Template Corporate Procurement Plan 2005-2007

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					      Template Corporate Procurement Plan 2005-2007




  The following document includes SAMPLE TEXT for inclusion in a
       Corporate Procurement Plan if considered appropriate




Note
Procurement is concerned with obtaining the best goods and services,
supplies and construction to meet the demands of service users with a
commitment to achieve value for money. A procurement plan is an
effective tool to identify and review current procurement profile and
practices, to determine future needs and to link procurement to an
organisation’s strategic objectives. Procurement plans link an
agency’s procurement strategy and savings targets with these
objectives. Procurement plans also provide an opportunity to
communicate to staff the direction of procurement reform within your
agency and contribute to its development. Procurement planning
therefore is an integral part of business planning and a number of
areas in your organisation should contribute to it including
purchasing, finance personnel (incl. human resources) and information
technology.




                                 1
                      Who Should Read This?



Those responsible for the development and implementation of Public Sector
Corporate Procurement Plans as set out in the National Public Procurement
Policy Framework.




                                   2
   Note:
   Organisations may consider that it would be appropriate to include
   a vision and a mission statement in their corporate procurement
   plan. The following or versions thereof may be appropriate




       CORPORATE PROCUREMENT MISSION STATEMENT

SAMPLE TEXT: “Ensure that the Organisation’s procurement function
operates in accordance with best practice as outlined in the National Public
Procurement Policy Framework and supports effective value for money
purchasing while ensuring probity and accountability”




                                     3
                              INTRODUCTION

SAMPLE TEXT:
“Required under the National Public Procurement Policy Framework, this
procurement plan has been agreed by the Management Advisory Committee
(MAC, or equivalent). It will seek to meet the obligations of the Policy
Framework and in doing so reinforce the Organisation’s and management’s
commitment to effective and efficient resource allocation and service provision
as prescribed by the Public Service Management Act, 1997 and the
Comptroller and Auditor General (Amendment) Act, 1993. The Plan will be
subject to periodic review.”


 Note:
 Consider whether it should be stated:
   a) which individual is assigned responsibility for the
       implementation of the plan, preferably a senior manager
   b) that regular interim reports on progress should be made, e.g. on
       a quarterly basis


“In order to prepare this plan it was necessary to:
    • Analyse the goods and services purchased by the Organisation
    • Analyse the way in which the purchasing/procurement function
       currently operates

This information was collated from corporate and business units’ plans,
financial systems reports, published Estimates figures and interviews with
relevant personnel.”


 Note:
 Individuals tasked with writing this plan should ideally have completed
 the capacity building training provided by the NPPPU. As part of that
 training you will have undertaken a detailed analysis of your
 organisation’s expenditure and procurement function.            This plan
 should be based on the key findings of that analysis, drawing from it
 priority objectives for the period ahead. The level of detail from the
 analysis provided in this plan is a matter for individual organisations.

 Some Organisations may want to include all relevant information,
 others may want to restrict the level of information in order to focus on
 the content of the plan. Individuals tasked with writing the plan should
 have created an ordered and clear set of background analytical
 documents which inform the development of the plan and which
 management can use to examine the basis for the proposed actions in
 the plan.




                                      4
                               SECTION ONE
                      PROCUREMENT OVERVIEW


SAMPLE TEXT:
“The Organisation has recently undertaken a comprehensive review of
procurement with a view to identifying opportunities for improvement in the
context of the procurement management reform programme being sponsored
by the National Public Procurement Policy Unit.

This review found that……
Note:
Introduce broad findings of procurement analysis carried out as part of
the capacity building initiative delivered by the NPPPU, including:
    • The overall status of different procurement in your organisation
       i.e. critical to business output (involving defence force
       equipment for Dept. Defence, patrol cars for An Garda, ICT
       infrastructure for Revenue and Dept. Social and Family Affairs),
       important to business output (involving consultancy for policy
       organisations and accommodation acquisition and maintenance
       for organisations), low importance to business output (involving
       office equipment and supplies and general utilities for
       organisations) or a mixture of these.
    • High level financial overview of current procurement function:
                               o Total Expenditure
                               o Organisation– centralised (estimated
                                  %), decentralised to end users
                                  (estimated %), mixture of two


SAMPLE TEXT:
The analysis shows that the Organisation’s total procurement expenditure in
the last financial year was €xm. This expenditure was spread across (for
example) 55 categories of goods and services. The top five expenditure
items were building works €x (% of total expenditure), ICT development €x (%
of total expenditure), IT hardware (% of total expenditure), and IT software (%
of total expenditure).”


