Delivery of Lm3 in the North-East “Procurement Power” Julie Davison Sustainable Procurement Officer Northumberland County Council ….driving service improvement through efficiency and effective procurement

Northumberland Story Lm3 project started in January 2004 Dedicated Project Officer Responsible to Head of Procurement Benchmarking survey completed June 2004 Northumberland County Council took the lead nationally in 2004 by adopting the LM3 model as a project to look for the first time at how a local authority might use its economic power in the community for the purpose of meeting regeneration objectives. In a joint project between Regeneration and Procurement with external support from the New Economic Foundation, resourced by a full time Project Officer, pioneering work was carried out to both implement and develop this leading edge thinking. The work proved to be extremely successful in a number of different ways:- Northumberland County Council was the first authority to be able to show what the financial impact of their procurement of goods and services together with grant funding was on the local community in an objective and auditable manner. Northumberland County Council have led the way in the development of a range of innovative ways from packaging and presenting tenders to help local businesses to benefit from procurement without increasing the cost of those services. By rewriting financial, corporate and procurement strategies Northumberland County Council showed how important it was to use a holistic approach to this problem. Northumberland County Council have contributed to national agendas and strategies including the National Small Business Concordat and Public Sector Food Procurement Initiative together with contributions of exemplar case studies being utilised nationally as best practice. ….driving service improvement through efficiency and effective procurement

Northumberland Story Project initiatives to create local opportunities Identify the opportunities Stimulate the market Work with both private and third sector Liaise with chamber of commerce and business link Following a review of the current status of the Counties sustainable procurement and LM3 activity together with the 2005/6 benchmarking results, an increased focus and action plan has been developed for sustainable procurement and LM3 in Northumberland County Council, in order to both increase momentum and with the added benefit of improving the opportunities of increasing the percentage spent locally. The action plan for Northumberland in 2007 is to:- Complete a benchmarking exercise for 2005/06. Review forthcoming tenders from the corporate contract tender list and to identify areas of potential new local spend with local suppliers. Working with Heads of Directorates to encourage involvement and identify opportunities. To ensure all possible action is undertaken to inform and assist small and local suppliers applying to tender with Northumberland County Council. To proactively encourage Heads of Directorates to open up direct procurement opportunities to local suppliers where procurement values are below formal EU tendering values. To actively continue to consider repackaging of tenders where relevant in order to encourage and attract small local suppliers to tender for opportunities and to continue where relevant one to one tender sessions with suppliers to clarify and inform on specific tender documentation. To continue to liaise with business link and notify tender opportunities locally and throughout the region. To continue to incorporate where relevant LM3 clauses within tender documentation encouraging local participation by all suppliers and encouragement to all suppliers to assist in the regeneration of the local area. To build upon the work carried out during the last year on maverick spend and be proactive ensuring that formal contracts replacing that spend are available to all suppliers including local suppliers. To work with Social Enterprises/SME’s to ensure they are prepared and well informed to tender with Northumberland County Council. Currently working with Community Transport organisations ensuring they are all listed to tender and have the necessary policies and licences in place. To continue work within the private and third sector. Working alongside the NECE we have completed an LM3 benchmarking exercise for The Alnwick Garden, a local trust in Northumberland which attracts hundreds of thousands of visitors each year. And currently working to assist another local company – Alcan in their LM3 benchmarking. ….driving service improvement through efficiency and effective procurement

