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Collaborative Procurement Board (CPB) Date of meeting: 30 November 2016 Title of paper: GLA Group – Wider Collaboration To be presented by: Andrew Mayes, Lead Commercial Manager Classification: Public 1 Executive Summary 1.1 This report is a continuation of the discussions at the GLA Collaborative Board on 28 September 2016 concerning the potential for wider collaboration across the GLA Group. This report highlights the objectives and challenges to this approach and recommends a dedicated team is implemented to construct a formal proposal. 2 Recommendation 2.1 That the Board note the report and agree that a dedicated team is required to examine opportunities to deliver wider collaboration across the GLA Group. 3 Introduction and Background 3.1 This report is an extension of the discussion at the meeting held on 28 September 2016. The position is that while the collaborative procurement agenda has delivered benefit to the GLA Group, this work has plateaued and there are other activities where working together more closely could deliver beneficial change. In essence this could be achieved in two ways: Expanding the remit of the existing CPB to look at more spend categories than those covered to date. This will move the activity away from simple common goods & services and will focus on more complex procurement. These tend to lack standardisation and therefore require significant business change to implement effectively. Setting up a wider Collaborative Agenda within the GLA Group to look at opportunities outside the sphere of procurement 4 Objectives & Expected Outcomes 4.1 It is proposed to investigate developing a collaborative body for the GLA Group [with mandatory attendance and engagement] to seek out opportunities to reduce total costs by working together. Initial objectives would be: To initiate, oversee and co-ordinate activities between members of the GLA Group to enable the delivery of the Mayor’s priorities (excluding specific activities managed through existing arrangements). To enable joint working and mutual support, so that each functional body and the Group overall can work as effectively and efficiently as possible to best serve Londoners. To establish sub-groups to lead and report on collaborative activities in particular areas Collaborative Procurement Board 4.2 The purpose of the existing Collaborative Procurement Board (CPB) is to: Oversee the effective procurement of common and low complexity category contracts on behalf of the GLA Functional Bodies. Provide governance to support the effective operation of the Collaborative Procurement Team (CPT) hosted by TfL on behalf of the wider GLA. Hold strategic responsibility for the oversight of common and low complexity spend by all parties. Lead the exploration of an increased scope to more complex procurement categories, to maximise the potential benefits to be delivered by the CPT. To review and approve / challenge commercial sourcing strategies and award recommendations. 4.3 The value added by these activities is significant [net £6.5m to date] but is limited as there is only a limited number of simple spend categories where beneficial change can be made by commercial staff acting alone. If the GLA has a wider ambition to collaborate, wider engagement from technical and sponsoring teams will be required to implement change. For example, replacing utility, stationery or document management suppliers requires very little support from business units. Completely re-engineering the supply chain and supporting process for IT or back office shared services are more about business change activities than a pure re-contracting exercise. 4.4 If the GLA Group has the ambition to really challenge the status quo for bought in services, or indeed to change the sourcing approach to those that might be considered to be contentious, these are activities that go beyond the current capability and remit of the CPB. Policy 4.5 There are clear benefits in using the experience of the commercial community across the GLA Group to develop and implement procurement policy. The recent work on Responsible Procurement is an example of sharing best practice and it would be sensible to continue this work under a more formal structure. It is suggested that a [RP working group] sits under a reconstituted CPB to ensure that policy objectives are addressed and the appropriate actions are implemented. Wider collaboration 4.6 4.7 5 It has been suggested that in addition to wider and more complex cooperation on procurement, the GLA might want to consider collaboration in the following areas: Information and communications technology Estates and facilities Commercial trading Shared services Equality, Diversity and Inclusion Initial discussions have started in these category areas; however there is currently no formal process to work up opportunities and quantify potential benefits. The development of a Collaboration Board has therefore been suggested. This would need to have a very different role, remit and composition to the CPB as the decisions that could potentially flow from a willingness to collaborate more fully would be significantly more wideranging than a simple agreement to buy common goods and services together. Using a couple of examples to illustrate the point, a systemic decision to collaborate could mean: Redesigned IT organisations and supporting supply chain for the GLA Group Multiple occupancy buildings within a corporate Landlord model across the entire GLA estate, irrespective of owning organisation, supported by a pay for use office / charging model A common Commercial Development capability designed to leverage all GLA’s opportunities in advertising, data networks, retail, car parking and any other relevant commercial opportunities, aimed at delivering the maximum possible commercial value. All shared services co-located on common platforms outside expensive areas of London, or indeed the UK, providing back office services to the GLA Group or other public sector bodies. Greater collaboration with other public sector bodies. E.g. London Boroughs or other members of the wider GLA family. Equality comments 5.1 None at present. 6 Key Risks and Issues 6.1 There are two broad groups of issues that would need to be addressed in repositioning the collaborative agenda across the GLA Group: Collaborative Procurement Board The remit of this group is set out in the Working Arrangement Document (WAD) and the Joint Arrangement Agreement (JAA) which together specify those spend categories that will be addressed on a collaborative basis. The logic for this approach is to avoid governance issues. Each member of the GLA Group has its own approval processes and procuring jointly potentially cuts across these independent management structures. The work to establish the CPB structure is complete and it would be straight forward from a procurement perspective to expand the remit to a wider set of categories. As mentioned above the CPB has addressed most of the simple common goods and services. The next sets of categories are more complex, potentially offer higher reward, but absolutely require additional resources to implement change. Some of these would be commercial, but operational, technical or finance colleagues could also be required. This brings three issues: i. Agreement of a revised CPB funding model for commercial staff in the context of tightening budgets and resource reductions in some functional bodies. There is already some debate about the relative merits of collaboration and this should be closed out as part of a funding review aligned to a wider remit. Benefits must exceed costs significantly. ii. Agreement to deploy non-commercial resources would require the support of a range of other stakeholders, depending up on the category of spend. For example IT would need CIO / CTO and recruitment could require input from the HR Director’s team. In the bigger functional bodies these resources do not respond to the Finance or Commercial Directorates and therefore need a wider stakeholder management activity. This would need support at executive level and a very clear commitment to identify benefits and drive through collaboration. iii. The collaborative work to date already has some examples of bodies opting out of arrangements for their own domestic reasons. The more complex the spend category, the more work and cost is required to agree a commercial solution. It is also true that the solution for a really complicated spend category is open to more interpretation. It is therefore imperative that a clear remit is agreed prior to any work commencing and that compliance to any resulting deal is driven across the functional bodies to avoid prejudicing the business case. Wider Collaboration For the GLA Group to collaborate on wider activities outside the procurement agenda will require a significant broadening of the remit of the board, the attendees and a very different approach to managing in scope activities. Testing with non-commercial colleagues in property and IT, there are examples of sharing best practice, market intelligence and informal provision of services. In no way are these activities formally agreed, clearly set out and bought into at executive level. If the GLA Group wishes to formally collaborate across non procurement activities it would need agreement at executive level across the functional bodies that there was merit in the approach. Some of the potential new areas for collaboration, for example property and IM could require decisions that need endorsement at Board level and choreographing this across the GLA Group would require significant effort to develop appropriate business cases. 7 Financial comments 7.1 None at present. 8 Legal Comments 8.1 None at present. 9 Next steps 9.1 Experience from the CPB confirms that the GLA Group can collaborate in areas of common interest and opportunity. This is has not been without issues, however generally the case is proven. Collaborating on a wider scale would potentially cut across more complex relationships and require more, and more senior, resource to mange implementation and delivery. In order for this to be well considered and implemented a dedicated team is required to work up proposals.