Cabinet Member – Councillor Menna Jones
To consider a report on the above.
*10.30am – 11.30am
To accept the report and ask the Service to report back on the result of the 'Innovative Procurement - Social Value Procurement Model' pilot, and also collect the data as raised during the meeting, and report back to the committee in a year's time (or when timely).
The Cabinet Member and officers from the Corporate Support Department were welcomed to the meeting.
The report of the Cabinet Member – Corporate Support was presented, following the members' request to receive an update on the progress of the Keeping the Benefit Local project, which was one of the priority projects within the Council Plan.
The Cabinet Member set out the context and the officers provided an outline of the contents of the report.
Members were given an opportunity to ask questions and offer observations.
Individual members submitted the following observations:-
<![if !supportLists]>· <![endif]>Although the summary at the end of the report stated that good progress had been made over the past five years in terms of increasing the percentage of the Council's expenditure that stays local, It was noticed that the percentage had only increased 3% over this period, and that the figure was down compared with four years ago, and with last year. The member understood the difficulties, but questioned the degree of self-appraisal behind this.
<![if !supportLists]>· <![endif]>It would be useful if data could be gathered regarding the number of local companies who had submitted a tender but were unsuccessful, and what feedback had been given to those companies, and then report back to the committee within around a year.
<![if !supportLists]>· <![endif]>It was important that major organisations in the area, such as Cyngor Gwynedd purchased locally in order to help the economy.
<![if !supportLists]>· <![endif]>The Preston Model was vital, but would not work effectively in Gwynedd since it was an urban model.
<![if !supportLists]>· <![endif]>One of the most important things we can do as a Council is explore how we can enable local companies to join forces and work together, and any investment committed to this would be seen not as a cost, but as a social benefit in itself.
<![if !supportLists]>· <![endif]>It was often said that Wales as a whole had very small businesses, and very big businesses, but not many medium-sizes businesses – it was those medium businesses that would create the largest benefit for our communities.
<![if !supportLists]>· <![endif]>We were all disappointed with the results to date, and want to see ways forward.
On a technical note, and referring to the graph titled 'Annual Local Expenditure' on page 19 of the agenda, a member questioned the accuracy of the £43m figure (capital and revenue) for 2017/18 as it was lower than the £56m figure (revenue only). An officer confirmed that the figure was wrong.
In response to the observations and questions from members, the following was noted:-
<![if !supportLists]>· <![endif]>In terms of the degree of self-appraisal, Gwynedd was just one of the few Councils that measured this type of activity in terms of keeping the benefit local. In the presentation at the beginning of the item, there was mention of introducing other measures, and this was in reference to the Well-being of Future Generations Act more than just the local percentage of expenditure. This figure had stayed quite constant over a number of years, and although a 1% change meant £1.5m of expenditure, it was fairly static. It was further noted that we had now reached a threshold and that it was difficult to increase the figure beyond this level because of the fairly strict legal restrictions and barriers we were subject to at present. If this was the case, we were now looking at a slightly different methodology to measure the other benefits of the agreement to Gwynedd, rather than the financial benefits only, and it was a fairly innovative project to look at the other benefits, in terms of employment etc. that could emerge as a result of the agreement.
<![if !supportLists]>· <![endif]>Although the percentage of local expenditure was fairly constant, the total spend on procurement had increased from £97m in 2017/18 to £140m in 2021/22 as a result of inflation and the increasing demand for the Council's services, especially in the social services field.
<![if !supportLists]>· <![endif]>With regard to assisting local suppliers to be able to compete and win contracts, it was acknowledged that capital expenditure was more of a problem than revenue expenditure, but since capital projects were larger projects on the whole, the companies who competed and won those contracts tended to be out-of-county companies. In those instances, the service tried to work with the main contractor to see what sub-contracting opportunities were available, and made every effort to advertise those opportunities, so that local businesses could apply to be part of the supply chain. Even so, some of the barriers, such as lack of desire, expertise and the resource to apply, were true for sub-contracting opportunities as well, and the number of local businesses competing and winning some of those sub-contracts was fewer than we would wish.
