Agenda item

To receive an update from the cabinet member for Finance, Business and Jobs, and Director of Law and Governance on progress since cabinet consideration of the Response to the Education and Business Scrutiny Commission report on Procurement: Accessibility and Social Value (Cabinet meeting, December 2020).

Note:  The cabinet report ‘Response to the Education and Business scrutiny commission report on Procurement: Accessibility and Social Value’ has been circulated with the agenda for background information only.

The commission received an update from Councillor Rebecca Lury, Cabinet Member for Finance, Business and Jobs, and Doreen Forrester-Brown, Director of Law and Governance on progress in response to the Education and Business Scrutiny Commission report on Procurement: Accessibility and Social Value.  The commission also heard from Elaine McLester, Head of Procurement.

Councillor Lury, explained to the commission that the recommendations had not been progressed as far as she would have liked, due partly to the impact of Covid which had set back a considerable amount of work across the council, with a need to focus on how the council responds to the pandemic, and also due to constraints in terms of staffing within the procurement team, which had been caused by difficulties in filling vacant posts.  There were currently only two full time staff, with three roles to be filled. 

Councillor Lury updated the commission on action taken against a number of the recommendations.  In terms of data collection, Councillor Lury advised that the team was doing quite well in terms of collecting data going forward, but historical data was more of a challenge.  Councillor Lury felt that focus needed to be on what data the council should collect going forward to make sure that the processes were right first, and then with additional capacity, historical data could be looked at with consideration of what the council would want to collect from previous procurements.  Councillor Lury advised that the E Procurement system already collected a lot of data and that data collection was being built into the procurement process as well.

In relation to tendering requirements, Councillor Lury explained that there were a number of constraints that the council had been subjected to, which were as a result of Brexit and the national government needing to update a number of the regulations.  Further clarity was awaited and once received, amendments to contract standing orders could be undertaken as well as updates to guidance and procurement templates.

In respect of work around social value, Councillor Lury sought a steer from the commission on consideration of what social value is, specifically based on the findings in the context of the investigations undertaken by the commission.  Councillor Lury highlighted that within the Fairer Futures Procurement Framework, one of the changes that had been made was a limit around social value, in that it would apply to goods and services contracts over £4m and £15m for works contracts.  Councillor Lury stressed that the council needed to be conscious of the impact Covid has had a really significant impact on all businesses and asking them to provide even more information and detail as part of a procurement process might actually hinder businesses coming forward and being able to partake.  Councillor Lury felt that it was important to think about what the council was trying to measure and to consider what the most important things were to the council in terms of social value and what was to be sought from businesses.  There was also the need to raise awareness, and this was an area that came more with the local economy team.  Councillor Lury advised that both she and the strategic director of Finance and Governance had been jointly working with the local economy team to try and make sure that the team got the right support around community wealth building and how they took forward the relationship the council had built with businesses.  Councillor Lury advised that during period of Covid the council had built up a stronger relationship with businesses across the borough, due to the tailored support offered by the council, this meant it would be easier to be able to identify businesses who might be suitable for certain contracts that were coming forward and also be able to support them through the process.  It would also be possible to reach out to businesses through a new mailing list developed, to make sure that they are aware of all the opportunities that are available.

In respect of the recommendation around Section 106, Councillor Lury informed the meeting that she was looking at this with the Director of Regeneration.  Councillor Lury highlighted that there were restrictions around what the council could actually do within S106 and whilst the council could encourage developers to use local businesses, a better understanding was needed as to how far the council could go with mandating some of this.

Councillor Lury went on to provide some information in respect of the Fairer Future Procurement Framework which had been approved by cabinet in January 2021.  Councillor Lury drew members’ attention to climate change and how the council might need to respond.  She advised that following approval of the Climate Change Strategy which was due to be considered by Cabinet in July, consideration would be given to what amendments might need to be made to the Framework going forward.

Training was a key focus, and there was also now digital training available through the e-learning portal.  If the council was able to grow the resource of the procurement team, then would be able to look at future training opportunities.  This would however be difficult at the moment with just two full time members of staff to be able to look at training more broadly across the whole of the council.

A new contract management toolkit was being developed and would be in place by mid-May.  Councillor Lury also made reference to the Construction Charter for which final comments from the Unite union was awaited, and Electronic Watch (ethical commitments around the procurement of electronic goods and services – IT and supply chains), an area that had been completely delayed due to Covid, but could now be focused on going forward.

Following the initial introduction from the cabinet member, questions and discussion were held around the following:

·  Steps to be taken to resolve the recruitment problem

·  Evidence received by the commission that local social value being used to the benefit of SMEs and local organisations in other local authority areas – why not Southwark?