      INSERT TABLE OF EXPENDITURE CATEGORIES IN ORDER OF
      VALUE




                                      5
  SAMPLE TEXT:
  “As part of the analysis, all expenditure categories were assessed in terms of
  their relative value and the risk associated with their purchase. The following
  picture emerged:”

Difficult to secure supply/low relative       Difficult to secure supply/high relative
expenditure:                                  expenditure:
Total Spend for 2005: €                       Total Spend for 2005: €
     • ICT consultancy                            • Building works
                                                  • ICT development
                                                  • IT software
                                                  • Legal Advice

Easy to secure supply/low relative            Easy to secure supply/high relative
expenditure:                                  expenditure:
Total Spend for 2005: €                       Total Spend for 2005: €
   • Photocopying paper                          • IT hardware
   • Furniture & fittings                        • Building repairs and maintenance
   • Computer supplies                           • Training
   • Postage                                     • Telecoms
   • Cleaning                                    • Fuel
   • Publications                                • Photocopying equipment/supplies
   • Office Supplies                             • Uniforms and Clothing
   • Faxes
   • Security
   • Travel
   • Record Management
   • Courier Services
   • Insurance
   • Newspapers



  SAMPLE TEXT:
  “The Organisation’s procurement spend is predominately on goods and
  services commonly used across business units. Such goods fall into the
  green and blue quadrants and represent a total expenditure of € (% of total).
  The remainder of procurement expenditure is on goods and services specific
  to particular business units, including building works € (accommodation unit,
  % of total), ICT consultancy etc……”

  SAMPLE TEXT:
  “This Corporate Procurement Plan is the formal outcome of the
  aforementioned procurement review process, and the procurement principles,
  high level goals and key objectives introduced in the sections to follow reflect
  the findings of the review…..”




                                          6
                              SECTION TWO
      PROCUREMENT PRINCIPLES AND HIGH LEVEL GOALS


SAMPLE TEXT:
“Introduction
The Organisation is committed to meeting its obligations under the National
Public Procurement Policy Framework, which is the national policy
underpinning public procurement reform. This involves ensuring that the
procurement function formally supports the Organisation’s key business
activities and is focused on delivering value for money outcomes through
analysis-based purchasing strategies that are consistent with EU and national
procurement law. This will require an undertaking to improve procurement
structures and expertise in the Organisation on an on-going basis, ensuring
that purchasing practices are professional and procurement staff have the
necessary capabilities to operate in line with best practice.”


 Note:
 Consider the degree to which the procurement function should be
 consistent with or directly linked to general organisational policy as
 set out in the Statement of Strategy or similar strategic documents
 within the organisation.

 In some organisations procurement will be essential in realising
 aspects of the Statement of Strategy, since the procurement of
 appropriate goods and services in a cost effective manner is often the
 difference between effective and ineffective service delivery. In other
 organisations, procurement will not have such a direct impact on
 business output.

 In certain cases, aspects of procurement may also be linked to wider
 Government objectives as set out in the Programme for Government or
 in the Partnership Agreements. Individual organisations need to
 determine whether there are any aspects of these policies which are
 relevant to their procurement activity and indicate in their corporate
 procurement plan how they intend to contribute to them through
 procurement practice.




                                     7
 Note:
 There are some common principles that must be included in the
 corporate plan. In addition, individual organisations may want to
 include procurement principles in their plan that seek to achieve
 social, environmental and/or other goals consistent with their
 organisation’s strategic aims. Examples of these are included.

