed an interest in the tender;
       25 suppliers submitted a PQQ;
       13 suppliers were invited to tender;
       2 suppliers declined to tender;
       6 suppliers did not submit a tender;
       The remaining 5 suppliers completed the online tender submission for one or
        more Lots; all 5 suppliers were invited to participate in the auction.

5.4.2 Benefits

    The tender was issued using the acquire eSourcing system which requires
    suppliers to complete the tender on line eliminating the need for suppliers to
    provide multiple paper copies of their tender submission. As part of the tender
    suppliers were asked to provide details of the following information:

       Ethical Trading;
       Fairtrade;
       Delivery.




                                   Page 14 of 31                           Version 1.0
Procurement Service
5.4.3 Savings

5.4.3.1 Efficiency Savings

     The auction has delivered the following potential savings:

        101 bids were placed by 6 suppliers against auction 1, with a potential
         annual saving of £2,470 against historic spend of £10,490, equating to
         23.55% saving.
        58 bids were placed by 4 suppliers against auction 2, with a potential annual
         saving of £19,021 against historic spend of £66,458, equating to 28.62%
         saving.
        18 bids were placed by 6 suppliers against auction 3, which has resulted in a
         small increase of 4.5%, which would have been a larger increase had the
         auction not been undertaken.

     These savings still need to be reviewed prior to the award of the contract.

5.4.3.2 Environmental Savings

     As part of Procurement Service’s Sustainability, Fairtrade and CSR policies the
     University requires suppliers to review and adhere to the University policies
     where possible as well as their own and the following are included as standard
     in the PQQ document:

        Environmental;
        Corporate and Social responsibility (CSR);
        Quality Assurance.

     As well as the above sections suppliers were requested to provide
     supplementary information relating to sourcing in an ethical manner, through the
     provision of:

        Details of the procedures that suppliers have for selecting and managing sub
         contractors and suppliers in the supply chain.

5.4.4 Summary

     Interviews and presentations were overseen by key University staff who would
     be using the new contract, and covered the catering, housekeeping, retail and
     procurement areas. Interviews were chaired by the Deputy Director of
     Procurement.

     All suppliers were asked to present on ethical trading within the supply chain, an
     area that has made the press on several occasions, and is closely linked to the
     University’s corporate and social responsibility policy for procurement. In
     addition to this, they were asked to bring along samples of Fairtrade lines.
     Following the presentation, each supplier was asked a set of standard questions
     and at the end of the process, the panel agreed scores.



                                  Page 15 of 31                              Version 1.0
Procurement Service
    The contract is currently being concluded and will be implemented in March
    2010.

5.5 Pest Control – contract management

5.5.1 Process

    Durham University’s Procurement Service let a contract for Pest Control in
    August 2004 which covered callouts and ad hoc pest control requirements. The
    University re-tendered this requirement to coincide with the end of the contract
    August 2007. The contract is now more pro-active, environmentally friendly,
    sustainable, user friendly and offers better value for money.

5.5.2 Benefits

    In 2007 the Procurement Service at Durham University reviewed the current
    arrangements for Pest Control and decided the reactive approach was not
    appropriate and a more proactive solution would be sourced for the replacement
    contract.

    With over 60 sites across the city, when it came to Pest Control it was essential
    to keep all management information in a central location, easily accessible for
    all end users. An easier way to manage the information, as well as a way to
    reduce the amount of paper used was required, whilst reducing carbon
    emissions and increasing ethical and Fairtrade procurement were also at the top
    of the ‘green’ initiative.

    After reviewing the tender returns interviews were arranged and the successful
    supplier was able to demonstrate their appropriateness of solution as well as
    value for money.

    Quarterly contract management meetings and staff training were agreed in the
    service levels as a way of managing and improving the contract.

5.5.3 Goals

       To administer a paper free agreement;
       To utilise available technology for ease of access;
       To provide a pro-active approach to pest control;
       To provide training into how to prevent/reduce infestations;
       To provide an ethical solution where possible to pest control methods;
       To manage responsibly the disposal of hazardous substances;
       To obtain real time information on call outs;
       To make financial savings based on a better and more ethical solution;
       To have instant access to management information;
       To achieve a pest free environment for staff and students.




