GROUP PROCUREMENT STRATEGY 2016-19 12 December 2016 Prepared by: Samantha Donigan, Assurance EIA Required? ☐ Manager Date effective from: 12/12/2016 EIA Completed? ☐ Policy approved by: Board Revision number: 1 Review Date: 16/12/2019 Lead officer: Samantha Donigan, Assurance Manager Group Procurement Strategy 2016-19 1 INTRODUCTION 1.1 The aim of this strategy is to ensure that the organisation is able to deliver its strategic corporate aims and objectives by procuring goods, works and services in a way which is both legally compliant and represents best value, stretching public and corporate resources as far as possible. 1.2 Ensuring that outcomes are delivered for Stockport Homes’ customers is at the heart of the work the organisation undertakes. As the company diversifies into different sectors and areas, this commitment to outcomes will remain constant but additional complexities will need to be considered. 1.3 The commitment to focus upon customer need, secure value for money, support local economic development and deliver wider social value will be a key part of all procurement projects. 1.4 The organisation is on a journey in terms of its Procurement Strategy. A procurement legal compliance framework has always been in place. However, the growth and aspirations of the new Group make for a step change again in terms of procurement. Stockport Homes seeks to maximise innovative procurement practices, some of which it has already succeeded at, but wants to build on this at the same time as maximising opportunities for encapsulating social value and maximising economic contribution to the Borough as a whole. 1.5 The principles embodied in this strategy apply to all procurement undertaken by the organisation and its subsidiaries. 2 CONTEXT 2.1 The financial environment for all public bodies has changed dramatically over the last five years and will continue to do so. Maximising efficiencies will remain a high priority to aid balancing budgets and procuring in an efficient and effective way is one way to aid this. 2.2 The legal environment for procurement is also likely to change. As an ALMO, Stockport Homes have always been governed by EU procurement law. In 2015, a new set of Public Contracts Regulations came into force in the UK, implementing the 2014 EU Directive on Public Sector procurement. 2.3 Since the referendum vote around Brexit there has been some uncertainty as to what the regulatory landscape will look like for public sector procurement once the UK is no longer an EU Member. At this time, there are no definitive answers and the organisation is keeping abreast of any key changes. It is likely that the UK government will implement domestic legislation around public procurement which will largely be in line with the EU Directive. What is certain is that the Regulations continue to apply until they are formally replaced by other legislation. Page 2 of 15 Group Procurement Strategy 2016-19 2.4 Communication with managers will take place on an ongoing basis as updates around procurement legislation emerge. 2.5 The corporate and group context for procurement is set out in the Mission and Aims : Mission: One Team, Transforming Lives Aims: Be a great place to work Be accountable to customers Maximise efficiencies Reduce inequalities Build strong, collaborative relationships locally, regionally and nationally Improve the environment 3 GROUP STRUCTURE ENVIRONMENT 3.1 In 2016, Stockport Homes developed a corporate group structure arrangement incorporating a trading company and a development company; with a charitable company to follow in 2017. 3.2 This strategy therefore takes into account not only procurement principles to be followed by each company individually, but also addresses the additional procurement considerations that a group structure creates. 3.3 An intragroup agreement has been developed which sets out a number of key principles, processes and approaches to be adhered to within the group, such as the parent company setting the strategic direction of the subsidiaries, approving their business plans and budgets and delivering procurement of all external services to the Group. 3.4 The Board of Stockport Homes Limited has reserved powers to approve the Group Contract Procedure Rules which are the operational framework by which significant purchases are made. The Contract Procedure Rules will be updated to reflect the move to a group structure. 3.5 Procurement requirements relating to a group structure which need specific consideration include: Ensuring that intragroup SLA’s exist for services provided by the parent to the subsidiaries for services provided to them Ensuring that thresholds for non-OJEU procurement activity (for works and services) are developed which are fit for purpose Considering how Leasehold ‘Section 20’ consultation requirements can be met for capital works delivered by the TradeCo Page 3 of 15 Group Procurement Strategy 2016-19 Monitor the use of the ‘Teckal’ exemption when awarding works in- house to the TradeCo Obtaining legal clarity about whether the TradeCo is a ‘contracting authority’ as described by the Public Contracts Regulations 2015, or not. 4 VISION FOR PROCUREMENT 4.1 Procurement is defined as “the process of acquiring goods, works and services, covering acquisitions from third parties and from in-house providers. The process spans the whole life cycle from identification of needs through to the end of a services contract or the end of the useful life of an asset. It involves option appraisal and the critical “make or buy” decision which may result in the provision of services in-house in appropriate circumstances”1. 