Y Pwyllgor Cyfrifon Cyhoeddus - Y Bumed Senedd
Public Accounts Committee - Fifth Senedd05/03/2018
Aelodau'r Pwyllgor a oedd yn bresennol
Committee Members in Attendance
|Adam Price AM|
|Mohammad Asghar AM|
|Neil Hamilton AM|
|Nick Ramsay AM||Cadeirydd y Pwyllgor|
|Rhianon Passmore AM|
|Vikki Howells AM|
Y rhai eraill a oedd yn bresennol
Others in Attendance
|Andrew Slade||Llywodraeth Cymru|
|Dave Thomas||Swyddfa Archwilio Cymru|
|Wales Audit Office|
|Huw Vaughan Thomas||Archwilydd Cyffredinol Cymru|
|Auditor General for Wales|
|Jonathan Hopkins||Llywodraeth Cymru|
|Matthew Mortlock||Swyddfa Archwilio Cymru|
|Wales Audit Office|
|Sue Moffatt||Llywodraeth Cymru|
Swyddogion y Senedd a oedd yn bresennol
Senedd Officials in Attendance
|Claire Griffiths||Dirprwy Glerc|
|Meriel Singleton||Ail Glerc|
Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad.
The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript.
Dechreuodd y cyfarfod am 14:00.
The meeting began at 14:00.
Good afternoon. I welcome Members and our witnesses to this afternoon's Public Accounts Committee meeting. Headsets are available in the room for translation and sound amplification. Please ensure that all electronic devices are on silent. In an emergency, follow directions from the ushers. We have received one apology today, from Lee Waters. He can't make it. Also, Neil Hamilton is delayed, as is Rhianon Passmore, but we may be seeing them later.
Do Members have any declarations of interest that they'd like to make at this point? No.
Item 3 and papers to note. First of all, the minutes from the meeting held on 26 February. Happy to agree those?
Secondly, we've received two pieces of additional information, first of all from the future generations commissioner—that's pack pages 65 to 130. She agreed to send a copy of the Portland metro procurement and her future generations framework, which, although developed for infrastructure programmes, could provide a useful basis for revisions to the procurement policy statement and the community benefits toolkit. So, can we note that response?
And also can we note the second additional information from Caerphilly County Borough Council on 5 February? That is details of services that Caerphilly CBC have purchased through the Crown Commercial Service framework. Good.
Can I welcome our witnesses to today's meeting? Thank you for being with us here today. Would you like to give your name and position and organisation for our Record of Proceedings? Who wants to start?
Sue Moffat, commercial director Welsh Government and director of National Procurement Service.
Andrew Slade, director general, economy, skills and natural resources.
Jonathan Hopkins, deputy director responsible for Value Wales and National Procurement Service.
Great. Thanks for being with us. We've got a number of questions. I'll kick off with the first. What practical progress have you made with the review of the National Procurement Service and Value Wales since the Cabinet Secretary's statement last September, and is the review on course to conclude by June as was originally suggested?
Thank you, Chair. If I may just begin by saying that we very much welcome the auditor general's two reports and indeed the committee's inquiry, because the procurement landscape has changed and is changing. Brexit brings a new dimension to the work that we're doing, where we are in terms of the age of austerity and the pressures on public spending, and then, more generally, how we develop best value in the wider societal sense from our public procurement is very much to the fore at the moment, and that was behind the Cabinet Secretary's desire to have a review, and therefore all of this work comes together at a very important and helpful time for us.
The review is under way. It has four key strands of activity: one looking at baseline data, so that we know as we move forward whether we are succeeding in what we're building from; one looking at a new service model, a future service operating model; one strand looking at governance; and another strand looking at the financial model that will underpin this work in the future. The plan is that all those work streams will come together before the summer. The Cabinet Secretary has said that he wants to be in a position to report on the work by September, when the Assembly returns. The one rider I would put on all of that is that the Cabinet Secretary for Finance is very clear that this should be a review that is driven by input and feedback from stakeholders, so we want to go at a pace that will allow us to bring stakeholder input firmly into the process. But that's the anticipation: by the summer, the work will be done and the Cabinet Secretary for Finance will be in a position to report back in September.
Report back in September, as he originally said. Why has the Welsh Government decided to make changes to its senior management arrangements for the duration of the review, and what impact has this had on service delivery?
I don't think it's had a particular impact necessarily. What we've faced as an organisation not least is the challenge of Brexit and making sure that we are plugged into what's happening at a Whitehall level in relation to work on exiting the European Union. In addition, we've had quite a lot to contend with more widely on commercial arrangements, including, latterly, work on Carillion and some of the other companies that you'll be aware of. Sue, as commercial director, is supporting me on all of that work, in particular leading on Brexit. We've got arrangements in place while the review is ongoing, which allows the work to continue, and Jonathan is driving that forward, but this is really a set of arrangements to underpin what's going on through the review process, and then we will see what's appropriate beyond that.
The future generations commissioner has said that she feels that the Welsh Government has lost impetus on this piece of work because of internal wranglings. How do you react to her suggestion?
Well, I saw that comment in her evidence and I was hoping to have the opportunity to talk that through with her last week. We were due to have a meeting, but it got cancelled—or postponed, anyway—because of the bad weather. I think it's fair to say, as I've just mentioned, we've got a lot going on in respect of Brexit, in respect of the review, in respect of following up quite a lot of other things that are happening in the wider world, and that comes on top of pushing forward the 'Prosperity for All' national strategy and, within that, the economic action plan. Procurement features very heavily within the economic action plan. So, I'm not completely sure what was at the back of the future generations commissioner's mind, and I will explore that with her. But, as far as I'm concerned, we're getting on with the review and, meanwhile, the work is being led, in respect of Value Wales and the National Procurement Service, by Jonathan, and in respect of the wider commercial work by Sue.
The evidence we heard last month suggested that there was a lack of awareness about the focus of the review. How would you respond to that suggestion? Do you think that the review could be more focused?
I'm not sure about the focus of the review. I think it is fair to say that we've got some work still to do in respect of making sure that the stakeholders are fully au fait with what we're doing and the way that the review is being governed. The first meeting of the stakeholder review group took place last month, and that certainly got the ball rolling. We have written out to stakeholders, but I think there probably is a bit more that we can do in respect of communications and engagement. We will use the material that comes from this inquiry, as indeed we're using material provided in the auditor general's reports, as part of the stakeholder feedback mechanism to inform the review, but I think there probably is more that we can do around communication. The stakeholder review group, which is being led by Andrew Falvey, who is commercial director at the DVLA—I think that's right, Sue, isn't it?—will meet at least monthly through the period of the review.
But you're confident that the stakeholders who need to be engaged are engaged in the process.
I think, probably six weeks ago, that might not have been the case. I'm much more confident that that's the case now.
Okay, thanks. Mohammad Asghar.
Thank you very much indeed, and thank you, Andrew, for giving us—[Inaudible.]—from Brexit to the review and consultation and all the rest of it. Before I ask my question, further to Nick's question, what is being done to ensure that the stakeholders are being provided clarity—I mean, this whole procedure needs clarity—on the purpose of the review and are able to make their views known on the changes under discussion at the moment?
I think it's a very fair point that you make, Mr Asghar. I think we are in the process of learning. The review work, I think, will show that there is more that we can do generally around communications and engagement, both in respect of Welsh Government's work leading wider public sector procurement activity and in the specific work of the National Procurement Service. I think that's generally a lesson learned, and it comes from the auditor general's reports. Right now, we're doing a lot with stakeholders, including through the stakeholder review group, in respect of the review, to explain what's going on, the terms of reference, the membership of the group, and I'd be very happy to write to the committee, if you would find that helpful, with the terms of reference and who is sitting on the review group, if that would assist you. But I think we're probably in a stronger position now, even a few weeks on from when you were receiving or taking evidence from other colleagues at an earlier stage in your inquiry.
Thank you. How will you be looking to ensure that any revised national governance arrangements provide effective leadership for wider procurement policy and take account of the lessons learned from the previous arrangements?
I think there are two elements, in a sense, in response to that. So, one is around what is the national leadership function in respect of public procurement. That, traditionally, has been the role of Value Wales, and that's certainly a part of the review and how we explain how we bring stakeholders together, including relevant public sector purchasers, but also others—businesses and communities—that have an interest in this work together to drive forward leadership for Wales as a whole. And then there's something very specific, I think, around the governance arrangements for whatever comes out of the review in respect of the National Procurement Service, which is hosted by Welsh Government but on behalf of the wider public sector. In both cases, I think, picking up on work that the auditor general brought to the fore in his reports, there's more that can be done to explain or give clarity to the governance arrangements and make those more visible and more transparent. And I think, along with stakeholder engagement and communication, that is another lesson that we have learned from the last few years.
Thank you. How would you sum up the overall impact of the current procurement policy statement and its 2012 predecessor?
The public procurement policy statement has, I think, driven a lot of behaviour in a very positive way across Wales, going back, as you say, to 2012 and then the revision in 2015. I noted, from some of the evidence that you'd had, that one or two colleagues out in the wider procurement business felt that the impact of the 2015 statement was slightly less strong than that of the original statement, and, in some senses, that's not surprising. In 2012, we brought everything together into the 10 key principles.
