Lessons learnt from procurement and contract management

In January 2023, Lord Evans, at the time Chair of the Committee on Standards in Public Life, wrote in his message to local leaders that “ethical culture does not emerge by accident.” So, it's not surprising that the Society of Municipal Treasurers (SMT) used a meeting on our recent report on local government procurement and contract management to focus on the practical steps required for building this culture. The report [ 1446 kb ] stressed the importance of “relationships built on openness and trust” and argued that at its heart “procurement is a series of transactions conducted by people, and how well individuals work together will affect the outcome”

Based on a review of 53 annual auditor reports and a selection of public interest reports, best value inspections, and statutory recommendations, our report found that local government procurement and contract management works best with strategic planning; end-to-end internal control; the right timings, technical expertise and people; and commercial awareness. In the SMT discussion, for procurement, it was resourcing a central procurement unit (CPU) and getting its role right that came out as a top priority. For contract management, giving the right support and enhancing professionalism was seen as essential.

Effective resourcing of a CPU

Recruitment and retention of procurement specialists was a common theme. For most participants, interim staff had been the go-to solution to fill the establishment gap. Some of the best examples of long-term success were where very skilled interims had been used on specific high-risk and financially-successful procurements, raising the profile of the procurement function overall as a result.

A raised profile for the procurement function was recognised as helping to demonstrate both its organisational value and the opportunities it provides for a career path – which in turn may help with resource investment, development and prioritisation discussions needed to support permanent recruitment. SMT members also recognised the benefits of the CPU developing strong relationships with service lines.

Providing the right support for contract managers

Contract management within the local government sector tends to be heavily devolved to specific service lines, rather than managed from the centre. Many of the SMT members felt the risk of non-compliance was higher in contract management than in procurement, because so much of the contract management function is devolved. Various ways of responding to this were discussed. The simple step of clearly amending contract managers’ job titles to incorporate 'contract manager' was seen as a good first step to improving the understanding of their role and awareness of its importance. A corporate centre of excellence for contract managers to turn to for support and development was also described as helpful. Handover packs from an outgoing procurement team to an incoming contract management team were also considered valuable for raising contract managers’ knowledge and understanding. Periodic check-ins with the CPU, as a trusted 'best friend', were also discussed.

Report: the key considerations

The discussion with SMT members identified the following questions:

• Where we use agency staff, are we getting the right skills and do we deploy them in the most effective way?
• Are we taking effective steps to raise the profile of the procurement team?
• Does our central procurement team facilitate the work of others? Is it seen as a 'best friend'?
• Is the handover process between procurement and contract management effective?
• Do contract managers understand what their role is and know where to turn for help?

Our report provides a checklist for councils to self-assess against good practice procurement arrangements. Local government spends over £80 billion per annum on goods and services, which is more than one third of all UK government spending on goods and services, and higher than the spending of any individual government department. The local government sector has an important responsibility to ensure that procurement and contract management arrangements maximise the use of public finances, that value for money is achieved, and procurement delivers strategic priorities. This robust discussion around practical steps forward was a strong start in the right direction.

For more insight and guidance, get in touch with Guy Clifton or Joanne Taylor.