Clive Feeney, CEO of LHC Procurement Group explores how frameworks can be maximise the potential of public sector budgets
There’s not a council in the country today that’s free from significant financial stress. The LGA says that one in 10 councils has already discussed receiving emergency support from the government.
Many more are struggling to secure sufficient financial resources to meet their budgetary obligations, or even to deliver the basic essential services.
Yet still local authorities and other social landlords are being asked to spearhead regional economic growth, develop new towns, and pay for fire safety, low carbon and healthy home retrofits too on stretched public sector budgets.
Learning from post-war reconstruction
In many ways, today’s current economic situation is very similar to the post-war years – with the need for significant reconstruction of our housing and infrastructure assets against the backdrop of slow economic growth and challenging decisions regarding spending priorities.
From that history, there are lessons we can learn. Because it was just 20 years after the war that 13 London authorities, from Richmond upon Thames and Harrow in the west to the Corporation of London in the east, came together for the first time to pool resources and to try a new approach to finding the quality building and construction services they needed to revitalise their boroughs.
Their meeting notes show they talked about creating common social and technical standards. Of coordinating industrialised and standards-based build programmes. And of serial contracts for the bulk purchase of components. Contracts that would help create much-needed economies of scale and make these programmes affordable.
This was the creation of London Housing Consortium, now part of the LHC Procurement Group, and almost 60 years since their first meeting, we are still helping local authorities and social landlords to achieve their needs.
Of course, today’s public sector procurement frameworks are much more sophisticated in their ambitions. The introduction of Gold Standard verification for frameworks in the last few years, for example, along with brand new legislation in the Procurement Act and related policy in other parts of the UK, now puts issues like social value and sustainability front and centre.
But let’s not lose sight of the fundamental financial reasons why cooperation and collaboration via framework providers makes so much sense. Heaven knows, the economic drivers are as vital today as they were at the beginning.
Frameworks are created to help buyers – usually called ‘contracting authorities’ or clients – procure goods and services from a list of pre-approved suppliers, with agreed terms and conditions and legal protections. A framework provider, like LHCPG, helps with the process.
For all public sector bodies, frameworks can be one of the most efficient and effective ways to save both time and money across a wide range of construction and maintenance projects.
There are five key areas in which frameworks help public sector bodies to save money:
- Reducing technical and administration costs, eliminating the need for teams of people (including expensive lawyers and consultants) to repeat tender processes and deal with the day-to-day assessments, technical checks, contracts and paperwork.
- Making the procurement process more streamlined and simplified, as so much of the process is standardised, repeatable at scale and optimised for maximum efficiency. This can also lead to quicker project completion which, in the case of retrofit and maintenance work in particular, can have a fast financial payback to a registered social landlord.
- Improving value for money, through pre-negotiated terms and conditions, often including discounts, volume rebates or added value services to support local communities. Not-for-profit framework providers like LHCPG also ensure any surplus made during the year is reinvested in the local area. Ours is offered back to our members in the form of a rebate that can be spent on local, community projects that deliver genuine social value – a key driver for today’s socially focussed public sector and a recommendation in the new Procurement Act.
- Encouraging collaboration between clients and establishing centralised buying, which delivers those economies of scale I was referring to earlier. Also, collaboration between clients and suppliers so that long-term relationships can be built and best practice agreed, troubleshooting any problems quickly and ensuring a successful project for all.
- Providing more efficient access to local SME suppliers who will offer clients a careful balance of the best service, the highest quality work to recognised industry standards, and the most competitive price.
Why make procurement difficult?
With construction projects, many public sector bodies may lack the technical knowledge or simply the resources to undertake the full-blown procurement process alone, which is why they often turn to framework providers for support.
So, in the face of continued economic challenges, I urge every local authority chief executive and housing team to look afresh at how LHCPG’s Gold Standard-verified frameworks can help streamline processes, minimise paperwork, and leverage collective buying power to secure better prices. By doing so, we can achieve substantial cost savings and deliver significant social value to our communities.
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