How we buy stuff
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How we buy stuff. - Or the Dark Art of Procurement. How we buy stuff. 160 or so housing associations in Scotland Very diverse businesses Size of operation - 20 units up to 48,000 units 97 have less than 1,000 units 8 have more than 5,000 units.

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How we buy stuff

How we buy stuff

- Or the Dark Art of Procurement


How we buy stuff1

How we buy stuff

  • 160 or so housing associations in Scotland

  • Very diverse businesses

  • Size of operation - 20 units up to 48,000 units

  • 97 have less than 1,000 units

  • 8 have more than 5,000 units.

  • Procurement and collaborative procurement – two different things !!!!

  • Imposed from above or good business ?


How we buy stuff2

How we buy stuff

  • Housing associations and co-operatives in Scotland contribute £ 1 BN into the Scottish Economy annually – wages and spend

  • Roughly £ 668 M of spend on goods and services and £ 357 M of staff costs.

  • Tenants rents, not public grants

  • Excludes construction spend but includes maintenance


How we buy stuff3

How we buy stuff

  • What do we do now ?

  • All associations and co-operatives have buying procedures – standing orders, order processes, authorisation levels, invoicing systems payment approvals. Record keeping is by sophisticated accounting systems – but not readily able to share or collate information

  • Putting value into local economy, getting a fair price for goods and services


How we buy stuff4

How we buy stuff

  • Why do we need to change anything ?

  • Drivers

  • European Legislation

  • Scottish Procurement Reform

  • Good business practices and the need to demonstrate value for money to tenants and others

  • Need to maximise effectiveness of resources


How we buy stuff5

How we buy stuff

  • European Legislation – the evil empire imposing unworkable systems for unrealistic ends ?

  • Aim was to remove barriers to trade and open up opportunities throughout member states

  • Treaties and Directives are the basis for Scottish Procurement Law, but how we implement, up to the Scottish Parliament.

  • Public Contract ( Scotland ) Regulations 2012


How we buy stuff6

How we buy stuff

  • European Legislation - new 2014 Directive

  • Object to simplify processes, reduce red tape

  • Pre contract dialogue, encouragement to use e procurement

  • Breaking contracts into lots and disallowing high turnover requirements for PQQ – all to encourage SME’s

  • Clarification of a lot of previous case law


How we buy stuff7

How we buy stuff

  • Why are we deemed Public Contracting Authorities and subject to public procurement law ?

  • NOT mentioned as such in the 2012 Regulations

  • BUT since 2004, been recognised in Europe and conceded by UK and Scottish Governments that we are

  • French case – definition of “controle”


How we buy stuff8

How we buy stuff

  • Thresholds for OJEU advertising:-

  • £ 4.3 M ( 5 M Euros ) for construction

  • £ 173 K ( 200,000 Euros ) for Part A and Part B, goods and services

  • Perfectly clear – or is it ?

  • Further duty on public contracting authorities – is advertising of a contract required anyway, because of three Treaty pillars of transparency, non discrimination and equality


How we buy stuff9

How we buy stuff

  • What happens if you don’t ? The threat of challenge by a disgruntled “economic supplier”

  • Realistic ? Risk ?

  • A few associations have faced threats of legal challenge – slowed down tender process, but

  • In climate of regulation and financial uncertainty, voluntary boards are uneasy.


How we buy stuff10

How we buy stuff

  • Scottish Procurement advice is that goods and services contracts above £50,000 should be tendered and advertised. Some HA’s apply this limit to construction contracts as well – huge amount of effort. Not clear if benefits identified – compliance not adoption

  • Yet procurement specialists not the norm in housing associations – but do we need ?


How we buy stuff11

How we buy stuff

  • Government focus on HA reform

  • Review of Procurement in the Affordable Housing Sector, Turner Townsend Report March 2011

  • £ 530 M spend -“more mature procurement” - £ 26M to £ 42M savings – collaborative activity identified as key

  • A bit short on practical recommendations, however – SFHA vehicle was the main one


How we buy stuff12

How we buy stuff

  • Procurement Reform ( Scotland ) Bill

  • Sits on top of the 2012 Regulations, does not replace, so HA’s are deemed Public Contracting Authorities

  • New thresholds introduced - £ 50,000 for goods and services and £ 2 M for construction

  • To use Public Contracts Scotland, up to EU thresholds, when OJEU notices as well.


How we buy stuff13

How we buy stuff

  • Other clauses on procurement strategies, community benefits and sustainable issues – well meaning, but more bureaucracy

  • We will remain deemed as Public Contracting Authorities because of EU position - not sensible to classify up to 80% of our membership as having businesses on the same scale as local authorities and NHS Trusts.


How we buy stuff14

How we buy stuff

  • Construction Review – published 22nd October

  • Procurement Capability Assessments – de rigeur for Local Authorities, suggestion will be required for all projects with government grant.

  • Some HA’s have used as an improvement tool, but may not be appropriate for housing activity – needs reform


How we buy stuff15

How we buy stuff

  • Local Authorities, in planning investment programmes to look at procurement routes and whether RSL or inter LA opportunities.

  • Seems like a great opportunity for collaboration, but in reality how this can work on diverse sites with diverse timescales is not clear

  • “bundling up tenders” – a small part of the story


How we buy stuff16

How we buy stuff

  • A project on a difficult site can take 4 or 5 years to get to tender and can be subject to many delays – planning, legal, environmental (bats, diamond headed ants), cost. How can this be planned for MMC etc ? Devanha approach

  • General provisions all sensible – project bank accounts, whole life costing, design, Construction Advisor for Scotland


How we buy stuff17

How we buy stuff

  • Many associations are considering how procurement tools can achieve savings

  • Use of Frameworks – very attractive idea, a pre established framework contract that you simply join to gain benefits

  • Disadvantages – have to use commercial framework contractors

  • Or set up your own framework – bit of a hassle but once done…………………….


How we buy stuff18

How we buy stuff

  • Procurement groups – I Flair, Trust/Bield/Cairn/Hanover

  • Started with Lead Developer arrangements

  • Now used for repairs, maintenance and procurement of furnishings for older people

  • Need commitment to actually use – Cyntra issue

  • Savings not always apparent


How we buy stuff19

How we buy stuff

  • So, working in a world which imposes behaviour on us through legislation and policy

  • Not always appropriate to our sector – scale and undefined benefits

  • Are opportunities for collaboration, better ways of working and potential savings for our tenants

  • Not always big ticket contracts – construction

  • Shared services, bulk purchasing, maintenance

  • Needs commitment for the long term, not short term view of participation


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