Corporate Procurement Strategy

July 2006
 Sunderland City Council
Corporate Procurement Strategy
Foreword
Welcome to Sunderland City Council’s Corporate Procurement Strategy.

The City Council makes decisions about balancing a range of issues in determining
how services are provided and how goods, works, services and assets are obtained,
through direct employment of staff, contracting with suppliers and service providers
or entering into partnerships with the private, public or voluntary, community and
social enterprise sectors.

Sunderland City Council, like all other Local Authorities, spends significant amounts
on the procurement of goods, services and works. For Sunderland this figure is
around £260m per year.

Excellent procurement is therefore at the heart of the Council’s ability to deliver good
quality, value for money services, supplies and construction to the City Council and
to the people of Sunderland.

Whilst the Council has a good track record of successful procurement and delivering
value for money for its citizens it is important to set out how the Council intends to
use procurement effectively to deliver its Vision, Strategic Priorities and underpinning
service objectives whilst achieving Best Value through a Corporate Procurement
Strategy.

This Strategy is a key element towards providing better, more reliable and
responsive services for local people.

Councillor Dave Allan

Cabinet Member for Resources and Member Champion for Procurement
 Sunderland City Council
Corporate Procurement Strategy
Contents Page
Page
No.

Contact details 1

1 Introduction 2

2 Background 3

3 Procurement Vision 7

4 Procurement Aims and Objectives 8

5 Culture and Governance Arrangements 9

6 Procurement Skills 14

7 Value for Money 15

8 E-Procurement 21

9 Continuous Improvement 23

10 Regeneration, Equality and Sustainability 26

11 Priorities for Improvement 28

12 Action Plan

Appendix A Previous Corporate Procurement Strategy Action

Plan – Progress

Appendix B Major Contracts – 2005/2006

Appendix C Terms of Reference for Procurement Groups

Appendix D VFM Framework

‘Driving Improvement in Services and VFM’
Contacting Corporate Procurement

Please contact us if you have any questions or comments regarding this

strategy.

Telephone 0191 553 1770

Email : [Link]@[Link]

Fax 0191 553 1090

Write to: Mr R Dennington

Corporate Procurement Manager
Corporate Procurement
City Treasurer’s Department
Sunderland City Council
Civic Centre
Burdon Road
Sunderland
SR2 7BQ

This information can be made available in large print, Braille, audio and
other languages. Please contact the Corporate Procurement Unit above
for help.

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1. Introduction
What is Procurement?

1.1 The term “procurement” has a broader meaning than that of purchasing,
buying or commissioning in that it includes the basic “make or buy” decisions
(i.e. whether to make, or employ direct staff to provide service, or to buy from
an external provider) and it spans the 'whole life' of the asset or contract.

1.2 Procurement is defined in the National Procurement Strategy for Local

Government as:

“the process of acquiring goods, works and services, covering both acquisition
from third parties and from in-house providers. The process spans the whole
cycle from identification of needs, through to the end of a service contract or
the end of the useful life of an asset. It involves options appraisal and the
critical “make or buy” decision which may result in the provision of services in-
house in appropriate circumstances.”

In the context of a procurement process, obtaining “best value for money”

means choosing the bid that offers “the optimum combination of whole life
costs and benefits to meet the customer’s requirement”. This may not be the
lowest initial price option and requires an assessment of the ongoing revenue
/ resource costs as well as initial capital investment.

What is Strategic Procurement?

1.3 Strategic Procurement is the integration of procurement within the strategic

planning and decision-making process of the Council. It is about 'management
by anticipation', i.e. anticipating changes in the external environment and
developing a robust and flexible framework and processes to retain and
enhance its effectiveness and relevance.

1.4 It is therefore important that the Council undertakes its procurement activity
strategically as well as maintaining effective arrangements for operational
procurement.

What is the Corporate Procurement Strategy?

1.5 The aim of the Corporate Procurement Strategy is to ensure that the Council
uses procurement strategically to deliver its Vision, Strategic Priorities and
underpinning service objectives whilst ensuring value for money is achieved.

Progress to date

1.6 The Council adopted ifs first Corporate Procurement Strategy in February
2004 which contained a range of action designed to improve procurement
activity across the Council. Significant progress has been made since that
time as outlined in Appendix A.

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2. Background

External Context

Byatt Report and ‘Towards a National Strategy for Local Government

Procurement’

2.1 In July 2000 the former Department for Environment, Transport and the
Regions and the Local Government Association (LGA) invited Sir Ian Byatt to
chair a taskforce charged with reviewing local government procurement in
England. This taskforce produced its report, Delivering Better Services for
Citizens, in June 2001. The report’s starting point was the critical contribution
that procurement can make to the quality of public services. It highlighted 39
areas for improvement in the management of public procurement.

2.2 In July 2002 the former Office of the Deputy Prime Minister (ODPM) and the
LGA published a joint response Towards a National Strategy for Local
Government Procurement. This document expanded upon the
recommendations and highlighted key areas for immediate action.

National Procurement Strategy for Local Government (NPS)

2.3 This strategy, was developed jointly by the former ODPM and LGA to take
forward the recommendations of the Byatt report and translate them into a
more effective format. The three year strategy is based around a vision for
Local Government procurement and has five key themes designed to make
that vision a reality. The themes are:

¾ Cultural shift
¾ Providing leadership and building capacity
¾ Partnering and collaboration
¾ Doing business electronically
¾ Stimulating markets and achieving community benefits

The first theme of Cultural Shift is an overarching theme relevant to each of

the other themes. Each theme is underpinned by a series of key actions
identified to progress that theme. The majority of actions have already been
implemented and where they have not these have been considered in
developing this Strategy.

e-Government

2.4 As part of the government's modernising agenda, the concept of ‘electronic

government’ and the resulting benefits were identified. Benefits are to be
gained from using available technology to provide a ‘joined up’ approach to
the delivery of services at a national and local level.

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2.5 E-government is not, however, solely about the electronic delivery of services
but aims to address the wider agenda of change within local government in
order to provide improved community leadership, increased democratic
engagement and economic vitality within the local area.

2.6 Local government was set a target of 100 per cent for services that can be
delivered electronically, being delivered in this way. The principles of e-
Government should be continually implemented to bring about improvements
into 2006 and beyond. Whilst the Council has achieved the target of 100 per
cent there is much more that can be achieved to develop, improve and
increase take up of the electronic means of accessing services.

2.7 Within the context of procurement, the e-Government agenda provides a

specific drive for e-Procurement to support a move to ‘paperless’ procurement
and associated service improvement, cost savings and efficiencies for the
Council, its partners and suppliers.

EU Legislation

2.8 EU procurement legislation is based on the principles of non-discrimination

and equality of opportunity on grounds of nationality, transparency and
competitive procurement in relation to supplies, works and services.

Best Practice Procurement

2.9 There is no “one size fits all” best practice to procurement but it is widely
acknowledged that the best procurement practices reflect guidance issued by
the Chartered Institute of Purchasing and Supply (CIPS), the Office of
Government Commerce (OGC), the Society of Procurement Officers in Local
Government (SOPO) and the Improvement and Development Agency (IDeA).
Guidance from these bodies shall be considered in implementing this
Strategy.

