Guiding Principles for the Essex CSU – “A Beacon of Good Practice”

1. Guiding Principles for the Essex CSU – “A Beacon of Good Practice” Guiding Principles Delivers clear measurable quality, efficiency and financial benefits in each project Actively drives continuous improvement in Essex PCTs ensuring better competency ratings for WCC Competencies 7, 9 and 11 A lean responsive organisation building confidence and trust with clients through a track record of on time value for money delivery and consistent application of processes Defines explicit and auditable tools, develops methodologies and standard processes to drive opportunity identification, benefits realisation and benchmarking, including a decision support framework to prioritise the strategic requirements of the Essex PCTs A proactive entity informing both current state initiatives and future state planning, identifying and prioritising opportunities aligned to PCT strategies, and regional and national health agendas Acts as a central, clearly identified “safe place” to share performance issues and other collaborative project discussions Seeks out and draws on widest possible best practice locally, regionally, nationally and internationally Acts as a single point of contact for external and internal suppliers to communicate with wider Essex PCTs and build on subsequent relationships and partnerships as appropriate Is an acknowledged repository and share point for best practice procurement related documentations and local interpretation of regional and national policy Acts as an intelligent client on behalf of the Essex PCTs, and assists PCTs in becoming more intelligent buyers of services e.g. from ERPHO Ensures that the Essex wide development is aligned to the regional CSC development and duplication of efforts are minimised as much as appropriate A.T. Kearney 1

2. The Steering Group identified 5 key service lines as the scope of the Essex CSU Essex CSU Services Procurement and Contract Management (including database) Supplier Market Analysis Training Specialist Services e.g. Social Marketing and Legal Risk and Compliance Management Services Supporting initiatives agreed as part of the wider Essex collaborative agenda Strategy Delivery • Strategy • Responsible to the CEOs for creating a robust 5 year procurement plan for Essex PCTs aligned to their strategic plans. • Track progress and update strategy on an annual (minimum) basis • Delivery • Provide and maintain the tools and resources for delivery of the procurement strategy identified above • Responsible for providing proactive reliable advice and support on the level of risk in commercial processes and to advise on appropriate compliance to i.e. CCP, EU competition law, OGC processes etc • Deliver a segmented market analysis using existing core sources of information and interpreting as appropriate to the local and project needs • Consolidate existing suppliers for specialist services into framework agreements to provide support as identified by the CEOs or the governing boards • Develop and maintain a core level of skills and competencies as appropriate across the Essex PCTs to ensure compliance to the commercial strategies and effective utilisation of the Essex CSU tools and resources Overall Objective A.T. Kearney 2

3. Essex CSU Services Service Specifications - Procurement and Contract Management including contracts database

4. Service Specifications – Risks and Compliance Management Essex CSU Services A.T. Kearney 4

5. Essex CSU Services Service Specifications – Supplier Market Analysis

6. Essex CSU Services Service Specifications - Training

7. Resource Requirements, Developmental plan and costs Under the preferred option the developmental phase will start on 1st Dec 2009 to shape up the overall Programme plan for Essex CSU and ensure definition of continuity 2011 24th Nov 2009 Dec 2009 Feb 2010 Oct 2010 Mar 2010 Dec 2010 Essex CEs to confirm go-ahead with Phase 0 PCT Boards to decide on the go-ahead with resourcing for Phase 1 PCT Boards to review Essex CSU performance and confirm go-ahead. Future hosting and governance arrangements for the Essex CSU will be confirmed • Key Deliverables for Phase 2 (indicative): • Undertake quite a few prioritised procurement projects • Deliver Training to the PCTs on using different Essex wide tools and solutions • Ensure Training is delivered by external suppliers and meets expectations • Captures ongoing Essex collaborative requirements and ensure that Essex CSU is aligned to the PCT needs and gets the benefit from Regional CSC • On an ongoing basis provides PCTs with proactive inputs and expert opinion around OJEU frameworks, EU policies etc • Key Deliverables for Phase 0: • A list of strategic procurement activities that Essex CSU will undertake in the next 12 months • Strategic principles that will guide the identification of collaborative procurement projects • Prioritisation of projects by value / volume / risk • Review existing tools within Essex and propose the share vs. Buy plan • Build appropriate relationships with member PCTs and all other stakeholders • Detailed Resourcing plan for next 12 months • Interpretation of government policy for local use • Finalise on the hosting and governance arrangements • Needs Assessment for Training requirements • Key Deliverables for Phase 1 (indicative): • Undertake a few (TBD) prioritised collaborative procurement projects ensuring benefits realisation happens • Put in place a fully developed contracts database • Put in place call-off arrangements for different suppliers of training • Clearly define the market analysis requirements and decide on the Build vs. Buy requirements Decision Points

