Agenda item

Representatives from Procurement Lincolnshire will attend the meeting to talk about the Committee’s Scrutiny Review.                                                                                   (Enclosure)

The Committee welcomed Alan Thomas (Chairman of the Strategic Procurement Board) and Sharon Cuff (Head of Service for Procurement Lincolnshire (PL)) and noted apologies from Manjeet Gill (Chairman of the Procurement Advisory Board). The PL representatives addressed the recommendations made by the Committee in its scrutiny review of the shared service.

Structure and Governance of PL

·         PL had two boards:

·         Procurement Advisory Board - membership included councillors from two authorities. It advised on strategy and reported to Lincolnshire Leaders and Chief Executives.

·         Strategic Procurement Board – membership: directors from all partner authorities. Responsibilities: performance monitoring, priorities and making recommendations on policy and strategy to the Procurement Advisory Board.

·         The Committee considered PL’s governance arrangements. There was general consensus that officers should be involved in the day-to-day running of the service.

·         When PL was created officers reported to an elected member management board; this was disbanded and replaced by the Procurement Advisory Board.

Scrutiny of PL

·         Members suggested that internal performance monitoring might be more effectively conducted by people without specialist finance knowledge

·         Historically the joint Lincolnshire Scrutiny Panel commissioned a scrutiny review of PL; this had previously been circulated to the Committee.

·         Since the Joint Lincolnshire Scrutiny Panel was disbanded responsibility for scrutinising PL on behalf of Lincolnshire County Council transferred to the Value for Money Scrutiny Committee.

·         Individual partners were responsible for conducting their own scrutiny.

Action Point

Circulate any scrutiny reviews carried out by other partners to Scrutiny Committee members.

Collaborative procurement

·         SKDC enjoyed a good collaborative relationship with PL.

·         Any partner that chose not to participate in a collaborative procurement exercise was required to submit a written explanation and business case supporting their decision.

·         Director-level representation on the Strategic Procurement Board assisted buy-in to collaborative working across partner authorities.

Defining savings

·         The baseline on which savings were calculated for the first five years of PL’s operation had been agreed by all partners.

·         PL representatives agreed that the way in which savings were defined needed to be more easily understood.

·         A sub-group of the Strategic Procurement Board was reviewing definitions; all partners would need to subscribe to any changes.

·         The Committee recommended that the definition should be amended to: “savings achieved or expected to be achieved by all current contracts or the latest contracts to be let) compared with the costs of the previous comparable contracts”.

·         PL acknowledged the limits to recording savings only and recognised the need to demonstrate value added through other activities.

Target-setting

·         PL acknowledged the importance of realistic challenging targets to motivate staff and enhance the credibility of the service.

·         Cut-off dates in respect of year end had been introduced.

·         Scrutiny Committee members recommended there should be a clear distinction between targets, estimates and actual savings.

·         The methodology for calculating targets was being reviewed by the Strategic Procurement Board working group.

·         Councillors suggested that targets should have been reviewed annually.

Calculating savings

·         PL had previously used the definition of national indicator 179 on value for money to calculate savings.

·         Councillors were critical of this methodology as it only measured contracts when money was saved. Members suggested the calculation should be the net value.

Representatives from PL broadly supported the Committee’s recommendations but advised that all 8 partners would need to approve any changes in methodology or definition. PL said they would provide a written report addressing the Committee’s recommendations and updating them on what had been agreed as part of the refresh.

Action Points

1.    Procurement Lincolnshire to provide a written response to the Committee’s recommendations following its five-year review (September 2013)

The Scrutiny Committee to consider Procurement Lincolnshire’s governance arrangements at its next meeting (June 2013)