Comprehensive Performance Assessment/Best Value

2.10 The Comprehensive Performance Assessment (CPA) has now overlain the
principles of Best Value that require local authorities to demonstrate
continuous improvement in the way that services are provided. The benefit of
CPA is the evaluation of the Council’s position in a formal self-assessment
and improvement planning process. This acknowledges the key role that
procurement plays in the delivery of effective services. By undertaking
reviews of those areas identified in the improvement plan resulting from the
Comprehensive Performance Assessment, local authorities need to apply the
four principles of Best Value, Challenge, Consult, Compare and test
Competitiveness. In applying these principles it is possible to identify the
services required to deliver performance improvement and then to choose a
service option to help achieve it. This is a key component of the National
Procurement Strategy for Local Government.

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 Efficiency Review: ‘Releasing Resources to the Front Line’
(Gershon Report) July 2004

2.11 An efficiency target of £6.45bn for local government in efficiency and

productivity improvements by 2007/2008 was has been set by the government
to release resources to front-line services. That translates into 7.5% when
related to the 2004/2005 baseline – i.e. a 2.5% efficiency target year on year.
The key areas of improvement for procurement identified nationally are:

¾ Public sector to become more strategic in the aggregation of goods,

works and services it procures.
¾ Improve 'supply-side' management - communicate public sector
demand to suppliers more effectively.
¾ Greater 'professionalism' in procurement by improving skills and
shared procurement models.
¾ Increased use of purchasing consortia.

2.12 The Council has been required to identify £12.571m cumulative efficiency
savings by the end of 2006/2007 and £18.856m cumulative efficiency savings
by the end of 2007/2008.

Scale of Procurement within the Council

2.13 The total gross revenue and capital budget for the Council in 2006/2007 is
£719.4 (excluding notional capital charges). The table at Appendix B identifies
the major areas of expenditure on contracted services or supplies within the
Council in 2005/2006.

2.14 During the financial year 2005/2006 there were 174,422 transactions valued
at approximately £256,037,328 processed through the accounts payable
system (i.e. non-payroll spend). This sum includes capital and revenue
payments and includes school budget expenditure.

Transactions for Year 2005/2006

Value of Total Spend Number of Average Number

Payment (£’s) Transactions Value of Suppliers
(£’s) (£’s)
1-999 29,622,432 149,799 198 10,602
1,000 – 1,999 14,019,980 10,157 1,380 2,431
2,000 – 4,999 24,788,067 7,848 3,159 2,092
5,000 – 9,999 20,528,396 2,982 6,884 1,101
10,000 – 19,999 25,444,353 1,813 14,034 715
20,000 – 29,999 15,058,102 622 24,209 271
30,000 – 39,999 9,989,162 287 34,805 143
40,000 – 49,999 9,564,029 216 44,278 128
> 50,000 107,022,807 700 152,280 210

The above analysis shows that just 26% of the spend accounts for 96%.

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2.15 The implementation of new systems (Enterprise Buyer Professional and
Business Warehouse) within 2006/2007 will provide management information
that will identify more precisely the nature and scope of the Council’s
purchasing activity.

3. Procurement Vision
Strategic Context

3.1 The Council and its partners are working towards a long-term vision agreed
with local people, where:

Sunderland will be a prosperous city. A desirable, safe and healthy place to

live, work, learn and visit, where all people can reach their full potential

Source: Sunderland Strategy 2004 - 2007

This vision acts as the focus for all Council activities including procurement. It
is therefore vital that procurement activity can be seen in the context of the
contribution it can make to this vision.

3.2 Reaching this future vision is dependent on pursuing action that is consistent
with the eight Strategic Priorities outlined in the Sunderland Strategy, these
are:

¾ Creating a Prosperous City

¾ Extending Cultural Opportunities
¾ Improving the Quality, Choice and Range of Housing
¾ Improving Health and Social Care
¾ Reducing Crime and the Fear of Crime
¾ Raising Standards and Increasing Participation in Learning
¾ Developing an Attractive and Accessible City
¾ Creating Inclusive Communities

3.3 The City Council remains committed to improving its service delivery for the
benefit of its customers. To demonstrate the Council’s commitment to the
continuous improvement of service delivery and the use of resources,
Corporate Improvement Objectives have been defined to reflect and help
realise the Council’s Vision, as follows:

¾ Delivering Customer Focused Services

¾ People Development and Being ‘One Council’
¾ Efficient and Effective Council
¾ Improving Partnership Working To Deliver ‘One City’

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 Procurement Vision

3.4 Within the above strategic context the procurement vision for the Council is:

“Procuring goods, services, works and assets by the most economic, efficient,
effective, and sustainable means to ensure that the needs of the community
are met, within a clear framework of accountability and responsibility. In doing
so, the Council will strive to become best in class by adopting world-class
procurement practices and techniques”.

4. Procurement Aims and Objectives

4.1 To support the Council’s Procurement Vision, the specific procurement aims
and objectives are:

¾ Maintain a corporate procurement culture and governance arrangements

¾ Ensure all procurement is undertaken by appropriately trained and

experienced staff

¾ Achieve Value for Money

¾ Make best use of e-procurement capabilities

¾ Continuously improve procurement planning and processes

¾ Ensure regeneration, equality and sustainability issues are properly

considered

4.2 The arrangements in place to secure the above aims and objectives are set
out in the following sections with actions shown for areas requiring further
development.

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5. Corporate Procurement Culture and Governance
Arrangements

5.1 It is important that all procurement activity contributes to the overall corporate
aims of the Council. The diagram below shows the arrangements in place in
order to secure this objective.

The Strategic Framework for Procurement

SUNDERLAND STRATEGY

CORPORATE IMPROVEMENT
PLAN & STRATEGIES

SERVICE PLANS

MEETING COMMUNITY NEEDS

PROCUREMENT
STRATEGY

E-COMMERCE STRATEGY –
E-PROCUREMENT

FINANCIAL CONTRACTS
PROCEDURE RULES PROCEDURE RULES

PROCUREMENT CODES OF PRACTICE

PROCUREMENT COMPETENCY FRAMEWORK

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 Role of Elected Members

5.2 Elected Members have a strategic role to ensure that the Council maintains a
modern approach to procurement which accords with its principles and
maximises its contribution to addressing its strategic priorities. The Cabinet
Member with responsibility for Procurement is the Cabinet Portfolio Holder for
Resources and, in relation to scrutiny, the function comes within the overall
purview of the Policy and Co-ordination Review Committee. Regular briefings
on current issues, as well as appropriate training are made available.

Strategic Planning Process

5.3 The Council’s strategic planning process, which results in the production of
the Corporate Improvement Plan, includes a requirement to explicitly
consider, for all major procurements, the impact on the achievement of the
strategic priorities of the Council.

Organisational Arrangements

5.4 The organisational arrangements for procurement are based upon a ‘Hub and
Spoke’ model. A Corporate Procurement Unit exists as the ‘Hub’ with the
Council’s Directorates being the ‘Spokes’. The roles of the Corporate
Procurement Unit and Directorates are shown in the diagram overleaf.

