Committee for Finance and Personnel

Inquiry into Public Procurement Policy and Practice in Northern Ireland

DFP - Progress Update on the Recommendations Arising from the Committee's Inquiry into Public Procurement 1st March 2011

From: NORMAN IRWIN

Date: 8 FEBRUARY 2011

Summary

Business Area : Central Procurement Directorate (CPD)

Issue: Progress update on the recommendations arising from the Committee’s inquiry into public procurement in Northern Irelans

Restrictions: None

Action Required: To note

Background

The Committee has requested an update from CPD officials on the progress being made to address the recommendations contained in the Committee’s Report. The briefing session will take place on 16 February. The Committee was last briefed on this issue on 30 June 2010.

I attach, for the Committee’s information, a progress update on the Procurement Board’s Action Plan. Actions which have been implemented are shaded grey on the table.

A brief summary on the progress made is provided below and officials will be happy to expand upon, or clarify any of the areas mentioned here, or in the attached Action Plan.

Summary of progress

In response to the Committee’s recommendations on the policy context in which procurement operates, the Procurement Board has approved a revised definition of Best Value for Money. Details of this revised definition, which will require the endorsement of the Executive, is set out in the next section of this update.

By way of a summary of work to date taking forward the Committee’s recommendations, the main focus has been on “social value”, capacity building, improved data capture, and Centre of Procurement Expertise (CoPE) accreditation and governance. This note highlights some of this progress and further details are contained in the Action Plan.

With regard to “social value” CPD officials have met with representatives from OFMDFM and agreed that OFMDFM will work with DFP in producing a working definition of, and methodology for measuring, "social value" in Northern Ireland. This work will be taken forward by the Sustainable Development Champions' Network, with advice from other specialist bodies such as NISRA. CPD will focus on continuing to develop advice on when and how social value can be integrated into public sector procurement contracts

Officials have also met with DETI to consider the issue of capacity building for Small and Medium Sized Enterprises (SMEs) and Social Economy Enterprises (SEEs) and are continuing to work with the Social Economy Policy Group and with Invest NI on how procurement advice and opportunities can be made more accessible to local businesses through the “nibusiness” website.

Also in support of this work CPD is revising and updating guidance for both public sector purchasers and suppliers on maximising SME and SEE opportunities to access public procurement. The guidance has been updated to reflect the views of key stakeholders and is currently with the Committee for comment prior to finalising and publishing the revised guides.

Work is also progressing on the development of more robust data systems to inform decision making. The proposed approach for the development of a data set of information will allow the impact of procurement policy on the SME/SEE sectors to be more closely monitored. This approach has been approved by the Procurement Board and a business case is currently being developed.

To support the implementation of consistent best practice across CoPEs, a training programme is being developed by CPD, in conjunction with the Centre for Applied Learning (CAL), which will support the development of licentiate arrangement for procurement practitioners across all CoPEs.

Work is also progressing on the issue of governance within public sector procurement and the CoPE accreditation process. Proposals for a new accreditation model have been submitted to the Procurement Board for consideration and their comments are currently being collated. The Committee’s views will be welcomed when work on the development of the model has reached a sufficiently advanced stage.

Definition of “best value for money”

In its Report, the Committee identified a need for the practice of achieving value for money to strike a balance between short-term monetary considerations and longer-term economic, social and environmental costs and benefits. The Department considers that striking this balance necessitates a refinement of the current definition of “best value for money” to take greater cognizance of the importance of sustainable development.

The existing concept of “best value for money”, as adopted by the Executive in 2002, is defined as:

“the optimum combination of whole life cost and quality (or fitness for purpose) to meet the customer’s requirements”.

This current definition enables a public body to compile a procurement specification which includes social, economic and environmental policy objectives within the procurement process. Whole life costs include both quantifiable and non-quantifiable or intangible costs and benefits.

At its meeting in November 2010, the Procurement Board endorsed a refinement of the definition of “best value for money” to read:

“the most advantageous combination of cost, quality and sustainability to meet customer requirements.”

In this context, cost means consideration of the whole life cost; quality means meeting a specification which is fit for purpose and sufficient to meet the customer’s requirements; and sustainability means economic, social and environmental benefits, considered in the business case, in support of the Programme for Government.

This revision brings a stronger focus on the delivery of sustainable benefits while at the same time it is in keeping with EU procurement legislation which requires that any economic, social and environmental goals being addressed in the contract award criteria must be related to the subject matter of the contract. Where this is not the case, a contracting authority could use contract conditions to achieve such goals where they are relevant to the performance of the contract.

Before seeking Executive approval for this refined definition the Procurement Board would welcome the Committee’s views. It is hoped to be able to finalise the draft Executive paper for the Minister’s consideration, by the end of February.