COUNCIL SAVINGS ENFORCED
How to deal with moribund Councils?
Central Government funding cuts are forcing Councils to address ‘deep cut’ cost reductions. There are limited ways in which this can be contemplated. Making staff redundant is an option; we simply make the statement without political comment!
Reducing the quality of services offered to the public is another option, as is ceasing to provide some services altogether. As with private sector organisations faced with having to make ‘deep cut’ savings, there is the potential haven of procurement to generate significant savings. How credible is this option? Frankly, it all depends. We offer six potential directions of travel for consideration.
1. Renegotiate existing contracts.
Yes, we do know all about EU Procurement Rules. We also understand ensuring Councils get value for money. Most contracts have a contract change process within them, so why not use it? The cost model can be re-examined and an audit clause invoked. Specifications and KPIs can be scrutinised to check if they can be eased to lower the contract price.
2. Access Government (or other) Framework Agreements.
There are well established Framework Agreements where the benefits of aggregation have been achieved and for which contract terms and conditions are agreed. There is the immediate benefit of avoiding costly PQQ and ITT processes. There is the additional benefit of it permitting procurement specialists to focus on other priorities and more challenging situations.
3. Outsourcing / In-Sourcing actions.
Outsourcing remains an emotive term in many councils, usually along the lines that all the outsourcing companies are interested in is profit. They certainly are interested in profit but should be held fully accountable for contract performance. When they don’t achieve it they can pay damages. Big deals have been done by some councils on a Risk and Reward basis. Typically, many of these deals are done to obtain capital investment that is the foundation for achieving savings. There are now some very dated outsourcing deals that warrant scrutinising for the potential of bringing key services back in-house.
4. Upskill the Procurement team.
The private sector remains as the largest investor in upskilling their Procurement teams. In this context we mean skills aimed at delivering savings. So, this is not procedure driven and doesn’t need a large team dealing with ‘Policy’. Investment in upskilling (assuming the trainers have actually done it in real life) can exceed 1000%. The upskilling programmes will be challenging, uncomfortable and demand action. Those who are ‘up-for-this’ will achieve the greatest benefits.
5. Auditing payment systems to Suppliers.
There are many lax payment systems. Tell-tale signs are purchase orders issued after goods and services have been received; departments signing off invoices without the intervention of a third party (leaving open the potential for fraudulent payment). Discounts and rebates not being obtained and, perish the thought, suppliers being paid twice for the same thing.
AND FINALLY
6. Aggregation with nearby Councils.
There is in our view a marked failure for negotiating Council’s to check the potential for aggregating requirements. This can be done on a wide range of goods and services purchases. Many of the forums we have encountered have been the home of defensiveness, self-protection and ‘leave it as it is’. These are outdated concepts, workable in the new life facing all council procurement operations.
We have never been able to accept the logic that nothing can be done.
WHAT ARE YOU DOING?
CAN YOU SHARE BEST PRACTICE?
IS YOUR COUNCIL MORIBUND?
If you are open to a telephone meeting, to find out how our services have helped improve results for other clients in the Local Authority sector, please call me on 01744 20698 or email me. We’ll set up a call.
Kind Regards
Steve