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 Procurement – Hub and Spoke Model
Corporate Procurement
Role
ƒ Delivering Procurement
Outcomes
ƒ Input to Service
Reviews
ƒ Procurement Strategy,
Children’s Policies & Procedures
Services ƒ Collaboration
ƒ e-Procurement
ƒ Procurement KPI’s
ƒ Corporate Contracting
Corporate ƒ Advice & Support
ƒ Training & Skilling
Services ƒ Corporate Contract
Management
ƒ Liaison with Centre of
Corporate Excellence / NEPO
Directorate Role
ƒ Contracting Procurement
ƒ Specifications
ƒ Commissioning
Unit
ƒ Contract Adult Services
Management
ƒ Devolved
Ordering

Development & Community &

Regeneration Cultural Services

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5.5 The organisational arrangements for procurement within the Council reflect
the contents of the Constitution in that Directors have delegated powers to
procure within:

¾ the law,
¾ the Constitution which includes the Contracts Procedure Rules, Financial
Procedure Rules, and Codes of Conduct
¾ the Council’s budget and policy framework

5.6 Directors operate Directorate delegation schemes which empower staff within
their Directorates to undertake a variety of functions including procurement.
These delegation arrangements vary from Directorate to Directorate but are
normally consistent with the level of delegation to budget holders. These
delegated arrangements have allowed the procurement relevant to those
specialist areas inherent in each Directorate’s services and activities to be
tackled by those officers knowledgeable and skilled in those services, in
accordance with the Constitution.

5.7 The Corporate Procurement Unit is headed by the Council’s Corporate

Procurement Manager who is responsible for leading the corporate
procurement function, providing strategic procurement advice, and effectively
co-ordinating developments in this area.

5.8 The role of the Corporate Procurement Unit is to support all Directorates in
the effective and efficient delivery of services by:

¾ maintaining a Corporate Procurement Strategy

¾ maintaining an efficient and effective procurement framework including e-
procurement solutions which seek to maximise the benefits of the
Council’s procurement power
¾ advising and assisting on complex procurement projects
¾ identifying, organising and monitoring compliance with corporate contracts
¾ providing general procurement advice
¾ seeking out and maximising procurement efficiencies
¾ assisting with the building of procurement capacity and skills
¾ maintaining (in conjunction with Directorates) a performance management
system for procurement including through maintaining local performance
indicators and targets

Close liaison is maintained with the City Solicitor and the City Treasurer.

5.9 The Corporate Procurement Manager chairs the Strategic Procurement Group
and Procurement Practitioners Group. The Terms of Reference for these
Groups are set out at Appendix C together with details of the role to be
performed within Directorates.

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 Specialist Procurement

5.10 There are a number of areas of procurement whereby a lead unit has been
nominated in order to ensure that form of procurement is undertaken in the
most efficient way but also to ensure that other corporate standards are
maintained. These are:

¾ All ICT hardware and software are to be purchased by the Council’s ICT
unit
¾ All transport (except for lease cars) and related plant are to be purchased
by the Council’s Transport Unit within the Community and Cultural
Services Directorate
¾ All property maintenance related procurement is to be arranged by
Property Services within the Development and Regeneration Directorate
¾ Recruitment advertising arrangements are arranged by Corporate
Personnel

Procurement Regulation

5.11 All procurement is regulated by the Council’s Constitution, which includes:

¾ the allocation of responsibility for functions between the Council and the
Executive (i.e. Cabinet) and the scheme of delegation to officers
¾ the detailed Contracts Procedure Rules
¾ the Financial Procedure Rules
¾ the Codes of Conduct for Elected Members and officers

This ensures that all procurement activity is underpinned by the principles of

openness and inclusivity, integrity and accountability in line with the
Sunderland Code of Corporate Governance.

5.12 Responsibility for operational procurement is largely delegated to Directors.

However, the letting of any contract which exceeds £250,000 in value is
subject to prior approval by Cabinet. The Council’s Monitoring Officer (City
Solicitor) and Chief Finance Officer (City Treasurer) also have specific duties
regarding the provision of advice and on the lawfulness of financial
transactions.

5.13 Due to the importance and risks associated with procurement the Council’s
internal audit service audits regularly the procurement framework and also
specific high risk / high profile procurement projects.

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 Risk Management

5.14 An element of risk is present in all procurement activity and it needs to be

appropriately managed. The following shall be observed:

¾ The Contracts Procedure Rules shall clearly prescribe processes to

ensure all legal risks are minimized.

¾ The Council will procure against pre-determined standards not only for
goods, services and works but also for the suppliers that are used.

¾ For each tender exercise a risk assessment shall be undertaken of the

risks associated with the particular exercise. The following risks shall be
considered:

¾ Bids being over budget

¾ Insufficient competition
¾ Financial position of bidders
¾ Health and safety policies and records
¾ Other considerations specific to each process

¾ Wherever practical, the Council will purchase using its own terms and
conditions of supply.

Schools

5.15 All schools have delegated budgets and have autonomy in procurement,
except in so far as they must comply with the Scheme of Delegation to
Schools which currently require compliance with the Council's Contract and
Financial Procedure Rules. Separate Contracts Procedure Rules are to be
put in place in relation to schools.

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6. Procurement Skills

Training

6.1 It is important that procurement activity including contract management is

undertaken by persons who are competent to do so. In furtherance of this the
Council undertook a skills audit of those staff who play a role within the
procurement process and a Skills Register is held by the Corporate
Procurement Unit.

6.2 Whilst a range of presentations and training sessions have been held this is
an area where it is planned to develop. The information held within the Skills
Register will be used to target further training.

6.3 In addition, those staff within the Corporate Procurement Unit who did not
hold a qualification in procurement have been encouraged to undertake NVQ
Levels 3 or 4, as appropriate to their role. As a result all staff within the unit
either hold a qualification in procurement or are studying towards one.

Codes of Practice

6.4 In order to ensure that procurement activity is skilfully planned, managed and
monitored, with a view to achieving completion of service delivery on time,
within budget, and in accordance with specification a number of Codes of
Practice are being developed.

6.5 At this time a Code of Practice on Partnerships is in use and the following are
in draft and after consultation are expected to be published by November
2006 :

¾ Specification Writing and Tender Evaluation

¾ Contract Management and Managing Contractors
¾ Negotiation Skills
¾ E-procurement
¾ Equality in Procurement
¾ Procurement and the Local Economy
¾ Freedom of Information relating to Procurement
¾ Purchase of ICT (hardware and software)
¾ Transport and Procurement
¾ Use of Agency Staff
¾ Use of Consultants and Advisors
¾ PFI
¾ Risk Management in Procurement

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7. Achieving Value for Money
7.1 A range of arrangements are in place to ensure that the procurement process
is focused on achieving the most economical advantage, taking into account
overall life costs in respect of quality and cost, and taking account of the
degree to which they fulfil the Council’s Strategic Priorities and those of
specific services. The diagram at Appendix D details these arrangements.

Best Value - Procurement Aspects

7.2 Throughout the 1990’s, under the now defunct Compulsory Competitive
Tendering regime, the focus was on achieving economy, normally manifested
in a least cost approach. Whilst this is an essential consideration of any
procurement, it is appropriate that procurement decisions are taken in light of
the broader objectives that the Council is seeking to achieve.

7.3 Compulsory Competitive Tendering legislative requirements were repealed in

January, 2000. In accordance with the Best Value Accounting Code of
Practice, certain activities undertaken by the Council were designated as
trading activities and for which the Council maintains trading accounts. These
activities are normally, but not exclusively, activities where an external market
exists.

