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Northumberland County Council

Northumberland County Council. Northumberland and LM3 Barry Mitchell LM3 Project Manager. Why look at the local economic impact of public spending. What happens to all the money we spend on goods and services? How does our procurement

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Northumberland County Council

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  1. Northumberland County Council Northumberland and LM3 Barry Mitchell LM3 Project Manager

  2. Why look at the local economic impact of public spending What happens to all the money we spend on goods and services? How does our procurement behaviour relate to our corporate strategy? Are we promoting regeneration through our public spending activity?

  3. The Leaky Bucket money enters the local economy… Tourism Welfare benefits Business investors Export earnings (spending on businesses from non-local people and businesses) Regeneration funding Q: How does money already come into my area?

  4. The Leaky Bucket …and money leaks out Energy and waste Taxes Spending on non-local services and products (care, food, etc) External contractors and consultants Q: How do we currently spend our budget?

  5. The multiplier effect A pound can be more than a pound Every time money is re-spent in your local economy, it is like new income for the person who receives it. The more money is re-spent, the higher the multiplier effect. The areas in blue in the images on the right represent how much money would be generated in your local economy if people spent 80% (top) versus 20% (bottom) locally, over and over.

  6. LM3 (Local Multiplier 3) a DIY economic indicator Enables you to measure the impact of your initiative or work on the local economy Adapted from the Keynesian multiplier You measure three rounds - how money enters, how it is spent, and how it is re-spent Clear, simple, transparent, and replicable

  7. How LM3 works in practice Two construction contracts NNDC compared two contracts. The LM3s are on the right. Note that the smaller contract in fact generated more money for the local economy! This example shows the importance of economic linkages. It’s not just where you spend your money, but what happens to your money after that.

  8. LM3 Project LM3 project in Northumberland • Partnership - Procurement and Regeneration - NEF, NSP and ONE • Supporting Key Objectives and Innovative • Measure and improve its local economic impact • Key initial Milestone targets - LM3 Benchmarking completion - Proactive Food Tender activity

  9. LM3 Project strategy • Strategy and Project plan developed and agreed by end January 04 • Definition of local a critical criteria • Survey form and letter prepared and tested

  10. Implementation of Strategy Survey Completion • 372 Survey requests issued February 04 • Reminder requests issued April 04 • Results consolidated June 04

  11. Implementation of Strategy LM3 Benchmark Completion • Completed Supplier Surveys result in 31% return • Benchmark LM3 Calculation 2.19 - Comprised In Area 2.76 - Comprised Out of Area 1.36 • Overall Benchmark classed as positive

  12. Model evaluation highlights • £1 of income spend from government generates • £2.19 in total and £1.19 additionally for the local economy - £1.04 from In Area suppliers - £0.15 from Out of Area Suppliers

  13. Local and Non Local Spend • In Area suppliers spend 76 % locally - predominantly labour cost and local suppliers • Out of Area suppliers spend 36 % locally

  14. Food Tender initiatives • Seminar with Suppliers • Encourage networking • Liaise with Agencies • Personal contact

  15. Food Tender initiative • Additional Communication to EU notice - Newspaper advertisements - Shown on NCC web site in tenders invited - How to do business guide published on NCC website - Example business questionnaire published on NCC website - Links from above to SBS,EU and Business Link websites

  16. Food Tender initiative Repackaging the Tender • Facility to tender by smaller lots - Food contract opening into 7 categories - 4 of 7 food categories opened into 4 Areas • Quality weighting on evaluation criteria - 60% / 40% in favour of quality against price

  17. Food Tender initiative • Option to tender as manufacturer or wholesaler • Required to assist in pursuing a sustainable food strategy - Quality criteria including sustainability - Ability to supply locally grown or organic

  18. Tender Results Food Tender statistics • 42 Expressions of interest - 22 local food suppliers • 16 Tenders received - 7 local food suppliers

  19. Tender Results Food Contract Award 2004 • 4 Categories to Local Suppliers Meat, Bread, Fruit and Vegetables and Milk • 3 Categories to non-local Suppliers Frozen, Groceries, Crisps nuts and snacks

  20. Continuing Work on Food • Formalise an approved Food Supplier list process - agree abridged application process but with necessary compliances - coordination between customer and suppliers

  21. Continuing Work on Food • Pursue PDO/PGI EU Accreditation - liaise with Trading Standards on inspection - liaise with DEFRA on processes - work with producers to complete applications

  22. Continuing Work • Ongoing key initiatives - proactively encourage local SME’s - meet the buyer sessions - liaison with Business Link - contact with umbrella organisations - repackaging relevant tenders - increase awareness of local suppliers

  23. Continuing Work Enhancing Policy statements • Best Value and Community strategy updated • Strategic statement enhanced • Finance Plan

  24. Other LM3 Evaluations • Working with the Private Sector - work completed with 2 local multi-national companies using LM3 to establish annual worth to local community • Working with Social Enterprises - work carried with ADAPT on benchmark and community worth and planned work with The Alnwick Garden Trust to commence shortly • Working with other Local Authorities - work completed with 1 District Council to establish indicative benchmark

  25. Other LM3 applications • Involvement on Buildings and Property tenders - innovatative community benefit clause in OJEU notice - liaison with Business Link - encouraging awareness with local suppliers - 16 out of 18 PQQ’s local - All contracts awarded to 3 local builders

  26. Community benefit clause Under this procurement exercise the Contractor is required to actively participate in the economic and social regeneration of the locality and surrounding the place of delivery for the provision of the service. Accordingly, contract performance conditions may relate in particular to social and environment considerations.

  27. Other LM3 applications • Involvement on Grass cutting tenders - liaison with Business Link - encouraging awareness with local suppliers - 22 out of 24 EOI local - All contracts awarded to 4 local suppliers • Involvement on Fresh Sandwich tenders - liaison with Business Link - encouraging awareness with local suppliers - 20 out of 21 EOI local - Contract awarded to 1 local supplier

  28. Other LM3 applications • Identify potential on pending tenders - liaise with relevant operational dept - ensure optimum tender packaging and awareness by local SME’s

  29. Northumberland LM3 • Quoted as best practice - Presentation at DEFRA suppliers conference - Presentation at Government Office NELL - Case studies within National SME Concordat - Case study within SBS publication - Case study within OGC publication

  30. LM3 Project Expansion

  31. LM3 Monitoring clause • A new requirement introduced for tender applications to include both a current and projected local spend analysis if the tender is successful

  32. LM3 Monitoring clause • Tenderers should note that completion of Schedule H is for Northumberland County Council’s monitoring purposes only and does not form part of the evaluation criteria for this tender. Your answers to this schedule will not be used to determine the award of this tender.

  33. LM3 Monitoring clause • LM3 Monitoring 1.29 One of Northumberland County Council’s strategic objectives is to measure the effect of our expenditure and to increase the amount of money which the Council spends in the local economy

  34. LM3 Evaluation criteria Continual review to include by end of 2006 within tender process • Evaluation criteria to include LM3 assessment as part of whole-life cost

  35. Potential Benefits 10% Increase in local spend from non local • Supported by our Strategic Statement and Finance Action Plan - utilising LM3 model highlights • Benefit to local economy of £34m per annum • Achieves £9.5m per annum efficiency gain

  36. Northumberland LM3 THANK YOU

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