 Public sector bodies are often concerned with more than the cost of a
 good or service since they are required to fulfil broader policy
 objectives. Given their role and function they may want to encourage
 particular social, environmental or others outcomes (e.g. encouraging
 the growth of SMEs). These can be policy objectives which could be
 included in a procurement plan. However any such plans to encourage
 social, environmental or other considerations must comply with
 existing EU and national rules, including requirements to encourage
 competition and operate procurement with probity and accountability.
 For example the European Commission has produced a guide called
 “Buying Green – a handbook on environmental procurement rules and
 regulations” which gives guidance on the interaction between the
 procurement rules and environmental policies. This may not be
 relevant to all organisations.

 It is important that where these objectives are introduced that they are
 fair, transparent and consistently applied across all organisational
 tenders. This should also be made clear to suppliers so that they can
 be treated consistently.


Common Principles

1. Carry out procurement in a manner consistent with EU and national
   procurement law.

2. Comply with procurement reform policy objectives set out in the National
   Public Procurement Policy Framework.


Social, Environmental and Other Principals

SAMPLE TEXT:

Reflecting the Organisation’s broader policy remit the procurement function of
the Organisation will seek to:

1. Ensure that procurement activity supports regional development, subject
   to legal requirements
2. Support the participation of the SME sector in Government contracts,
   subject to legal requirements (perhaps suitable to a Organisations such as
   Enterprise, Trade and Employment);


                                      8
3. Ensure that procurement supports waste recycling policy or introduction of
   recycled paper in all the Organisation’s activities ”


SAMPLE TEXT:
“High Level Goals:
Practical implementation of these Policies will be through the following six
high level procurement goals:


Note:
The relevance of these high level goals will vary from organisation to
organisation depending on the current development level of the
procurement function. The important work will be to determine which
aspects of these goals are relevant to your organisation. These goals
are set out here in no particular order of importance and it is a matter
for your organisation to determine which of these goals are
appropriate for your organisation.


   Goal One
   Develop a planning framework that seeks to deliver a coherent and
   consistent approach to procurement across the Organisation and support
   the introduction of best procurement practice initiatives.

   Goal Two
   In support of the planning framework, develop the specialist purchasing
   structures and capabilities necessary to provide the strategic direction,
   analysis and advice to deliver effective purchasing performance. This
   includes consideration of how best to group and coordinate internal
   resources to manage total purchasing expenditure on goods, services and
   capital works.

   Goal Three
   Develop information management procedures to inform procurement
   planning and practice at all management levels of the procurement
   function.

   Goal Four
   Ensure that organisational ICT systems, in particular the financial
   management system and purchase-to-pay system can support
   information-based   procurement  management      and    streamlined
   procurement processing.

   Goal Five
   Introduce initiatives designed to introduce or enhance demand
   management, purchasing strategy development, supplier performance
   management and performance review.




                                     9
Goal Six
To participate in public sector procurement initiatives as they arise and are
deemed appropriate to the Organisation, including e-procurement
initiatives and aggregation projects.”


Note:
These procurement goals will need to be broken down into detailed
objectives with specific actions. In drawing out these goals into
actionable objectives, it is important to consider the timeframe within
which they are achievable.

Example:
Objective – Reduce transaction costs by 25%
Action – Introduce Corporate Procurement Card for purchases under
value of €500, which are responsible for 35% of total transactions.
Timeframe – End 2006

It is also possible that specific goals will need to be set out for
resolving procurement issues with particular goods or services – e.g. –
it may be necessary to set out and implement a policy dealing with
mobile phones – to control use and cost.




                                   10
                                 Goal One
   “Develop a planning framework that seeks to deliver a coherent and
   consistent approach to procurement across the Organisation and
   support the introduction of best procurement practice initiatives.”


   Note:
   In your capacity building work with the NPPPU you will have developed
   a view on the procurement function in your organisation. At this stage
   you might briefly summarise the main findings of the procurement
   review in relation to current procurement planning regime:
         • Overview of current planning regime
         • Strengths and weaknesses
         • Opportunities for improvement

   Individual organisations will have to determine the extent to which they
   consider organisational change is required. In some organisations
   there is an adequate structure to support procurement reform – others
   may need a root and branch review. There is little need to develop
   extensive structures unless it can be proven that they add value to the
   process.