7.4 Since achieving ‘Excellent Council’ status, the Council has reviewed its
approach to conducting Best Value Service Reviews, conscious that it is vital
to ensure that the benefits of these reviews are retained but targeted to areas
of greatest priority. It has been decided to undertake two types of review:
strategic reviews which concentrate on cross cutting and partner influenced
services; and more specific targeted service reviews of key activities or areas
of perceived or potential poor performance. Within each review an appraisal
of the procurement options will be undertaken including, but not limited to:

¾ restructuring or repositioning of in-house services

¾ re-negotiation of existing arrangements
¾ the cessation of the service
¾ Public / Private Partnerships (PPP) through a contract of joint venture
¾ Private Finance Initiatives (PFI)
¾ transfer or externalisation of the service to another provider
¾ market testing all or part of the service
¾ joint commissioning or delivery of services

As an ‘excellent authority’ the requirement to review all services and the

inspection regime have been removed. However, the Council has recognised
the benefits of retaining a Best Value Review Programme.

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7.5 Future strategic procurement decisions will be made after a careful
consideration of the options available. The Contracts Procedure Rules will
place a duty on all Directors to keep all activities under review, having regard
to ongoing viability, national and local benchmarking data and intelligence
from ‘soft’ market testing. Where ongoing viability is an issue, prompt review
and action will be necessary. In every instance Directors need to consider
whether other methods of service delivery should be assessed and if
appropriate implemented. As a minimum:

¾ No later than the penultimate year of a contract, review the need for the
service and how it should be delivered in the future
¾ With regard to those designated trading activities, a report should be made
to Cabinet on the options and a recommended way forward at least once
in every 5 years.

7.6 The initial consideration will analyse whether there are material net benefits
arising from a change to the method of provision. Where there are material
net benefits or these are very likely to arise consideration will be given to the
options outlined in paragraph 7.4 above.

7.7 In those circumstances where there is no viable in-house option, an

appropriate procurement options appraisal will be undertaken with no ‘in
house’ bid. An ‘in-house’ financial comparator will be maintained as a
benchmark for consideration of the options available.

7.8 Where external tendering is considered appropriate, the following safeguards

will be put in place. The Council will:

¾ use consultation to make informed decisions on service design and

specification
¾ compile effective and innovative contract specifications that clearly state
its service requirements focusing as far as possible upon service
outcomes rather than procedural inputs, and that attract the widest range
of interest
¾ ensure that a process of continual review is carried out once a contract is
awarded.

7.9 The Council recognises that its employees are its most valuable asset and is
committed to ensuring that where the Council secures services from
elsewhere, the impact of any changes on its employees will be managed in a
supportive and positive fashion. All procurement that potentially involves the
transfer of staff will follow the requirements of TUPE and the Code of Practice
on Workforce Matters in Local Authority Service Contracts.

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 Sourcing Strategy

7.10 The Council will use a range of methods to source goods, works and services
(detailed below) after consideration of the specific category of procurement it
falls within. Key considerations in coming to a view about the sourcing of
specific types of goods, works and services include:

Cost - high or low

Importance / Criticality - relative to the operation of the business, Strategic,
Tactical or Operational
Risk - of all aspects, e.g. of failing to receive the good, works or service
Market - sparse or saturated, outlook
Complexity - e.g. skills required

These factors will heavily influence the type of procurement which is most
suited to meet the specific requirement. For example, is a long term
procurement required, does the procurement require the development of a
separate partnership approach / agreement etc.

Annual Procurement Plan

7.11 An Annual Procurement Plan will be produced by the Corporate Procurement

Unit. This plan shall be compiled from information collected as part of the
Corporate Improvement Plan process, Directorate Service Plans and a
Contracts Register.

7.12 At the beginning of each financial year the Council shall publish on the
Council’s Web Page a prospectus of its planned procurement activity for that
year. This will be a summary of the Annual Procurement Plan.

7.13 For each of the categories of expenditure that are high in strategic importance
and financial impact (e.g. construction) there will be a separate procurement
plan.

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 Managing the Supply Base

7.14 The Council has an interest in encouraging a competitive market for the
goods, works and services it procures and therefore will encourage tenders
for Council business by ensuring that:

¾ access to future contract information is available and easily accessible

¾ the 'How to do Business’ section of the Council website is easy to follow
and includes contact details of relevant procurement officers
¾ the cost of tendering is realistic and is comparable with tendering in the
private sector. In support of this the Council is collaborating with other
local authorities in the region to develop and implement an e-tendering
system
¾ documentation is clear and concise and where possible standardised
¾ the tender process is transparent in terms of the criteria to be used in the
selection process and not be too prescriptive in how outcomes should be
achieved
¾ Information to be returned with tenders should be only that which is
relevant and not previously requested, e.g. accounts, health and safety
data, certification etc.

Contract Management and Approved Supplier Lists

7.15 The Council intends to have the majority of procurement expenditure

undertaken through contracts. All contracts will be recorded electronically
within a Contract Register.

7.16 A range of approved supplier lists (known as Standing Lists) are maintained
for the procurement of different goods, services and works, however it is not
coordinated corporately. This shall be addressed through making Corporate
Procurement responsible for their co-ordination. Where possible, only
approved suppliers will be awarded business from the Council.

Framework Agreements

7.17 For high volume and repeat purchases or where there is difficulty in predicting
demand for goods, services and works, the Council will establish or use third
party (e.g. Office of Government Commerce) framework agreements with
suppliers. These agreements will cover terms and conditions of purchase,
quality expectations and review processes.

North East Purchasing Organisation (NEPO)

7.18 The Council is an active member of NEPO which is a joint contracting

organisation made up of 11 north east local authorities as full members and
13 district councils as associate members. There are currently 77 corporate
contracts arranged through NEPO in which the Council participates. The
Corporate Procurement Unit will continue to co-operate and develop stronger
links with this purchasing consortium in order to maximise bulk purchasing
power and reduce administrative costs.

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 Construction Procurement

7.19 It has been agreed by the Tyne and Wear Chief Executives to identify a range
of areas of activity where a collaborative approach to procurement and
service delivery may prove beneficial in efficiency and service improvement
terms. One of these areas is Construction and Sunderland is to lead on this
review.

7.20 In recent years new methods of construction procurement have been explored
nationally through an agenda titled ‘Constructing Excellence’. The review
outlined above will consider the implications including financial benefits,
efficiencies and probity issues associated with this agenda. Where it is
decided to adopt practices or alter established procedures these will be
approved in advance by Cabinet for specific projects and more generally as
required.

Private Finance Initiative (PFI)

7.21 The level of Private Finance Initiative (PFI) credits allocated at a national level
has significantly increased in recent years for an initial base of £75m in
1997/1998. The Council has criteria that are applied to determine whether
PPP/PFI or other alternative methods of service delivery options is likely to be
suitable to meet particular capital investment needs. These include:

¾ the certainty of service need over a 25 year period

¾ the likelihood of fundamental changes to service provision over a 25 year
period
¾ the likelihood of alternative methods of finance becoming available over
the short and medium terms
¾ the impact of the revenue consequences on the Council’s revenue budget
¾ the need to demonstrate value for money through a whole life costing
approach

7.22 The Council has taken a prudent approach to utilising the PFI financing
source with two schemes completed to date:

¾ Sandhill View Community Learning Centre - £17.7m PFI credits

¾ Highway Signs and Street Lighting - £25m PFI credits

There are no other potential projects at this point in time.