Northumberland Story Local Successes on some opportunities Food Grass cutting Construction Sandwiches Non Local Successes on consolidated contracts Reverse E Tender for stationary Innovative food procurement specifications incorporated within the tender included breaking the Food Tender into 7 categories, the majority of which were also further analysed into 4 areas, which could be tendered for by area or in full. This was particularly of interest to local small suppliers and producers. Re packaging the tenders proved to be more attractive to the market and encouraged smaller organisations to submit bids. A significant change in policy incorporated within the evaluation criteria was that the quality/price ratio increased to 60/40. Also incorporated within the quality criteria required was the ability to assist Catering Services in pursuing a sustainable food procurement strategy which included the flexibility for a supplier to provide, where specified by schools, locally grown or organic produce. Also with Verge Cutting, the aim was to stimulate the market, create awareness and interest from local suppliers and ensuring business and procurement support was available if required. In stimulating the market, by the normal methods of advertising, together with the now established contact with Business Link, additional liaison was made with the National Farmers Union, an umbrella organisation, which would further create awareness as it was anticipated that this would encourage local farmers to tender. The tender was also broken down into lots so that tenderers had the option to tender for any or all of the lots. This measure was taken because it was recognised that it would bring the scope of the tender within the capacity of many of the farming community to supply services. It is difficult to balance the efficiency gains required by the Council and the requirements of the 2004 Gershon Review. The effect of joining the North East Purchasing Organisation is to ideally save council money, and although this was achieved following the recent reverse ETender for stationery, it meant local suppliers had no chance of competing and were totally cut out of the loop. An excellent cost saving exercise for the council, however, not good news for our local suppliers as the contract was awarded to a national company based down South. ….driving service improvement through efficiency and effective procurement

Balancing the Bucket The challenge ahead is to positively increase the proportion on local spend whilst working within the confines of the procurement regulations and work with Economic Development personnel to assist in regenerating the local area. However following the Price Waterhouse Coopers review of the Corporate Centre and agreement by Senior Management, the Procurement Team has been set an efficiency target of £500,000 within the financial year 2006/7 and £1m in the following financial year. This makes the target of 10 % an extremely difficult task to achieve for Northumberland. It is apparent that the initial percentage of direct local spend for Northumberland County Council relating to the financial year 2003/4 is a high percentage and one that is difficult to maintain. ….driving service improvement through efficiency and effective procurement

Benefits for Northumberland Assist in strategic decision and policy making Benefit to local economy established from model on profile changes Created catalyst for change and stimulated both local authority action and the local marketplace Counter balance to Gershon and aggregated buying A review of corporate spend throughout the Council by Head of Procurement has revealed a degree of maverick spend. This spend is being gradually identified and rectified with formal contracts now being tendered for replacing the maverick spend identified. Significant effort by the Head of Procurement has been made on a corporate basis to ensure awareness of the Finance and Contract rules together with EU tendering requirements to ensure corporate compliance. ….driving service improvement through efficiency and effective procurement

Way Forward for Northumberland Permanent Sustainability officer appointed Continuing initiatives on procurement opportunities and engaging sme’s Rebenchmarking and assessing targets Working with third sector and large private sector companies Working with Legi successful county/ district lm3 initiative A replacement for the post of LM3 Project Officer at NCC was installed in May 2006 as an LM3 / Sustainable Procurement Project Officer – hence the reason I’m here today. Northumberland County Council is now in a position to ensure sustainable procurement and LM3 is one of the main objectives for the authority and is included in the Corporate Performance Plan. This approach was built around the adoption of 2 commitments within Northumberland County Council’s policy and internal strategies:- Firstly to increase the amount of money spent locally and which is specifically incorporated within Northumberland County Council’s published strategic statement for 2005/09. Secondly within the AES and Service Plan for 2005/6, stating the objective of increasing local spend by 10% to 70 % by 2008. At this point it is important to emphasise that this is not primarily the responsibility of procurement (this lies in the mapping of opportunity and the innovative implementation of tender process), but a joint responsibility between Regeneration and Procurement with help from other directorates particularly those with responsibility for corporate objectives, strategic financial management but also those with direct procurement opportunities. Northumberland County Council are proposing a high profile event in the summer of 2007 working with districts and the voluntary sector linking discussions with Northumbria Police, North East Centre of Excellence, Business Link, Federation of Small Businesses (North East), Northumberland Care Trust and the Council for Voluntary Services. We hope to engage with SME’s in Northumberland to provide knowledge, skills and support, to respond to business opportunities with both the County Council and the Districts. In turn, this knowledge transfer should widen their ability to seek business opportunities in the private sector also. We continue to contribute to, and participate in, region wide work being undertaken by the North East Centre of Excellence. ….driving service improvement through efficiency and effective procurement

