Joint procurement – the pros and cons
- Partnerships between local authorities are increasingly common, as councils strive to identify more effective and efficient ways of working
- Partnerships can help councils share knowledge and best practice, and potentially make significant efficiency savings through joint procurement
- We discuss some of the advantages and challenges to consider when looking at joint procurement for your council
One of the best examples of partnership working is in the joint procurement of services. Here, we discuss some of the advantages and challenges of joint procurement, and look at what can go wrong when authorities are in the dark about what their neighbours are up to.
Dangers of being in the dark
When several areas across southern England flooded in early 2014, one of the biggest challenges residents faced was getting hold of sandbags.
Some councils were unaware their sandbag provider had also agreed to supply several neighbouring authorities. When supplies ran low, this lack of co-ordination meant that councils could not turn to their neighbours for help, as supplies had already been assigned.
Understanding the arrangements other councils have in place is important whatever the service being provided. For example, local authorities providing social care, need to consider not only what services are available within their own area, but also what is being provided across their borders.
An authority may place a resident who requires full-time care in a nursing home within a neighbouring authority, where family members can visit more easily. However, statutory responsibility for that resident remains with the authority where they are ordinarily resident. If the nursing home was to close suddenly, there could be potential implications for a number of neighbouring local authorities.
Adam Lickorish, Senior Strategic Risk Consultant, Zurich, says councils often fail to consider the consequences of arrangements made by other authorities.
“Awareness about what neighbouring authorities are up to could undoubtedly be better across certain types of services,” he says.
Knowing what is happening locally can help authorities build joint working and resilience. There can be significant advantages to teaming up and procuring jointly, such as increased purchasing power.
For example, if supplies of gritting salt were running low during a particularly harsh winter, an individual local authority might find it difficult to source as much salt as it needed, or at an acceptable price.
However, a number of authorities approaching the market together could represent a more attractive option to a salt supplier whose product was in high demand, and might help each authority secure a better deal.
Understanding the risks of joint procurement
However, joint procurement is not without its risks.
Lickorish says: “Joint procurement needs to be entered into on a fair and equal basis between all the councils involved. If your neighbouring authority is a stronger negotiator and is more motivated, the service could end up being tailored more towards their needs than yours.
“Also, if two local authorities team up to jointly procure from one provider, they won’t be able to turn to their neighbour for help if that provider fails.”
Mitigating this risk involves taking the same careful approach to building resilience that an authority would adopt if it was procuring individually.
Lickorish concludes: “The most important thing to do is to understand your own supply chain, how it affects your organisation and what would be the impact of the failure of your providers.
“If you are procuring jointly, you need full stakeholder engagement. Your risk, insurance, resilience and procurement teams all need to know what each other is up to, as any new contracts you enter into could mean new risks.”
Ultimately it’s for you to decide whether to collaborate with your neighbouring councils. The benefits can be great, but you should be mindful of the risks.