The other thing to say is that, as I mentioned earlier, the landscape is changing and the impetus or the way that we measure effectiveness in respect of public procurement is changing. In the period, I guess, running up from 2010 to 2012, we were very focused on efficiency savings and cost savings. That is undoubtedly still the case in an age of austerity. But we also have to look more widely at the societal value from how we use public money in the goods and services that we purchase. My expectation is that there'll be a new public policy statement that arises from the review work. I wouldn't wish to prejudge the outcome of the review, but that would be my expectation.
When is the Welsh Government planning to upgrade the procurement policy statement, what key changes need to be made, and how will you involve stakeholders in these developments?
Well, stakeholders definitely do need to be very heavily involved, because this is the set of principles on which all of the public procurement across Wales should be based, and I think, again, that will come out as part of the stakeholder group within the review, as part of their job to help us shape that. It'll be subject to a much wider consultation, I'm sure. But it needs to take into account Brexit, it needs to take into account the Government's ambitions around 'Prosperity for All: the national strategy' and, within that, the economic action plan. And it needs to take into account the fact that we're still under very significant public spending pressures.
And finally, how are the voids of the procurement board and the NPS board's leadership being filled while decisions are made on future arrangements?
We looked at this quite hard. We have the national procurement board, which looks at procurement across the public service and then the NPS board, which is the governing body for the National Procurement Service. I remember discussions with Sue and Jonathan and others about the degree of overlap between membership on the different boards, and many of the individuals who will sit on those boards will be, as you'll see when I write to you, party to the review group as well.
So, I think, two things here. One, we have a strong stakeholder representation and a representation from the users of the services into the review process, and then, secondly, the delivery group within the NPS that drives a lot of the day-to-day work of the National Procurement Service and oversees that and brings local authorities and other public sector purchasers together, which is led by Jonathan. That is continuing throughout the process of the review, so we haven't stood that body down. We're carrying on using that group to inform and drive our procurement activity.
It has been stated to the committee that,
'one of the consequences of the introduction of the National Procurement Service has been that some of the other support that was available has kind of been allowed to dwindle a bit, diminish...particularly around policy.'
What is the Welsh Government doing to ensure that the structural changes in public procurement do not diminish the support provided to local authorities in the short term?
There are probably a number of ways that I could come at that question. I think there is, from the feedback that you've had not just in respect of the point you made, but, more generally, from reading some of the transcripts and watching one or two of the sessions back, a slight sense of hiatus, which, probably, people feel is associated with the review. I think it is true to say that some of the things that we might have driven forward in this particular time period we're now waiting for the review to complete and to inform what we do next. It would be a bit odd in many ways to prejudge some of that activity. We are trying to continue to provide support to local authorities and others through the work of the National Procurement Service and through the work of Value Wales, whether that's in respect of capacity and capability or in respect of training more generally, or in respect of support of tools and e-commerce-type arrangements.
The other thing to say is we have put out a number of procurement advice notes along the way over this period in respect of Better Jobs Closer to Home, I think in respect of e-procurement, in respect of the code of practice on ethical employment and supply chains, and a number of others. Sue and Jonathan might wish to come in there, but we're carrying on doing that work. That work hasn't gone away. Other areas that we've put advice out on—?
There has been advice out on the new single procurement document that, despite the results of the referendum, still has to be implemented before the end of 2018 as well. So, anything that's legislative, driven by EU regulations in relation to procurement, we still put policy advice notes out on those.
We put one out on steel a couple of months back, and we're currently working on one at the moment, which is in relation to the SQuID, the questionnaire that's used in the tendering process. The EU regulations require that to be changed, so we're working on that at the moment. We will be putting something out that covers that shortly.
Thank you, Chair. We know the Welsh Government is planning a programme for procurement to provide better support for public bodies' procurement activities. What are the priorities, from the Welsh Government's perspective, with regard to that? Also, could you tell us a little bit more about the interim work outlined in your paper, specifically on decarbonisation, and also on the Better Jobs front, which you mentioned just a minute ago, Mr Slade, and the circular economy pilot as well, please?
I'll bring colleagues in in a minute, if I may, in respect of the different pilot exercises and so on. They might be able to give you a bit more detail.
We've got the opportunity through a new programme for procurement to drive a whole range of different work, including in respect of capacity and capability, e-procurement, more work to facilitate SMEs—small and medium-sized enterprises—engaging in procurement activity, making sure that we've got proper data underpinning all this and we're capturing spend information properly, and so on. A lot of work was done initially on the programme in the first half of last year, 2017—I think that's right, isn't it, Sue? I know that the procurement board talked through some of that from a wider stakeholder perspective. Some of that work is—I wouldn't say necessarily that it's in abeyance, but again we're waiting to see what happens with the review, looking at the wider landscape before we drive much more of that further forward. But the expectation as part of 'Prosperity for All' and indeed the Government's manifesto, the 'Taking Wales Forward' document, was that we would have a five-year programme for procurement activity and it will pick up from the review process.
In respect of the pilots, we've done quite a lot on decarbonisation, for example. I'm the senior responsible owner for the decarbonisation programme within Welsh Government now. We have a ministerial taskforce led by the Cabinet Secretary for Energy, Planning and Rural Affairs, Lesley Griffiths, and that involves a number of other Ministers. The ministerial taskforce took a paper in January on decarbonisation, in particular looking at the lessons learned by Natural Resources Wales, who found that a lot of their carbon footprint—over half, actually—came from the goods and the services that they were procuring. We're looking at the lessons learned by NRW in pursuing that information, and a paper is I think due to come back to the ministerial taskforce in April. So, that work is progressing.
On Better Jobs Closer to Home—Jonathan, can you talk a bit about that?
Better Jobs Closer to Home is an employability initiative for which there are commercial interventions. It was originally proposed by the Wales TUC and they made some suggestions in there as to what they would like to see. There are currently four pilots ongoing at the moment, and they are based on applying commercial interventions to situations where the public sector buys things for employability reasons.
So, the first one, the first pilot, is to set up an organisation, effectively, to manufacture garments that are bought by the Welsh public sector—so, yellow jackets and things like that. Because, up until now, there isn't anything manufactured in Wales; it's bought through distributors. So, the intention is to actually have that organisation up and running by this summer to actually manufacture things that will be fed into NPS arrangements.
The second and fourth pilots are based on actually increasing throughput into existing organisations. The first of those is signs. Obviously, there's going to be a lot of signs bought over the next couple of years by the Welsh public sector, so the pilot is focusing on getting that throughput through this organisation. The fourth pilot is based on shredded paper. There is an organisation that actually shreds paper that's waste from public sector organisations, so the pilot is aimed at increasing the volume that actually goes through that particular organisation.
Pilot three—the fourth one I'm describing, but pilot three—is based on taking waste paint, treating it and making it usable again, and that would then actually be used by public sector organisations in Wales. So, that's the focus of Better Jobs.
And these are aligned with the Valleys taskforce; these are all located in the Heads of the Valleys area, and we have different timing outcomes depending on the different needs of the project. So, one of them, for example, requires a particular site, I think, to become available, and we're working on that at the moment.
Thank you. Obviously, all of those pilots have the potential to create jobs, but in terms of the focus of our inquiry here as well, do they have the potential to really drive value through the procurement process?
Excellent. And what about the circular economy pilots as well?
Public Health Wales, when they moved into their new premises in Cardiff, they equipped that entirely with remanufactured furniture. So, that was furniture taken from all of their other premises across Wales, and it was remanufactured by a social enterprise and completely kitted out. If you go in there, you wouldn't tell that it was remanufactured. The carpets have got squares from the various carpets across it; it's quite well patterned. So, effectively, the pilot that we're working on is to see two things, really. First of all, to see what we can do in terms of furniture across the Welsh public sector. So, a group has been set up to scope out what furniture is in existence at the moment across the public sector. The next phase will be to look at the demand, and then we'll see if we can replicate what Public Health Wales actually did. The second phase will be, if that then works, to look at the spend data and to identify other opportunities for, rather than buying new things, taking what already exists, remanufacturing that and reusing that within the Welsh public sector.
Very interesting. Thank you very much. We've heard that local authorities would like more in the way of practical support from the Welsh Government, for example in contract management. How will you ensure that the programme for procurement includes the practical support that public bodies want?
We've separately picked up on that from local authorities in particular, and a number of others. I guess there's a balance to be struck because we're all subject to resource pressures, so it's making sure that we make the best use of expertise and the possibility of practical support across everybody who's involved in public procurement. One of the points that Sue regularly made through the Preparing for the Future programme that we did within Welsh Government—an organisational development programme—was that there was a vast amount of learning that we should be drawing from across the public sector. I think that's, again, something that we want to pick up in the context of the review: what exactly is it that authorities need, how are we going to be best placed to provide that moving forward, is it a role for Welsh Government through the Value Wales function, or are there others who could be brought in to help with that type of activity.
