Liverpool Council’s procurement transformation to become ‘best in class’

A two-year plan to transform the way Liverpool City Council buys services in order to deliver better value for money for residents is set to be implemented.

Earlier this year, the council commissioned specialist external consultancy 4C Associates to carry out a review of the existing systems and processes across the organisation.

This was in response to the Best Value Inspection in 2021, and subsequent appointment of Commissioners.

The review covered £550 million of spend and all aspects of procurement activity across the organisation, from the initial stages of commissioning, through to tendering, contract management and payment together with governance, decision-making and general internal processes.

The review identified a wide-ranging number of improvement opportunities to tackle challenges caused by the current operating model, which is described as “fragmented, overly complex and poorly understood”.

It will see an enhanced focus on the delivery of overall value, including financial, social and environmental impact and return on investment, along with aligning the procurement strategy and contract management with the priorities of the council and the City Plan. 

The International Association for Contract and Commercial Management estimates that poor procurement and contract management costs companies between four and nine per cent in lost revenue – meaning the changes have the potential to deliver significant financial benefits.

As part of Mayor Joanne Anderson’s commitment to delivering social value for residents and communities, suppliers will be monitored and held to account on their social value commitments through the inclusion of specific measures of success within contracts.

A number of short term actions will start to be implemented immediately to deliver rapid and tangible improvement. Longer-term opportunities including a new target operating model will be presented to Cabinet in Q1 23/24 following the development of a change programme.

The changes form part of an overall Finance Improvement Plan, which is already under way.

The findings will be considered by the Finance and Resources Select Committee on Tuesday 18 October, ahead of a Cabinet meeting on Friday 21 October, and further scrutiny at Audit Committee on Wednesday 26 October.

Assistant Mayor with responsibility for procurement, Cllr Frazer Lake, 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 City 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 benefit for local residents and communities.

“It is a key part of the Mayor’s triple lock to make sure every decision we make is seen through the prism of the impact it has on people, planet and equality.”

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