Procurement and contract management strategy 2023 to 2029

At the time of refreshing this strategy in August 2022 the region of North Yorkshire is subject to a Local Government Review, bringing together the eight separate local authorities of the region into one combined and stronger authority - North Yorkshire Council. This new council will become operational from 1 April 2023.

In readiness for the commencement of the new council, the Procurement and Contract Workstream required a light touch refresh to be undertaken to the existing strategy to enable focus to remain on ensure the new council is legal and safe.

Post April 2023, when the combined strengths of the authorities have been brought together into one team a further and more in-depth refresh to this strategy is planned which will align to the new council’s plan and aspirations including support of local supply and reduction in carbon impact.

2023 to 2029 refreshed to the 2018 to 2022 procurement and contract management strategy

• new rules of operation
• process and documentation
• data assimilation to master categories
• data cleanse of creditors
• improved vfm as combined opportunities are identified

2023 to 2029 safe, legal and compliant

• to procure and ensure efficient and effective management of all third party spend ensuring the new council safe, legal and compliant from vesting day onwards
• enactment of the Regulatory Reform

2025 to 2026 onwards local and sustainable

Corporate goals on carbon reduction, sustainability and the circular economy, mitigation of environmental impact, alignment to regional aspirations, defining what local means for the new council and how the balance between delivering social value and commercial pressures.

This is the third edition of the Procurement and Contract Management Strategy which continues to build on the delivery of value to the council. Savings have been delivered by the service over the last eight years and future saving opportunities identified will continue to support of the new council’s efficiency programme.

Procurement continues to change and with the implementation of the Regulatory Reform anticipated by September 2023 will continue to do so. This service has successfully grown since moving from an external provision to become an award winning team, with nationally recognised professionalism and skill. In alignment to the creation of the new council, internal procurement governance has been modernised and improved.

Contract management remains core to ensuring valuation creation post award and this service continues to promote best practice across the council and engage with the senior responsible officers to ensure optimal delivery remains front and centre to the supplier relationship.

This refreshed strategy continues to build on the work done to date, but will also combining the expertise, skill and good practice available from the borough and districts who are soon to join the new council alongside the regional and national expertise from all sectors.

The council currently spends in the region of £514 million externally each year, across both revenue and capital. This will increase into the new council to an anticipated £656 million. Across the life of this strategy we will manage spend around £5 billion. We use a variety of contracts, from simple purchase orders to long-term complex contractual agreements. Some contracts are with a single provider, others are framework agreements with multiple suppliers.

The council procures a wide range of goods, works and services, including front-line direct services and indirect back-office support. Examples include:

• adult and children’s social care
• highways repairs and maintenance
• IT
• utilities
• food
• transport

This will widen further within the new council including waste collection, housing, elections and licensing with the majority of spend split between place (around 63%) and professional (around 37%) master categories.

This strategy sets out the plan to achieve best value, efficient use of resources, use of technology, innovation and practices and procedures to ensure we make the best use of that spend. The council will seek to influence new national policies as the country adapts to being under World Trade Organisation rules and we will adapt this strategy to take on board new recommendations and join others in influencing policies locally, regionally and nationally.

North Yorkshire County Council's master category spend

• professional: £95,704,182 - 19%
• place: £139,828,896 - 27%
• people: £279,306,564 - 54%

This strategy applies to all directorates and services across the council. All officers of the council must have regard to the strategy and the Procurement and Contract Procedure Rules when undertaking procurement activity – including service planning and commissioning decisions which will require procurement exercises to be undertaken.

To support the delivery of the strategy and wider ambitions of the service, procurement, purchasing and commissioning need to be defined and understood throughout the council.

Procurement is the strategic process of acquiring goods, works and services, covering acquisition from both third parties and in-house providers. The process spans the whole procurement life cycle from identification of needs, through to the end of a works or services contract or the end of the useful life of an asset. It is supply market facing with its internal customer in the council. It involves options appraisal and the critical ‘make or buy’ decision. Procurement seeks value for money in how we deliver commissioning plans.

Purchasing or buying is the transactional process of ordering and paying for goods, works and services. This is connected to, but separate from procurement, and is illustrated in the procurement lifecycle section.