SAMPLE TEXT:
“The strategic importance of procurement to the Organisation has historically
been undervalued, with the function for the most part viewed as a low level
back office support function. As a consequence, the planning regime for
procurement has a significantly less important role than equivalent human
resource and IT plans. This shortcoming has been recognised by the
Organisation. The Organisation will seek to address this through the
realisation of Goal One.

Goal One will be progressed through the following objectives:

1. Ensure procurement reform is supported at a high level in the Organisation
      • Provide for sign off on corporate procurement plan at senior
         management level
      • Seek to make implementation of plan the responsibility of an
         individual within senior management
      • Provide half yearly reports to the management board of the
         Organisation.




                                     11
2. Establish a procurement planning group made up of key procuring
   divisions from within the Organisation to agree the contents of a corporate
   procurement plan
       • Invite IT, HR, and other relevant division representatives to form
          group
       • Establish terms of reference and work programme
       • Hold monthly or quarterly planning meetings

   Note: This is one way of dealing with the development and
   implementation of the corporate plan.      There may be existing
   processes within your organisation which could work just as easily. It
   is important to remember:

   The plan should be agreed and endorsed by senior management;

   The plan should be the responsibility of one senior manager to ensure
   it is being implemented – otherwise it is likely to fail.

   The plan should have the broad agreement of all relevant interested
   parties – the key purchasers, human resources, finance, IT and
   accounting. It would also be useful to alert internal audit to the
   existence of the plan and invite their views.



3. Link the Corporate Procurement Plan to the Organisation Statement of
   Strategy
      • Award procurement a high level strategic objective in the Statement
          of Strategy or make it a subset of a high level objective
      • Award procurement the same stature as HR and IT in the annual
          business planning cycle
      • Include reference to procurement objectives for the relevant area in
          local business plans”




                                     12
                              Goal Two

“In support of the planning framework, develop the specialist
purchasing structures and capabilities where necessary to provide the
strategic direction, analysis and advice to deliver effective purchasing
performance. This includes consideration of how best to group and
coordinate internal resources to manage total purchasing expenditure
on goods, services and capital works.”

Note:
Summarise the main findings of the procurement review from the
capacity building process in relation to current procurement
organisation and structures:
      • Overview of current procurement organisation and structure
      • Strengths and weaknesses
      • Opportunities for improvement

This will indicate whether procurement is centralised or decentralised,
the level of responsibility for procurement at management level and
whether some or total reform of the organisation of the procurement
function is required. These requirements should inform the goals and
objectives adopted.

Different organisations will have different procurement structures and
different approaches to resolving internal challenges will be necessary.

Most organisations already have a procurement officer – though the
responsibilities of the function vary from organisation to organisation
and in some cases the Officer is only notionally involved in
procurement. It is important that the procurement officer has a central
role in the procurement function. It may be necessary to assign full
time responsibilities to that official for all procurement – compliance
and strategic for a small organisation. Where there is a larger body, it
may be necessary to split the function – have one person involved in
planning and strategic work and one person ensuring that compliance
with EU and national procurement rules are observed.

Part of the aim of the procurement management reform programme is
to improve the skills base of individual organisations. This is intended
to be proportional to needs – and skills should be improved and
professionalized where it is necessary and where such skills can add
value to the organisation’s procurement.

In determining the skills mix, organisations should determine the
“skills gap” by carrying out a skills needs analysis and determine
appropriate procurement training based on the requirements of the
post.




                                  13
SAMPLE TEXT:
“The procurement review exercise carried out by the Organisation suggests
that there is an opportunity to enhance the role of the procurement officer and
also address the current structures whereby a significant proportion of
procurement activity suited to centralised arrangements is decentralised and
ad hoc…… The Organisation will seek to address these issues through the
realisation of Goal Two.

Goal Two will be progressed through the following objectives:


1. Establish a central procurement unit (where appropriate) with a remit to
   manage, control and monitor procurement in the Organisation

      •   Place the procurement officer at the head of the new unit, where
          appropriate

      •   Establish terms or reference, responsibilities and work programme
          for procurement officer and unit

      •   Consider the degree to which the unit should have direct control
          and/or influence different types of procurement, low value and on
          major procurement undertakings.


