A two year plan has been drawn up to reshape the way Liverpool Council manages its contracts following a wide ranging external assessment.
The damning Caller Report and appointment of commissioners in 2021 led to an intense focus being placed on how the local authority manages procurement. Further heat engulfed the authority following the expensive energy contract debacle and a failure to renew more than a dozen “high level” contracts.
As a result, Liverpool Council appointed 4C Associates to embark on a six week period of work assessing more than £550m of spend to help shape its procurement improvement plan. The plan makes almost 50 recommendations of “improvement opportunities” the council can take to deliver best value in its contract sourcing.
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The six week tender by the procurement specialists cost Liverpool Council an additional £164,000. Their investigation found that the authority’s current system is “fragmented, overly complex and poorly understood.”
It added: “The interface between the strategic planning of service areas and the procurement process is weak, resulting in lost opportunities to drive value” and there is “insufficient time and resources” invested in the council’s procurement cycle.
In addition, the report found “there is little evidence of proactive demand management activities in the pre-procurement stages. As a result, the current focus of procurement tends to be on compliance and price, both of which are understandable given Liverpool Council’s challenges since 2020.”
After conducting 30 interviews and reviewing 50 documents, the external contractors determined how a lack of clarity exists within the wider organisation on the ownership of contract management and as a result, there is “increased financial and commercial risk from those contracts that are ineffectually managed.” In a bid to turn fortunes around, 4C advised Liverpool Council to focus on five different themes.
These include driving improvements in planning and assurance, raising the bar on contract management, strengthening governance, accountability and decision making, releasing the full potential of social value and increasing commercial capability and capacity. Of the 49 opportunities identified, 23 opportunities have been identified as short-term improvement actions which should be commenced immediately, while the remaining 26 are identified as longer-term objectives which will be subject to future cabinet approval upon development of a programme of change for procurement.
The report has been considered by the commissioners who said improving commissioning and procurement processes forms a vital part of the improvement plans the council has set. The government appointed officials encouraged the commissioning of the independent diagnostic review and support its findings and recommendations.
They said it was “essential that the city council makes rapid progress on implementing the review’s recommendations.” An external contractor was sought as Liverpool Council did not have the capacity to undertake the work itself and wished to receive an independent assessment.
Cllr Frazer Lake, assistant mayor with responsibility for procurement, said: “This is a key part of our improvement journey to tackling the issues raised in the Best Value Inspection. At a time when we face significant financial challenges, it is more important than ever that we are making the most of every pound that we spend.
“Liverpool Council is one of the biggest organisations in the city, spending large amounts of money on contracts and services. We have the power to shape that spending in a way that delivers huge benefits for local residents and communities.”
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