Commissioning is the activity of assessing needs, resources and current services, to develop a strategy to make best use of available resources to meet the assessed needs and desired outcomes. It is the informed design of what we want to deliver in meeting our priority outcomes for our communities. Commissioning is frequently facilitated by procurement activity.

Procurement and commissioning - the relationship

Procurement and commissioning are intrinsically linked. The procurement function is designed to deliver and support commissioners’ intentions in a legal and compliant manner, delivering the best value for money. Whilst the procurement function sits centrally within the council and commissioning sits within Directorates, it is key that we develop and maintain strategic links to all commissioners to ensure procurement activities are undertaken efficiently and economically.

The council’s Category Management approach to procurement brings together the expertise from procurement and commissioning across the council to identify the most appropriate and effective approach to deliver required outcomes.

Contract management is the process of managing contract creation, execution and analysis to maximise operational and financial performance, while managing risk.

Legal context

Public procurement is governed by a legal and regulatory framework which is being transformed to create a simpler and more commercial system with openness and transparency at its core. Failure to adhere to public procurement law can expose the council to costly legal challenges. In that context, this strategy is intended to support compliance with the council’s Procurement and Contract Procedure Rules, the UK Public Contracts Regulations 2015, and the fundamental procurement principles of transparency, equal treatment, non-discrimination and mutual recognition. Developments in this area as a consequence of Brexit will be considered and acted upon over the duration of this strategy, such as the Regulatory Reform.

The procurement lifecycle

The procurement lifecycle is a continual cycle consisting at the core of:

Requisitioning

• search catalogue/create online shopping cart
• create requisition
• requisition workflow and approval

Purchasing/Spot buys

• purchasing/spot buys
• goods receipt
• monitor supplier performance

Payment

• invoice receipt
• invoice reconciliation and workflow
• payment settled, update accounts payable

Spend analysis

• gather spend date from accounts payable
• analyse spend
• determine compliance
• identify sourcing projects

Strategic sourcing

• identify sourcing projects (overlaps a small amount into strategic sourcing)
• identify markets/suppliers
• run discovery events/tender exercises
• evaluate responses
• select supplier (overlaps a small amount into strategic sourcing)

Contract management

• select supplier
• execute contract
• manage contract/catalogues
• maximise operational and financial performance

The above are all involved continually in a cycle of source-to-contract, which in turn is in a cycle of source-to-pay. 

We will ensure that commercial arrangements and contracts awarded by the council provide optimum value for money. We will also use our procurement spend to provide the very best social value for our communities.

The Procurement and Contract Management Service are responsible for:

• providing professional advice, guidance and insight regarding markets, suppliers and contractual options to help support service delivery and improvement
• leading the development of plans for how we spend our money with suppliers from across the private, public and voluntary, community and faith sectors
• ensuring that our contracts are developed, awarded and managed in line with best practice, including developing strong relationships with our key suppliers
• driving social value by encouraging spend with local firms and identifying apprenticeship and skills opportunities through our supply chain

At the heart of this strategy sits our ambition to deliver the best local authority Procurement and Contract Management Service in the country, where we:

•  achieve savings and value for money for the communities of North Yorkshire
• support the delivery of quality outcomes for service users
• support the wider ambitions of the council and its partners
• develop a very deep understanding of user needs
• influence and operate commercially, understanding supply market capabilities
• practice robust contract management
• attract suppliers of all sizes and from all sectors to want to work with the council
• attract procurement professionals to want to work for the council, and
• be recognised nationally as a procurement centre of excellence and expertise

Our ambition is therefore summed up in our procurement vision: "Working collaboratively to deliver efficiencies, value for money and sustainable quality through a proactive commercial approach to procurement and commissioning for the communities of North Yorkshire."

We have adopted a Category Management approach at the council, where logically segmented and related expenditure is grouped together objectively (data driven) to take advantage of better intelligence of our buying needs and of what supply chains have to offer. The categories are then managed through a continuous and systematic process in order to improve quality, savings and efficiency. This can lead to aggregation of demand where appropriate, and will determine why we buy what we do, how we buy it, from whom and with what results.

Category Management’s close working relationship with service managers and commissioning colleagues is critical. Application of the overall process is mandatory but Senior Category Managers shall use their judgement in applying appropriate tools and techniques to develop a new flexible operating model based on better engagement and more effective planning of procurement activity. Category Sourcing Plans will be produced for each master category (People, Place, and Professional) that maps their future procurement activity and develops one to three year plans against which resources can be allocated and performance measured.