   Note:
   The requirement to set up new structures will depend on the size and
   nature of procurement – the relative scale and whether procurement is
   simple or complicated. More resources should be devoted to
   complicated procurement and less to simpler more mundane
   requirements.


2. Determine the appropriate skills mix for the central procurement unit and
   other business units involved in procurement projects in the Organisation
   to ensure that staff have the necessary capabilities and operate in line with
   best practice

      •   Define procurement skills required for each post/officer involved in
          procurement
      •   Acquire appropriate procurement training based on gap analysis
          which would indicate the skills required for each post and define a
          strategy to meet these needs”




                                      14
                                  Goal Three

   “Develop information management procedures to inform procurement
   planning and practice at all management levels of the procurement
   function.”

 Note:
 Summarise the main findings of the procurement review in relation to
 information management in current procurement procedures:
       • Overview of current procurement procedures
       • Strengths and weaknesses
       • Opportunities for improvement and better information
          management

 Information management is often the key to effective procurement.
 Readily available sources of information on tenders, on practices and
 procedures to be adopted and other requirements allow organisations
 to tender more easily without “re-inventing the wheel.” They provide
 for continuity when staff move or are transferred.

 It may be necessary to develop appropriate basic compliance
 procedures if these do not already exist. Information management
 should go beyond procedures and into the where and how value for
 money can be achieved by procurement.



SAMPLE TEXT:
“The procurement review exercise carried out by the Organisation suggested
that there was an opportunity to develop the procedural guides governing
procurement, particularly with regard to clarification of expenditure thresholds
for staff…...Those involved in procurement are cognisant of the national and
EU procurement guidelines but there is nonetheless an opportunity to
formalise this knowledge through training and also audit its application to
manage risk associated with non-compliance….. The Organisation will seek to
address these issues through the realisation of Goal Three.

Goal Three will be progressed through the following objectives:

1. Establish procedural framework for different categories of expenditure

      •   Draw up procurement procedures reflecting decision on which
          expenditure is centrally purchased, locally purchased, including
          which purchases should be supported by market analysis ahead of
          tendering, which should be purchased using purchase cards etc.

2. Improve internal communication on procurement
      •     Issue template draft request for tenders on an intranet site as a
            resource for those tendering


                                      15
      •    Maintain copies of all procurement policy and compliance
           guidance on internal intranet.

3. Publicise commonly acquired goods and services and lists of suppliers
     •     Develop a list of suppliers (possibly in conjunction with another
           Organisation) from whom small items of goods or services are
           acquired
     •     Publicise this list on an internal intranet in order to avoid
           duplication of suppliers and limit time spent searching for
           suppliers of certain small value goods or services

4. Inform Organisation of wider procurement issues in the public sector
       •   Develop contacts with wider procurement community to exchange
           information and co-ordinate purchasing
       •   Collect information (e.g. on aggregated arrangements)
       •    Disseminate such information to Organisation and target groups
           involved in purchasing”




  Note:
  Organisations should as part of their information management develop
  broad performance indicators. In some cases this will be price, (e.g.
  stationary), in others it will be service levels or quality of the goods or
  services. Value for money is defined in the National Public
  Procurement Policy Framework.




                                    16
                                     Goal Four

   “Ensure that Organisational ICT systems, in particular the financial
   management system and purchase-to-pay system, support
   information-based procurement management and streamlined
   procurement processing. “

   Note:
   Summarise the main findings of the procurement review in relation to
   the support current ICT systems provide for the procurement function:
         • Overview of current procurement procedures
         • Strengths and weaknesses
         • Opportunities for improvement

   It is clear that a well operated and effective financial management
   system can be of significant assistance in developing an
   understanding of the procurement function of any organisation.
   Financial systems differ and it is possible that they have not been set
   up in such a way as to provide accurate data on the types of goods and
   services acquired by a organisation.

   It would be worth exploring with the Finance unit whether it is possible
   for the system to generate accurate details on products and services
   acquired and the extent of the work involved in amending the system.


SAMPLE TEXT:
“Much time and effort have been invested in the design and roll out the new
financial management system, which can support automated purchase-to-pay
and provide for the gathering, recording and processing of procurement
financial in a structured, readily available, transparent and auditable way. To
optimise the return on the potential benefits from this, management must
understand and specify their systems-generated procurement information
needs. The Organisation will seek to address these issues through the
realisation of Goal Four.

