1. The Chairman welcomed Henry Swan to the meeting and invited him to give the Committee an outline on how his role supported Kent Businesses and to answer questions from Members of the Committee.
2. Henry stated that as Head of Procurement he was responsible for procurement across the whole of the County Council. He set out the following key aims
3. Henry explained that half of the money spent externally was with Kent businesses. The majority of this went to: medium sized businesses (32%), small and medium sized businesses (SME’s) (22%) and micro businesses (17%). Compared with other counties Kent was doing well.
4. Henry informed the Committee that KCC used to advertise contracts via the South East Business Portal but they had procured a Kent Portal and all tenders over £50k were advertised on it. Suppliers could register on the Portal for a particular category and receive an email alert when a tender for that category was posted on the portal. Kent District Councils, and Kent and Medway Fire and Rescue and Medway Council were also able to advertise via the portal. The cost to KCC of the Portal was £22k. There were currently 5,600 suppliers registered on the Kent Portal, 3,060 were Kent suppliers. He confirmed that Kent had a good supply base.
5. Henry confirmed that his role was to ensure that procurement was carried out legally.
6. Henry explained that for every procurement over £50k there was a procurement plan. The plan gave options for carrying out the procurement, and checklist - set out how Kent businesses would be considered within the tender. The Procurement Board met monthly and the question of how Kent businesses were being considered was always asked by the Leader. Henry stated that sometimes the answer to this was to say if the tender was broken down to smaller contracts it would be more advantageous to Kent businesses.
7. Regarding European procurement rules, there were times when KCC knowingly pushed the boundaries of the rules in cases where it was considered unlikely that there would be a challenge, the level of risk was outweighed by the benefits, KCC will take risks, procurement will advise decision makers on the level of risk that has been evaluated. Part of the role of the procurement team was to give advice on this level of risk.
8. Henry confirmed that he met regularly with the Federation of Small Businesses (FSB). He had also tried to standardise procurement documents across the County Council and as part of this process had got feedback from the FSB to make the procurement process better for these suppliers. Tenders should then look similar online. The outsourcing of the Youth Service had been carried out via the Kent Portal and there had only been two complaints about the use of this facility. He stated that everything his team did was focused on Kent businesses.
Question – Do the FSB have particular problems with KCC tendering process?
9. Henry replied that the move to standardised documentation would make it easier for them. Part of the feedback on the documents from FSB was that these should be in plain English. There was also information about consortiums which had been incorporated, plus information on whether a financial assessment was required or not. Issue highlighted re consortiums and need for companies to work together and form a Joint Venture Company if they were successful in tendring.
Question – What is the cost of making a bid?
10. Henry stated that the main cost of submitting a bid was in time to the business, we aim to make this as easy as possible for them.
Question – Regarding the Social Value Act, is social value something that is quantifiable? Is there more that we can do to facilitate third party procurement? Is it possible for the Kent Portal to be use by all bodies outside of Kent?
11.Henry replied that there was a lot of misunderstanding about the Social Value Act, it was not something that could be used for all procurements. Central Government had come out with a law or guidance which did not tie in with European law. The legal interpretation of the Social Value Act was that we should consider it when thinking HOW we do the procurement and carried out our procurement but not when we carry out our evaluation of the tenders because this would be unfair to European bidders. He confirmed that the social value was taken into consideration anyway and that there had not been need for an act which had not been helpful.
12.Henry explained that it was possible to infer things that KCC would like to be included, such as apprenticeships, in conversations but not in the tender specification document. However, suppliers could include this in the bid and we could then pick up on that on contract on that basis.
13.Regarding the Kent Portal, Henry stated that it was the intention to extend the use of this by other non Kent based businesses, so that they could use it to advertise for Kent sub-contractors.
Question – In your two and a half years experience at KCC, if there were three things that you could change about the way that procurement is carried out in the public sector what would they be?
14. Got to get it right at the beginning. Henry stated that there were benefits from being in the public sector, the evaluation process was good, and it was not possible to change your mind about the tender halfway though as happened in the private sector. In the public sector it was not possible to negotiate the contract (with final 3 providers) as you would in the private sector. However, in the private sector you are not given the best price as it was expected that there would be negotiation. Henry referred to the reverse auction process which he was using where suppliers bid against each other and the lowest bidder was awarded the work. The suppliers were able know whether they were 1st, 2nd and 3rd in the scale of tenderers but not the price bid.
Question – How do you manage risk?
15.Henry stated that it was important to ensure that what people tendered for is what we/they actually wanted. At the beginning of the process officers were encouraged to talk to suppliers. Use PIN notice to engage with Market. At the end of the process if there are two lowest bidders, we would talk this through with the manager of the contract, we can not get the tenders to change anything but it was important to ensure that the understanding of the contract manager and the tenderer were the same, before the contract was awarded.
