Agenda item

Report of Strategic Director, Corporate Services and Governance

Committee received a report and presentation on the Council’s external local spend. It was reported that the Council’s procurement objectives are; to obtain the best value when procuring goods, works and services, to support and develop the local supply market to grow the local economy and to ensure that all activity is carried out efficiently, effectively and in accordance with current legislation.

Within the Corporate Commissioning and Procurement Strategy 2016/17 – 2020/21 there is a commitment to strengthen Gateshead’s local economy.  It was reported that Gateshead Business is defined as “a company or other organisation which has an office or premises within the Gateshead Council boundary to which invoices are paid as identified through Agresso”.  It was noted that other local authorities have different definitions of what is a local business, however currently Gateshead is not in a position to track in more detail and therefore the financial management system is used to measure.

It was reported that there is a focus on buying locally, which is contained within the Constitution, Contract Procedure Rules. In 2010 central government funding was received for the Supplier Development Programme, Gateshead businesses had more access to that funding than other areas to help them compete. Procurement supplier engagement events continue to be held when there are opportunities around upcoming tenders.  Officers from the Procurement Team attend Economic Development Breakfast meeting to encourage local suppliers to bid, in addition the NEPO Portal can be used for quick quotes. It was also confirmed that work is underway to increase the amount of business to local businesses and increasing employment and training opportunities for residents. This work is led by the Economic Development Team, linked with anchor institutions, i.e. those who bring economy to Gateshead.  Work is underway to establish which organisations are anchor institutions.  It was also noted that Contract Procedure Rules set out that if the contract value is below £100,000 tenders can be invited from at least two local contractors.

Committee was advised that influenceable Council spend for 2016/17 is £209M.  It was noted that some organisations centralise their invoice arrangements, therefore this cannot be considered as local spend as the invoice is not being paid in Gateshead. Some authorities include any businesses operating within their boundaries regardless of involvement in Council spend.

Comparisons between Gateshead’s local spend and other local authorities was provided. In particular Doncaster’s spend was looked at as it has undertaken work to increase its local spend, however a dedicated team is in place to do so.

The top 20 suppliers was provided in relation to Gateshead, LA7 and nationally, in terms of Gateshead the most spend is towards social care provision.  Some local suppliers appear in the top 20 national supplier list, however are not considered local spend for Gateshead due to invoices not being paid locally.

Future action was outlined which includes further analysis of spend to clarify all activity, roll out of Community Wealth Building Model and implementation of an action plan to target increases in local spend as well as closer working between Economic Development and Procurement Teams.

It was suggested that in terms of quantifying spend more analysis should be done to ensure organisations are not being undervalued, for example by looking at the number of local residents employed within an organisation.  It was acknowledged that this would be difficult as there are thousands of suppliers on the Council’s database and there is not the capacity to go through each supplier, the Financial Management system is also not capable of analysing the suppliers to that extent.

It was suggested that information regarding number of local employees could be included within procurement forms before contracts have been awarded. It was confirmed that this would go against EU Directives as all suppliers have to have the same access and this could potentially open the Council up to challenge.

The point was made that there should be more emphasis on economic development instead of analysing statistics. It was also pointed out that there needs to be recognition of what is manufactured and provided in Gateshead when analysing local spend. It was recognised that currently there can be no meaningful comparison between authorities due to a differing definitions and instead resources should be spend on educating, advising and supporting local businesses to compete for tenders. It was also noted that alongside this best value needs to be looked at and this may not always be local.

It was suggested that work needs to continue to encourage organisations to relocate to Gateshead.

RESOLVED    -           (i)         That the comments of the Committee on the

information provided within the presentation be noted.

                                    (ii)        That the Committee agreed to the proposed further

actions:

·         Officers to continue to analyse spend to classify all procurement activity;

·         Further discussions to take place within Group Management Teams to identify barriers to spending locally;

·         Roll out of a Community Wealth Building Model;

·         Formulate and implement an action plan with targets to increase local spend;

·         Develop closer working between Economic Development and Procurement Teams