Procurement Annual Activity Report 2023-24
North Ayrshire Council · 3 December 2024
Back to Cabinet — 3 December 2024 and its agenda
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NORTH AYRSHIRE COUNCIL 3 December 2024 Cabinet Title: Procurement Annual Activity Report (23-24) Purpose: To provide Cabinet with an update on procurement activity for the period 23/24 Recommendation: Cabinet notes the report 1. Executive Summary 1.1 It was agreed by Council in September 2020 that a procurement annual activity report would be produced for Cabinet. This is the fifth report, for the period 23-24. 1.2 Award Activity - During the report year 162 different procurement exercises were awarded to 191 suppliers for a total value of £173.5m. 1.3 Governance - Procurement is governed by public sector procurement legislation and the Council’s Standing Orders Relating to Contracts. North Ayrshire Council have a legal obligation to publish a Contract Register, Procurement Annual Report and Procurement Strategy. 1.4 Spend Analysis - North Ayrshire Council spent a total of £292.3m with 3630 suppliers. The report contains information on spend by category, spend distribution, the top 20 suppliers by spend, the size, type, and location of suppliers. 1.5 Community Wealth Building - £71.5m was spent locally with 879 suppliers which was an increase of £14m from the previous year. The local spend percentage was 24.5%, which meant the 27% Council Plan target was not reached, however, local subcontracting of £10m was reported and if this could have been included, the local spend percentage would have been 28%. The report also contains information on local spend and percentage fluctuation, local spend distribution, and local spend by category. North Ayrshire Council’s Business Support and Development Team continue to work closely with suppliers and the Corporate Procurement Unit to identify and support local suppliers to maximise their success winning contracts within legislative limitations. Local contracts awarded increased to £16.8m, which was an increase of £9.5M since 22-23.
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1.6 Community Benefits - Community benefits delivered are detailed including 3567 employment weeks, equating to 69 jobs and 42 wish list projects. 1.7 Improvement Activity - The report also provides details of ongoing improvement activity including adding more suppliers to e-invoicing, creating sustainability case studies and carrying out operation workshops to drive improvement of templates, guidance and processes. 1.8 Procurement Commercial Improvement Programme - A capability assessment was carried out by Scotland Excel in November 2023 and the Corporate Procurement Unit achieved advanced practice in 9 out of the 11 areas assessed. 2. Background 2.1 At the Council meeting in September 2020, it was agreed Cabinet would receive a detailed annual report covering all procurement activity. This report covers 23-24 procurement activity. Award Activity 2.2 During the 23-24 period, 162 different procurement exercises were progressed by the Corporate Procurement Unit, resulting in contracts being awarded to 191 suppliers for a total value of £173,544,036.25. The different procurement types undertaken are listed below: Procurement Type Number of Procurements Awarded Total Value Awarded Quick Quotes Awarded 53 £ 3,782,415.93 Single Tender Actions Awarded 38 £ 3,393,399.27 Direct Awards Awarded 18 £ 5,180,128.91 GPA Tenders Awarded 19 £ 112,399,710.58 GPA Multi Supplier Awarded 5 £ 8,732,462.00 Non-GPA Tenders Awarded 13 £ 15,767,634.42 Non-GPA Multi Supplier Awarded 2 £ 4,910,000.00 Mini Competitions Awarded 14 £ 19,378,285.14 Total 162 £ 173,544,036.25 Governance 2.3 Public sector procurement legislation regulates procurement activity for goods, services or works and the regulations North Ayrshire Council need to comply with are noted below: • Procurement Reform (Scotland) Act 2014 • Public Contracts (Scotland) Regulations 2015 • Procurement (Scotland) Regulations 2016 Each regulation has specific thresholds and compliance requirements, and failure to comply could lead to costly legal challenges. In addition to the external legislation the