8. Key Activities undertaken from Jan 2010 Directive Programme Leadership is critical in building momentum to the programme, getting buy-in from stakeholders and defining the strategic direction for the Essex CSU • Defines the strategic principles that will guide the identification of the collaborative procurement projects • Builds appropriate relationships with member PCTs and all other key stakeholders (specifically CSC and CPH) and develops a stakeholder engagement plan to be followed by the Essex CSU • Engages with the regional CSC programme to ensure effective alignment of the programmes is in place and appropriate definition of support requirement is clearly highlighted • Engages with PCT Leads to understand their key support requirements and ensure that the service delivery plans meet PCT expectations • Engages with the developmental support team from PCTs to prioritise projects by value / volume / risk • Defines a list of strategic procurement activities that the Essex CSU will undertake and develops the detailed service delivery plan (6-9-12 months plan) • Develops a detailed resourcing plan for the next 12 months highlighting the total hiring vs. Secondment / transfer requirements • Engages with the PCT Boards to discuss issues around transfer/secondments and ensures resolution before April 2010 • Leads the process of creating appropriate job description for the new hires and ensures that the recruitment process is effective • Develops plan for funding arrangements for the Essex PCTs and ensures buy-in from all relevant stakeholders • Finalises on the hosting and governance arrangements and ensures buy-in from all PCTs • Interprets government policy for local use and puts in place the strategy for risk and compliance management • Leads the review of existing tools within Essex to propose the “Share vs. Buy” plan • Leads the programme of “Needs Assessment” to understand training requirements within the PCTs

9. Lower Cost of service provision Cost Avoidance Benefits Case The anticipated financial benefits from the Essex CSU will be derived from the lower cost of service provision and the cost avoidance achieved through collaboration 1 2 • Description: • This is mostly driven by avoiding a necessary spend per PCT by doing it centrally once. For example, to improve on WCC Competency 9 (Secure Procurement Skills), the Essex PCTs will need to employ 1-2 FTEs each which means a total of 5-10 FTEs. While through the CSU the PCTs could have lesser, more capable and efficient resources to deliver on the procurement projects. • Primarily this should focus on the reduction of transaction costs • Ongoing transaction costs should be managed against clear criteria – e.g. % of contract value Description: This is mostly driven by avoiding duplication of resources in non-core, collaborative projects or duplicative type of activities and hence having a lower cost of service provision for the overall project. Cost savings should be measured against an agreed ROI figure in line with commercial best practice and realistic, stretching targets Given the indicative full annualised cost of  £500k, at an ROI of 2.5x the Essex CSU should minimum target savings of £1.5m per year The detailed financial benefits and savings achievable from the Essex CSU can be derived only after a list of projects for collaboration is finalised. A key output from Phase 0 will be to provide the detailed financial benefits case for the Essex CSU

10. Benefits Case The services identified by Essex will help strengthen PCT commissioning and commercial functions and address WCC and QIPP agendas Proactive alignment of short and mid term procurement plans to strategy Efficient and cost effective procurement of collaborative opportunities Standardised data formats and improved data security and integrity Ensuring the retention and application of accumulated knowledge across Essex Enhance PCT's capacity and efficiency in transactional procurement Increase collaboration and contract aggregation to exploit the potential for greater market influence and vfm benefits Quick and easy access to accurate contract information that supports evidence-based decision making Standardised procedures and data formats across the region for benchmarking contracts around similar services Proactive planning for upcoming contract renewals and potential renegotiations Comprehensive provider information that supports better provider management and development Ability to show improvement on WCC Competencies (7a, 7b, 7c, 9a, 9b, 9c) Procurement and Contract Management (including database) Risk and Compliance Management One stop shop for risk/compliance issues for all PCTs ensuring similar advice provided Reduced risk of non compliant procurement processes Clarity and consistency in interpretation of policy Local issues and requirement fed proactively into policy makers Ability to show improvement on WCC Competencies (8c, 9c) Better understanding of the existing market dynamics and opportunities for market intervention and innovation Increased capacity to aggregate volume Improved understanding of the associated risks of market interventions Increased knowledge of provider capability/capacity enabling PCTs to make informed commissioning decisions Improved understanding of where and how sub-scale providers and services are driving inefficiencies and poor quality Ability to show improvement on WCC Competencies (5a, 5c, 6a, 6b, 6c, 7a, 7b, 7c, 8a,11a, 11b) Supplier Market Analysis Mandated responsibility to ensure consistent application of procurement skills, processes and toolas Better awareness of the 'new' NHS marketplace, Cooperation and Competition Panel rules and the influence of PCTs Improved technical commercial/procurement skills Enhanced staff development and building PCT reputation as an employer of choice Increased efficiency of training spend Ability to show improvement on WCC Competencies (1c,9b) Training

