17 May 2011 | Lindsay Clark
Birmingham City Council has slashed its
off-contract spending by recruiting “ambassadors” within authority
More than two years ago, the councils did not know how
much was spent outside of contracts approved by the procurement department
until it performed its first assessment.
Once the procurement team measured rogue spending, it
found around 22 per cent was outside official contracts, said Nigel Kletz,
assistant director of corporate procurement services at Birmingham City
Council. That figure has now been cut to near zero, he told SM.
Part of the process in achieving the reduction was
recruiting senior managers inside council departments to ensure contracts were
complied with, he said. “They are operational stakeholders. We steer their
direction and provide the data for them, but it is much more effective to have
them on board as ambassadors and give the messages of compliance within their
own directorates, than it is for us to come in as a central resource and say
you must do this.
“We’ve got engagement at the very senior management
level and then we cascade it down in each particular directorate, tailoring the
messages to the needs of the adult’s, children’s, environment or development
directorate,” Kletz said.
While the council improved compliance, it also
improved the availability of contracts. At the start of the process, contracts
were in place for only around 30 per cent of the spending; now that figure is
75 per cent, he added.
On average, contact compliance saves around 12 per
cent compared with spending outside these arrangements, Kletz said.
Birmingham is the largest council in Europe, with a
total budget of £3.4 billion. However, the ring fence around some spending,
such as education, means it can control around £1.7 billion. Since the cuts to
central government funding, announced in the Comprehensive Spending Review, the
councils is expected to save £200 million in the current financial year, or
find new revenue streams or cut services to make up this amount.
These circumstances have contributed to political
awareness of procurement, Kletz said. “We have got politicians who take a very
active interest in how the council spends its money,” he said.
☛ Kletz will be speaking on the topic of stakeholder
engagement at The Public Procurement Show,
where Supply Management is an official media
partner, in London on 14-15 June.