Go Tender - The Procurement Centre

Case Study: Northumberland County Council

Description:

Noprthumberland CC Northumberland County Council decided to measure and improve the local economic impact of its £245 million procurement budget and used its food supply contracts as a starting point. The Local Multiplier 3 (LM3) tool found that local suppliers re-spent on average 76% of their contracts with local businesses. Investigations revealed that if the council shifted 10% of its current spending on non-local suppliers to local suppliers, this would generate an extra £34 million for the local economy.

The first step was to raise awareness by arranging a seminar to communicate the contract needs to all the small and local suppliers. The food tender process was explained and second tier suppliers were encouraged to achieve approved supplier list status.

The second step was to maintain suppliers’ capability by working with regional business support organisations to match up businesses with technical support.

The third step was to alter the specifications of the upcoming tender to open it to all types of business. They split the contract into lots, allowing businesses to bid on a combination of up to seven food categories in four geographic areas of the county (which were they?)1. Procurement officers also used Best Value criteria, weighting quality and price at a ratio of 60:40. The quality criteria also requires that the contractor be able to assist the Council’s Catering Services Department in pursuing a sustainable food procurement strategy and be able to supply locally grown or organic produce.

Benefits:

NCC Meat and Veg • By increasing awareness of the Council’s food tender process and encouraging local SMEs, they saw a five-fold increase in local supplier expressions of interest.
• Four of the seven product categories (meat, milk, bread and fruit and vegetables) were awarded to local suppliers.
• Almost half of the £3million annual contract goes to local suppliers and will circulate amongst the local economy.
• The council’s reputation has increased among local businesses, resulting in a real ‘spirit of cooperation’ together with a Chamber of Commerce and ‘Best to Do Business With’ awards.

Key Lessons:

• Breaking a contract into lots gives the contracting organisation a more competitive service overall.
• Although there is more administrative work involved, the additional time investment was offset by the quantity and quality of the tenders received.
• The project has continued by applying the LM3 methodology to forthcoming tenders including property construction, fresh sandwiches, verge cutting and public transport provision.
• The project will now be rolled out to all the 25 councils in the North East.

1 Breaking a contract into separate lots is acceptable legal procedure as long as it can be justified for economic reasons rather tan to circumvent EU thresholds.

CASE STUDIES FROM OTHER AREAS

Glasgow Housing Association (GHA) Works Contracts
Summary Glasgow Housing Association (GHA) Works Contracts

This case study examines the social requirements sought to be delivered on construction projects for Glasgow Housing Association (GHA), one of Britain’s largest housing stocktransfer associations. As part of the housing stock transfer a commitment was made to maximise employment and training from GHA’s investment programmes, and GHA is also strategically committed to a contribution to the social regeneration of its neighbourhoods. The approach also addresses the community regeneration policy of the Scottish Executive that makes clear the importance of tackling poverty and providing access to suitable employment.

The initial value of the procured contracts was £630m with approximately a further £150m to be procured before the end of 2006, taking the total value to £780m. The framework contracts are for 3-5years. The longer-term relationships introduced through partnering and framework agreements provide contractors with continuity and security of work, and it is hoped that this should enable them to increase the number of ‘new entrants’ and apprentices they engage. The PQQ process described in this section was used by GHA.

To date eleven contracts have been procured for housing refurbishment work. here are a number of contractors delivering works for GHA in relation to the refurbishment works but for this case study one contractor was interviewed. Lovells has been selected as a preferred.

Source: Sustainable Procurement Cupboard – The Legal Shelf

CASE STUDIES FROM SOUTH EAST NORTHUMBERLAND

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Click here to read about Northumberland County Council’s food contract exercise