7.23 The Council will continue to use the criteria set out at paragraph 7.20 above to
consider potential projects to utilise this source of funding in the best way and
seeking to ensure that Sunderland receives it’s fair share of resources
allocated to fund Private Finance Initiative schemes by government.

7.24 These are high value long term procurements which the Council needs to
ensure it gets right. The Council secures external expertise to support it in
undertaking these procurements including in the areas of project
management, technical, financial and legal advice.

19
 Public / Private and Public / Public Partnerships

7.25 The Council adopts a pragmatic approach to utilising such partnerships and
considers each option on its merits. Examples of recent approaches are:

¾ Empire Theatre - contract with Live Nation to reduce deficits and improve
cultural opportunities for the public;
¾ Pooled Budgets under Health Act Flexibilities – designed to facilitate
seamless delivery of health and social care services.

The Council will continue to use this pragmatic approach.

Other Partnerships

7.26 The precise nature of partnerships range from informal non–legally binding
arrangements to work together by, for example, sharing expertise and
information, to legally binding contractual arrangements. The word partnership
is used in a variety of contexts in addition to its strict legal definition but it is
the precise nature of the agreements in place, be they contractual or
otherwise, which governs the relationship. Care should therefore be taken
when using the term partnership and a full understanding of the nature of the
agreement in place should be obtained and fully understood.

7.27 The Council will continue to adopt a pragmatic approach to utilising

partnerships and will consider each option on its merits. Partnerships can
however be complex and it is important that the relationship is fully
understood and that risks are managed appropriately. As such a detailed
Code of Practice has been developed to ensure that the opportunities and
risks associated with partnerships are properly considered.

Project Management

7.28 Many projects contain an element of procurement and in order to manage

these projects the Council has adopted the PRINCE2 methodology.

e-Procurement

7.29 The Council is committed to taking appropriate steps to utilise e-government

procurement options where there is a sound proven supporting business case
which includes:

¾ a risk assessment
¾ adequate security and financial control safeguards
¾ reduced acquisition and transaction costs
¾ an assessment of the impact on the payment of creditors
¾ an assessment of the readiness of the market / suppliers

20
7.30 To date the following options have been implemented:

¾ the procurement module of the SAP Financial Management System has

been implemented which facilitates e-ordering and e-workflow
¾ an e-quote / e-tendering solution has been chosen and is being piloted
¾ a small number of charge cards are used

7.31 It has been recognised that this is an area for development and as such a
specific e-Commerce Strategy has been developed which covers e-
procurement solutions but also e-payment solutions.

7.32 The e-procurement strategy covers the following key processes:

Information and Advice

¾ City Web Intranet site

¾ City Council's Internet site
¾ Advertising of opportunities (on both the above)

Procurement Processes

¾ e-Sourcing and e-Tendering

¾ Market places
¾ Catalogue management
¾ Purchase ordering
¾ Goods receipting and delivery notes
¾ Invoice processing
¾ Payment of suppliers
¾ Supplier access to ‘back office’ systems
¾ Purchasing cards
¾ The use of e-auctions

Supplier Adoption

7.33 A key element in the success of the Council's e-procurement plan is adoption
of the principles and action by the supplier base. All suppliers will be
encouraged to embrace new ways of working which will include:

¾ Processing quotes, tenders and auctions electronically

¾ Supplying electronic catalogues
¾ Integration of web sites
¾ Receiving purchase orders via e-mail or web
¾ Electronic billing
¾ Automatic accounts
¾ Provision of electronic management information

The end goal is to eliminate 'paper based' information and the associated
costs, materials and time.

21
7.34 The Council recognises that small and medium enterprises (SME's) must be
considered in this process of supplier adoption. There are distinct advantages
to SME's in doing business electronically however some SME's may be slow
to adapt to technical innovation. The Council will consider methods of
ensuring that SME's are not disadvantaged by the introduction of e-
procurement through dissemination of information such as funding assistance,
training, seminars and networking and keeping non electronic means of
interaction open for as long as possible. This also applies to other groups of
suppliers including social enterprise and the voluntary sector.

8. Continuous Improvement

Procurement Framework

8.1 In order to ensure that the procurement framework remains fit for purpose an
annual review of the Corporate Procurement Strategy and Contracts
Procedure Rules shall be undertaken.

Contracts

8.2 Where contracts are to run for a number of years, the contract should be
sufficiently flexible as to provide for continuous improvement throughout the
period of the contract and provide for smooth exit strategies or alternative
arrangements. New forms of contract that provide incentives to the contractor
/ supplier shall be considered.

Regional Centres of Excellence

8.3 As part of the government’s national procurement drive, the former ODPM
established nine regional centres of excellence for procurement and
efficiency. Their remit being to:

¾ Scoping, and implementing with other authorities in the region, options to

realise efficiency savings in procurement and project management
¾ Driving collaborative procurement between authorities, sectors and all
public sector bodies in the region
¾ Building procurement capacity skills
¾ Developing contestability in public services through procurement
¾ Stimulating the market place with a diverse range of suppliers including
small and medium sized enterprises (SME’s), the voluntary and
community sectors
¾ Stimulating the further development of e-Procurement and e-Commerce

8.4 The Chief Executive of the Council is a member of the Steering Group of the
North East Centre of Excellence. The Council engages with the Centre in all
of its activities and work streams in order to identify areas for improvement.

22
 Performance Management and Information

8.5 The procurement modules of the new Financial Management System and,
once implemented, Enterprise Buyer Professional and Business Warehouse
will provide a vast array of information at corporate, service and supplier level.
This information shall be used to identify areas of procurement activity / spend
where improvements can be made in terms of process efficiencies or
cashable savings.

Performance Indicators

8.6 A range of performance indicators in relation to procurement performance are

to be introduced, as follows. Due to the limitations of the existing IT facilities
some of the indicators will only be measurable once Enterprise Buyer
Professional and Business Warehouse are introduced.

KPI Target for 2007/2008

Strategy 100% of milestone activities from National Procurement

Implementation Strategy for Local Government completed
Qualifications 75% of named procurement officers with a relevant
procurement qualification
Skills Development 5% of time per procurement officer spent on structured
training in the procurement-related skills
Best Practice 100% of overall contract value awarded within a financial
year in accordance with standing orders aligned with
procurement best practice
Aggregation 1 20% of corporate spend (excluding capital) through
corporate framework agreements and corporate contracts
Aggregation 2 10% of corporate spend (excluding capital) aggregated
through collaboration with other public sector organisations
Sustainable 25% of framework agreements and contracts awarded (in
Procurement year) following best practice on sustainable procurement
Local Government 10% of corporate spend placed with Small and Medium
Market 1 Enterprises (SMEs)
Local Government 5% of corporate spend (excluding Capital), including
Market 2 grants, placed with the third sector
Local Government 1% of corporate spend (excluding Capital) placed with
Market 3 ethnic minority businesses
Satisfaction with the 90% of internal customers satisfied/very satisfied with
Strategic Strategic Procurement Function
Procurement
Function

