Progress towards the development of a new procurement landscape in Wales

The Welsh Government is committed to making Wales a more prosperous, more equal and greener nation – the choices we make when purchasing goods and services for the people of Wales are crucial to making that a reality.

Continuing to maximise procurement spend in Wales to support local wealth is key to creating a more resilient Welsh economy, especially in the face of global economic uncertainty. The £6.3 billion annual procurement spend will support sustainable jobs and growth; fair work and employment practices; modern infrastructure and construction; among wider benefits for our economy and public services.

This investment in Wales’ future will help to define our progress against the wellbeing goals we are pursuing for future generations. From innovative measures to decarbonise our public sector estate to delivering the training and skills fit for the future, our procurement choices can help to protect the future of our planet and tackle the causes of poverty.

The context for this spend is also changing. The social partnership legislation currently being drafted will place requirements on public bodies to have a procurement strategy to encourage and support more joined up, clearer and more sustainable approaches. There are also immediate challenges in relation to post EU transition procurement reform that will impact on the rules that operate in Wales.

As procurement decisions touch on so many areas of our life across our economy, public services and third sector, procurement plays a central role in the delivery of policy priorities ranging from the foundational economy, circular economy and decarbonisation, to social value and community benefits.

Procurement is a crucial tool in helping to deliver wider Welsh Government priorities. It helps to deliver better public services for everyone, whenever we need them, wherever we need them. Well designed public sector procurement can contribute to making Wales a more prosperous nation which benefits everyone fairly and tackles the inequalities that stop us fulfilling our potential.

Delivery on these ambitions is reliant upon a profession with the skills and capacity needed to make our goals a reality. These are exciting times for procurement as new innovations are proving their worth. But too often, the procurement profession has been undervalued and underutilised as a delivery lever. The Procurement Policy and Capability team in the Welsh Government is working towards building capability, skills and resilience across the profession to address the skills deficit, and nurture future talent whilst empowering staff and encouraging innovation.

The recent success of the Better Jobs Closer to Home pilots proves that we can use intelligence and data to drive policy and strategic initiatives through procurement. It proves that we can innovate and create solutions that work for Wales.

I hope that you find this document informative and that it helps you understand the journey that the profession is on and encourages ideas about how we can collectively deliver on this exciting vision for the people of Wales.

Rebecca Evans
Minister for Finance and Trefnydd

Procurement is considered a key mechanism for supporting delivery against a number of important policy areas in Wales.

In September 2018, the then Cabinet Secretary of Finance issued a written statement announcing the conclusion of the Procurement Review. Alongside this, the First Minister set out a series of procurement commitments in his Leadership Manifesto which are cross-cutting across major policy areas.

The commitments set out in the Written Statement and Leadership Manifesto, make clear that a new procurement approach is needed in Wales (details of the commitments and associated reference ID can be viewed in Annex A).

The initial approach adopted by the Welsh Government, consisting of 9 strands (details of these are located in Annex B), was designed to address the commitments in both the manifesto and written statement. These also complement the aims set out in the Economic Action Plan and the Low Carbon Delivery Plan whilst supporting the drive to make Wales a Fair Work nation by leveraging fair work outcomes from public spending and procurement practice. As the 9 strands have been considered by some to be distinct areas of work, a more holistic approach has been developed focusing on delivery of innovative and progressive procurement within Wales.

The progress over the last 18 months against the commitments contained therein and the positive outcomes achieved, is outlined under the key themes below.

The National Procurement Service (NPS) has worked closely with the Welsh public sector, including the Welsh Local Government Association (WLGA) and the Welsh NHS, to reduce the number of NPS frameworks. It also established a new working group with the Crown Commercial Services (CCS) to explore collaborative opportunities.

It was agreed with the Local Authority Heads of Procurement Group to maintain the level of NPS frameworks and service until April 2020. This would ensure that a collaborative and managed approach could be undertaken to move to regional procurement models. As a result, a draft national contract plan has been developed. This has been finalised and published to the Welsh public sector in February 2020.