Goal Four will be progressed through the following objectives:

1. Configure procurement reports required from the financial management
   system
      • set out reporting requirement to support procurement planning and
         management
      • set up working group with finance unit to discuss actions to format
         system to produce reports
      • provide training and education for management and staff to get
         maximum advantage from new report capability




                                      17
2. Evaluate the introduction of a corporate procurement card for low value
   purchases to reduce transaction costs associated with administration
      • Evaluate the benefits of a card
      • Outline control procedures
      • Indicate how the introduction of a card can reduce and/or replace
         existing transactional costs and procedures
      • Ensure purchase-to-pay system can be integrated with corporate
         card with regard to transfer of expenditure data

3. Reduce transaction costs by consolidating invoicing to monthly or quarterly
   issuance as appropriate


4. Reduce transaction costs by reducing the size of the supplier base




                                     18
                                  Goal Five

   “Introduce initiatives designed to introduce or enhance demand
   management, purchasing strategy development, supplier development
   processes, supplier performance management and performance
   review.”

   Note:
   In the course of the capacity building procurement review it is likely
   that a series of additional issues will have emerged, outside of the
   specific findings with regard to your organisation’s procurement
   planning, organisation and structure, procedures and practices, and
   ICT systems. These can be categorised as cross-functional project
   specific issues such as the need to develop purchasing strategies for
   identified expenditure areas, introduce demand management
   techniques,    develop    supplier   performance   monitoring     and
   management frameworks, and provide for performance review of the
   procurement function.



SAMPLE TEXT:
“Apart from identified opportunities to improve practice and performance with
regard to procurement planning, structures, procedures and ICT systems, the
review highlighted a number of other areas that could be addressed in the
short term on a project basis. The Organisation will seek to address these
issues through the realisation of Goal Five.

Goal Five will be progressed through the following objectives:

1. Establish a programme of purchasing strategy development
      • Identify priority expenditure areas suitable for purchasing strategies
          in line with best practice solutions provided in the SUPREM
          analytical framework
      • Assess existing procurement approach for good or service
      • Carry out demand analysis, involving assessment of demand and
          possible substitution of the goods or services or reduction in
          demand
      • Carry out supply market analysis
      • Devise new strategy to reflect demand and supply realities
      • Formalise process to evaluate strategy outcomes, carry out
          evaluation and use results to inform future procurement




                                      19
         Note:
         Demand analysis and supply market analysis is new for most public
         sector organisations. It is important that it is carried out in a planned
         way so as to provide valuable information to inform procurement
         planning and actions. In particular it should be focused on high
         expenditure and/or high risk purchases.

         Understanding the markets in which your organisation operates is
         important for maintaining a competitive market and maintaining
         pressure on incumbent suppliers to deliver value for money.




2. Address first priority expenditure – consultants
     • Develop a centralised register of all consultants used by the
         Organisation
     • Establish key tests and requirements which must be fulfilled in order
         to hire consultants
     • Establish a regime for monitoring the outputs from consultants


3. Develop demand management techniques at a central level which help
   manage/reduce costs

     Note:
     For this approach to be successful it is necessary to understand the
     nature of demand in your organisation and then seek to develop a
     strategy to reduce demand.



4.        Introduce and assist a programme of supplier development

     •    Examine the supplier base and indicate how long suppliers have been
          used by the Organisation
     •    Seek the views of existing suppliers on the way in which the
          procurement process could be improved
     •    Devise a list of goods and services that will be used by the
          Organisation and include these in the corporate procurement plan to
          help inform the market about future opportunities.
     •    Examine the supplier base with a view to widening it (where there are
          few suppliers) and narrowing it where there may be too many one-off
          suppliers.




                                        20
 Note:
 Individual organisations should consider how they can within the
 requirements of procurement law, introduce a supplier development
 programme and attempt to maintain a diverse and competitive supply
 market. This would involve communicating requirements to suppliers,
 setting up a two way information process to exchange information and
 provide for resolving difficulties with suppliers when and if problems
 emerge.

 Focus should be on encouraging better competition.