                                Page 16 of 31                              Version 1.0
Procurement Service
5.5.4 Obstacles and solutions

     Obstacle                       Solution
     University buy-in              Procurement set up a management team
                                    including a member from:
                                     E&B Facilities Management;
                                     Colleges Division to represent end
                                        users;
                                     Procurement Service Strategic
                                        Contract Management;
                                     Supplier – MITIE Pest Control.
                                    Meetings have included the setting up of
                                    contract improvement plans,
                                    communication by website and training.
     Getting departments and         Instructions were set up for end users
     colleges to use the contract       to follow on the Procurement website.
                                     Workshops carried out to discuss and
                                        recognise the signs pests leave
                                        behind and what action to take.
                                     Key departmental and College staff
                                        were invited to attend contract
                                        management meetings so issues
                                        could be discussed and resolutions
                                        agreed by both parties.
                                     H&S agreed to discuss pest control at
                                        the H&S co-ordinators meeting and
                                        provided MITIE’s online link and how
                                        to navigate around the portal.
     Turning the initiative from    Pro-active procurement and constant
     paying lip-service to making   improvement of the contract through
     it happen                      management meetings have made
                                    savings possible on a long term basis.
     Ensuring the project is        MITIE use the University as a case study
     known about outside of         and a tool for best practice which they
     Durham University              feel has lead to more business
                                    opportunities.

5.5.5 Performance and Results

       Performance is managed through management information showing the
        success and/or improvement required within the contract;
       Measure methods used to control pests to see how environmental
        alternative products are used and how the usage increases;
       Measure costs from previous financial year undertaken with previous
        supplier against the first year of the current contract, which shows a 54%
        saving on price;




                                 Page 17 of 31                              Version 1.0
Procurement Service
       Constantly working with the supplier to improve contracts, and targets set for
        improvements such as paper free contract by end 2009. Note, this has been
        achieved, and a series of workshops have been arranged to ensure that staff
        are able to use the on-line alternative.

5.5.6 Lessons Learnt

       This contract would not have had as much success were it not for the
        enthusiasm of the Procurement Service, and the buy-in from Departments
        and Colleges;
       Environmental benefits of contracts can be captured in the same way you
        can with financial savings. This means you can report on the difference
        being made and quantify the potential impact of each area within a contract
        improvement plan;
       Selection of a pro-active supplier has proven benefits in cost savings, ease
        of information, training and willingness to improve environmental areas
        where possible;
       Communication and training of end-users is important to ensure an effective
        contract;
       Communication with the contacted supplier is vital to make sure that they
        understand the culture, procedures and processes of the university and how
        all parties can work together to achieve that aim;
       Regular ongoing training for staff involved in the use of the contract helps
        keep them focused and helps to prevent infestations occurring.


6   Central Core Procurement Team (CCPT)

6.1 Tenders

    Throughout 2009, 111 tenders have been commenced, an increase of 3.61% on
    2008 figures.




                                 Page 18 of 31                              Version 1.0
Procurement Service
    Figure 3 - Tenders 2009


                                          Tenders 2009

                                           7%
                                 2% 1%
                                   1%
                                                                   23%
                           10%

                      4%



                                                                           6%



                                            46%



          Science                                   Social Sciences & Health
          Central Services                          Queens Campus
          Colleges                                  Durham Business School
          Libraries                                 Business & Regional Development
          University Wide

    These included:

       26 for the Faculty of Science, with costs totalling approximately £1.4m (34%
        of this within Physics);
        o 10 for Physics, 4 of which were for Centre for Advanced Industry
        o 2 for Biological and Biomedical Sciences
        o 3 for Chemistry
        o 4 for Computer Sciences
        o 2 for Earth Sciences
        o 5 for Engineering




                                 Page 19 of 31                             Version 1.0
Procurement Service
    Figure 4 - Faculty of Science


                                           Faculty of Science



                                     12%


                   8%
                                                                                        38%




             19%




                                8%
                                                             15%




              Physics                      Computer Sciences         Earth Sciences
              Engineering                  Biological & Biomedical   Chemistry


       7 for the Faculty of Social Sciences and Health, with costs totalling
        approximately £691,644 (81% of this within Geography);
        o 1 for Anthropology
        o 2 for Archaeology
        o 2 for Geography
        o 2 for Sport




                                  Page 20 of 31                                 Version 1.0
Procurement Service
    Figure 5 - Faculty of Social Sciences and Health