·  Timelines for taking matters forward

In response the question around social value, Councillor Lury expressed that it could be made quite complicated for a business to be able to demonstrate how they will provide social value, and a small business being required to find other ways in which to provide extra local value on top of the service they are being contracted to provide could create an undue burden on that business, both in terms of applying for the contract in the first place and being able prove how they are going to do that, and also being able to deliver it alongside the core parts of a contract.  Councillor Lury explained that from her point of view and sought understanding on was whether, in recognising the fact that a local business was providing social value already by the fact that they are local, and therefore the way in which social value was judged might therefore not need to be as strict as needed, for example, requiring businesses to ‘set out the seven things that they are going to do as a business’ to meet social value.  Instead it could be more about the council taking into consideration how many local people they employ, or where their headquarters are, things they are already doing as a business for the local area.  Councillor Lury felt it was that kind of difference that would be useful.

In terms of timelines for taking matters forward, Councillor Lury informed the commission that a written update on progress in around six months’ time, but stressed that due to the challenges in recruiting to posts in the procurement team, it would be difficult to take forward a number of the actions until the recruitment issues were resolved.

Doreen Forrester-Brown touched upon a number of points made by Councillor Lury.  Doreen informed the commission of the reorganisation that she had undertaken in the procurement team with the implementation of fairer futures procurement and the scrutiny recommendations in mind, to ensure that the team had the right staff at the right level, including provision for trainee and junior posts to allow for career progression and more senior posts being mindful that this was a key priority area.  Also, being an advisory function, there was a need to make sure there were resources to train officers involved in procurement activity across the council, and to make sure that they understand and are aware of how to implement the principles and practices within the fairer future procurement framework.

Doreen went on to highlight some of the challenges faced in relation to the recruitment process undertaken and the competiveness of the market in terms of recruiting procurement professionals, both in London and nationally.

Doreen praised the work of the Head of Procurement and the procurement team and highlighted some projects that were or had been recently undertaken, including amendments on the fairer futures procurement, the contract management toolkit, and the rolling out of the digital training package on procurement that all officers could access.

Doreen indicated that there was still more work to be done around social value and explained that in respect of smaller SMEs, the current regulations were still in place so the council’s ability to push for more local SMEs was still not quite there.  She did anticipate that one of the positive things that might come out of Brexit was the procurement regulations and the ability to do things at a much more local level and drive that through community wealth building.

Doreen highlighted the need to clarify the distinction between procurement and local economies in order for recommendations from the commission to be directed appropriately.  Doreen explained that the procurement function was about the purchase of works and services that the council needed to deliver its core functions, and the procurement team advised on the process.  It did not develop relationships with businesses in the borough, and if it did, could potentially be seen as a conflict of interest under the regulations, as the council needed to be fair, open, and transparent, treat everybody equally and apply the process.  In terms of supporting and understanding local businesses, and collecting data about local businesses, this was where the local economy team had the expertise and much more experience.

Elaine McLester, informed the commission of some of the complexities and challenges around applying social value, particularly to lower value contracts. 

Elaine highlighted, that the council spent a vast amount of money in so many different ways, and one of the concerns was around unintended consequences.  Due to the nature of the organisation, in requesting information, the council could not just take the information provided at face value, the council would require evidence and supporting information in order to be able to assess and score the information being provided due to the regulations the local authority had to comply with.  Elaine explained that the social value portal had been created around themes, outcomes and measures, which linked back to the commitments of the council.  The social value portal was however only used for larger scale contracts, and even then was not a one size fits all approach, and there was not an easy way to apply, an example of this was a high value contract, but was only six months long, then this may mean the council’s aspirations of having apprenticeships may not being able to be fully applied – would the job placement then be classified as a training opportunity or mentoring.  It was very difficult to come up with a very clear definition. Another complication highlighted was how this would impact on leaseholders, when trying to build in social value for leasehold work, as this may not be part of what leaseholders could be charged for.  Elaine advised that there were lots of complications relating to social value, but stressed that officers were not trying to block the commission’s recommendations around this issue and were trying to find a way through it, with a recognition that it was not a one size fits all, and that there isn’t an easy solution.

In response to the cabinet member and officer comments in relation to social value, the chair informed that the commission and its work was very supportive of the idea that whether through the social value portal or otherwise, that the council lean towards prioritising the types of social value that aligned well with the council priorities and it was felt that this would be a legitimate way to prioritise.  The chair indicated that there was evidence that social value had been done quite well elsewhere, with big gains in the amount of local procurement organisations that were often delivering the types of social value that the commission sought to achieve – this had been identified through commission work looking at the Centre for Local Economic Studies (CLES).

Doreen informed the commission that she had looked at some literature and work that CLES had done around looking at both local spend and how they assess local spend and also how they have engaged in the area of community wealth building.  She acknowledged the strong link between procurement and community wealth building, the collection and collation of data being critical. 

Doreen also reported that research was being undertaken around working with more anchor institutions.

RESOLVED:

That it be noted that an update on progress will be provided in approximately 6 months’ time.