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Council’s Standing Orders Relating to Contracts also has requirements on how officers are permitted to procure. The diagram below shows the activity required at specific values. Procurements above £10k are progressed via the optimal compliant procurement route, which could be Quick Quote, Tender, Framework Call-off or Single Tender Action. Frameworks frequently utilised are mainly owned by Scotland Excel, Scottish Government, Crown Commercial Service and the 3 Ayrshire Councils. 2.4 North Ayrshire Council has a legal obligation to publish a Contract Register of all “live” contracts, and an Annual Procurement Report on its regulated procurements (over £50K for supplies and services and over £2M for works) This gives potential suppliers visibility of future tendering opportunities. A Procurement Strategy is also published and refreshed annually. Spend Analysis 2.5 During the report period North Ayrshire Council spent £292.3m with 3630 suppliers. 2.6 North Ayrshire Council buys a wide range of supplies, services and works and the table below details the top 10 categories by value, and the number of suppliers used within each category. vCode Business Sector Total Spend Total Suppliers Construction £ 131,063,797.77 325 Social Care and Services £ 65,319,257.53 318 Facilities Management £ 24,023,246.57 138 Utilities & Energy £ 18,175,758.28 33 Arts, Sports & Leisure £ 7,406,955.41 101 ICT £ 6,079,078.82 118 Vehicles £ 5,435,535.05 60 Waste & Environmental services £ 5,306,076.90 61 Healthcare £ 4,640,568.37 77 Food Beverage & Catering £ 3,571,624.61 62 Total £ 271,021,899.31 1293 2.7 An analysis of the spend by suppliers shows that 47 of the 3630 suppliers, received more than £1m (67%) and at the opposite end of the spend profile, 2015 suppliers received less than £2,000 (0.3%). The top 20 suppliers by spend (see appendix 1) account for £154.5m (53%). Up to £2,000 Single Quote £2,000 to £9,999 Minimum 3 Written Quotes > £10,000 approach Corporate Procurement Unit Quick Quote, Tender, Framework Call-off, Single Tender Action
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2.8 This dataset shows that most suppliers are Scottish, and the chart below shows the amount spent per supplier size in each of the 4 nations. 2.9 The data also shows, that where the size of the company is known, 79% are small or medium enterprises and the chart below confirms most companies fall in the small company definition i.e., less than 50 employees. 2.10 It is also recognised that Third Sector Organisations have a key role in delivering vital services for North Ayrshire citizens and strengthening community empowerment and during 23-24 just over £37m was spent with 130 Thirds Sector Organisations. 21% 30% 49% Large Medium Small
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Community Wealth Building 2.11 From a Community Wealth Building perspective, buying from local companies is a strategic priority for North Ayrshire Council, however procurement legislation does not permit preferential treatment based on location. In the year covered by the report £71.5m (24.5%) was spent with 878 local suppliers which was an increase of £14m from the previous year. However, the local spend percentage decreased by 1.5% due to an increase of £71m in total spend because of large capital projects, including flood protection schemes, building construction, and enabling works. These contracts were mainly awarded to tier one contractors, which do not exist in North Ayrshire. The Council Plan local spend target of 27% by 2024, was not reached, however the Corporate Procurement Unit approached these non-local tier one contractors (see the table below), who confirmed £10m of spend was subcontracted locally, and if this spend could have been included, the local spend percentage would have been 28%. Company Local Subcontracted Spend Muir Construction £643,000.00 Marley Contract Services £4,339,235.60 Connect Modular £220,764.50 Sanctus £550,000.00 RJ McLeod £1,000.00 Kiely Bros £28,000.00 Redpath Construction £391,783.60 Van Oord UK Ltd £30,358.00 Hub South West Scotland £3,296,829.00 John McGeady Limited £535,400.00 Total £10,036,370.70 The increase in local spend came from a mixture of different spend categories including the arts, sport & leisure, education, healthcare, social care and services, travel & accommodation and waste & environmental services. There are many variables that can cause future fluctuation including: • The existence, capacity, and competitiveness of the local supply base, • Fluctuation in North Ayrshire Council’s requirements/budgets, • Providing services in-house rather than outsourcing, • The number of local suppliers awarded places on National Frameworks, • An increase in total spend, without a corresponding increase in local spend.