Thank you. Moving to the auditor general's report, then, that tells us that Welsh Government didn't carry through its previous plans for a procurement development service because of cost constraints. What assurance can you give us that the programme for procurement will be adequately resourced?
Sorry, I'm just writing that down. The procurement development—?
Yes. The procurement development service—the plans for that weren't carried through because of cost constraints.
I'm just wondering whether this was the successor—forgive me—the successor to Home Grown Talent.
It was, yes.
It was a business case that went to the Welsh European Funding Office for European structural funding to take forward further learning and development across procurement in Wales, funded with EU funding, and the business case got rejected.
So, in light of that then, can you give us an assurance that the programme for procurement will be adequately resourced?
[Laughter.] Sorry, I'm laughing because I'm conscious that this will get immediately played back to the Cabinet Secretary for Finance who will want to know what commitments I've given in respect of funding. The funding of public procurement work and building capacity and capability is a core part of the review. Again, I wouldn't wish to prejudge the outcome of that. I think one of the reasons why the Cabinet Secretary for Finance was keen that we should know the outcome of the review work by the summer, or into the early autumn, was to take account of it in the context of the next rounds of budget planning. The resources need to be there to make the thing work effectively. On the other hand, we are up against a very tight public sector spending environment, and that's what we're operating within. So, I hesitate to give firm commitments, but we recognise that this is something that needs to be addressed through the process of the review.
Okay. Thank you. Cardiff council suggested to us that the introduction of the National Procurement Service had seen some of the Welsh Government's policy support dwindle. Do you think that that's a fair assessment?
I think, from what I know about this area—and bearing in mind that I've been in the job nine weeks—but in terms of where we've got to, I can see why people might form that view, partly because of the way that we're now driving forward with the review, so we're waiting to see what the outcome of that will be, and also because, I suppose, we haven't gone out with a new public policy statement, again because that's fed into the review work. But I'm not sure I completely accept the notion that we weren't out there driving the policy agenda. The work that Sue led on the code of practice in relation to employment and supply chains was groundbreaking. I don't think anybody else in the rest of the—well, certainly no-one in the UK or the EU is doing it; I'm not aware of any comparators around the rest of the world. We've had a number of other countries quite interested in what we're doing, so I think we are still, I would like to think, at least helping drive, if not actually driving, the policy agenda on procurement more generally.
And from a resource perspective, the NPS staff are completely separate to the Value Wales staff. There is no overlap in the work that they do.
Yes, that's a good point in respect of functions.
Okay. Thank you. One final question from me then. We took some evidence from Caerphilly council, who told us that the WLGA are identifying a strategy and sourcing plan for Wales. Has the Welsh Government discussed with the WLGA the work it's undertaking, and how it could fit in with your own plans?
I saw that reference in one of the transcripts from your earlier session. I'll ask colleagues in a moment if they've had any direct contact from the WLGA on that. The WLGA haven't raised that specifically with me. I would welcome the fact that they're taking that work forward, and I will be meeting the WLGA soon and I'll bring that up with them at that point. I don't know if Jonathan—.
We haven't had a formal discussion with them on it, but we have had a preliminary discussion around the context. This was whilst we were pulling together the programme for procurement last year. What they described to us was that they were looking at—rather than looking at everything on an all-Wales basis, they were looking at it on the basis that some things are better bought all-Wales, some things are better bought regionally and some things are better bought within the authority. So, they shared that with us, that thinking, and then we agreed to pursue that with them going forward as we develop the programme. But that will now feed into the review.
So, you certainly think there's room for collaborative working around that.
I've had a number of conversations with the head of procurement at Caerphilly and shared with her a model for blueprinting how you build a regional model for collaboration as well.
Okay. Thank you.
Thanks, Vikki. Adam Price.
Prynhawn da, good afternoon. Conwy council in their oral evidence to us gave an assessment of the NPS that, if not quite damning, was certainly fairly sobering reading. They said that it wasn't ready to be launched when it was, that there clearly wasn't a plan of exactly how it was meant to work effectively, and that it was very, very reliant on the people and the organisations it was meant to serve. Do you think that's a fair assessment?
In headline terms, I think it's probably fair to say that the NPS got going slightly slower than was perhaps hoped for at the outset. But I think in terms of uptake now, just in the last year or so, we've seen more than a 50 per cent uptake in use of the frameworks. The level of spend is up towards the £240 million to £250 million mark. We are increasingly seeing people using the frameworks. There was a period, I think, and I'll bring Sue in in a moment, because she lived through all of this, where we were migrating frameworks across from the old arrangements to the new ones while the team was getting staffed up and so on. So, although the inception of the NPS was in late 2013, in practice your first full operational year would have been early 2015-16—so, sort of the spring or the beginning of 2015 onwards. And we always said at the outset that we would look to review NPS after three years, so that's very timely in terms of where the finance Secretary wants the review to go, and indeed your own work as a committee. So, I don't think I would completely accept that. But I think the business case made a number of assumptions at the beginning of the process. Some of that was brought out in the auditor general's report. There was a level of expectation about what could be delivered, and as against a pretty tight levy or supplier rebate, and these are all lessons that we've learned through the process and most definitely informed the review. Do you want to—?
Yes. When I joined in September 2013, there were 10 staff in post from a headcount of 42 that was proposed. So, pretty much the first year was spent recruiting, building staff, putting in place processes and systems, none of which had been considered in the business case. Then also one thing I was really conscious of, if you look at other public buying organisations such as Crown Commercial Service, YPO, ESPO—they don't ask the customers what they want, they just do a framework and put it out there. So, the concept of having a delivery group made up of stakeholders was about the stakeholders directing the programme of work for NPS in a much more consultative manner.
I would personally disagree with the Conwy statement in terms of the dependency on our customers. We've had five local authority representatives since the delivery group was created. The membership has changed over time, but there was also a desire from stakeholders to be involved in the category forums that developed the specifications, because the users are the ones that have to say we've got the framework right. They have to be useable. Also, they wanted to take part in the evaluations as well. Part of it is about building trust and confidence in the work that you're doing, because they've still got to satisfy the internal governance around the contracts and frameworks they're using. So, in part, I would agree in terms of a resourcing process, hitting the floor running, the infrastructure wasn't there. But on the dependency on our customer base, that's been driven by the customers wanting to engage and having a desire to oversee the work that we do.
So, the need for this wider consultative model was part of the reason for, you'd accept, a lower rate of growth than was originally anticipated.
I think so. I think the auditor general's brought that out in his report.
That is slightly at odds with what you've just said, though, in terms of this inclusive stakeholder-based consultative approach. It slightly—well, it directly contradicted, really, the evidence that Cardiff council gave. They said directly in terms—that the NPS had a fairly adversarial approach to working. How would you respond to that, because that does directly contradict the point that you've just made?
I was going to say, I'll kick off and then Sue can come in as well, I think how organisations come at the NPS in large part is informed by how they already went about their procurement services and their approach to procurement more generally. At the end of the day, we're not in the business of compelling anybody to work in a particular way. The approach has been to try and add value for the public sector and through the public service as a whole. We have a number of partners who obviously welcome the approach being taken by the NPS and that's evidenced by the way that the framework uptake has increased and the amount of money going through the frameworks as well. Not everybody has wanted to adopt the approach taken by NPS, and, I dare say, in places NPS has been challenging. I don't know if you want to add to that.
I can recognise the Cardiff comment in that Cardiff were the first local authority who put an opt-out business case into the National Procurement Service board for building materials, and it was the first test of whether the governance model and the opt-out process would work. It was rejected by the NPS board, but there were no sanctions to that, so Cardiff carried on and did their own procurement anyway for building materials. So, they were really the butt of the first test of governance that was put in place when the concept of the NPS was created.
Again, there's a slight tension, isn't there, between the point that you made, Andrew, just a few moments ago about wanting to avoid compulsion, or something along those lines, and a perceived reluctance to allow members to opt out of NPS frameworks? The decision by the NPS board that you just referred to bears that out, doesn't it?
I suppose the point I would make—and Sue was touching on it—is that the NPS board is composed of a wide range of players. It's not a Welsh Government board, and the delivery group, similarly, would be made up of a number of others. So, the decision arrived at in respect of that opt-out was by the wider group of membership of the board, not the slight implication that the Welsh Government sought to stop that happening. At the end of the day, we couldn't stop Cardiff doing that; that's not the way that the model works. But, clearly, the NPS board felt that that was not the right way to proceed, and I guess if you're Cardiff and you've just been told by the NPS board that they don't want you to proceed that way, it might not feel great. But I don't think that necessarily means that the thing was adversarial.
Possibly one of the things that lay in the background, then, maybe to some of these negative perceptions, was the concern about what I think Cardiff council referred to as 'scope creep'—an infelicitous phrase maybe—essentially, the NPS moving into areas that at least some stakeholders hadn't perceived they had intended to cover under its remit. And the increase in the evaluation of the amount of common and repetitive spend, I suppose, is related to that, and this perception that, actually, that was really about generating more income. You referred to trust earlier, and that, actually, that sort of eroded trust.
