PROCUREMENT & CONTRACT MANAGEMENT - OVERVIEW

1. PROCUREMENT & CONTRACT MANAGEMENT - OVERVIEW DRAFT PROPOSAL – V 2.0

2. KEY PRINCIPLES; “Structure first and transform after” – Vic Baylis A single approach does not fit all units Align a single point of contact (PM + SRM) to each key DU (5 in total) The transition will be handled in phases Accept that in the first phase “lift and plug” is the right thing to do. Ensure we maintain the BAU aspect Skilled procurement professionals will be needed quickly and for the short > medium term (by and large they don’t exist today) Test the models singularly and as a whole How do we get to a “pooled” support unit ?

3. DATA FEEDS TO INFORM THE NEW TARGET OPERATING MODEL • IMPACTABLE SPEND - £410 Million • CONTRACT REGISTER; • 347 CONTRACTS • 50 CONTRACTS OVER £1 Million • Top 10 excluding HA’s = 35% of spend (£143 Million) • Veolia • Vertex • NCP • Capita • AJ Bush • Transport Trading Ltd • Residential Management Group • Npower • West One Infrastructure Services • Land Sec Properties • Extensive client input from the work by Proteus (7th Floor) • Developed spend map/categorisation (level 2 only) that aligns with Capital ambition and methodology agreed with CFO (PH) • Procurement card spend (120 cards/2K transactions/month/£50-60Kper month spend) • Ariba e-proc system – 2K transactions per month = roughly 25% of spend

4. KEY ISSUES TO ADDRESS TO INFORM THE NEW TARGET OPERATING MODEL • INTEGRITY AND QUALITY OF SPEND MAP AND CATEGORISATION (This is and will be different to a GL view of spend data) - £98M can’t be categorised to 2nd tier level. • Address the “gap” between DU contract lists and the central list(s) • Ariba system enhancements to ensure it will deliver the system WCC need going forward • How we embed the elements that we will have to “lift and plug” to ensure initially BAU with downstream synergies. • Evaluation of existing people capabilities to deliver in the new model • Understanding what Vertex via Enterprise are contracted to deliver Vs what the actually deliver Vs what we want them to deliver in the future! • Address the complimentary elements of the OJEU process, Legal frameworks, etc • How we can “bring under control” the “tail spend”; • Approximately 10% of the spend is with 80% of the supply base (5,000 of the 6,500 total) . This in turn drives nearly 90,000 of the 115,000 payment transactions for WCC • How we enable cheque and cash payments currently, through new secure channels, but remove the former.

5. THE SUPPORT FUNCTION SHOULD DELIVER THE FOLLOWING; • OJEU specialist advice – within the team and to the DU’s/SU’s • Analytical capability- markets, data, suppliers, commodities, spend, etc • Current “live” comprehensive contracts register • WCC position to cover policy and procedures (and practical tools, etc) to ensure we deliver on the following “agendas”; • Environmental • Sustainability • Green • SME’s • Local Businesses • Governance – CRB, P&S, DCB, etc • Financial measures/Budgets, etc • Training and Development plan/register, etc • Planning capability • Ariba – e-procurement • Procurement cards/Corporate cards/Cash ready cards, etc • Administration

6. H of P&C Adults & Communities Children & Young People City Management Built Environment Resources PROPOSED NEW TARGET OPERATING MODEL (TOM) 104 EA Head of Supplier Management OJEU specialist Head of Purchasing Head of Support COMMISSIONING AREA PM AREA SRM AREA SRM AREA SRM AREA SRM AREA PM AREA SRM AREA PM AREA PM AREA PM Pooled Resource Supplier Relationship Managers/Coordinators - 37 Purchasing Managers/Buyers – 6/8 CATEGORY PURCHASING MANAGERS (£410M split by spend map) - 21 IT Travel Clothing/Uniforms FM Energy Print/Paper Agency Staff Cleaning Marketing Training Catering Legal TBC subject to spend map Support - 23 Cards, e-procurement (3 > 7), Analysts (3), Sustainability, Procurement Planners (2), Governance (2), Admin (3), Contract register, SME, Local, Financial controls/budgets