4.2 Stockport Homes has significantly high public spend2 and has a responsibility to ensure any public money that is spent on behalf of its customers is done so in a compliant and efficient manner. 4.3 Stockport Homes’ vision for procurement is to: Maximise the benefits from spending public money with third parties, demonstrating value for money at all times Support the delivery of innovative procurement solutions leading to high quality service provision Ensure there is a consistency in approach across the group (and each individual organisation) Deliver procurement projects that are aligned with the group’s aims and corporate plans Maximise social value and local employment in its purchasing powers Embed a culture where all managers undertaking procurement activity know where roles, responsibilities and accountabilities lie, where they are trained in procurement requirements, and where advice and guidance on all matters on procurement is readily available from a specialised central procurement team. 5 PROCUREMENT DELIVERY MODEL 5.1 Procurement is devolved to budget managers within Stockport Homes. Budget managers lead procurement projects within the organisation, taking responsibility for developing specifications, project managing the process, awarding contracts and being responsible for the delivery and management of that contract throughout its lifecycle. Budget managers know their areas of expertise and the detail of what services they require in their specifications, and know how the contractor is performing on a day to day basis in terms of service 1 National Procurement Strategy for Local Government in England (2014) 2 Turnover of £41million in 2015-16 Page 4 of 15 Group Procurement Strategy 2016-19 delivery and so is best placed to monitor performance and manage the contract over the long term. 5.2 The organisation recognises that in addition to this there is a central role required for providing strategic advice and guidance, producing template documentation which is in line with legislative requirements, and ensuring compliance via monitoring and embedding best practice approaches, which includes continuing to remain up to date with changes to procurement law, best practice and emerging case law. This element is fulfilled by a dedicated Procurement Officer. 5.3 As the organisation continues to grow and diversify, this Strategy aims to review resource implications on budget managers and the current Procurement Officer role and assess whether additional support is required. This is something that some members of the Leadership Team have felt needs addressing in particular. 5.4 In terms of other delivery aspects, Directors and Heads of Service provide leadership for procurement across the organisation, ensuring compliance within each team and Directorate and receiving monitoring reports from the Procurement Officer to ensure sufficient oversight of spend is gained and maintained. 5.5 It is imperative that there is a consistent approach to procurement given the devolved nature of the services delivered within the Group. This Procurement Strategy and associated action plan will assist in embedding working practices which support compliance yet continue to meet the needs of the organisation as it continues to evolve and diversify. 5.6 Finally, Stockport Homes Group will have its own set of Contract Procedure Rules, Scheme of Delegation (related to both financial and governance) and Financial Regulations which are communicated to and must be adhered to by all staff and effectively govern the decisions made within the procurement delivery model. 6 EXTERNAL FACTORS / DRIVERS 6.1 There are a number of external factors which influence the design and delivery of the internal procurement function and which shape our demands from the market. 6.2 From a legal perspective, these include compliance with EU Procurement Directives (2014) and the UK Public Contracts Regulations (2015), as well as OJEU3 tendering processes. These apply to Stockport Homes Limited. 3 Official Journal of the European Union Page 5 of 15 Group Procurement Strategy 2016-19 6.3 Other drivers include a requirement to consider / adhere to the following: Value for money Social value Sustainability Safeguarding Modern Slavery Act Living Wage Accreditation Equality and Diversity Working with SME’s Health and Safety Leaseholder Consultation Customer Involvement 7 STRATEGIC OBJECTIVES AND OUTCOMES 7.1 This strategy has identified six key objectives, encompassing all aspects of procurement that are key to the needs of Stockport Homes Group.