Services procurement: Protecting the public purse

In this blog we explore how the pressure on government could potentially be reduced through modernisation and elevation of the procurement function. 

The challenge 

Increasing demand

Local authorities in the UK face a myriad of demands and responsibilities that are essential for maintaining the wellbeing of their communities.

1. An ageing population: With an aging population, there's an increased demand for adult social care and healthcare services. This requires more resources and facilities to support the elderly.

2. Children’s services: Widely recognised alongside adult social care as the fastest growing pressure on council finances, demand for everything from family support to children in direct care is increasing.

3. Housing crisis: The shortage of affordable housing has led to increased homelessness and pressure on local councils to provide housing solutions and support for those in need.

4. Climate change: Local authorities are expected to take action against climate change by implementing sustainable practices, developing green infrastructure, and mitigating the impact of extreme weather events.

5. Public health: The Covid-19 pandemic highlighted the importance of public health services, putting pressure on local authorities to manage public health crises and ensure the well-being of their communities.

6. Education: Meeting the educational needs of a diverse student population requires additional resources and specialised support, especially in areas with high population growth.

7. Economic development: Stimulating local economies, creating job opportunities, and supporting businesses have become essential, particularly in the wake of economic challenges.

8. Digital infrastructure: The increasing reliance on digital services demands investments in broadband access, digital literacy programmes, and cyber security measures.

9. Community safety: Rising crime rates and concerns about community safety require resources for policing, community outreach, and crime prevention efforts.

10. Environmental regulations: Compliance with stricter environmental regulations necessitates investments in waste management, clean energy, and pollution control.

11. Mental health support: The growing awareness of mental health issues requires local authorities to provide accessible mental health services and support for residents.

These increasing demands place significant pressure on local authorities, requiring them to manage their resources efficiently, collaborate with various stakeholders, and adapt to changing circumstances to meet the evolving needs of their communities.

Reduced supply

In this case I mean supply of funds. Cost cutting, an economy where growth has slowed, a population that is currently grappling with a cost-of-living crisis with energy costs, mortgage rates and basic goods all costing more than a year ago, results in less money available to support services and service demands and more families and individuals needing more support from the state. As cited in the introduction to this article, the outcome of this is that local authorities simply can’t keep up and we have seen a number of them issue a Section 114 notice amid issues balancing the need to deliver services and pay for them.

So, demand for services is going up while supply of these services is being squeezed through financial pressures. And yet the main way out is to invest more. This leaves the sector with the unenviable challenge of how to deliver more services with less money while trying to ensure investment is made to ease future pressures. This is where procurement can help.

So how do we modernise the process to bring procurement to the fore?

Procurement within some public sector bodies has often been left in the dark – seen as the gatekeeper at the end of the process to ensure things are compliant and there are frameworks in place. However, if the sector is to solve its financial issues, then this isn’t enough anymore and focus need to change  towards modernising the profession and being able to help balance some of the equation. We work specifically to support with the procurement of professional services and consultancy and wanted to share some details for how these new processes have been helping our customers.

A framework that works

The newly launched 1141 YPO Framework, on which we are the sole Managed Service Provider, is fit for purpose. It allows Authorities the flexibility to engage known suppliers or suppliers from our pool, using processes ranging from direct appointments through to end-to-end market engagement including supplier market assessment and recommendation, request for information (RFI) and request for proposal (RFP) preparation, response evaluation and selection support, alongside a set of commercials to suit each service.

This means that Authorities have a framework that gives all the control and market access they want with the flexibility they need under a compliant procurement process, meaning each engagement is completed via an Order form - quick, effective and compliant.

Categorisation of spend

One of the principal difficulties in managing consultancy procurement is in defining what is consultancy – and possibly more importantly what isn’t consultancy. Generally, as an area of resource spend, consultancy will be one of the highest expenditures, yet it is often the least regulated and most poorly mandated.

Often consultancy engagements are started in periods of desperate need, or they are part of a core strategies agenda driven by senior individuals with careers and reputations at stake, and neither of these scenarios aid sound decision-making. Creating sound decision making frameworks and taxonomies around what you expect from your consultancy suppliers is key, and things like a balanced services contract, risk sharing, clear outcomes from your investment and supplier ‘skin in the game’ are not too much to ask.

Therefore, we work with our customers to implement a bespoke adaptation of our triage process that allows organisations a framework for decision-making that they can tailor to their authority and can overlay all consultancy buys to ensure you get value from your agreements.  But just as importantly, all things that aren’t consultancy are categorised into more mandated and lower cost areas such as recruitment.

Visibility and control

Without data, communication and clarity, how can people within the organisation be expected to make sound on-going decisions? And yet we commonly see siloed decision-making around the procurement of services whereby the buyer draws up technical specifications and engages suppliers before procurement are even in the room. 

Procurement teams then start managing some/all/none of the buying process along with contracting, before things are handed off to an operational team. Having different parts of the organisation with different agendas, different understanding of the requirement and differing levels of commitment to delivering the outcome creates a challenge.  It means organisations are stuck measuring ‘value’ as part of the tender process rather than true value being delivered – it is one thing to be cheap at the point of bidding but was the value actually delivered? How much change control was there? Was the project extended? Was it delivered on time and on value as promised? That is the real determination of value.

As such, core to our partnership with local authorities is bringing all the key stakeholders together through our platform to allow joint visibility and decision-making through the entire process of scoping, buying, and contracting, but then actually to go further and offer on-going visibility of performance throughout the project.

Providing all stakeholders with visibility into contract performance from implementation through to delivery means it is possible for all parties to review progress at milestone periods, approve and authorise extensions and variations and track all approval justifications. The outcome of this is that we can provide our customers with true return on investment (ROI)reporting on procurements as opposed to just focusing on the decision at point of purchase. In turn, this helps to focus the buying decision away from just savings in the procurement stage, as now everyone has visibility of contract and project performance overall.

Allowing purposeful competition without stagnating the process

There has always been a trade-off to manage in procurement with the idea competition drives best value but that it also takes time, money, and critically technical understanding to generate value from a competitive procurement process. A competitive process delivered well will work within the time and budget parameters of the organisation to deliver the supplier that will offer the best outcome to suit those parameters.

But a poorly run competitive process may mean unnecessary cost, delays, frustration and possibly even doing it again – we all know the phrase, ‘buy cheap, buy twice’. So, fundamental to the delivery of our services to local authorities is the provision of a suitable, vetted, contracted, compliant and proven supply chain of  more than1000 suppliers that have been specifically pulled together to support public sector organisations. This means we can run competitive procurements with our suppliers quickly and in a way that works, ranging from multiple quotes to full multi-stage and assessment procurement processes, so we can balance time and cost into the procurement process design.

The above are four of the core areas that we work with local authorities on in order to support their procurement processes. We deliver these on a consulting, one-off and enterprise basis to supplement the needs of your organisation and your procurement team, meaning local authorities can turn on and off the tap of support and ensure they are doing everything they can to help their organisation in solving that ‘unmanageable’ challenge of how they buy more services, more effectively with less budget.

To quote the big blue supermarket, every little helps!

If you have any questions or would like to know more about our Managing Consultancy and Professional Services framework and how YPO can help, please get in touch with the team!