I think these are all lessons to learn for the future and will be picked up as part of the review process. I'm not sure about scope creep for all the NPS. As, I mentioned earlier, the public procurement landscape has changed—
It's a great term, isn't it?
It is marvellous, yes. I think we're used to 'mission creep', but 'scope creep' I think is—
I think—I'll bring you in in just a movement, because you've got a perspective on it. The public procurement landscape has undoubtedly changed, but that's much wider than NPS. In respect of what NPS was there to do, I think, almost exclusively, you drove forward, or have driven forward, category areas that were identified in the business case. One area that has developed, and I was involved with that in my last job, was in respect of food. Food, I think, was always envisaged to be in the mix, but it was a rather amorphous category, and the view was taken that we needed to review that, or NPS needed to review is, and establish what I think became four categories of specific spend. And that work undoubtedly did happen. I wouldn't necessarily regard that as scope creep.
The point made about reluctance to allow opt-outs because of income generation I can understand, but a number of the NPS frameworks are not really big income generators. They're around renewable energy or use of renewable forms of electricity and so on, which are not driving large amounts of rebates, are they?
I think the key thing about income is—I was always conscious of income, but had my focus been on income, I would never have taken on all of the Welsh Purchasing Consortium contracts that took almost a year to on-board and sort out, and renegotiate, work out where they were being used, and engagement with the suppliers, and there was no income from that as well. So, there was a significant amount of resource. And also, the spend analysis that informed the NPS business case was 2010-11 data. Value Wales had run another couple of annual spend-analysis exercises looking at spend—sort of looking a year back, so that gave us much more accurate data. And also, the other area that the business case was silent on was categorisation of the spend. There are a number of ways of categorising spend—United Nations Standard Products and Services Code, ProClass, e-code—and I like to be very clear on a baseline, so one of the first things we did was, through the stakeholder group and the board, agree what the most appropriate categorisation of spend was to apply to that spend data, and it's always been aligned with the categories outlined in the business case.
And just this specific area of food—the data on food was very mixed, and I'm quite risk-averse in terms of—. Food is so important from a health and safety and a nutritional and a Welsh economy perspective, so I wasn't going to jump in and say, 'Yay, we're doing food.' What I actually said was, 'We need to take the time to do a proper business case on food.' So, we brought an expert in on food and spent a year doing the complete landscape review—spend review, supply review, engaging with all the policy areas of Welsh Government that deal with food—and then a business case went to the NPS board who decided whether or not the NPS should do food or not.
Can I just—? Before I bring Rhianon Passmore in, how do you address concerns about the relationship between the NPS and the Welsh Government? In principle, the Welsh Government is supposed to be a host body, but the audit officer picked up on concerns that it may become more than that, so the NPS actually becomes almost like a Government department over time. How would you deal with those concerns? Is that happening and is it a bad thing?
I think the concerns are more in appearance than reality, but I think that that's nevertheless an issue. So, if people get the sense that NPS is not distinct from Welsh Government, then something is not going right and I think that that is something that we need to address in the context of the review. I haven't seen evidence of Sue rushing around and blending the roles in terms of how she's performed the work in relation to the substance, but the perception is out there, and I think it's something that we do need to address through the course of the review.
I would add that that was one of the areas that the business case didn't test in terms of the concept of NPS. If you look at the other public buying organisations, most of them have been around for 30 to 35 years. They're all actually local-authority owned, so Eastern Shires Purchasing Organisation, Yorkshire Purchasing Organisation—the big ones—Crown Commercial Service are a trading arm, and Scotland Excel. They're owned by the local authorities, and even though the customer base is broader than the local authorities, the income they generate just goes to the owners and they're run much more as commercial enterprises. I mean, Yorkshire purchasing now have a separate trading arm that actually supplies to the private sector as well as the public sector, and I think you need to look back at the ownership model, and perhaps hosting wasn't necessarily the most appropriate model, and it's something, as Andrew said, that the review will learn from.
And, if I may, YPO—the Yorkshire arrangement—has been running for decades, hasn't it?
Yes, so these things take some time to get going. And leverage and mandating—so in the case of the local authorities, where they're all bought in—that makes a big difference, doesn't it? I think, in Northern Ireland, purchasers are obliged, aren't they, to work through the Northern Ireland model?
So, in Northern Ireland, the Northern Irish Government run what they call CoPE, centres of procurement excellence, which are top-slice funded, and all procurement across the whole of the public sector goes through the CoPEs. Local authorities don't do their own procurement.
Because you've seen both sides of this, haven't you, Sue?
So, do you think, if it was being set up now, it could be done in a—? I'm sure that it ticked the boxes at the time, but do you think it could have been done in a better way now that would make it appear more independent or be more independent?
If it's going to be truly independent, the ownership needs to be really clear and the funding model needs to be clear. The levy that was set for the NPS was so low it wouldn't be sustainable at 0.45 per cent. Eastern Shires—ESPO—generated £80 million in income last year, based on £1.6 billion of spend. That's an average of 2 per cent levy. And most of the buying organisations—some will be higher and lower, but when you average it out, they're charging at least 2 per cent.
So, undoubtedly, there are some big lessons to be learned from all of this, and we have to come up with a model that will be really good for the participants that will be the place that people want to go to be engaged and, as Sue says, has real buy-in and ownership from the participants.
Rhianon Passmore is very eager to ask a question.
You've sort of answered what I was going to ask you, really.
So, in terms of the witness evidence that we've received so far to date, I think it's not unfair to say that, out of those that we have had evidence from, there's been a distinct discomfort with NPS procurement, and some of the witnesses, including Conwy, would go even further than that. So, obviously, people vote with their feet if there is no sanction, and, if there is no buy-in, how serious an impasse is it between—? You've talked about the relationship between Welsh Government and NPS, but, really, what about your stakeholders, those who should be naturally coming to you? Is it down to the funding model? Because there does seem to be a distinct lack of buy-in. From my personal perspective, from the outside looking in, there does still seem to be a huge conflict, a tension, between the social procurement community benefit—Better Jobs Closer to Home and the whole Value Wales agenda—. There seems to be a big chasm there. Have you a perspective or a position on what I've just said?
I don't think it's a chasm, but I do think that there are quite marked differences of view, and I think there is a job to be done through the review to identify what is going to work.
One of the issues that I think the Auditor General's review brought out was that it's quite hard to please everybody all of the time. In a voluntary arrangement, where everybody—73 organisations are participating, lots of different types of public authorities with different types of spend, and getting an arrangement that is going to suit everybody and lead them to think that this is the best way forward on all fronts was always going to be challenging, and we've have no power to impose sanctions or anything of that sort.
I think part of it is because of the point that the Chair was making about a conflation, or the appearance of a conflation, of roles—what's the Welsh Government, what's the NPS. I think there's something about how we engage and so, because, I think, of concerns in north Wales and the degree to which they felt bought into things, we've made a real push to get buyer arrangements and category arrangements going out across Wales as a whole. We've got the north Wales procurement forum, which has been set up within the last 12 months, to try and address some of that engagement, but there is undoubtedly work still to be done, and the funding model is a big part of it. It's a competitive environment out there; there are others out there who want people to join procurement framework arrangements as well, aren't there?
One of the key areas for me when I joined was there was no resource in the business case for stakeholder engagement; it was about category teams. I repurposed one of the roles as a stakeholder manager, and subsequently, in May 2016, appointed a full-time stakeholder manager for north Wales to focus solely on the north Wales customer base, and that's since grown to three stakeholder managers in September last year. We're competing with the other public buying organisations that have got really large teams, that are out there selling their frameworks and setting up Wales-specific offices.
Sorry, if I could just drill down into that, in regard to—. However many people you've got marketing your product, if your product isn't going to be attractive to the buyer, then they're going to vote with their feet. I'm still trying to understand whether it's the product on offer that's either not competitive or it's not giving community payback—whether the product on offer is as optimum as it could be. If not, will the review be looking at, I presume, then, an audit across Wales of what is best procured nationally, best procured locally, best procured regionally, and, if so, that's a really big piece of work, but I still think, if we want to cover this gap, that has to be something that is looked at, and is that going to be on your agenda?
Yes. It is already on the agenda. Some of the work the NPS has already been doing is working with groups of stakeholders to say, 'What can we do for you, specifically?' So, in south-west Wales, an engineering consultancy framework's been put in place; we've done mini competitions for groups of stakeholders, where they've wanted to go to market together under the NPS framework. So, much more of a regional approach, where the stakeholders are asking for it. That work has already started, but we need to build on it and use the feedback from the review to actually make sure we shape something that's right for the stakeholders. And every stakeholder has a different requirement; some want the least cost, some want higher aspects of social value in it. So, striking that balance is always going to be a difficult tension.
All of this needs to be brought together through the review. So, the points you were making, Ms Passmore, a few minutes ago, about what's national, what's regional, what's local, where are we going to get most value added, these need to be addressed through the review process alongside the drivers of public procurement. It's not just about cost savings now. There's a wider suite of things that we're trying to do with public purchasing. And we do have to address both tests: have we got it, and can we sell it? I think, in response to the point about have we got the right products, the fact that there is quite significant uptake now in our frameworks, on a rising trend, suggests that NPS is providing services that people want. They may not be the services everybody wants, but I think we are seeing significant uptake now, and that suggests that, even if there are lessons to be learned, NPS is delivering quite a lot of what quite a lot of people want.