Major Projects

KPI Target for 2007/2008

Time to Procure Time from publication in OJEU to contract award reduced

by 10% from previous years base

23
e-Procurement

KPI Target for 2007/2008

Percentage of 75% of all invoices received electronically

Invoices received
Electronically
Percentage of 10% of corporate spend in year (excluding Capital) through
Corporate Spend electronic sourcing (e.g. electronic tendering / requests for
through Electronic quotes / auctions)
Sourcing
Percentage of 90% of orders raised electronically
orders raised
electronically
Percentage of 82% of all invoices paid electronically (using BACS,
invoices paid CHAPS, direct debit or any other electronic means)
electronically

24
9. Regeneration, Equality and Sustainability Issues

Use of Local Suppliers

9.1 In assessing whether a quote or a tender is the “most economically

advantageous” regard will be had to price, quality, delivery, professional skill,
efficiency, health and safety record and reliability. As far as possible, within
the law, the Council will maximise the opportunities for using local suppliers.
In selecting suppliers to provide quotes for lower value goods and services
(under £50,000) due regard should be had to the reasonable justification for
local delivery. The Council will work with local business representatives to:

¾ raise awareness of opportunities

¾ ensure the procurement processes followed by the Council is understood
¾ ensure that local suppliers know what the Council expects from its
suppliers
¾ provide advice, guidance and training where appropriate
¾ follow the principles of the concordat between the Council and SME’s

9.2 The Council is a partner in a national pilot programme (New Approaches to

Public Procurement (NAPP)) considering UK legal, and European legislation
issues relating to the promotion of community benefits and social inclusion
(particularly training and employment opportunities) through construction
procurement.

9.3 The new EU Consolidated Procurement Directives (January 2006) enable

community benefits to be considered as part of a procurement process.

Targeted Employment and Training

9.4 The Council is committed to achieving the economic, social and

environmental objectives set out in the Sunderland Strategy so as to ensure a
better quality of life for all the City’s residents, now and in the future. To
achieve this the Council will consider including employment, training, equal
opportunities and opportunities for small and medium sized enterprises, in its
specifications for service and works contracts. Where such factors are
included in contract specifications, consideration of the ability of contractors to
meet these requirements will feature in all stages of the selection and
appointment process.

25
 Voluntary Sector

9.5 The Council recognises and values the important role the voluntary,
community and social enterprise sector (VCSE) can play in supporting the
Council’s Strategic Priorities and provision of services. Where the VCSE
sector does play a role, the aims and objectives of this Strategy will be
adhered to.

9.6 The Council also recognises the value the VCSE can play in delivering
services in:

• Addressing market failures

• Filling gaps in the marketplace
• Developing business in the most deprived areas
• Decreasing barriers to employment

Diversity and Equality in Procurement

9.7 The Council takes its obligations very seriously with regard to diversity and
equality. To ensure that this commitment is reflected in procurement activity,
the Council will make sure that the procurement process is done in a fair and
inclusive way, and we will work with all our suppliers and contractors to
ensure that those who deliver goods and services on our behalf subscribe to
the Council's Diversity and Equality Policy and act in compliance to it.

9.8 To achieve this objective the Council will:

¾ Monitor service provision and delivery to identify whether the services we

are providing are appropriate, effective and inclusive.
¾ Ensure the procurement process itself is fair and inclusive
¾ Ensure potential and existing suppliers and contractors meet their equality
requirements in line with all equality legislation, e.g. their response to
questions in relation to their performance under section 7.1 of the Race
Relations Act 1976 and RRA 1976 (Amendment) Regulations 19th July
2003 (The Race Directive 2000/43EC)
¾ Ensure that potential suppliers and contractors are aware of the Council’s
Diversity and Equalities policy through the tender process and comply with
any requirements if successful.
¾ Include appropriate equality clauses in all contracts
¾ Post-contract monitoring to assess performance against equality
indicators, collating reports of complaints from service users, including
issues relating to harassment and service audits to check on any problems
in relation to the equalities aspects of the specification.

26
 Sustainability

9.9 The Council will consider sustainability as a key objective of future

procurement. The issue of sustainability will be considered in the detailed
Codes of Practice where appropriate. The overriding principle will be that all
the costs and benefits of each investment (including specifically the
sustainability aspects) will need to be analysed and considered prior to
commitments being made at the contract or project level.

10. Improvement Plan

10.1 Those areas included within the Strategy that need to be introduced to ensure
the delivery of the Strategy are included within the attached Action Plan.

11. Conclusion
11.1 Good procurement is clearly essential in maximising the use of resources
available to the Council. To date, the Council has taken a pragmatic yet
immensely beneficial approach to strategic procurement decisions and this
Strategy will enable this approach to be maintained and developed into the
future.

11.2 This Strategy will be reviewed annually and an action plan published and
implemented to ensure that the Council continues to enjoy the benefits of
good procurement and is able to demonstrate best value. The first annual
review will be undertaken in July 2007.

27
 Sunderland City Council – Corporate Procurement Strategy
Action Plan

Ref Element Lead Target Date

Responsibility
Corporate Procurement Culture and Governance Arrangements

R1 Promote the Corporate Procurement Strategy and new Procurement Procedure Corporate Procurement December
Rules to all senior managers and in so doing highlight those managers with Manager 2006
responsibility for specialist procurement (e.g. ICT, Transport, Property issues).

R2 Introduce new Procurement Procedure Rules to cover the relevant issues in this Corporate Procurement September
Strategy and current good practice. Manager 2006

R3 Directorate Delegation Schemes to be reviewed in light of this Strategy and the Directors / Chief Officers December
new Procurement Procedure Rules (in consultation with the 2006
Corporate Procurement
Manager)

R4 Corporate Procurement Unit to standardise the approach to assessing the risks Corporate Procurement March 2007
for all procurements over the tender threshold. Manager (in
consultation with the
Head of Risk
Management)
Procurement Skills
R5 The Procurement Competency Framework to be further developed to ensure all Corporate Procurement October 2007
officers involved in procurement have the necessary skills Manager
R6 Codes of Practice to be developed covering the areas set out in the Strategy Corporate Procurement October 2007
Manager
Ref Element Lead Target Date
Responsibility
Achieving Value for Money

R7 Complete spend analysis to provide base data to inform: Corporate Procurement September
Manager 2006
- a review of corporate framework agreements and corporate contracts and )
expand where better value for money can be achieved; )
- a review of the approach to e auctions (buying); )December
- training and development of procurement staff; )2006
- targeting local business with a view to ensuring local business can make the )
best case for undertaking work / supplying goods and services )
- the targets to be set for efficiency savings and gains. )

R8 An Annual Procurement Plan to be produced for 2007/2008 onwards – with Corporate Procurement April 2007
summary published on the Internet. Manager

R9 Corporate Procurement to review the use and coverage of Standing Lists and co- Corporate Procurement April 2007
ordinate their use in future. Manager

