24 February 2000
But doubts linger about council's purchasing strategies, reports Elizabeth Bellamy
Councils say they will meet next month's target of submitting plans on how they will perform under the government's best value regime.
The new system, which takes effect on 1 April, will see councils review all business functions, including procurement. As the replacement for compulsory competitive tendering, best value will fundamentally change the way council purchasing departments operate, according to local government experts.
Under the Local Government Act 1999, by 31 March more than 400 councils in England and Wales must submit performance plans to the Department of the Environment, Transport and the Regions (DETR) to guarantee "continuous improvement" in the way they carry out their functions. The plans are the first step in a five-year process that will ensure each council reviews its performance.
Local authorities will have to explain why a service is being provided, benchmark the service against other authorities, consult the community and suppliers on how the service could be improved, and consider outsourcing services or changing their suppliers. In June, the Audit Commission will report on how their plans measure up and councils will have until August to respond.
The process of implementing best value will see some big changes in the working life of procurement staff, said Dave Wheller, chairman of the Society of Purchasing Officers in local government (Sopo).
Councils will, for the first time, be legally obliged to have a procurement strategy in place, Wheller said. "This will move procurement towards the corporate core of local authorities. Intelligent, strategic procurement is at the heart of best value," he added.
While the shift towards a strategic focus will ultimately benefit council purchasers, Geoffrey Filkin, non-executive director of the New Local Government Network (NLGN), a think-tank and pressure group, said the scope of the best value review will place greater demands on procurement staff over the next few years.
Purchasing departments would find it difficult to recruit new employees and reskill their existing workers, he said. This would particularly affect smaller councils with smaller budgets. "There aren't enough qualified people out there to fill the roles."
Last year's NLGN report, Procuring Best Value, backs up his comments. It claimed that councils were unlikely to develop quality purchasing skills across all areas. Research by Warwick Business School also found that council staff lacked skills in, among other things, negotiating and managing open-ended contracts with private-sector contractors, and benchmarking.
Around 80 per cent of local authorities are members of consortia, such as the Central Buying Consortium (CBC), to make savings on low-value, high-volume items. But best value will place an increasing demand on procurement staff to handle the delivery of services - an area in which purchasers are also lacking skills, said Wheller.
Not all councils are ready for the new system, which will cause teething problems, said Filkin. "Some of the leading authorities are clear in how their purchasing strategy will address best value, but most have not got to that stage."
Howard Davis, project co-ordinator for the national best value evaluation project at the University of Warwick, agrees. "This is a learning curve for all concerned," he said.
These types of problems have again prompted council purchasers to call for an even closer examination of local government purchasing. The push began late last year when the government announced the creation of a central government procurement advisory service, the Office of Government Commerce (OGC).
At the time, Steve Gilbey, chairman of the CBC and head of supplies and contracts for Hertfordshire County Council, told SM there was a need for a local government body that purchasers could telephone for advice.
But while Filkin agrees there is a "recognised need for a government review of local authority procurement", others have urged caution. Dave Pointon, procurement manager at Portsmouth City Council, warned that any local government purchasing review needs to be specific in its focus.
"It would have to look at things like how a best value inspector would identify areas of poor purchasing," he said. Portsmouth has been running a shadow best value pilot scheme since April 1998, including a three-year review of its procurement department.
Talks to discuss a review and OGC-style body for local government have been taking place between Sopo, the CBC, the Improvement and Development Agency for local government, the Confederation of British Industry and the Local Government Association since the latter half of 1999. The results have yet to be announced.
The DETR said it was considering the impact that best value would have on procurement, and recognised that councils were moving towards a "challenging new form of service provision".