                                  Social Sciences & Health



                                                                  14%
                   29%




                                                                                      28%



                                29%




                       Anthropology      Archaeology       Geography       Sport



       52 for the Central Services Divisions, with costs totalling approximately
        £8.54m (64.5% of which is within E&B);
        o 24 for Estates and Buildings (E&B)
        o 15 for ITS
        o 1 for Finance
        o 5 for HR
        o 4 for Registrars (1 of which is in collaboration with ITS)
        o 2 for Treasurers
        o 1 for Development and Communications




                                 Page 21 of 31                               Version 1.0
Procurement Service
    Figure 6 - Central Services Division


                                  Central Services Tenders


                                          4%      2%
                              8%

                    10%
                   2%                                                       45%




                            29%




             E&B                                       ITS
             Finance                                   HR
             Registrars                                Treasurers
             Development & Communications

       4 for Queens Campus, with costs totalling approximately £5.62m (1 of which
        was let in collaboration with E&B);
       11 for the Colleges Division, with costs totalling approximately £4m;
       2 for Durham Business School;
       1 for Libraries Division;
       1 for the Business & Regional Development Department;
       8 University Wide.

    Savings of £2,154,266 were generated throughout 2009 by adopting
    professional procurement practices. Further details can be found in Appendix B.

6.2 Contracts

    77 new contracts have been awarded throughout 2009. This is more than
    double the number of contracts awarded in 2008 and demonstrates the
    proactive nature that the Procurement Service now have in identifying areas
    where contracts could be implemented and would add value.

    14 were above the EU Public Procurement Regulations threshold and were
    therefore advertised in OJEU. Of these 14, the following 7 tender exercises
    resulted in contracts: These were for:




                                  Page 22 of 31                           Version 1.0
Procurement Service
            o DHS1 District Heating;
            o Professional Services;
            o Facilities Management;
            o Fruit & Veg, Dairy and Sliced Bread;
            o Fresh & Frozen Fish and Seafood;
            o Ventilation Plant Maintenance;
            o Inter-Campus Bus Service (Category B).
     The remaining 7 tender exercises resulted in one-off purchases and were
       for:
            o Rubber Crumb Rugby Pitch;
            o Echelle Grating for South African Large Telescope High Resolution
              Spectrograph (SALT HRS) project;
            o Gateway Project Construction;
            o Confocal Microscope for Biological & Biomedical Sciences;
            o Mass Spectrometer for Chemistry;
            o High Performance Computer;
            o Camera system for SALT HRS project.

    5 mini-competitions were held on existing frameworks, resulting in the University
    not having to undertake EU procurements in the following areas:
           o Communications Infrastructure Framework Agreement – Lot 3
              University framework;
           o Audio Visual Equipment – OGC framework;
           o Audio Visual Equipment – NEUPC framework;
           o IT Training – OGC framework;
           o Mobile Telephones – OGC Framework.

    The remaining 58 were below the EU Public Procurement Regulations
    threshold, and were therefore tendered with suitably identified suppliers. Of
    these 58, 30 were one-off purchases and 28 resulted in longer term contracts.

    47 contracts and tenders have been identified for 2010 which demonstrates the
    way in which the Procurement Service are able to plan workload. This number
    does not include those tenders that are requested through the 2 week Service
    Level Agreement. Where these tenders can be planned this helps ensure that
    the Procurement Service is involved in the initial discussions prior to the need to
    begin the process in acquire, so that work can adequately be built in to
    portfolios, an accurate specification created, evaluation agreed, risk mitigated,
    and effective contracts implemented that demonstrate contract improvements.

    Out of the 47 contracts and tenders so far identified:

    8 are due for the Colleges Division;
    25 are due for the Central Services Division, of which 11 are for E&B;
    7 are due for the Faculty of Science;
    7 are University wide contracts.

    Out of these, 18 are subject to EU legislation.




                                 Page 23 of 31                               Version 1.0
Procurement Service
6.3 Suppliers

    In 2009, 579 new supplier requests were received whilst 744 supplier details
    have been removed from Oracle, a reduction of 7.7%. More suppliers continue
    to be removed from the database than are added, which demonstrates the value
    provided by the CSFPT and CQPT who continue to review all options available
    such as using suppliers already on the system, using contracted suppliers,
    suggesting new contracts to be put in place and using the purchasing card
    wherever possible.