11. Hosting, Governance and Performance Management 5 possible development options were discussed by the Steering Group to recommend the hosting arrangements for the Essex CSU

12. Hosting, Governance and Performance Management The Steering Group has recommended a “PCT Hosted / Partnership Model” as Phase 0 for the Essex CSU from now till March 2010 • A “ PCT Hosted / Partnership Model” was the preferred approach: • 1 Programme Lead and 1 admin recruited and headcount assigned to the hosting PCT. This will be equally funded by all 5 PCTs • Until March 2010 : Developmental resources will be provided (on a part-time basis) to support Essex CSU agenda by each PCT. The resources will remain part of the existing PCT till March 2010 or until the conclusion of any formal consultation • Beyond March 2010 : Based on the future resourcing requirements produced by the Programme Lead, existing resources will be either seconded or transferred to the hosting PCT. This will be determined in the next few months • From April 2010 : Approved FT/interim resources recruited and headcount assigned to hosting PCT; proportionately funded by all 5 PCTs (proportion to be agreed according to programme lead recommendation) Essex CEs need to agree on the “Hosting” PCT prior to Jan 2010

13. Principles for Governance Structure Hosting, Governance and Performance Management A set of ten principles will guide the Essex CSU Governance structure • Keep things simple: Governance structure to be as flat as possible in order to make decisions faster • Keep things clear: The governance body should have clear responsibilities, and decision-making authority. The structure should be easy to communicate • Enable focus: Allow sufficient focus and attention on the core purpose of Essex CSU • Ensure full representation of the member PCTs (all 5 PCT representation is paramount) • Minimise disruptive change: Rely on current structures where appropriate • Recognise the importance of the role of individual PCT Boards and the importance of the need for mandated delegation of decision making • Enable Collaborative working and ensure clear measurable quality, efficiency and financial benefits are delivered in each project • Ensure the interests of all parties are considered fully before making decisions • Allow decisions to be made at the lowest appropriate level unless otherwise. Ensure clear escalation rules with a commitment to fast resolution • Ensure that the governance arrangement encourages effective collaborative working between the member PCTs and maintains a supra-PCT interest and view in decision making while acknowledging the individuality of the PCTs

14. Hosting, Governance and Performance Management PCT Representation Options The Steering Group proposed a full representation of all PCTs in the Essex CSU Governance Body Structure & Relationships PCT Boards • All PCT representation: • Membership constitutes 5 CEs or, • Membership constitutes 5 Senior Directors or, • Membership is a mix of CE and senior directors from PCTs • Committee with few representation: • A small number of members represent the PCTs on the Governance Board • The CSU is hosted by a PCT and governed by the PCT Board • An individual accountable to the PCT Boards to deliver The “Collaborative Steering Group” for Essex will act as the Essex CSU Governance Body. The members of the “Essex CSU Governance Body” are: Sheila Bremner, CE of Mid Essex Catherine O’Connell, CE of West Essex Russ Platt, Director of Commissioning of SE Essex Alan Mack, Deputy CE and Director of Corporate Development & Governance of NE Essex Jacky Brown, Director of Finance of SW Essex Strategic / Governance Essex CSU Governance Body Operational Team CSU Team • The Essex CSU Programme Lead needs to have dual reporting: • Line reporting to the hosting PCT • Performance reporting to the Essex CSU Governance Body Key: Line of delegation Line of reporting