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2.12 The graphs below show both the local spend increase and local spend percentage increase over the last 10 years. The actual spend data shows a steady increase throughout the 10-year period, with the local spend more than doubling from £31.9m in 14-15 to £71.5m in 23-24 and the local spend percentage increasing to 24% in 23-24 from 19% in 14-15. 2.13 The top 19 local suppliers by value all received more than £1m, with a total value of £42m (59%) and at the opposite end of the spend spectrum 397 local suppliers received less than £2,000, with a total value of £209k (0.3%). The graph below shows the spend distribution across local suppliers. 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 Local spend £m £31.90 £35.70 £37.30 £44.70 £41.90 £43.20 £45.10 £51.20 £57.60 £71.50 £0.00 £10.00 £20.00 £30.00 £40.00 £50.00 £60.00 £70.00 £80.00 LOCAL SPEND £M 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 Percentage 19% 18% 20% 23% 20% 20% 21% 23% 26% 24% 19% 18% 20% 23% 20% 20% 21% 23% 26% 24% 0% 5% 10% 15% 20% 25% 30% LOCAL SPEND PERCENTAGE 19 15 53 25 155 214 397 0 50 100 150 200 250 300 350 400 450 £1m or more 500k to £1m 100k to 500k 50k to 100k 10k to 50k 2k to 10k less than £2k
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2.14 An analysis of the spend with local suppliers shows that over 75% was spent within the Social Care and Construction sectors. Category Value Percentage Social Care & Services £40,027,404.19 56% Construction £14,253,826.59 20% Arts, Sport & Leisure £6,388,608.04 9% Travel & Accommodation £3,098,697.74 4% Healthcare £1,916,679.02 3% Education £1,890,059.94 3% Waste & Environmental Services £990,346.29 1% Facilities Management £918,938.45 1% Human Resources £294,671.56 1% Other £1,756,894.07 2% 2.15 North Ayrshire Council’s Corporate Procurement Unit and service teams work together to maintain a tender waveplan of all future tendering opportunities and they also participate in bidder’s days and meet the buyer events to raise awareness of opportunities for local suppliers. 2.16 North Ayrshire Council’s Business Support and Development Team continued to engage and support local suppliers across North Ayrshire, and during 23/24 138 businesses received support, with 59 of these businesses receiving one to one consultancy support. The support provided focused on capacity building, putting suppliers forward for North Ayrshire Council Quick Quotes and Tenders, utilising specialist consultancy support, advising suppliers how to register and use Public Contracts Scotland advertising portal and Public Contracts Scotland-Tender e-tendering system, and signposting to other procurement related resources such as the Supplier Development Programme. The Business Support and Development Team continue to work closely with the Corporate Procurement Unit to identify suitable local businesses as early in the procurement process as possible. This work means the team have further influence on smaller value spend for goods, services and works and this has led to individual service teams reaching out. For example, Property Maintenance and Investment, Streetscene and Health and Social Care Partnership teams have sought recommendations to gather quotes for jobs under £10k, resulting in local companies successfully winning work when they would otherwise have remained unknown to the service. A focus also remains on actively encouraging local suppliers to bid on national frameworks, and although this does not guarantee spend it creates a pathway to supplying a product/service to any council when there is a requirement. 2.17 Cabinet previously approved North Ayrshire Council’s response to the Scottish Government consultation on Building Community Wealth in Scotland on 2 May 2023. The response included potential amendments to the Procurement Reform (Scotland) Act 2014 to better support local suppliers where the supply base exists and reviewing the regulated threshold for supplies and services. The Bill will seek to address economic and wealth inequality by supporting the retention of more wealth in local and regional
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economies. It will seek to ensure consistent implementation of the Community Wealth Building model of economic development across Scotland. For lower value procurements, between £10K and £50K for supplies and services and between £10K and £500K for works, North Ayrshire Council continue to utilise the Community Wealth Building Quick Quotes process. During 23-24, 53 Quick Quotes with a value of £3.7m were awarded of which 10 were awarded to local suppliers (£813k - 21%). For all other types of procurement exercise (Tenders, Framework Call-offs, Single Tender Actions) including Quick Quotes £16.8m were awarded locally. This was an increase of £9.5M since 22-23. Community Benefits 2.18 As part of the procurement process, community benefits are requested either on a voluntary or mandatory basis, dependant on the value of the proposed contract. The community benefits requested during 23-24 focused on employment and training, with a focus on priority groups, supply chain support, education support and community support. The table below shows what was delivered during 23-24. Improvement Activity 2.19 Additional improvement activities were carried out throughout the year to improve procurement services. The e-invoicing project continued to progress during 23-24 with an additional 4 suppliers being added, increasing the number of suppliers participating in this process