The revised NPS pipeline identifies a programme of 32 national agreements with the flexibility to amend the programme as need arises (details of these agreements can be viewed in Annex C). These agreements, while let nationally, will provide a focus on delivering regional and local well-being through either direct contracting opportunities or supply chain intervention.

Transition to the 32 national agreements has progressed well. In September 2018 the NPS pipeline identified 63 frameworks. In April 2020 there will be 42 frameworks under NPS management reducing to 34 by April 2021 and the 32 by the end of 2022. The transition plan, based upon tapering the number of agreements, was agreed with the WLGA to ensure continued service provision.

A number of existing framework agreements (currently managed by the NPS) that do not fall within the scope of a national agreement will be delivered regionally through local authority collaboration. We anticipate that these will be available for wider public sector use and will form, along with the revised NPS pipeline, the start of a Welsh public sector collaborative pipeline embedding at its heart the Wellbeing of Future Generations goals and all underpinning Welsh procurement policy drivers and associated legislation.

In addition to the national plan, the NPS are providing insights and lessons learnt to help shape the delivery of local and regional approaches with our local authority partners. For example, we have been working closely to help establish a new regional food buying approach across the local authority sector. While this will focus on local authority needs, best practice will continue to be shared through a food category forum and information exchange with the Welsh NHS.

We are also working directly with the chair of the WLGA Heads of Procurement network in the development of the WLGA construction consultancy agreements. Previously let by the NPS and used extensively, the new Local Authority agreements will complement their existing capital works frameworks for highways and schools. Again, the frameworks will be open to all in the Welsh public sector and we are sharing NPS knowledge and lessons learnt with the Local Government procurement team.

In addition, there are a number of areas that have been identified as being more effectively delivered on a UK national basis. These include postal services and corporate travel services. We are working with CCS to ensure their UK national agreements will meet Welsh public sector needs.

The emphasis on digital technology is an overarching commitment which runs throughout procurement policy development. The Welsh Government created a Digital Action Plan for Procurement.

Single sign-on has been successfully implemented within Sell2Wales. A new set of qualification questions have been prepared for the European Single Procurement Document (ESPD). Development work to provide integration between Sell2Wales and eTenderWales has commenced and is currently in testing. The eTenderWales and eTradingWales contracts have also been re-procured until the end of March 2022.

Digital signatures have been implemented within eTenderWales and piloted successfully within Welsh Government in the Digital ICT procurement team. We will shortly be extending the functionality to the wider public sector in a series of pilots.

The Welsh Government procurement function co-ordinates its procurement activity pipelines in a way that clearly articulates the contribution of this work programme to Welsh Government policy priorities and commercial vision.

A policy prioritisation tool has been developed for use against Welsh public sector spend, to ensure a targeted and intelligent approach to focus efforts where maximum value can be achieved through policy implementation. There will be a focus on delivering the respective agendas under each of the 5 identified Policy Priority areas (all of which will have cross overs and/or alignment with the other areas).

The 5 policy areas are:

• Decarbonisation
• Social Value
• Community Benefits
• Foundational Economy
• Circular Economy

We have developed a decarbonisation dashboard which is available to public bodies in Wales so they can see their own carbon intensity ratings for the goods, services and works they are buying. They can then identify opportunities for carbon reduction/interventions and develop their own decarbonisation action plans with support, guidance and training from Value Wales. We are working closely with the Decarbonisation Team to establish what support/training they can provide and to ensure our work aligns.

Community wealth-building activity, Better Jobs Closer to Home and “anchor institutions” are some of the mechanisms that have been used to deliver community benefits, social value and to advance our work on the Foundational Economy.