<![if !supportLists]>· <![endif]>Contrary to the historical arrangements for social benefits, a social value procurement methodology introduced a scoring element, and companies were presented with a series of measures so they could select what benefits they would deliver, although the Council could also highlight what its priorities were. It was further noted that the measures were based on the objectives of the Well-being Act, and included a spectrum of options such as job creation, the environment, the Welsh language etc.
<![if !supportLists]>· <![endif]>It was believed that this flexibility helped local companies, because a locally-based company was more likely to be able to offer benefits, as those benefits had to be realised within the county, rather than within Wales or Britain. A tender would be evaluated, obviously based on price and the service offered, but between 10% and 20% of the total tender evaluation could also be applied to the local effect the company has.
<![if !supportLists]>· <![endif]>Social enterprises were generally well-placed to compete for tenders and to offer local benefits, not only in terms of their nature and way of working, but also in terms of how we procure and procurement regulations.
<![if !supportLists]>· <![endif]>The Council continued to follow the same procurement regulations since Brexit. New contracting rules were expected to be introduced at the end of 2023, but it was not believed that these would be substantially different to the current ones, with the exception of some technical changes, and we would still be expected to conduct an open competition within Britain perhaps, rather than across Europe as before.
<![if !supportLists]>· <![endif]>Community Councils were expected to follow the same procurement regulations as this Council, but they might not have the required expertise or resources to conduct the same processes as the county councils.
<![if !supportLists]>· <![endif]>Although the Social Value Procurement Model pilot had commenced over a year ago now, there had only been three opportunities to apply this new methodology, and the service was keen to also include a framework measure as part of this. As such, officers felt it was premature to make a full assessment of the methodology at present. Also, the service was working within a national policy void in this regard, and was keen for the Government to catch up and overtake us, so they could lay out a new policy system for us to work within. The service would like the committee to have the opportunity to explore the methodology in detail and scrutinise the results of the pilot before approving any policy change in Gwynedd. We could not specify a clear timetable for this at present. Three pilot studies were not believed to be a sound basis for policy-setting. We needed a much bigger number, but could not confirm exactly how many at present, as this depended on the workloads of the procurement teams and what contracts were suitable to be used for the methodology.
<![if !supportLists]>· <![endif]>Officers were unaware of a scheme by the Council to bulk-buy fuel on behalf of residents to assist them with the costs of heating their homes, but they would enquire with the Energy Manager to see if such a scheme existed, or was proposed.
<![if !supportLists]>· <![endif]>The service was looking closely at the Preston Model, and the social benefits model being developed in Gwynedd was partly based on that model. Evidently, Preston had the advantage of operating within a slightly different legal system to Wales, and it was probable that a higher number of suppliers in that area had the capacity to supply.
<![if !supportLists]>· <![endif]>Where possible, contracts should be split up into different lots to make it easier for local suppliers to compete on a more even playing field than if it were a single large contract.
<![if !supportLists]>· <![endif]>Although we believed that managing to remain static constituted some degree of success in the current circumstances, we did not wish to limit our local expenditure ambition to 60%, and we must continue to explore all sorts of ways of facilitating small companies all over the county.
<![if !supportLists]>· <![endif]>The report in question talked about procurement arrangements specifically, but there was an effort by the whole Council to support local businesses, particularly so in the field of economy, and that the means by which small companies collaborate and form a system where they could compete jointly for tenders was something that the Economy Department was studying specifically.
<![if !supportLists]>· <![endif]>The service needed to work with other Council departments to identify opportunities to buy locally, and also engage with companies to notify them of the opportunities available.
<![if !supportLists]>· <![endif]>The analysis of the types of businesses that exist within the county, referred to under 'Next Steps' in the report, had been completed and was available for the members.
<![if !supportLists]>· <![endif]>The service had looked at forming consortia as part of Meet the Buyer events - guidelines had been drawn up on how to do this, and what the considerations were. However, we saw that businesses were not that keen overall to form consortia, due to the element of competition between them.
RESOLVED to accept the report and ask the Service to report back on the result of the 'Innovative Procurement – Social Value Procurement Model' pilot, and also collect the data as raised during the meeting, and to report back to the committee in a year's time (or when timely).