Okay. I'm going to move to my questions now, if I may. I'm also interested as to what feedback there was, before I go into them, in regard to why the European structural funding bid was unsuccessful, because I know it's a huge issue across Europe, so, at some point, if somebody could address that—. So, in terms of 'buying once for Wales', do you feel that's been successful?
The trouble with the 'buying once for Wales' notion is this idea that there's just this one point where everything happens. This was about trying to get frameworks that work for the benefit of the 73 members and indeed others. I guess the answer to that is a bit like the response I gave a few minutes ago: it's a work in progress. We've learned a lot along the way. Uptake of the frameworks, spend and the number of people using them has increased and continues to increase, so—
Do you feel, to interrupt, through the Chair, if I may, that it's been quite a slow pace?
I don't think it's a matter of it being hugely slow. I think there were expectations at the beginning of the process about what would happen and hopes in terms of what would be delivered, and I hope one of the things that we've tried to explain today is that these things take time. You've got to have buy-in. Whether we've done enough to get the buy-in and so on is one of the lessons that we need to address through the review. If you think about NPS having been running since early 2015, so fully operational, then we have seen framework uptake grow significantly, amounts of money going through, jobs created grow and so on, and, on the projection that we are currently at, we would hit £0.5 billion of spend by 2021-22, something like that. Now, that's slightly later than was set out in the business case, but, if you account for the sorts of points that Sue was making earlier on, I don't think it's massively slow, and there are lots of other frameworks out there that people have been using, and getting people to work with us in NPS and for NPS to provide what's needed has been a big part of the process.
And in terms of the review and the importance of the review, in terms of forming future policy in this regard, I presume that we are looking internationally at what others are doing across procurement in nations the size of Wales.
I was actually recently with Cardiff University public sector procurement forum in Milan, and I can say that, without exception, every other Government that's got a collaborative procurement approach has the same challenges and issues around not all departments want to buy the same thing, based on individual want rather than need sometimes. Everybody has their own preferences of supplier. Unless there is a mandate, you don't get that uptake driven through contracts and frameworks. So, we are quite well plugged in internationally, but it was really interesting to be in a room of peers across all different countries across Europe, where they have the same challenges and different approaches to addressing them.
Okay, thank you. So, we've mentioned the auditor general's report and the £234 million spend within the framework for 2016-17 and the indicative savings of £14.8 million within that. So, can you confirm the final spend and savings figures for 2016-17 and outline for me the situation that we're in now?
So, they are correct. They are the figures that went in the NPS annual report, and the spend to date, which is April to December for this financial year, is £177 million, with just over £7 million— it's £7.6 million—in savings.
So, it's on target.
Yes. And on top of that there are a further 36 jobs that have been created in Wales this financial year, taking the total number of jobs up to 241.
Okay, thank you. The report, the auditor general's report, also states that some NPS members dispute the savings figures. So, why have you been, it seems, unable to reach agreement around this particular perception?
I think the difficulty is one of control within an organisation. So, we produce a savings methodology for every framework, based on previous price paid or what the market's doing, and that savings methodology is agreed. Then, when you're actually tracking the spend and the savings reported by the suppliers, what we don't have the ability to influence is how those savings are tracked within an individual organisation. Cardiff council are actually quite good at this. So, they have a template that their procurement department has to do for every procurement, based on the previous price paid, and that goes into finance. In some organisations, such as the police forces, that do the same, they actually take that money from an individual's budget and put it into a central pot, but not every organisation has the same level of sophistication when it comes to recording and tracking savings, and we can't see what the processes are internally, which is why they get disputed.
Okay. So, basically, it's different models being used and utilised in a different way. So, in terms of the review, in terms of you talked about the levy and in terms of the funding model, I would presume it would be a good time, therefore, to agree some sort of incentivisation programme around that model usage. Because, without similar systems, it's going to be extremely difficult, and you're going to constantly have that.
One of the models we have been looking at is Scotland Excel, which is owned by the local authorities. They focus less on the savings, and they focus more on the social value. It's almost like a league table now between the 32 local authorities. The focus is much more on social value. They still report their cash savings, but the league table is around who's doing the best around the social value aspects of it.
Okay. Thank you. Finally, the auditor general’s report also states that £60 million—quite a big chunk—of the £150 million spent through Crown Commercial Services, who you've referenced earlier as a big service, could potentially have been provided, as you've said, through NPS frameworks. So, in your view, have you discussed with them why they've chosen—simple question—a different model? Because, technically speaking, you should be the preferred model of choice.
It's complicated because it depends a bit on categories, doesn't it, and it's not as if we're not discussing or working with CCS where we can. But it's undoubtedly the case that we can be looking for some of that money to come in the direction of the NPS.
There will be all different reasons. There will be that they want continuity with a supplier where a contract was previously awarded under a CCS framework. So, they go out and either extend through the framework or do a direct award, and that supplier may not be on an NPS framework. It may be that there's additional flexibility in that framework that they want in terms of the scope of services, or it might just be that somebody's made a decision that they want to use CCS. Lots of frameworks have different processes around them. Some you can direct award, some you need to run a mini competition, some you can just take a catalogue price. So, 'it depends' is, I think, the only answer I can give.
We do look at various frameworks where there is no Welsh supplier base. So, CCS are very good at getting best public sector pricing, and they've got £11 billion going through their frameworks. They've got the leverage to do that. So, for example, on Canon photocopiers, in Wales, on our multifunctional devices framework, we cannot match the Canon pricing. So, we've got an agreement with CCS that we funnel Canon requirements through them, but CCS then share the levy with us on that. So, we're operating on a levy share for some of the CCS.
So, how's it going to change in the future?
I think that'll be the outcome of the review.
It'll be part of the review. Fundamentally, your point is absolutely right: NPS, the concept, has got to be the provider of choice. It's got to have buy-in from the participants, and it's got to work for the people who are taking part in it, and the financial model and the incentive model is a key element in that. If you get it right, we'll have more success, even more success, in the future. Get it wrong and we won't have a model that works, effectively.
Okay. Thank you, Chair.
Great. Thank you, Rhianon. Back to you, Mohammad Asghar.
Thank you very much indeed. Now, my question to the panel—just relating to procurement fitness checks and staffing issues. That is it, basically. Where are you in your development of a new approach to procurement fitness checks, when will the checks be done, and what improvements to the process can public bodies expect to see, given the circumstances of previous checks?
We are picking up the procurement fitness checks work in the context of the programme and they will be addressed through the review. I might ask Jonathan to say a little bit about the process that got us to this point and where we can add most value going forward in terms of the maturity of people or different organisations' procurement functions. A lot of useful work was done that we can build on. I know there was some pushback in some of your evidence sessions about the degree to which we've shared the lessons learned from that, and that's certainly something that we want to address. But on the fitness checks more generally, Jonathan—
The procurement fitness checks were devised to help public bodies in Wales assess how effectively their procurement function was contributing to their overall organisational aims. They were developed many years ago now—at least 10 years ago—and that was based on how an organisation was perceived as being best to support its aims at that particular point. So, the model was used by many organisations across Wales and gave them an assessment of whether they had mature or in-need-of-development procurement functions. Effectively, the work that came out of Value Wales was designed to help them to improve the input. So, the process was due to be redesigned, I think, back in 2015-16, and some work was actually undertaken to redesign that process. Then, when we started last year to pull together the programme for procurement—and the programme is effectively just a five-year plan for procurement for Wales; that's what we've called it, and it was not a plan that Welsh Government was coming up with, it was a plan that Welsh Government was leading the development of with a view to developing with the wider sector—when that was being pulled together, it was apparent that we needed to refresh the fitness checks even further. So, that work has been taking place. A draft methodology was produced, but that will actually now be looked at in the review to see how it can better support some of the most recent developments, like the decarbonisation and things like that that I mentioned earlier. They weren't part of the original consideration, so we'll build that in.
And that also includes, if I may, Chair, a self-assessment tool, doesn't it, which we're having a look at?
It does, yes. Some of the negative feedback that we had around those was not so much on the actual methodology but the way in which the assessment was actually undertaken. Effectively, it was an external provider that actually undertook that, and people felt that it was completing a questionnaire, and that wasn't a robust enough check. So, that's another part of our considerations, in that it's methodology but it's also how it's actually undertaken, and, even more importantly, what support is then available to public bodies wanting to make improvements going forward.
It's nice to know about that. Have the lessons been learned? The information received by the committee was that fitness checks were intended nicely by the Government, but they were inconsistent in the approach. Also, the second one was also saying that some of the fitness checks were conducted over the phone. So, there are areas where we still have to work it out, as you just mentioned. My question is: does the Welsh Government have any data on the current numbers of qualified procurement personnel relative to the public sector's £6 billion of expenditure? Does the Welsh Government agree that there is a deficiency in the number of qualified staff, and does the Welsh Government have an estimate of the size of the staffing deficit?