The desired outcome is to source more strategically, be more innovative and enable service managers and commissioners to get the most out of the market and supply chains. Data driven procurement is at the heart of our approach, and is summarised in our Category Management process:

The Category Management process

A continual process of:

Research

• data gathering
• business requirements
• spend profiling
• category profiling
• supplier profiling

Analysis

• data analysis
• SWOT/PESTLE
• competition analysis
• portfolio analysis
• supplier preferencing

Strategy

• data driven decisions
• opportunity analysis
• quick wins
• options appraisal
• category strategy planning

Procurement

• data driven procurement
• PCPRs/OJEU
• gateways
• bid/SQ/ITT
• tender evaluation/acceptance
• award and unsuccessful arrangements

Manage

• data driven management
• implementation and communication
• post project review
• contract measurement and reporting
• target and manage continuous improvement via KPIs
• review and update contract

We have adopted a Category Management approach, which starts with data from research, assessing needs and analysing options, through preparation of strategies, procurement, to mobilisation and contact management. This includes controlled contract exit management at the appropriate point. The overall aim of this approach is to ensure high quality outcomes and the very best value for money are achieved.

We will consult and engage with stakeholders throughout the procurement lifecycle, to ensure our procurements properly reflect need and opportunity, and take account of the wider context, including the council’s plans and strategies, locality working and collaboration with others.

All master categories will work to common principles and rules, but strategies will be tailored to meet the needs of the specific sub category, reflecting the service area, stakeholder needs and the market place/supply chain, to ensure quality outcomes and value for money are achieved.

Our commitment is to provide a modern and innovative procurement service, using the right technology and processes for our staff and our suppliers. This is vital in achieving our ambitions. We will lead on continuously reviewing our approach to ensure we respond to feedback, and develop the e-sourcing and e-purchasing systems we use.

A key element of our strategy is the use of YORtender, the e-sourcing procurement portal for the Yorkshire and Humber region. We aim to ensure that we are using the full functionality of the system to improve work processes for the council and our suppliers.

YORtender provides real benefits to all:

• a single procurement approach across the region
• a means to share, co-ordinate and collaborate on procurement exercises
• e-enabled for all to work smarter and to reduce procurement lead-times
• suppliers can register their capabilities and interests in opportunities
• suppliers receive email alerts of opportunities
• immediate access to current opportunities
• news alert feature to communicate key information

E-purchasing is also integral to the overall success of procurement processes and involves the use of an electronic system(s) to acquire and pay for supplies, services and works. The council has recently invested in the Oracle iProc tool which offers e-purchasing and spend analysis capability to assist in alleviating the pressures faced by operational buyers.

Ultimately, the aim is to enable many operational tasks in the Procure-to-Pay cycle to become automated and/or self-service. The role of the Procurement and Contract Management Service is to plan and source the contracts we buy from, including advice and oversight of the entire procurement cycle.

By further utilising e-sourcing and e-purchasing we aim to:

• reduce transaction costs
• make processes more efficient
• improve management information and visibility of spend
• increase control and consistency of processes
• improve contract spend compliance

We are responsible for optimising the statutory and legal boundaries of UK procurement legislation to deliver the most efficient processes and outcomes for the council.

As an integral part of delivery to the new council, procedures will be adapted and consolidated to ensure a seamless transition and processes documented for continuous delivery of the forward plan of work. Following enactment of the Regulatory Reform currently anticipated in late 2023, all processes will be adopted to ensure compliance is maintained.

We will demonstrate clear ownership and accountability within our procurement activities, with structured governance and assurance, to ensure clear, timely and transparent decision making. All procurement activity is accountable to the Corporate Procurement Board, chaired by the Corporate Director – Strategic Resources.

The Procurement and Contract Management Service will provide appropriate central support and challenge, ensuring lessons are learned and shared, in order to drive continuous improvement in the council’s procurement activities.

We will operate transparently, with a visible and accessible contracts register and forward procurement plans, robust management information, and clear bid and tender processes and documentation, to ensure a positive and professional relationship between the council and its procurement partners, and confidence in our approach from markets and the communities of North Yorkshire.