6.4 Capital Orders

    There has been 267 Capital Orders placed throughout the duration of 2009, this
    is a 73% increase on the total placed in 2008.

    There has been more capital lab equipment refurbishments awarded to
    Departments from the Research Capital Equipment Fund (sometimes referred
    to as SCAP), these often include lower value items which when combined are
    treated as capital. Spending commenced in August 2008 by Departments from
    this fund, which had a slow start at the beginning and the bulk of the purchasing
    was done during the final 2 quarters of the financial year, ie: January – July
    2009. The Research Capital Equipment Fund also has approval of £3million of
    capital equipment expenditure during Aug 2009-July 2010.

    In addition to Research Capital there has also been awards from the capital
    programme for ITS and BSI equipment, ITS will continue to purchase equipment
    until 2011/12 for the IT Infrastructure, IT Vision and IP Telephony Projects. The
    BSI Phase 2 refurbishment completed in July 09, purchasing for this project
    consisted of many lower value lab items, no further orders will be placed for this
    project.

6.5 Purchasing Card

    Information on card usage is still regularly reviewed to ensure compliance and
    appropriate use of the cards. There has been an increase of 73 cardholders
    throughout the University in the last year bringing the total to 552 cardholders of
    which 55% are registered on the online system.

    Since Barclays introduced an online system for cardholders an upgrade of this
    system has taken place. This has had little effect on the cardholders however it
    has had a positive impact on the Barclaycard online administrators within
    Procurement. They are now able to:

       Raise cardholder limits;
       View cardholders authorisations;
       View where cards have been declined and resolve issues so that the
        purchase can be made;
       Run more reports to facilitate contract management, on areas such as:
        o Spend by supplier;
        o Zero spend.


                                 Page 24 of 31                               Version 1.0
Procurement Service
    Work will start with the Business Assurance department in the New Year to
    discuss the possibility of carrying out the monthly download in electronic format
    as this will provide a further environmental saving.

6.6 Insurance

     2009 has seen some significant changes to the Insurance Service including:

        The return of Claire Robinson from 12 months maternity leave in March
         2009;
        The appointment of Barbara Dick to the position of Insurance Assistant
         working 21 hours a week from August 2009.

     The Insurance Service is constantly looking to improve the way that insurance is
     handled and some of the topics currently being worked on are as follows:

        Reviewing the travel forms currently used for student travel to make them
         more user-friendly and comprehensive;
        Investigating the feasibility of an online travel system;
        Standardising the asset register process with all asset register information
         being compiled for departments and colleges so that they only need to
         update the information provided. This will make it much easier for
         Departments and Colleges to update their information, which should speed
         up this part of the compilation of information for UMAL;
        Improving the internal claim file system to show ongoing claims and closed
         claims to facilitate ease of use and understanding;
        Working with UMAL on paying travel claims electronically as part of our
         Corporate and Social Responsibility policy.

     Some of the successes of the Insurance Service since January 2009 include the
     following:

        All insurance queries were handled within the Service Level Agreement
         despite an increase of 39% to date in the number of queries received;
        The large claim for the July floods has had an interim payment of £160,000
         paid by UMAL;
        The Buildings and Contents exercise and the Insurance Renewal were both
         submitted to UMAL within the deadlines requested.

6.7 Balanced Scorecard

     The Procurement Service continues to monitor performance using customer
     satisfaction surveys. The feedback covers the performance of all staff, including
     the F/DPT, CCPT and Insurance. Whilst there have been some minor criticisms
     (2%), which were followed up directly by the Deputy Director of Procurement,
     there is clear evidence that internal customers are satisfied with the level of
     service they receive.




                                  Page 25 of 31                              Version 1.0
Procurement Service
    In 2009 the questionnaires were amended and developed to ensure we have a
    full 360° feedback process. Therefore as well as amending the surveys to
    capture environmental and social activity new surveys were created to capture
    supplier and staff feedback. Consequently all suppliers who now participate in a
    tendering process are invited to provide feedback on the process. Procurement
    staff complete regular surveys to ensure their needs as well as the customer
    and supplier are being met, to highlight any concerns they have and to capture
    potential improvements to processes and procedures.