I don't think we can give you a detailed answer today, Mr Asghar, on that. We could come back to you on it. Part of this, I think, goes to the recommendation in the McClelland review back in 2012 that there should be roughly one procurement expert for every £10 million of public spending. Was that right, Sue?
Whitehall, I think, operate on a one expert per £20 million, and so it's a different range. I think one of the other issues for us, and I think for public procurers more generally, is this changing landscape. So, the emphasis on public procurement, which is a point that Sue regularly makes, is around, or has been around, EU regulations, and a rather transactional approach to procurement. In fact, we're looking to procurement—as in some of the conversations we were having earlier—to do a rather broader set of things now in support of the wider economy, and adding social value. I think that that more generally means that the procurement profession more widely has a range of challenges, and I don't know what that means in terms of ratios of experts per amount of cash spent, if that makes sense.
Okay. The evidence we have received from the WLGA suggests that it has been working with local authorities' heads of procurement to consider an approach based on the English Local Government Association's use of business value codes to performance manage procurement activity. Have you explored this approach by way of an alternative to the fitness checks?
I think it's part of the review, because I remember talking to Marion Stapleton, who's leading the review work, and she mentioned those. I don't know if Jonathan knows any more about it.
We haven't explored that particular approach, but we have been asked by the WLGA to do that. So, we will happily do that.
Okay. Thank you. And, finally, the auditor general's report highlights some high-profile procurement failures, including the Welsh Government. What lessons has the Welsh Government learned from recent procurement failures, and what progress has been made in the Preparing for the Future programme, which was established to identify issues within the Welsh Government procurement processes and to ensure the best value for money that you can achieve here?
Preparing for the Future was a Welsh Government organisational development programme, so that was very much focused internally within Welsh Government, and we had four key work streams, one of which was on the commercial side, and Sue led that. That was about a range of things, including securing savings. It was also about starting to generate wider value from Welsh Government's purchases, and we spend about £670 million a year—something like that—as an organisation, directly through our procurement of goods and services. It was also about control and assurance arrangements within Welsh Government, and it was also about improving training and guidance for staff, and a lot of work went on through the Preparing for the Future programme to do just that. The programme closed last summer. Did you want to add to that in terms of specifics?
Yes. In terms of the specifics, the things that we've done include—. There's now mandatory training for all staff that come into Welsh Government. There's an e-learning package, so they understand who can procure, and the amounts, and then, depending on your role, there's additional training—face-to-face training—in areas such as contract management, category management, negotiation skills, and getting best value from contracts and frameworks. We've got a delegation framework now—delegation of authority to who can award and sign off a contract. There's much more governance around evaluations. So, all evaluations now have a review by corporate procurement if it's not corporate procurement that have carried them out. It's very much, as Andrew said, around making sure we've got the right processes, procedures, governance, and skills and development for people, so that when they're running a procurement, they're equipped to run it effectively and efficiently.
Vikki Howells, back to you.
Thank you, Chair. Is there time for me to ask a few supplementaries on the back of Mohammad's questions?
Yes, whatever you want. Go for it.
Thank you. Just going briefly back to the fitness checks, how do you compare progress over time? I believe we've done the second round of fitness checks now.
Yes, that's right. The second round we're undertaking—I think it was just before I started, so it would have been around 2015. Within Welsh Government, we had a look to see how progress had been made since the previous round. The findings of that fed into the work that was undertaken to do the next phase of fitness checks. What it effectively found was two things. One was that we needed a new model of undertaking the fitness checks, because the things that people needed to get good at, they'd got good at that now, so we needed to take it to the next level, so that's the next stage of fitness check. But the second was that the fitness checks themselves, it was one model that was applied to every organisation. And what a lot of the users found was that if you were local government, or if you were the NHS or somewhere, it wasn't universally applicable. So, an organisation might complete something and there was a whole section that actually wasn't relevant to it. And then, when people were aware of how that organisation was performing, it made it look as if that organisation wasn't necessarily doing as well as it might have been, whereas, in that sector, that area wasn't really appropriate.
So, effectively, the new set of fitness checks that we're going to be producing takes those two things into account. So, it will show more of an evolution rather than specific progress in terms of the areas. Well, that's the intention.
Is there a danger that, with a more individualised assessment process like that, it can be difficult to compare across the piste?
There is that. I think what we've been asked to do is to produce a more adaptable version. So, rather than a different one for different sectors, something which can be adapted within the particular sector that you're actually in. So, just to give you a practical example: community benefits is something that everybody is generally aware of, and, if you're in the NHS, you tend not to focus on delivering community benefits because that's not what your area is. But if you look at the methodology that they apply to actually deliver wider value than savings, they are actually applying the same thing. So, it's just around, maybe, rebranding and broadening the definition of 'value' rather than specifically calling something 'community benefit', if that makes sense.
Thank you. Obviously, there's some really good practice out there and we've heard anecdotal evidence of that before this committee. Who's responsible for disseminating and monitoring good practice to ensure that it becomes the norm and not just the exception?
The work of Value Wales is to try and pick up on activity across the whole of Wales and help the wider public sector apply that learning. I know that's been one of the key features for concerns for the procurement board. I think, more generally, in respect of the national procurement service delivery group and others, that's also a mechanism by which best practice is shared, and then there's regular communication out from Value Wales, isn't there, to all public authorities?
Yes. Part of the discussion we had with the WLGA about their proposals was that, traditionally, Welsh Government and Value Wales had led on everything and then got to the place where they were responsible for collating that. Those discussions suggested that maybe you could have different owners for different initiatives, depending on what it was and the relevance to that sector. So, that's something that we considered in pulling the programme together, and it's something that we'll actually feed into the review.
And for the last three years we've hosted the annual Procurex conference, which has been an all-Welsh public sector procurement conference very much about showcasing case studies and best practice from across the public sector in Wales.
Okay. Thank you. And my colleague, Mohammad Asghar, identified earlier the perceived shortage of procurement personnel. Research from Cardiff University in 2012 said that, with regard to procurement, there's a,
'chronic skills deficit at the heart of the public sector in Wales'.
Based on a good practice rule, they said at that time, in 2012, that we were 174 professionals short in the Welsh public sector. Is that research that you would recognise and stand by? And, if so, has progress been made since that point? I'm thinking particularly of the fact that the Home Grown Talent programme finished in 2015.
There is a high premium on the procurement professional generally, whether that's in the public sector or out there in the private sector. We have done a lot across Wales over the last five or six years to try and increase capacity and capability. It's certainly part of Value Wales's mission to improve capacity, capability and careers development as well in respect of procurement. I'm not sure—unless colleagues advise me to do so—that I should sign up immediately to the Cardiff research, although I think we would accept generally that there are areas where we have gaps in the public sector, and, indeed, we have a certain number of vacancies within Welsh Government. We have tried, through the Home Grown Talent approach and more generally, to increase the supply of people coming into the sector and in support of public bodies, and it's a key focus of the review.
Andrew, is it possible for you to provide us with that information, of the Welsh Government's assessment of that?
Yes, okay. Yes, indeed, because it links, in a sense, doesn't it, to Mr Asghar's question earlier on? It's sort of sequential to that. So, yes, we'll write to you.
Thanks. Sorry, I interrupted Vikki.
Just to say, I'm personally not familiar with that research, but what came out of the work that we did last year to do with the programme for procurement was that the type of skills you need very much depend on what it is you're actually trying to achieve. So, if you're doing a tender, you need quite different skills than if you're engaging with particular organisations to deliver the decarbonisation. So, I think, as part of the programme work we did last year—and this will come into the review—is a broader assessment of what the procurement community in Wales is needing to achieve specifically in terms of outcomes over the next five years and then what skills are actually needed to support the delivery of that.
So, is there a successor programme to Home Grown Talent that's planned, and would that explore, perhaps, options for apprenticeships as well?
Apprenticeships are certainly very much on the agenda; so too is what we can do to encourage people to offer placements to individuals who are training or going through the education process. As Sue mentioned earlier, we had pitched for ESF money to support a successor to the Home Grown Talent scheme, and we didn't get that money. We have rolled the question of what we do next about talent development up into the review process.
It is a highly competitive market in Wales. We've got a number of central Government departments in Wales that are constantly pulling on core talent. The creation of the new Government commercial function in Whitehall has seen an exponential growth in salaries at middle management and senior management levels, and then we've also got the aerospace and defence industries, and the Ministry of Defence over the bridge in Bristol and also the finance sector around Bristol have a massive pull on our resource as well.
I was just going to say that you've done an awful lot internally within Welsh Government to raise standards and put people through assessment centres and so on. One of the consequences of that is that they've become highly marketable in themselves.
Exactly, and that leads to my final question, really, which is that putting in place that training programme is obviously really crucial, but even when it is in place, what do we do to try and stop the people who have been trained on these programmes from moving into the private sector? We've certainly heard lots of evidence here about the difficulties with retaining procurement professionals.
Do you want to kick off? I was going to say that it's difficult to lock people in, isn't it, really?