R10 A review of the Constructing Excellence initiative to be undertaken and an Corporate Procurement April 2007
assessment of how construction procurement could be improved to be made. Manager (in
consultation with
Director of Development
and Regeneration)

e-Procurement
R11 Implement the SAP Module 'Enterprise Buyer Professional' (EBP). Benefits Corporate Procurement April 2007
include improving management information, maximise bulk buying power etc. Manager / ICT /
Accountancy CCC
Ref Element Lead Target Date
Responsibility
R12 Roll out the e-tendering / e-quote system. Corporate Procurement April 2007
Manager onwards
R13 The actions contained within the e-Commerce Strategy are to be implemented. Corporate Procurement October 2007
Manager / Assistant City
- the Council’s Internet / Intranet Procurement will be developed further Treasurer
highlighting potential tender opportunities to the business community (Accountancy)
- the Enterprise Buyer Professional module of SAP
- provide electronic catalogues through an e-Marketplace
- roll out the e-tender / e-quote system (QTender) across the Council
- introduce consolidated ordering and electronic invoicing from suppliers
- provide supplier access to enable them to track progress of their orders /
invoice
- introduce purchasing cards where it would lead to efficiencies
- undertake e-Auctions (purchasing) in areas where it would leads to savings
- further develop processes to expand the use of electronic payments
- explore the potential for taking telephone payments in other service areas
- provide access to customers (e.g. Council Tax payers) to their accounts on-
line where appropriate
- explore the potential for the use of payment kiosks

Continuous Improvement
R14 New forms of contract that provide incentives to the contractor / supplier shall be Corporate Procurement December
considered for all future tenders. Manager 2006

R15 The range of KPI’s for procurement outlined in this Strategy are to be introduced. Corporate Procurement September
Manager 2006 (to the
extent system
functionality
allows)
Ref Element Lead Target Date
Responsibility
Regeneration, Equality and Sustainability Issues
R16 The Council is to work with local business representatives to raise awareness of Corporate Procurement April 2007
opportunities, the council’s procurement processes, and assist them wherever Manager
possible.

R17 Include procurement within the next revision of the Compact with the voluntary, Corporate Procurement Next revision
community and social enterprise sectors. Manager
 Appendix A

Previous Corporate Procurement Strategy Action Plan (Feb 2004) – Progress

Ref Element Lead Responsibility Progress

Procurement Strategy and Framework

R1 Strategic Planning Framework updated to include reference to procurement within Head of Policy / Complete
the Corporate Plan and Best Value Performance Plan. Assistant City
Treasurer

R2 Identify and publicise centres of excellence / expertise for procurement within the Corporate Complete
Council, e.g. PFI. Procurement
Manager
R3 Establish and rank all areas of Council procurement on a risk / importance basis Corporate Complete
and review resource allocation arrangements within the Corporate Procurement Procurement
Unit Manager

Consultation / Awareness
R4 Seek comments / agreement of CMT on Draft / Final Corporate Procurement City Treasurer Complete
Strategy
R5 Seek comments / agreement of EMT on Draft / Final Corporate Procurement City Treasurer Complete
Strategy
R6 Seek Cabinet approval to Draft / Final Corporate Procurement Strategy City Treasurer Complete

R7 Consult key stakeholders on Draft Corporate Procurement Strategy Assistant City Complete
Treasurer
R8 Undertake Member Awareness Sessions on Procurement Assistant City Complete
Treasurer
R9 Maintain and publish an up to date database on all planned major procurement Corporate Ongoing
activity, with reference to the Council’s ‘How to do business with the Council’ guide. Procurement
Manager
Ref Element Lead Responsibility Progress

Organisational Arrangements
R10 Review Council Scheme of Delegation in line with this Strategy City Solicitor Any necessary
amendments
have been
made.
R11 The Strategic Procurement Group to meet, at least, half yearly and undertake an Corporate Complete
annual review of the Corporate Procurement Strategy and Framework Procurement
Manager
R12 Restructure and reposition City Purchasing as the Council’s Corporate Assistant City Complete
Procurement unit, including the creation of a post of Corporate Procurement Treasurer
Manager, sufficient resources to implement and maintain the Corporate
Procurement Strategy and underpinning Framework, and a restructure the
Council’s Warehouse (NEPO store) to recognise the transfer of the Gateshead
store to Sunderland.
R13 Review of Contract Procedure Rules Corporate Drafted -
Procurement expected to be
Manager / City put to full
Solicitor Council in
R14 Review of Financial Procedure Rules City Treasurer / September 06
Assistant. City
Treasurer
R15 Development of school specific Contract and Financial Procedure Rules Head of Strategy and To be
Performance (LEA) / completed after
Assistant City review of
Treasurer Council CPR’s /
FPR’s
R16 Bi–annual report on progress and performance to EMT and an Annual Report to Corporate Complete
Cabinet Procurement
Manager
Ref Element Lead Responsibility Progress

R17 Development of initial Procurement Codes of Practice, i.e. : Corporate 5 are in draft, 2
- Social Care, Construction, ICT, Transport, Agency Staff / Consultants, Private
Procurement yet to start
Finance Initiative Manager with
relevant Head of
Service
R18 Review Directorate Delegation Schemes in line with this Strategy and Directors Awaiting issue
underpinning Framework of new
CPR’s/FPR’s
Procurement Performance Management and Information
R19 Implement the procurement modules of the new Financial Management System Project Manager of Complete
to improve management information at a corporate and service level and assist FMS Implementation
with the development of a corporate approach to procurement.

R20 Establish key performance indicators and targets for procurement, drawing on Corporate Included in this
national work and local needs Procurement Strategy.
Manager Delayed due to
national work in
this area.
R21 Assess the Council’s performance in relation to the achievement of the objectives Corporate Complete
and targets set in the National Procurement Strategy and develop an Procurement
improvement plan to address any policy or procedural issues. Manager / Head of
Corporate Policy
R22 Assess the benefits from adopting the Procurement Excellence Model for the Corporate Not adopted.
Corporate Procurement Unit Procurement ISO 9000 in
Manager place.
R23 Undertake benchmarking with other organisations to ensure best practice Corporate Ongoing
Procurement requirement.
Manager
Ref Element Lead Responsibility Progress

Procurement Training / Skills

R24 Identify those officers within the Council who have procurement responsibilities, Corporate Complete
undertake a skills audit and make recommendations where necessary Procurement
Manager
R25 Undertake detailed training on the requirements of the Corporate Procurement Corporate Complete
Strategy and underpinning Framework with key officers. Procurement
Manager
Audit
R26 Review approach to auditing procurement within the Council Assistant City Complete
Treasurer
Procurement Practice
R27 Assess the services offered by the Office of Government Commerce (OGC), Corporate Complete
including the use of GCAT and SCAT, and consider their usefulness by the Procurement
Council. Manager

R28 Review current practice / regulations regarding the procurement of consultants Corporate Agency
and agency staff (feed into Code of Practice). Procurement Contract is
Manager in liaison undergoing a
with Asst. Chief Exec tender process.
(Org Dev)
R29 Introduce a corporate database of contractors who have been suitably vetted by Corporate Under review
the Council in respect of Health and Safety, financial standing, technical Procurement due to
capability and equality. Manager practicalities.

R30 Implement the corporate project management methodology. Executive Complete.

