Procurement that’s proactive and innovative

It finally appears that government is beginning to recognise the importance of maximising the benefit of procurement spending. There is an emerging realisation that the £257bn spent by central government and the wider public sector on procuring goods and services must create jobs and growth. Indeed it represents a fifth of all government expenditure.

Jobs and growth are just one side of the benefits that procurement can bring. There is a real value to having an activist approach to procurement where innovation in policy, strategy and personnel is allowed to flourish and real benefits are felt for communities and business. For too long procurement has been the game of the large multinational. Now there is a real commitment to supporting SMEs to deliver services, to tackle worklessness through procurement spend, and to stimulate apprenticeships.

Over the last three years, the Centre for Local Economic Strategies (CLES) has led a crusade to ensure procurement spend is linked to and brings maximum benefit to local economies. Our work with Manchester Council is well documented and the local authority is held as an example of good practice in sustainable procurement practice. They have been able to demonstrate the benefit their procurement spend brings to the Manchester economy; and also the value of investing in framework arrangements for construction contracts.

Many of the activities stimulated in Manchester are now beginning to be rolled out across local government and the public sector and the benefits are beginning to emerge. We are, however, far from finished on this agenda. As we move towards an outcome focus in policy, it is important that procurement and commissioning practice follows suit. This means monitoring as a matter of course the benefit that procurement spend and supplier activity brings to local economies and priorities; and secondly giving the suppliers the basis by which they can demonstrate economic and social value.

Our work with Manchester Council has unearthed numerous examples of where suppliers in both the commercial and social sectors have contributed towards wider local and economic priorities. What joins these examples together is a clear place stewardship role for local government in encouraging suppliers to maximise benefit and a value among the supply chain that they can contribute to wider social good. A couple of examples really stand out.

Redgate Holdings provide recycling services for the council; effectively Manchester’s waste is sent to Redgate’s depot in Gorton, a ward with a number of neighbourhoods in the 1% most deprived nationally, for sifting. Given the growth in recycling rates, Redgate has been able to expand recently creating eight new jobs. Two years ago the jobs would have been advertised widely and probably gone to non-Manchester residents. However, through the procurement process the council has promoted the importance of tackling worklessness alongside delivering services; these eight jobs have gone to residents of a nearby neighbourhood in which 70% of the working age population is out of work. That is activist procurement in action with real tangible benefit.

GB Building is one of 12 contractors that sit on the large construction activities framework of Manchester Council. It has recently been responsible for rejuvenating a vast swathe of housing in the Moss Side area of the city. For GB Building and the council the process has not just been about physical regeneration but also about enabling associated social regeneration. Apprentices, through the Manchester People into Construction Scheme, have been a key part of the development with many societal benefits. For example, Malcolm had led a life of petty crime and had spent some time in prison. An apprenticeship supported jointly by the local authority and supplier has enabled him to learn the value of work and has brought structure to his life.

The above are just two examples from one city. There are going to be key examples from elsewhere and across the public and commercial sectors of where procurement activity is bringing clear economic, societal and environmental gains. This demonstration of value is important. First, it demonstrates that local authorities in an era of austerity can make public money go further through economic localism. Second, it provides the evidence by which the private sector can finally begin to demonstrate corporate social responsibility commitments.

To take the next and vital step government must continue to promote transparency, efficiency and the role of SMEs in procurement. It must also, however, recognise that effectiveness in provision is equally important by giving both local authorities and suppliers the flexibility to deliver, demonstrate and evidence economic and social benefit.

It was repeated frequently at Public Servant’s public procurement conference I attended in December that Cabinet Office minister Francis Maude is interested in procurement and sees it as a vital way to create jobs and growth. It is time for Mr Maude to also advocate economic and social impact by signing up to economic localisation, as well as activism and innovation in public procurement.