I think the work that Whitehall have done creating the Government commercial function is actually evidence that we need to recognise how highly competitive procurement is and the way that salaries are paid now from a Whitehall perspective, we can't meet from the Welsh public sector. So, it is very difficult to retain really good competent staff, if they're looking for a development move and the salary that matches it as well.
What we can do is provide highly stimulating types of work. I think it's fair to say that reports back from colleagues working in both Value Wales and in the NPS say that the work is valuable to them, that they're personally invested in it, and wherever possible we foster that spirit in the way that we do things. You can put certain kinds of restrictions on people who are doing apprenticeships—sorry, restrictions in the sense of locking them in to a degree—and you can put certain sorts of caveats around costs of training and learning and development and so on, but, ultimately, in a competitive market, people can take their labour elsewhere.
Okay, thank you very much.
Neil Hamilton with a supplementary.
It's clearly a supply problem in as much as if demand for people's services outstrips the number of people who are available to fulfil those demands, inevitably you're going to see this tension. What exactly is the disparity, would you say, in pay between what you're offering within Welsh Government or within the public sector in Wales and what people can earn in the private sector? Is it a very significant margin? Obviously, from what Andrew Slade was saying a minute ago, quality of life in the workplace can offset to an extent the better pay that might be on offer elsewhere. So, how big is the tension?
I think I may be better writing to you on that because what we've actually got is the Hays annual salary survey. Our professional body does a survey with Hays every year, across the procurement community that are professionally qualified, and reports at a regional level and grade level and also gender level on what the disparity in salaries is. I'd be more than happy to send that to the committee.
Okay, thank you very much.
But it is a factor, you're quite right, Mr Hamilton.
Thank you. Just picking up in terms of the need for future—[Inaudible.]—before that with stakeholders, Jonathan Hopkins I think mentioned strategic actions and I've obviously mentioned previously the issues that there are between value and also social procurement. Would you think that we have a clear strategic direction to be able to set, post review, that mission statement, moving forward? Because, if we are going to attract the very best across Wales and seek to retain those, through whatever incentivisation programme—there are millions of them out there—then we need to think about how that then dovetails in terms of the regional approach, in terms of possible re-organisation around local government agendas, and then you've got that bigger supply chain, sort of just working within a local authority because of the landscape that we are all understanding, and increasingly so across the public sector. So, in terms of my question, really, is there a clear strategic direction from Welsh Government around procurement?
For Wales, the direction of travel set out by Welsh Government is the 'Prosperity for All' national strategy, and within that the economic action plan. So, that is the template that we're using to drive our policy activity, going forward, and that is about attracting and retaining the maximum amount of value for Wales. You're then into an interesting set of issues, as you point out, Ms Passmore, as to what is value, and, again, the economic action plan talks about a wider range of factors, including the fair work agenda, making a living reality of what we're trying to do through the well-being of—
Sorry to interrupt you. We're all very familiar with those policy documents and the agendas. So, there is a clear strategic direction. So, therefore, in terms of where procurement needs to be and in terms of the mandate across this really important review for Wales in terms of public sector spend, are you confident that you're going to come up with a solution that will improve the status quo?
The review is being designed precisely to try and address these sorts of questions and to do it in an inclusive way with stakeholders. The factors that we need to take into account alongside where we're trying to go with the economic action plan are, of course, where exit from the European Union takes us in respect of the rule—the operating framework—but then, also, the fact that we continue to be under very significant pressure in respect of the public finances. So, we're never going to get away from the desire to secure efficiencies and to release cash savings wherever we can, but we need to be much more collectively across Wales—sort of intelligent and flexible about how we use the procurement framework to drive that wider social value. And that then brings us back to some of those capability issues because that requires a different approach and a different set of skills to help bring that about. All of those things need to be looked at through the review.
Caerphilly council told us in evidence that they'd like to see a shift from an emphasis on savings by the NPS to community benefit and social value. I presume that, based on your comments earlier about Scotland, that that has some resonance, maybe, for you as well. How are you seeking to incorporate community benefit, social value and the requirements of the Well-being of Future Generations (Wales) Act 2015 into contracts?
Part of that is reflected through the 2015 updating of the public procurement policy statement. So, that very specifically took into account where we were going with the well-being of future generations Act. On specifics, in respect of NPS—
With regard to the NPS, we track the number of jobs created in Wales, and the suppliers report that as a direct impact of running business through the NPS frameworks, and we also look at the benefit to the Welsh economy of how much is actually being spent with Welsh-based suppliers to see what the social value is there. And the other aspects of Wales procurement policy. So, the joint bidding guidance: NPS put a lot of work into pre-market engagement, and the joint bidding guidance that Value Wales produced a number of years ago we factor into all of our procurements. So, if there are small and medium-sized enterprises or microbusinesses that want to get together to put in a joint bid, we actually elongate the procurement timescale to give them the time to do it, along with the guidance, and that's actually been quite successful in areas that are heavily dominant with national suppliers. So, liquid fuels: we've got an SME consortium that won quite a lot of business, where 90 per cent of the market is one or two national suppliers.
On the well-being of future generations Act, as you all detail, we've got a number of pilot exercises running. I don't know if Jonathan wants to pick up on some of those.
I think some of the feedback that you've had has implied that there's, maybe, too much guidance, and it's a little bit confusing as to what's actually out there.
So, when we were pulling together the programme work last year, we concluded that, really, there were three broad things that procurement could achieve: one was help somebody save money, two was help somebody deliver the future generations Act goals, or three was to specifically support somebody else's initiative, like decarbonisation and so forth. So, the work that we did in the programme was around trying to simplify that landscape and trying to focus the processes that were in place—the tools—on helping people to achieve one of those three things.
The other thing that came out of that conversation was that, in terms of whether you want to save money or whether you want to do something else, a lot of it depends on what it is you're actually buying and what the actual supply market is out there. So, if you're buying stationery, you might have specific goals. If another organisation is buying stationery, they might have different goals. I think the process that we were looking to do was aimed at helping organisations to look at what it is they're actually buying and looking to deliver broader benefits based on what it is they were actually buying. So, as a result of that, we started having conversations with colleagues in the future generations commissioner's office, which were very helpful. Through those discussions, we decided that it would be very helpful for the wider sector to do some pilots to look to see what was actually possible.
We also took advice from the wider sector that, based on previous experiences, they said, 'If you're going to do pilots, involve us in those pilots—we want to work with you, rather than you doing the pilots and then giving us the answer.' So, we attended one of the WLGA heads of procurement meetings and asked for volunteers to work with us on pilots. We got 22 volunteers, but we had to cut it down to four or five. Effectively, we started working with those heads of procurement and the commissioner's office to look to see what pilots we could actually do.
During those discussions it was clear that, even myself, I found that having the commissioner's officers in the room with us helped significantly in my own understanding of the Act and what the practical implications were and what the scope of it actually was. That was really helpful. So, the first pilot that we thought of doing out of that was to develop some training for people in public bodies on the basics of the Act and how to apply the basics of the Act to the procurement processes that they were actually doing; that's the first one. The second one was to refresh the existing documentation, templates and processes that were out there to help people undertake procurement to, (a) better reflect the requirements of the Act, but (b) just to make it simpler for everybody because people have commented that to undertake very simple processes involves a very bureaucratic process. So, that's the second one; we decided to set about doing that.
The third and fourth ones were where the local authorities decided that they wanted to make some specific impact in a particular product area, and after several meetings of talking about this and looking at what the opportunities were, we concluded that everybody gets things delivered through the supply process and when those things are delivered, they're delivered in packaging that is often made of plastic, often disposable but isn't biodegradable and so forth. So, the third pilot was based on identifying areas of spend that come in packaging, and seeing if we could work to actually do more to reduce and, ultimately, eliminate that. The focus was on plastic packaging—sorry. The end result of the discussions was a focus on plastic packaging that has built up a momentum as the focus on plastic in general has actually come about.
So, those are three pilots that we set about working on. The fourth one was when we spoke to NRW and they had some specific ideas on things that they wanted to do in terms of timber and so forth, so we decided that we would actually work with them to take forward that as a fourth pilot. That hasn't progressed as yet, but that is another one we're going to do.
Thanks for that very comprehensive overview. I'm conscious of time, but do we have a little bit of overtime?
That was very useful and instructive. I know that you didn't have your meeting as planned with the commissioner, so you couldn't get into the detail, but she did say, though, that she felt that the pilot projects had lost their impetus, and you did say, I think in relation to the last one, that that was slightly delayed, but you wouldn't necessarily recognise that description from what you've just told me. I mean, are they going forward, or are there reasons for holding them back?
I think I'd say—. I wouldn't disagree entirely with what she said. My view is that we had hoped to have made more progress by this particular point, but I think with the—. One of the good things about the way procurement is going now is that everybody seems to want to do something with procurement, so, with some of the priorities that we've had to deal with over the last couple of months and some of the things I talked about earlier, maybe we've directed our resource to some of those at the expense of these pilots. So, it's unfortunate, but I do recognise that.
There's a lot going on, basically, and these pilot projects have been a little bit of a casualty of that in the short term.