Our ambition is to be recognised as a contract management leader in the public sector. We will achieve this by delivering efficiencies, savings and service quality improvements through an assertive, proactive, consistent approach to supplier relationship and contract management.

This will include the management of risks such as contract management capability, supplier performance, changes in requirements, and stakeholder relationships. Where appropriate contract management plans will be utilised in order to ensure that value is created throughout life of the contract:

• the contract value increases over time up to the critical point of leverage when the contract is signed
• after the contract is signed there is an initial period when the contract value is maintained at that level and then over time there are three potential scenarios:
  a) contract management maintains that level of value
  b) collaborative contract value creation brings a 10% potential value increase
  c) contract neglect brings a 10% potential value erosion

In addition, the need to satisfy increasing compliance and analytical requirements has also led to an increase in the adoption of more structured and complex contract management procedures. The drive to improve contract management skills across the council will enable greater value to be achieved. The development of appropriate contract management processes and support from the Procurement and Contract Management Service will enable a consistent approach to be embedded into the council.

Contract management responsibilities

Contract management responsibilities include:

• maintaining a comprehensive contracts register
• ensuring contracts align with the objectives of the council and offer value
• ensuring contractual obligations are met by both parties
• managing contracts throughout their lifecycle, including variations and extensions

The Procurement and Contract Management Service will:

• segment contracts in relation to spend and criticality to the council and work with service-based contract managers to assess and baseline contract management activities against best practice for strategic contracts
• work with internal audit to identify shortfalls and create improvement plans to close contract management gaps

A contract management practitioners group has been created to discuss best practice and confirm that the council’s most critical supplier relationships are being baselined and are a priority with appropriate resource being available to manage them. It is important for contract management to work closely with business management, finance, procurement and legal services to ensure contracts are managed throughout their lifecycle. The practitioners group will identify those who are currently involved in contract management activities and where needed provide guidance and support as development needs emerge.

Contract management will seek to ensure that suppliers and their services are managed effectively, and that continuing quality and value for money is achieved. Contract managers within the council will ensure that effective contracts are in place, and that suppliers deliver according to the terms, conditions and delivery targets contained within the contract. A key outcome is that the council progresses with ensuring that the optimum value is achieved from the relationship with the supplier ideally in a collaborative manner building long-term relationships.

We will invest in and develop the procurement skills and capacity of our staff, to ensure we are recognised nationally as the best local authority Procurement and Contract Management Service in the country.

Our aim is to create within the service the combination of the right people, the right structure, and the right skills, aligned with career development opportunities and support. We will aim to attract, retain and motivate high-quality, skilled procurement commercial professionals where we are unable to develop from within.

Our staff will maintain and develop good skills in strategic thinking with commercial acumen, along with operational and practical procurement expertise. We will be effective relationship managers with the ability to influence, have good emotional intelligence and communication skills. This will help us to be credible with stakeholders and suppliers.

Our staff will know their supply markets, cost drivers and understand the regulatory environment in which they work. Investing in training and development programs for our staff will bring growth and succession planning to the service.

The Procurement and Contract Management Service also has a wider role to play in the development of contract management and commercial skills across the council, our partners and our customers. We will develop and deliver a high quality training offer to our customers and suppliers, including skills in tendering, maximising social value, and behaviours to enable improved contract management.

The Public Services (Social Value) Act 2012, places an obligation on the council to consider economic, social and environmental well-being within any procurement for public service contracts above the relevant Public Contract Regulation threshold. The council endeavours to not only meet the legal requirements, but exceed them, through consideration of social value within all procurement activity.

Procurement can and will improve the well-being of the residents of North Yorkshire. As a council we want to grow our economy and improve the lives of all those living within the county.

Delivery of social value is intrinsically linked to commissioning which assists with innovation, creating savings and social outcomes.

The focus for the new council will be defined as its structure is put in place up to and beyond vesting day, however this service will continue to build it’s confidence to explore the social, economic and environmental impacts that can deliver and support the new council's aspirations for a carbon negative and sustainable future.

There has never been a more influential time to bring social value to the front and centre focus of project delivery; commissioning, procurement and contract management all have an intrinsic part to play in ensuring support and development of the local communities and environment the council serves.