5.    Introduce efficiency targets and output measures
      •   Develop a programme for efficiency targets and outputs in
          procurement
      •   Develop monitoring and reporting framework”

Note:
Organisations should set efficiency targets for their own corporate
procurement plans. While some measures will be suggested here,
organisations need to consider efficiency targets which are
appropriate – reduction in transaction costs or targeted reductions in
costs through a range of strategies – e.g. aggregation, reductions in
demand etc.

Setting measurable efficiency targets is important in reinforcing that
procurement activity is output based and involves much more than
compliance.

In the beginning, organisations should set a few strong measurable
targets which can demonstrate changes in efficiency. Once they have
bedded down, then they can be enhanced with more sophisticated
measures. Such targets can include unit cost reductions or overall
expenditure reductions. Determining these will require some level of
analysis to ensure that they are reasonable, achievable and significant
relative to the “do nothing” option. It is important that the base figures
for any savings are robust and identifiable. Reductions in overall cost
could come about as a result of reductions in prices arising from
effective procurement or reduced demand; it is important to identify
the source of the cost reductions.

Targets should be linked to objectives – so that it is possible to
monitor achievement of the objectives.




                                    21
The following are a number of examples:

 -   set out target for reduction in spending on e.g. stationary supplies
 -   outline exact spending on stationary supplies over last three years
 -   indicate approach to be taken, e.g. reductions in maverick purchasing
 -   evaluate spend after three months and compare with quarterly spend for
     other years and make adjustments as appropriate
 -   examine to see whether spending on stationary had fallen by 3 per cent
     for the calendar year

Indicators can take the form of volume reductions in the processing of
transactions:

        •   determine number of invoices issued by the Organisation
        •   determine an approach to reducing number of invoices – e.g.
            introduction of monthly billing for all
        •   indicate approach to suppliers and in all future tenders from the
            Organisation


Issue                                        Aim
Number of contracts under €50,000            Reduce number of contracts by 1%
Total number of suppliers                    Reduce number of suppliers by 1 %
Total annual spend                           Reduce by 3% overall
Indicate savings target                      Reduce by 3% overall or for certain
                                             goods and services
Average spend by supplier                    Increase average spend by 10 per
                                             cent
No of annual transactions                    Reduce volume by 10 per cent
Average transaction value                    Increase average transaction value
Average transaction cost                     Outline plan to reduce cost by 10%
Prices of high value goods                   Monitor prices of high value goods
                                             against CPI
Determine probity/accountability             Evaluate number of complaints
Number of aggregated arrangements            Indicate whether more or less in 1
                                             year




                                        22
                                    Goal Six

   “To participate in public sector procurement initiatives as they arise
   and are deemed appropriate to the Organisation, including e-
   procurement initiatives and aggregation.”


   Note:
   One outcome of the capacity building initiative will be participants’
   membership of an inter-organisational collaborative opportunities
   group. This group will act as a forum for sharing of best practice and
   for identifying opportunities for aggregated arrangements. Such
   participation in public sector wide initiatives is in line with the National
   Public Procurement Policy Framework.



SAMPLE TEXT:
“The procurement review highlighted a number of opportunities for the
Organisation to engage in cross-Organisational procurement initiatives with a
view to achieving better outcomes than would be possible from acting
unilaterally. The Organisation will seek to maximise benefits from such
opportunities through the realisation of Goal Six.

Goal Six will be progressed through the following objectives:


1. Participate in cross-Organisational aggregation initiatives with a view to
   reducing costs through the maximisation of public sector purchasing power

      •   Participate in aggregated arrangements for paper, furniture and
          fittings, computer supplies, office equipment, uniforms and clothing,
          computer supplies, drinking water and confidential waste and
          ensure full participation and all such products purchased from such
          arrangements by end 2006. This should be progressed through the
          collaborative opportunities group.
      •   Consider the extent of maverick purchasing and determine the
          reasons for it.
      •   Issue appropriate instructions on use of these arrangements
      •   In cooperation with OPW/GSA set up appropriate information flow
          on Organisational use of existing aggregated arrangements
      •   Share information on aggregation with other Organisations in order
          to improve practices and behaviours.




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