Northumberland’s Approach Northumberland have identified a range of actions and initiatives. From working with private and voluntary sector organisations to amending corporate procurement policy, and ongoing work with service directorates to review potential projects for up and coming tenders. ….driving service improvement through efficiency and effective procurement

NECE Implementation Deliverables Lm3 benchmark completion for all 25 local authorities in North East Specific work with major Private sector companies and the Third Sector including Alnwick Garden Enhanced model created to cater for non public sector including staff and salary costs Generate regional impact by local producers Working with local authorities who have utilised Lm3 as a delivery mechanism for LEGI The scope for the LM3 benchmark exercise was to roll out to as many local authorities in the North East who wanted to take part. Although there was a gradual roll out at first, it was never envisaged that the result would be for all 25 local authorities in the North East to take part with such success. The NECE have worked alongside Northumberland County Council and major private sector companies such as and Egger, who utilized the LM3 benchmark as an investment to show the local community its worth. This has included major working partnerships with other large private and third sector companies within Northumberland. And a good example of an enhanced model used to cater for non public sector, including staff and salary costs was completed for The Alnwick Garden, which as part of a joint initiative with the NECE and Northumberland County Council will be presented to the RDA (Regional Development Agency). Close partnership between the Northumberland County Council Head of Procurement, Regeneration and the NECE LM3 Project has resulted in contributions to the Wansbeck /Northumberland LEGI bid which has now been successful and Wansbeck have been awarded £11.8m. The success of this will create an opportunity for South East Northumberland to develop a post for an Outward Facing Development Business Officer. The NECE are also working with Redcar and South Tyneside who have also won funding for LEGI. ….driving service improvement through efficiency and effective procurement

NECE Benchmarking Progress From the 25 NE Local Authorities: 11 Completed and agreed 2 Completed pending reviews 11 in varying progress state Tasked to complete by October 2007 From the 25 North East Local Authorities – 11 completed, of which 5 from Tees Valley were unique in the fact that they all agreed to do benchmarking as a unit, using the same definition of their local area. 2 have completed pending reviews and 11 are in progress. All are tasked to complete by October 2007. ….driving service improvement through efficiency and effective procurement

NECE Benchmarking Progress Data consolidated to give regional and sub regional information RDA provided with substantive aggregate information for regional economic reviews Each local authority provided with individual model and benchmark evaluation All regional information has been reported back to the RDA for use sharing the impacts in the North East. Each authority has been provided with an individual model and the benchmark evaluation is presented and reported. Recommendations for the way forward mainly steer towards internal buy in from Executive and Members with a top down approach. ….driving service improvement through efficiency and effective procurement

NECE Lm3 Way Forward Adoption and implementation plan proposed for each local authority Development of sme support from RDA linked to implementation initiatives rebenchmarking to evaluate and measure change Each authority to work towards their own individual action plan as a result from the benchmarking exercise. They should develop initiatives working with SME’s and complete a rebenchmarking exercise to evaluate and measure the effects of change. ….driving service improvement through efficiency and effective procurement

NECE Vision of Lm3 Procurement and regeneration jointly working to: Identify the procurement opportunities Matching the supplier base Delivering the change Achieving 5% on £2.5billion within the North East which is £125 million extra in North East Procurement and regeneration jointly working to identify the procurement opportunities, matching the supplier base and delivering the change. An example to show if the NECE can make a difference of achieving 5% regionally through the LM3 project, the North East would benefit from an extra £125 million. ….driving service improvement through efficiency and effective procurement

A Thought to Consider…. Question – Where will local suppliers be in 5-10 years if we don’t act now? ….driving service improvement through efficiency and effective procurement