6.8 Communication

     Throughout 2009, Procurement have undertaken further training and awareness
     sessions for University staff, via workshops and training sessions, with suppliers
     and with Procurement Service staff. These workshops and training included:

        Training for 9 members of ITS on the current paper based P2P process;
        Quarterly P2P training courses delivered to 64 members of internal staff
         across all Departments and Colleges;
        Oracle training with Unisys delivered to end users on how to reconcile
         purchasing card transactions. The Purchasing Team Leader for the CCPT
         now attends all Unisys training to end users on the reconciliation of their
         purchasing card. The importance of this is made clear when cardholders
         collect their cards from the Procurement Service, and while Unisys explain
         the training on the Oracle System, they were unable to provide answers to
         questions on processes. The result of combining this expertise is that the
         cardholders are now fully aware of what is required of them and why. Since
         starting the training last year the numbers of queries and problems have
         reduced;
        Konica Minolta delivered a workshop to the end users reviewing the
         functions of the machines and providing help and guidance;
        Procurement staff carried out internal training for other colleagues within the
         section covering the following areas:
          Refresher training for the F/DPT;
          EU Framework Training;
          Project Training;
          Sustainable Procurement Training will be carried out in January 2010.
        Sophie Sowerby, University Training Manager delivered 2 specific
         Communicating Assertively training sessions across the F/DPT;
        Specific training courses were delivered for a group of Procurement Staff on:
          EU Framework training delivered by Achilles;
          Sustainable Procurement training by Achilles;
          eSourcing by Wax Digital.
        A 2 day “Meet the Buyer” event was held for suppliers in April 2009. There
         were over 266 suppliers who contacted Procurement Service declaring an
         interest in the event. The purpose of the event was firstly to help suppliers
         understand how:
          The EU Public Procurement Directives and Regulations affect the
             University’s tendering processes and how they are encompassed within
             them to obtain goods, services and works;



                                  Page 26 of 31                               Version 1.0
Procurement Service
        To complete and return the relevant documents that are used during
         tender exercises and giving advice and guidance on completion of these
         documents. This event was a huge success

    Work will continue in 2010 to engage with SME’s and local suppliers, through a
    series of “Meet the Buyer” events. University staff will also be invited to some
    “Meet the Supplier” events to meet with potential and current suppliers.


7   Faculty / Divisional Purchasing Team (F/DPT)
    Staffing throughout 2009 has been a problem across both teams. There have
    been 3 resignations, with the staff being brought in on Fixed Term Contracts to
    see the implementation of eProcurement in all leaving before their termination
    date. To date, there is 1 member of staff remaining on a Fixed Term contract
    until end July 2010, and there are 3 Temporary Purchasing Staff, and 2
    Temporary Administrative Staff. The structure of the Procurement Service is
    under review as a result of the implementation of eProcurement, and for that
    reason, it was felt more sensible to allow the existing permanent staff the
    opportunity to apply for the jobs that most interested them, and for the
    vacancies to be filled on completion of this re-structure.

    In addition, there has been a very high level of long-term sickness this year, and
    at times, it has been very difficult to hit the service levels with the number of
    staff available. This was particularly bad over year end. However, our
    customers have not been aware of these issues, work has been completed to
    the best of the staff in the F/DPTs ability, and they are to be commended for
    their attitude throughout these difficult times.

    Hopes for 2010 are that the teams will be able to stabilise, though this is only
    possible once the vacancies are filled, and the new roles appointed to.

    See Section 3.2 for further details on changes, and Appendix A for new
    organisation structure.

7.1 Colleges and Queens Purchasing Team (CQPT)

    From 1st January 2009 to 31st December 2009 the CQPT has processed 3,282
    requisition forms, placing orders to the total value of £14,135,914.81. 61% of all
    orders were placed with contracted suppliers where prices have already been
    agreed. As the majority of these are also blanket orders, it makes it difficult to
    negotiate further savings, which have already been made on the implementation
    of the contract.

    Out of the 39% (1,280 orders) not placed with contracted suppliers, the CQPT
    have undertaken the following process:




                                 Page 27 of 31                               Version 1.0
Procurement Service

     Mini Competition (MC)                   75
     Request for Quotation (RFQ)             23
     Request for Tender (RFT)                 8
     Verbal Quote (VQ)                       78
     Total                                  184

7.2 Central Services and Faculty Purchasing Team (CSFPT)

    From 1st January 2009 to 31st December 2009 the CSFPT processed 5,320
    requisition forms placing orders to the total value of £41,430,963.85. Out of
    these requisitions, 70% are made with contracted suppliers where prices have
    already been agreed. 19% of all orders placed were blanket orders which again
    makes it difficult to negotiate savings as prices have already been made when
    the initial contract was let.