Management Team
Ref Element Lead Responsibility Progress

Best Value
R31 Amend the Best Value Review Methodology to include a Corporate Procurement Head of Performance Agreement in
unit representative on all Service Reviews. Improvement place.
e-Procurement
R32 Develop an e-procurement strategy. Corporate Complete –
Procurement being
Manager / Corporate implemented
Head of ICT
Workforce Matters
R33 Develop a Workforce Matters protocol with the trade unions to implement the Employee Relations Agreed
new Code of Practice. Manager / Corporate approach with
Procurement trade unions
Manager
Private Finance Initiative
R34 The ongoing contract management for PFI schemes will be further developed, Senior Assistant City Drafted – being
through the production of a Code of Practice. Treasurer updated due to
regulation
changes
Construction
R35 Undertake a review to consider the implications associated with the Corporate Now forms part
recommendations of the ‘Rethinking Construction’ Taskforce (feed into Code of Procurement of review
Practice). Manager / Head of agreed across
Land and Property Tyne and
Wear.
R36 Pilot ‘community clauses’ and ‘training and employment opportunities’ with NAPP Training and Completed.
external procuring bodies (e.g. ARC and SHG) with a view to evaluating the Development Co- New tender
results as to how any benefits may be mainstreamed into the council’s ordinator clauses written.
procurement practices. Part of >£50K
process.
Ref Element Lead Responsibility Progress

Equality
R37 Consider the requirements of the Race Relations Act 1976 as amended by the Corporate Completed
Race Relations (Amendment) Act 2000 in relation to procurement practice. Procurement
Manager / City
Solicitor
Local Business
R38 Undertake a review to ascertain how the Council can maximise the opportunities Corporate Complete -
for using local suppliers. Procurement Ongoing
Manager dialogue with
North East
Chamber of
Commerce.
Partnerships
R39 The new Corporate Procurement Manager will work with the City Solicitor in Corporate Complete
delivering the agreed action highlighted during the recent review of the Local Procurement
Code of Corporate Governance. Manager
 Appendix B (i)
2005/2006 - Major Contracts (over £200,000),
Corporate Contracts

Organiser Description Approximate Term Renewal

Annual Value (£) Date
Council Short Term Vehicle Hire 217.5k 2 years May 2007
Council Commercial Vehicle Hire 945k 5 years Feb 2007
Council Contract Hire 727k 5 years May 2009
Council Plant / Equipment Hire 1.0m 1 year August 2007
Council Horticultural Equipment Purchase 513k 1 year Feb 2007
Council Advertising 370k 4 years January 2009
NEPO Furniture 1.1m 5 years January 2009
NEPO Office and Educational Supplies Various Various Various
Contractors
Council ICT (Hardware and Software) 13.2m 1 year January 2007
NEPO Photocopiers 570k 4 years March 07 &
August 08
Council Food 2.2m 5 years Sept. 2007
Council Telecommunications 3.2m 2 years August 2008
NEPO Gas 2.2m 3 years (option April 2007 or
to extend for 2 2009
yrs)
NEPO Electricity 2.4m 3 years (option April 2007 or
to extend for 2 2009
yrs)
NEPO Water 900k 5 years June 2007
Council Cleansing 805k 1 year April 2007
Total In excess of
30.3m
 Appendix B (ii)
2005/2006 - Major Contracts (over £200,000),
Specialist Contracts

Lead Directorate Description Approximate Term Renewal Date

Annual Value (£)
Social Services Social Care 50,000,000 Various Various
Social Services Supply of Community 1,000,000 2 years plus 2 year August 07 or
Equipment option August 09
Social Services Stairlifts 260,000 2 years March 2007
Education Home to School Transport 1,100.000 3 times per year Various
Community and Cultural Building Cleaning Materials 1,150,000 Annual October 2006
Services and Corporate
Services
Community and Cultural Ready Mix Concrete 187,000 1 year plus 1 year option June 2007
Services
Community and Cultural Building Surveying 150,000 1 year plus 1 year option January 2007
Services Framework
Community and Cultural Building Materials 1,600,000 1 year October 2006
Services
Development and Regeneration Street Lighting 3,300,000 N/A – now PFI N/A – now PFI

Development and Regeneration Building Maintenance 3,700,000 5 years plus 2 year April 2007
option
Development and Regeneration Building Design and 19,500,000 Various Various
Construction
Development and Regeneration Civil Engineering 19,450,000 Various Various
(Highways /Environmental)
Corporate Services Schools Optional Insurances 627,000 5 years + 2 year optional April 2008/2010
extension
Total 102,024,000
 Appendix C (i)

Strategic Procurement Group

Terms of Reference

1. Assist with the development and maintenance of the Corporate

Procurement Strategy, Framework and Action Plan

2. Consider and comment on corporate systems and processes for

procurement

3. Assist with ensuring the Corporate Procurement Strategy, Framework and

Action Plan are communicated effectively to those responsible for
procurement activity

4. Ensure all procurement within their Directorates is consistent with and

supports the Corporate Procurement Strategy and Framework

5. Assist with the preparation of reports to the Executive Management Team

on progress in implementing the Corporate Procurement Strategy and
Action Plan

6. Consider and champion the introduction of innovative and cost effective

working practices where value can be added

7. Consider how experience, expertise and best practice regarding

procurement can be shared across the council

8. Receive and consider reports and make recommendations or take

appropriate action on the following :

¾ Progress against the Corporate Procurement Strategy Action Plan

¾ Performance against targets set for Procurement

9. Assist with the identification of areas where corporate contracts would add
value

Devolved Procurement in Service Directorates

1. Develop specific procurement strategies, in consultation with the

Corporate Procurement Manager

2. Implement and manage procurements in accordance with the Council’s

Procurement Strategy and underpinning Framework (i.e. Contract
Procedure Rules and Codes of Practice)

3. Collect key procurement information for use by the Corporate Procurement

Manager in the development and maintenance of the Corporate
Procurement Strategy and regular reporting on procurement.
 Appendix C (ii)

Procurement Network Group

Terms of Reference

The Procurement Practitioners Network is a forum where procurement officers

from across the Council meet to discuss all issues relating to procurement
and feed comments back to the Strategic Procurement Group.
 VFM Framework Appendix D
Driving Improvement in Services and VFM
SUNDERLAND STRATEGY

CONSULTATION CORPORATE IMPROVEMENT PLAN

STRATEGIC STRATEGY

MEDIUM TERM
FINANCIAL PLAN
CAPITAL STRATEGY CORPORATE
AND ASSET PROCUREMENT
MANAGEMENT PLAN STRATEGY

SERVICE/BUSINESS PLANS

SERVICE
SERVICE STRATEGIES / WORK BENCHMARKING COMPARATIVE UNIT COST PERFORMANCE AGREEMENTS
PROGRAMMES AND PROFILE ANALYSIS / STAFF APPRAISAL

CROSS RISK INTERNAL EXTERNAL CAPITAL CAPITAL BUDGET BUDGET PERFORMANCE CORPORATE
MANAGEMENT REVIEW AND INSPECTION PROGRAMME PROGRAMME PREPARATION MONITORING MANAGEMENT GOVERANCE
CUTTING CHALLENGE CHALLENGE MONITORING AND PREPARATION AND CONTROL
PROCESSES ACCOUNTABILITY

LOCAL STRATEGIC OTHER

PARTNERSHIP PARTNERSHIP PARTNERSHIPS
ARRANGEMENTS

PARTNERSHIPS THEMATIC SRB PARTNERSHIPS PARTNERSHIPS

CHECKLIST PARTNERSHIPS ETC CODE OF PRACTICE