to 11. Further rollout of the project is planned for 24-25. To support North Ayrshire Council’s net-zero journey, The Corporate Procurement Unit continued to procure all goods, services and works that support the reduction of climate change impact and adaptation and in addition created 2 sustainability case studies for the design and build of 6 Amenity bungalows at Afton Court Stevenston (modular housing) and Millport flood protection. Both case studies are published on the Scottish Government Sustainable Procurement Tools website. Quarterly operation workshops were also carried out to share and implement new ideas for improvement, and as result numerous templates, guidance documents and processes were amended to support continuous improvement. Procurement Commercial improvement Programme 69 Jobs 3567 Employment Weeks 25 Work Placements 2 SME/TSO Workshops 9 School Projects 18 Community Projects 42 Wish List Projects 14 Employability Sessions 34 Job/Career Fairs
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2.20 The Corporate Procurement Unit undertook the Procurement and Commercial Improvement Programme assessment in November 2023 and scored advanced practice in 9 out of the 11 areas assessed, detailed below. The assessment was carried out by Scotland Excel on behalf of the Scottish Government. Question Level Achieved Level Description 1.1 Leadership and Governance 4 Advanced Practice 1.2 Procurement Strategy 4 Advanced Practice 1.3 Climate Change 4 Advanced Practice 1.4 Learning and skills 4 Advanced Practice 1.5 Risk Management 4 Advanced Practice 1.6 Commercial Acumen 4 Advanced Practice 1.7 Continuous Improvement 4 Advanced Practice 2.1 Implementation & Exit Strategies 4 Advanced Practice 3.1 Contract & Supplier Management 3 Good Practice 3.2 Contractual Obligations & Additional Benefits 4 Advanced Practice 3.3 Lessons Learned 2 Improving Developing Level 1 Improving Level 2 Good Practice Level 3 Advanced Practice Level 4 Improvement activity that contributed to the achievement levels included: • Involvement in in-house vs outsource decisions, • Creation of sustainability case studies, • Creation and maintenance of a net-zero roadmap, • Monitoring FNT2030 templates for fleet, waste, ICT and building services, • Implementation of a risk management plan, • Implementation of a Contract and Supplier Management Policy. 3. Proposals 3.1 Cabinet notes the contents of the report. 4. Implications/Socio-economic Duty Financial 4.1 No direct financial implications within this report, however, all progress in growing the level of local spend will continue to be set within the context of North Ayrshire Council’s duty to secure Best Value. Human Resources 4.2 None.
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Legal 4.3 North Ayrshire Council’s procurement activities comply with all relevant public procurement legislation and the Council’s Standing Orders. Equality/Socio-economic 4.4 North Ayrshire Council’s procurement activities encourage fair work practices and payment of the real living wage and delivery of community benefits relating to employment and training. Climate Change and Carbon 4.5 North Ayrshire Council’s procurement activities comply with the Procurement Reform Act (Scotland) 2014 sustainable procurement duty. Key Priorities 4.6 None. Community Wealth Building 4.7 Procurement Local suppliers are identified and invited to quick quotes and supported through tendering and framework opportunities wherever possible. Employment Community Benefits for employment and training are requested within relevant procurement exercises. As a Living Wage Accredited Employer, North Ayrshire Council strongly believes that all employees should be paid the real living wage. North Ayrshire Council also encourages all bidders to pay the real living wage and ask for information on their payment practices. This will include the number of staff who are paid and those that are not paid the living wage, with reasons for non-payment. The Corporate Procurement Unit and The Fair Work Ayrshire Team will use this information to work with suppliers to help them achieve payment of the living wage to all employees on future contracts. Land and Assets – Not applicable Financial Power – Not applicable Democratic Ownership – Not applicable
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5. Consultation 5.1 Throughout all procurement exercises there is direct involvement with all relevant Directorate teams. Mark Boyd Head of Service (Finance) For further information please contact Suzanne Quinn, Senior Manager (Corporate Procurement), on 01294 324039. Background Papers None
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Appendix 1 – Top 20 Suppliers by Spend Supplier Name Aggregate Spend VAN OORD UK LTD £32,987,405.36 HUB SOUTH WEST SCOTLAND LTD £26,046,001.49 PPP SERVICES (NORTH AYRSHIRE) £14,290,705.26 EDF ENERGY CUSTOMERS PLC £11,964,184.62 MARLEY CONTRACT SERVICES £10,334,730.70 CLARK CONTRACTS LTD £8,381,172.11 NORTH AYRSHIRE LEISURE LIMITED £6,073,133.90 JAMES FREW LTD £5,205,769.03 MCTEAR CONTRACTS LIMITED £4,612,532.07 HANSEL ALLIANCE £3,889,198.68 HAMILTON TARMAC £3,654,024.98 R J MCLEOD (CONTRACTORS) LTD £3,581,508.06 CORNERSTONE £3,516,933.16 MUIR CONSTRUCTION LIMITED £3,339,364.20 BUCKREDDAN LODGE NURSING HOME £3,054,878.32 KIBBLE EDUCATION & CARE CENTRE £2,905,127.34 KEY HOUSING ASSOCIATION LTD £2,749,032.75 HILLHOUSE QUARRY GROUP T/A MACASPHALT £2,738,905.09 TOTALENERGIES GAS & POWER LIMITED £2,646,595.05 THE RICHMOND FELLOWSHIP SCOTLAND £2,613,097.40 Total £154,584,299.57