The community benefits toolkit, could you just say a little bit about the auditor general's recommendation about updating it and where you are on that, and also about the need to avoid sort of toolkit inflation, or you know—
A Member: Toolkit creep.
Yes, indeed. [Laughter.]
It's a fair assessment. Jonathan, can you just explain where we're up to with that?
We shall add that creep to the list of—
I'm sorry, I should, if I may—. I should have said, the Cabinet—[Inaudible.]—the commissioner a week or two back. I'm due to have the meeting. We have invited the commissioner onto the review stakeholder group, so either Sophie Howe or one of her team will be part of that process so that we continue to drive these things through.
The toolkit is a practical way of helping public bodies to document and record the community benefits that they actually make. We were asked to look at that, because it was considered, again, to be—. It's a spreadsheet, so it's not the easiest thing in the world to use. But just going back to some of the earlier comments I made, when we were considering that during the programme for procurement, we realised that, actually, maybe we need to revisit the definition. So, rather than have a focus on community benefits, have a broader focus on the wider value that can actually be achieved. So, rather than have community benefits methodology, you would have a delivering wider value methodology, of which community benefits would be one element. So that, again, will be picked up in the review, and people who wish to continue recording community benefits—because that is quite a well-embedded process, now, for some people—they will be able to continue to do that, but within the broader remit of the revised methodology.
Simplifying and standardising reporting, and that includes the quality of the data coming in—one of the points that Sue was making earlier on—I think is another key part of this.
And it is very construction-geared at the moment, and there is a recognition that value and community benefits come in many different forms across many different categories and commodities, so it needs to take into consideration the need to be adaptable.
Finally, could we turn to the question of e-procurement? Summarising, essentially, you did invest in an e-procurement service programme. You've decided to close that down. Many people are scrathing their heads and asking 'Why?'
Well, we've been funding e-procurement for about 11 years, I think, from memory. We have closed part of the programme, which I think is the more localised contribution. I know there's been some comeback on that from a number of people who spoke to you earlier on in the inquiry. Our central e-procurement functions—those things that operate at a national level—that contract continues to run through till next year.
Yes, there are a number of contracts. There's eTender Wales, which is BravoSolution's. There's the xchangewales marketplace, there's a Dun and Bradstreet service and AWARD. They were bought on a national basis 11 years ago and funded by Welsh Government for all of the public sector to use. Some organisations, predominantly local authorities, have gone with another tool called PROACTIS. I think there are 14 that use PROACTIS now, so chose not to go with the national tool.
The piece that has been closed down was focused resource for two years to increase the number of organisations that had adopted the trading marketplace, and that was just the end of the funding of 11 years of support to embed the marketplace across the Welsh public sector. But the contracts for the other services all carry on until 2019 and we've been working with the stakeholder community to look at what the requirements are in future, because the tools have moved on a lot, organisations have changed their finance systems as well, and some organisations have got them interactive with their finance systems.
Right. So, there is a range of reasons there for a kind of patchy take-up. But is it still the case that Welsh Government policy—you know, in an ideal world, in a universe not too far away, people will be using the same system? Because there is value in that—people using the same system helps you, helps us.
Yes, there is. Again, the degree to which we can mandate this is back to the review and how we make what we're offering the provider of choice. But there's a range of work going on in respect of the digital workstream within Welsh Government linked to this.
Yes. If you look at the NHS shared services, where they've got 10 organisations using a single finance platform, they've really heavily adopted eTrading [correction: eTender] Wales, and they're using the marketplace as well. So, a lot of the efficiencies of having a single tool depend on the number of organisations using the same finance platform, if you really want to get into the technical aspects of it and really drive out efficiencies. So, it works really well for NHS.
So, as part of your—. If everything comes down to the review, it'd better be good. So, you will be seeking—
I'll write that down. No pressure. [Laughter.]
You will be still seeking to try and incentivise people to buy into—literally to buy into—the same system, but to use the same system, because that facilitates everything that you're trying to achieve.
Yes, and it provides a range of other benefits, not least in respect of efficiency of procurement activity.
Similarly, then, with the collaborative spend analysis project—is that the Atamis database?
Okay. So, how satisfied are you with the take-up of people using the system, and the bits of the public sector that weren't fully engaged, like the further education sector? Are they now part of that project as well?
It's a contract with a Welsh SME, Atamis, as you say. We're using the data for a whole range of things, including in relation to decarbonisation spend. Every participant in NPS, is it, has got a licence to or access to the system?
Yes. So, the Welsh Government funds the licences for 73 public sector bodies in Wales to use the Atamis spend repository, and they can access their own information. Nationally, we can access all of it. Some organisations log in and use it, some don't. I think that was one of the findings of the audit reports that came out. So, they've all gone through the training for it. It's the regular usage and how they embed it internally that's patchy, I think.
Yes. I've had the ability to fire off some written questions, and it gives proportions of tier 1 Welsh spend, which is quite interesting reading. Just on that, it's slightly outwith the principal focus of this inquiry, but I see that, in the latest year for which we have data, the Welsh Government proportion—overall in the public sector it's 51 per cent, and was consistent year to year, but Welsh Government fell from 44 per cent to 41 per cent, and the NHS down from 41 to 39 per cent. Is that—? I don't know, in procurement team central, would alarm bells go off on somebody's desk? Are those proportions significant in terms of that aspect of public policy, you know, improving the Welsh quotient, or would you expect to see that year on year? Is—
Are the alarms bells ringing?
So, the figure for Wales as a whole has gone up from about 34 per cent, I think, to the 51 per cent that we're at now. You're quite right, Mr Price, that it does fluctuate a bit. It depends a bit on given years and what we're requiring in a particular purchasing programme, so, in a particular year if you were looking to buy something that you simply cannot source in Wales, that will immediately have an impact on your figures. Are we losing sleep over that particular point? No, I don't think so, but if we started to see further years' data demonstrating that so we have more of a trend then that would be very worrying. But the whole thrust of the economic action plan and everything else is about making sure that more providers, companies from Wales, can pitch in for public service business in Wales and, not least, Welsh Government.
And I think, if you did a comparison to central Government, where around 13 per cent of their spend is with SMEs, they actually claim around 25 per cent because they count second tier in the supply chain. In terms of Welsh Government specifically, 41 per cent is a really healthy level of spend in Wales, and it is cyclical. So, contracts will change the supplier base. We've seen a lot of consolidation in some markets, so there's no IT supply chain in Wales any more. There is a really strong cyber security supply chain. There are no stationery providers that are Welsh-specific suppliers any more that are on any frameworks at a national level. There have been huge amounts of market consolidation, and that does have an impact on the data.
And, going back to your earlier reference to those pilot projects in the Valleys action plan, is that the kind of data point that you would seek to work with, identifying a key gap in the Welsh economy that could, potentially, be filled?
Absolutely, and Atamis helps with that because, as Huw was pointing out in a meeting a while ago, Atamis allows you to see voids in the system, so where have we got big gaps in terms of what we're procuring, and are there therefore areas in the market that we can be stimulating?
And, finally, I don't know whether I should declare an interest at this point, but I was quite alarmed to see the figures that the lowest in the table is the National Assembly for Wales. I'm a commissioner, so maybe—. Is the Commission part of the NPS framework?
Yes. I would say it's possibly down to the types of things that the Commission buys. So, it's pretty much IT, property services and catering, and security outside of that. There isn't the breadth of services that, for example, a local authority would be buying—food for schools, milk for schools, that type of thing—which does actually impact on the data.
So, maybe we can do a pilot project with you sometime soon, but thank you.
Thank you, Adam. And, very finally, Rhianon Passmore.
Thank you. Very briefly, then, so, in terms of the review—apologies for having missed it earlier—when is it going to report back, and also would you be taking into consideration the huge potential for community benefit, wider social procurement, in regard to, for instance, the NHS as a major employer, the biggest across Wales, doing more around apprenticeships, and also taking on staff? Local government does it seemingly by goodwill. There's huge potential there in terms of employment. And also in terms of tender contracts for SMEs. We know that there are massive problems for small businesses in terms of getting the right advice to be able to go for these types of contracts. So, would there be consideration of those two points?
We're doing everything we reasonably can in respect of SMEs, and it's a big feature of the economic action plan. The wider benefits point absolutely is part of the review. In relation to timing, what I said earlier was that we need to get the work done by the summer so that the finance secretary was in a position to report back on it in September when the Assembly returns. But the one rider to that would be that he's absolutely determined that there should be a review that is driven by input from stakeholders and users of the service. So, we wouldn't want to curtail the review process simply to say, 'We've hit that deadline', and not pick up important points. I think colleagues around the committee as a whole and the auditor general have brought out the need for there to be good buy-in to the relationship—you know, the arrangements moving forward, and that's got to be a critical part of this.
Okay. Thank you.
Thanks. We've overrun slightly, but Members had a fair number of questions for you, and I think there was a lot of information there. Can I thank Sue Moffatt, Andrew Slade and Jonathan Hopkins for being with us today, for what was our last evidence session for this inquiry? You are our ultimate witnesses, if I can put it that way.
That sounds like a tv programme.