Question – What barriers to participation have the FSB identified?
16.Henry replied that the SME’s had identified the need for clear advertisements and tenders in smaller lots where possible. These were things which KCC tried to do but there was a balance to be struck. KCC sometimes needed to upscale contracts for financial reasons. Sometimes small but not always better; Need standardisation, clear advertising, smaller lots.
Question – What are the barriers to voluntary sector infrastructure support groups?
17.In relation to the Voluntary and Community Sector (VCS) Henry stated that he was working with these groups and acknowledged that there was more work to be done with this sector. If KCC worked with the voluntary sector and used volunteers it should be more competitive as they did not have the same costs. He confirmed that we would need to use the third sector more.
Question – What about Not for Profit (NFP) organisations?
18.Henry stated that NFP organisations could move forward, should be more competitive (as use volunteers or not for profit) but that was not always the case.
Question – How do you evaluation sustainability?
19.Henry confirmed that this related to delivering the contract in the required period. He explained that if an abnormally low bid was received there was a duty to investigate to make sure it was sustainable. They would ask for a breakdown of price from the tenderer. If we were satisfied with the breakdown we could challenge them to deliver to that.
Question – Regarding the Kent Portal is there a directory of services available to organisations?
20.Henry replied that there was not, it was a means of advertising tenders and it held the contracts register, there were currently 2.5k contracts on it. It was also a method to communicate to suppliers. Some are not accurate but in progress to improve.
Question – What is the one major thing that the organisation could do to improve procurement/commissioning?
21.Henry stated that KCC could implement the report that he had taken to Corporate Directors on Monday 20 January 2014. The key parts were 1) to have the right people in the right places and roles and 2) contract management - to make sure that there was clear contract management and clear roles. The Committee asked Henry to supply them with a copy of the report. Henry stated that a good example of contract management was where the Head of Commissioning in Public Health saw that Kent Community Health NHS Trust was not doing what they were required to do under the contract she challenged them and got a credit of £690k. Service performance sits with Commissioners and their role is to have an understanding of contract management.
Question – De- commissioning and re- commissioning – how well do we do that and what are the real issues?
22.Regarding re-commissioning and de-commissioning this does not sit with procurement, but with commissioning. He emphasised the importance of looking across the whole of the county council when commissioning for example there was a tender for infant feeding, which when it went to Procurement Board the question was then raise about Children’s Centres and their role.
Question – In relation Kent businesses is there a limit regarding economies of scale?
23.KCC target for 60% Kent business (1st and 2nd tier). Henry stated that KCC was getting close to that limit now. It was now more about taking into account second tier sub contractors. The Council could only do so much. KCC was ahead of the game compared to other Councils.
Question – One of the weaknesses is enforcing and monitoring contracts. It is important not to be outsmarted by the private sector and are we too soft in enforcing control?.
24.Henry agreed that there was vast scope for improvement. Procurement were now responsible for the contract side, in the past this had rested with Legal Services. Key is what needed, by when and standard. There was a standard form of contract, with key provisions and other provisions which could be included as appropriate. The start of the process was crucial as there was no scope for changing the tender specification once the tender process had started. When a client produced a contract colleagues in procurement challenged it in relation to clarity etc. The contract manager needs to be involved in the process all the way through – this is now happening. Need to be right before procure. Henry confirmed that there was a big push on contract management.
Question – Are procurement involved early enough in the process?
25.Henry stated that procurement were now involved in nearly every procurement. He gave the example of Mark Lobban who had involved procurement nice and early in the process for adult social care procurement. Henry emphasised that procurement colleagues were not there to stop commissioners or to give legal advice but their role was to help managers do the right thing in relation to procurement and help do legally as much as possible and advise on risk
Question – How do you get the best out of a contract?
26.It is important to consider how long a contract needed to be, in local government there had been a tendency to have contacts of 5 years or longer. We should have the contract for whatever length is best for the Council. (so if need to award yearly make process easier not contract longer e.g. commodities) At the moment there was an edict to 1) make sure that there is a budget for the procurement and therefore contract managers must speak to finance to confirm this and 2) to try to limit contracts to 2 years at the most, as uncertainty of future budgets. He acknowledged that there would always be times when there was a need to have longer contracts where capital investment by the contractor was required..
Question – Do you get more tenderers for a longer contract than for a shorter one?
27.Henry explained that this depends on what type of contract it was, it was necessary to talk to the market and to decide on the best way forward e.g. the telecare contract was for 18 months, as within that period a larger solution would become available and this system could become part of that.
28.The Chairman thanked Henry for helping the Committee with their work and for answering questions from Members.