Birmingham finds stakeholders are the key to contract compliance

17 May 2011

17 May 2011 | Lindsay Clark

Birmingham City Council has slashed its off-contract spending by recruiting “ambassadors” within authority directorates.

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.




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