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Procurement for the age of austerity

With reduced budgets and tougher times ahead, many public sector organisations will need to re-think their procurement strategies

Tim Oakley
Guardian Professional, Tuesday 17 August 2010 11.51 BST
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Procurement for the age of austerity
This article was published on guardian.co.uk at 11.51 BST on Tuesday 17 August 2010.

Local authorities will need to concentrate more on repairs and renovations to exisiting social housing schemes. Photograph Guardian/Graham Turner

The coalition government's 'emergency budget' has left the country in no doubt that we all face an age of austerity.

The most obvious target has been public sector expenditure, where non ring-fenced departments may see budget cuts of 25% or more over the next five years, bringing every item of public expenditure under scrutiny.

The future of major capital development programmes, such as schools in the BSF programme, eco-towns, new hospitals and cultural centres are all at risk.

It would seem logical, therefore, that the next five years will see a switch from expenditure on new build to the four Rs - repairs, renovations, remodeling and refurbishment, possibly with consideration being given to extensions.

Tim Oakley

However, these more modest scale projects will undoubtedly be at least, if not more challenging and time consuming in the procurement of the necessary building products and services than even larger programmes, such as BSF, and the responsibility is likely to fall on in-house technical and procurement teams.

The need to remain compliant with EU public sector procurement directives and stringent UK public contracts regulations must be balanced while ensuring that long term quality and best value efficiency principles are maintained, together with due consideration for sustainability and the carbon reduction agenda.

Improve communities

In addition, current improvement works need to be fast tracked on to site to complete decent homes initiatives and improve communities, to meet government deadlines and achieve social return in addition to financial return on investment.

This is a tough predicament for already stretched departments, which are likely to lose even more staff and resource in the near future, in line with public sector cut backs, and public sector procurement for building products and services is a complex task.

For this reason, public sector officers are increasingly considering outsourcing procurement activity to the private sector. But the risks associated with such a strategy are already well documented by the National Audit Office.

Another way is for public sector officers to cooperate and use existing proven methodologies, especially for procurement of technically complex building products and services.

One example is use of OJEU compliant, pre-tendered framework arrangements created by LHC, a not-for-profit public sector organisation, which has been helping public sector bodies procure building products and services for over 44 years.

Framework arrangements are a proven tool to fast track procurement, and offer significant real time benefits and a smoother path from inception to contract completion, with due consideration given to working in the unique environments of the public sector.

Social landlords

To date, LHC has helped over 500 social landlords to achieve the decent homes objectives before the 2010 deadline and is already working with many more to incorporate sustainable solutions and, with site liaison officers, ensure the standard of work is maintained.

LHC is also working closely with many local authorities, using its EF1 framework arrangement for education contractors, to help repair and maintain existing school buildings to improve learning environments across the UK.

This process of working together and avoiding waste is also in line with the operational efficiency programme's aims to share good practice and avoid duplication. Examples such as use of framework arrangements demonstrate how the public sector can work in a collaborative fashion to drive efficiency.

So, buildings can be developed, communities can be improved and schools can be enhanced even in the new age of austerity.

However, this can only occur if public sector bodies are willing to work together to acknowledge and promote existing arrangements, and not be sidetracked by wastefully reinventing the procurement wheel, which may risk non-compliance and a compromise on quality.