7. OPEN DISCUSSION

8. APPENDICES CLIENT VIEW + KEY REPRESENTATIVES VIEW SPEND MAP CONTRACTPROFILE

9. Draft Design Principles- Contract mgmt & procurement – Proteus lead client view • Summary of customer needs: • Consistent approach to developing SLAs/specifications that are fit for purpose with a clear benchmark • Common approach with best skills in negotiation and relationship management who understand how to drive the right outcome with the best methods in delivery • Commercial framework that defines the end to end process for procurement & contract management, key decision points, triggers for change, with skilled advisors providing value add expertise • Develop MI that will allow commissioners to know that we are achieving their strategy and desired outcome, allows for effective decision making, and gives contract managers the ability to manage performance and costs. • Define governance boards that will be separated into approvals versus advice. TOR will define the types of skills required in these boards, roles they will play • Define the types of contracts & SLAs required as ‘standard’ and T&Cs with legal, grouped into categories based on fit for purpose outcomes based on 3rd party business’ and relationship with WCC • Capability of the group should include: • Strong financial understanding, total cost of contract • Understand unit costs of supplier pricing • Basic legal understanding, and knowing how & when to seek additional advice • Planning for the lifecycle of contracts, roles & responsibilities of different parties, incorporating business change impacts • Market analysis/expertise in the areas the team will procure from • Experience in delivery of SLAs, therefore ability to critique and advise commissioners on how to develop one that is appropriate • High level overview of key issues today: • Approach to developing SLAs/specifications is quite varied and inconsistent across the council • Ability to negotiate a win/win situation with suppliers is generally low. There are pockets of capability but this is not utilised effectively for the benefit of the organisation. • Relationship management is varied and needs to be developed as a skill. • Market analysis is in many cases not done at all, sometimes depending on existing suppliers for information, or using tendering process. Benchmarking is missing, and this is a big opportunity missed at the moment to obtain best value for money. • Financial understanding overall is quite low. Total cost of contract is not calculated in any department, understanding unit cost of suppliers is not clear. Education is essential in this area moving forward. • Every dept has a different view on the involvement of Legal. Need a consistent view on how legal is involved, and for what skill. Due to low commercial internal expertise, staff look to Legal for commercial advice as well and this is not appropriate. Need to redefine the TOR for legal with the new support group. • The current CRB/DCB governance is varied in outcome. Many say they are there to approve and don’t use these vehicles for advice. Some criticise the relevance of advice given and the knowledge of board members of the expected outcomes discussed. The boards should be revisited and potentially separate and advice board versus approvals board, review experience of attendance, what is presented to them, intervals, etc • There is a lack of understanding generally on how we translate legislative into our contracts with suppliers. Many feel we over-limit ourselves to guidelines that we aren’t interpreting correctly. • The success of the group & the new roles will only be as good as the capability we have to meet these needs. This area needs significant review once the new service levels are agreed

10. WHAT THE KEY CLIENT AREA REPRESENTATIVES SAID • Informing process & communications need; • A plan for the next 90 days • “People Lists” which must capture; • Performance • DDA • Maternity Leave • Sickness • Specific Needs • Vacant posts • ++ TACS with FTE (are 15% of w/force) • Links with external bodies - e.g. PCT, OGC, X river, etc, etc. • Logistics – physical • Governance – Fit for Purpose (construct of DCB/CRB, etc) • How do we cut through the bureaucracy (e.g. Neighbourhoods) • Define areas of organisational efficiency (e.g. contract management – consistency of approach and appropriate for value/risk) • Ensure we have the “WIFM” Factor for staff (e.g. we don’t want to lose good staff and provide a clear list of the benefits) • Make it easy to do business with WCC (e.g. SME’s.) • Ensure we have “Right Sizing” not “down sizing” • Back to Basics + Do a few things well • Adding to not replacing • Develop links with commissioning + How do we engage them

11. APPENDIX – SPEND MAP