15. Hosting, Governance and Performance Management And has defined a clear set of responsibilities for each teams with a clear line of delegation Key Responsibilities Set the strategic direction for the Essex CSU Act as the “ultimate” arbiter for the Essex CSU Approves yearly budget for the Essex CSU Approves the list of procurement projects that could be delegated to the Essex CSU team to manage PCT Boards (X5) Delegated authority from PCT Boards Defines the strategic objective of the Essex CSU Guides the Essex CSU Operating Team in decision making Acts as a point of contact to handle escalation and resolution of issues Reviews and finalises the workplan Reviews yearly accounts and submits report to member PCTs Performance manages the Essex CSU Operating Team Essex CSU Governance Body Facilitates discussions in each PCTs to identify projects which could be collaboratively handled Acts as the interface to the suppliers of services (e.g. ERPHO) to ensure PCTs get value for money service Develops the strategic principles that define the criteria for prioritising a project for collaboration Ensures that every project delivers quality, efficiency and financial outcomes Undertakes Training needs assessment for each PCTs and identify the training requirements and suppliers for the same Undertakes Market analysis to provide a view of different provider dynamics, economics and issues which can enable PCTs to undertake more effective market intervention Essex CSU Operating Team By Dec 2010, the Essex CSU Programme Lead should put forward the future governance arrangement based on resourcing and hosting arrangements Key: Line of delegation Line of reporting

16. Hosting, Governance and Performance Management An indicative balance scorecard have been defined by the Steering Group to monitor performance of the Essex CSU Balance Scorecard for performance management of the Essex CSU • Financial Targets • £XX m Cost reduction in PCTs’ spend (total cost model) • Delivering CSU outcomes to agreed budget • Reduction of cost per transaction over time • Improvement in VFM (product and contract) • Deliver on cost avoidance targets • Deliver projects on the agreed ROI target set • Quality Targets • Delivered to standard • Clear records kept • Adherence to standardised workflow system • Clear project planning principles used at all times • Project delivered on time and on budget • Contestability targets met • Improvement in WCC Competency (7, 9, 11) • Customer/partnership satisfaction • Learning & Growth • Define and deliver new ways of working • Drive an agenda of innovation • Develop a wider capability across Essex • Enable team building and working across Essex • Deliver appropriate, cost effective training and development programmes • Efficiency Targets • Elimination of duplicate procurement activities • Consolidation of headcount and roles across the cluster • Appropriate spend relative to value /risk of procurement • Maximise savings from low value high volume contracts

17. To ensure success of the Essex CSU, clear expectations should be set by the PCT Boards and a clear alignment needs to happen with the CSC and CPH Key Dependencies and interfaces Mandated expectations from PCT Boards Mandated alignment required with CSC Essex CSU CSU Governance Body • Programme Lead to attend on Regional CSC review meetings • Proactively identify cross-region procurement activities and resource developments with CSC • A formalised buy-in arrangement for broader CSC services (e.g. procurement and legal call off arrangements) • Reciprocal arrangements offer Essex CSU outputs to EoE region to ensure better knowledge dissemination • Benchmarking of CSC/CSU performance against agreed KPIs Set the strategic direction for the Essex CSU Act as the “ultimate” arbiter for the Essex CSU Approves yearly budget for the Essex CSU Approves the list of procurement projects that could be delegated to the Essex CSU team to manage Approves resource requirements (hiring as well as secondment) for the Essex CSU CSU Operating Team CSU Services Training Market Analysis Risk and Compliance Management Mandated alignment required with CPH Procurement and Contract Management Define and understand the current support that CPH provides Work along with other PCTs in the region to define a single strategy for CPH Take a view of the impact on the PCTs if CPH support is removed. Define a progression path for Essex CSU to pick up the workload which CPH is providing Ensure that an adequate notice is provided to the CPH incase termination of support is decided A.T. Kearney 17

18. Risks and mitigating actions Key risks and mitigating actions

19. Key Next Steps Key Next Steps for the Essex CSU development • If approved the allocated PCT resources / Steering Group will : • Immediately take approval from the individual PCT Boards to hire the CSU Programme Lead • Drive the assessment of specific individuals’ capabilities or recommendations on specific individual transfers across the patch • Drive definition of specific job descriptions of the resources who will be part of the Essex CSU • Define the detailed fund flow mechanisms specifically hub funding or the SHA funding for FY10-FY11 and seek approval from PCT Boards • Understand and undertake market sounding with external suppliers for any services (if required) • Ensure that the regional CSC and Essex CSU interactions continue to be supportive • Define the future implications of the Essex CSU with the SCG • Define the key dependencies with all the stakeholder groups and define how the relationship needs to be managed by the Essex CSU • Agree on the PCT which will act as the “Host” for the Essex CSU • Agree on the arrangements required for resource transfer or secondment from other PCTs • Define the scope, resource requirements and KPIs for the priority procurement projects identified for collaboration • Once appointed, the “Programme Lead” should : • Start defining the Programme plan for FY10-11 • Prepare a detailed delivery and service roll-out plan and start interacting with the key stakeholder organisations • Identify resource requirements post March 2010