    Out of the 30% (1,596 orders) not placed with contracted suppliers, the CSFPT
    have undertaken the following process:

     Mini Competition (MC)                  228
     Request for Quotation (RFQ)            281
     Request for Tender (RFT)                 9
     Verbal Quote (VQ)                      218
     Total                                  736


8   Conclusion
    Despite the difficulties that have been faced in terms of staffing, the Director and
    Deputy Director of Procurement feel that this has been a very successful year
    for the Procurement Service, in terms of the value that has been added for the
    University, and the way that the Procurement function will now be able to move
    forward.

    Activities in 2009 will be used as a starting point for 2010, where bigger savings,
    more sustainable purchasing, and the full introduction of eProcurement will be
    seen.

    If you have any queries on this report, please do not hesitate to contact the
    authors, details below.

     Alison Holmes MCIPS                         Laura Watson FInstLM MCIPS
     Director of Procurement                     Deputy Director of Procurement
     Telephone: 0191 3344524                     Telephone: 0191 3344525
     Email: alison.holmes@durham.ac.uk           Email: laura.watson@durham.ac.uk




                                 Page 28 of 31                               Version 1.0
Procurement Service
9         Appendices

Appendix A – Revised Organisation Chart from Implementation of eProcurement
                                                                                                                 Alison Holmes
                                                                                                                   Director of
                                                                                                                  Procurement




                                                                                                                Laura Watson
                                                                                                               Deputy Director of
                                                                                                                 Procurement




                                                                                                   Louise Mason
                                                                                                 Personal Assistant
                                                                                                to Director & Deputy
                                                                                                       Director



    Margaret Parry                         Rebecca Morris                    Neil Petch          Dave Armstrong             Liam Glasper          Linda Meade           Rachael Scott          Lyndsay Keane         Claire Robinson
     Purchasing                             Procurement                     Contracts and       Strategic Contracts      Strategic Contracts   Strategic Contracts   Strategic Contracts     Strategic Contracts   Insurance Manager
      Manager                                 Manager                        Catalogues              Manager                  Manager               Manager               Manager               Manager (f/t)
                                                                              Manager



                 Angela Healer                               Nicky Ord                 Wendy Woollett                                                                                                                             Barbara Dick
                   Assistant                                Procurement               Assistant Contracts                                                                                                                      Insurance Assistant
                  Purchasing                                Administrator               & Catalogues                                                                                                                                  (p/t)
                   Manager                                                                 Manager



                               Rob Biggins               Chris Slade                                  Teresa Hogg
                            Purchasing Officer       Procurement Officer                              Contracts and
                                                                                                    Catalogues Officer




                             Philip Readman
                            Purchasing Officer




                                Catherine
                               Thompson
                            Purchasing Officer




                                                                                                             Page 29 of 31                                                                 Version 1.0
Procurement Service
Appendix B - Savings


          Jan-                                 May-                                                                            Total
                 Feb-09   Mar-09    Apr-09             Jun-09    Jul-09    Aug-09    Sep-09    Oct-09   Nov-09     Dec-09
            09                                   09                                                                          Savings

CCPT
        500      2,500    459,534   331,193   10,480   -        48,033     306,814   15,088   352,586   470,443   24,805    2,021,976
CSFPT
        1,609    2,997    4,430     11,100    6,699    14,627   14,529     1,816     5,282    7,307     1,811     222       72,429
CQPT
        287      4,850    13,128    3,965     2,750    15,063   2,348      609       4,650    4,028     2,465     5,716     59,861

        2,396    10,347   477,092   346,258   19,929   29,690   64,910     309,239   25,020   363,921   474,719   30,743    2,154,266




                                                           Page 30 of 31                                   Version 1.0
Procurement Service
10 References
Figures

  1.   Local Suppliers
  2.   SME’s
  3.   Tenders 2009
  4.   Tenders - Faculty of Science
  5.   Tenders – Faculty of Social Science and Health
  6.   Tenders – Central Services Division

Tables

  1.   Processes completed in acquire
  2.   SME definition
  3.   Local Suppliers
  4.   Cash Saving Summary




                                Page 31 of 31           Version 1.0

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:1
posted:12/8/2012
language:Latin
pages:31