We have appointed the Centre for Local Economic Strategies (CLES) to work alongside officials to provide practical advice and resource to assist public services boards (PSBs) to implement new approaches to procurement. These new approaches will be based on analysis of current levels of procurement expenditure, identification of supply voids and will explore every opportunity for optimising the involvement of indigenous business in public procurement.

We expect that initial projects will commence in March 2020, ensuring lessons learned from the experience gained through the Better Jobs Closer to Home pilot projects are embedded into the projects.

The Foundational Economy challenge fund is also supporting 11 innovative projects from public and private sector partners which aim to trial new approaches to maximising the value of procurement activity for parts of the local economy.

The Better Jobs Programme has looked at various innovations to find ways to use the money the public sector spends on works, goods and services to provide sustainable, good quality jobs.

Some of the innovative approaches have included:

• reserving contracts for social enterprises
• buying prosperity through new approaches to tendering and the application of State Aid
• establishing local provision to overcome supply voids, and
• setting up special purpose vehicles and bringing together supply and demand.

These innovations have shown what can be done and these approaches are now being normalised and scaled up through the Foundational Economy work.

The Better Jobs Pilots in 2019 established a manufacturing facility in Ebbw Vale employing people from the most deprived area of Wales. The manufacturing facility which is operated by a social enterprise, have secured orders from CADW, the Welsh NHS and are in discussion with Transport for Wales. Through bringing supply and demand together we are on course to provide between 30 and 50 new quality jobs by April 2020. The Better Jobs Team worked with an existing social enterprise who collects and shreds paper to increase demand from 20 tonnes a paper a month to well over 80 tonnes a month. This increased demand has resulted in 46 new jobs for people, the majority of whom are living with a disability. Building on that success, work is underway to mainstream some of the same innovative approaches with the wider public sector and options for potential projects are being explored.

The Welsh Government is currently looking to influence and inform the Foundational Economy work, and take forward the commercial elements of this work. Focusing on foundation sectors such as Social Care, Construction and Food, we will look to work deep in supply chains to highlight opportunities for local suppliers and build stronger relationships throughout the breadth of the supply chain.

The appointment of CLES as our Community Wealth Building Partner will enable the PSBs and their anchor institutions to embed opportunities within their tenders for local suppliers. Through analysing spend and company data we will be able to identify where local supply exists but is not being used, and where there is no local supply. This will provide the PSBs with possible interventions to help meet the aim of creating community wealth, ensuring fair work and better meet the Wellbeing goals.

Where local supply exists but are not winning public sector contracts, we will investigate the reasons why not. Commercial Innovation will work with public sector buyers to show how their tenders can be written in such a way as to encourage local suppliers to bid. They will liaise with colleagues working with local suppliers to set out what is required to win public sector contracts. Where there is no local supply, we will look into the plausibility of creating supply.

We are working closely with Housing colleagues and WoodKnowledge Wales as part of an integrated approach to increase the growth of Welsh timber and determine what mills can do with Welsh timber in order that it is a mainstay material for construction. This is an end to end supply chain disruption that will lead to a reduction in imported timber; less incineration and more growth of home grown timber; and, more Welsh timber being milled for the construction industry to feed the burgeoning off-site timber manufacturing production in Wales. This will provide a real boost to carbon reduction and zero carbon housing in Wales.

Where there is a relative lack of growth of small enterprises into medium enterprises we have used data to identify and support small local suppliers who are ready to make the next step. Such activity will contribute to grow the ‘missing middle’ agenda and will provide resilience and succession planning for grounded firms in Wales.

In order to strengthen procurement leadership, the Welsh Government ICT Procurement team has undergone a peer assessment against Government Commercial Standards. Welsh Government Corporate Procurement is beginning the process and, where necessary, we will develop action plans to strengthen levels of commercial awareness and ability.

Skills and capability is a priority area and a commercial skills development proposal has been developed identifying short, medium and long term priorities for:

• Future proofing
• Procurement and Commercial Skills Development Programme (existing)
• Raising the profile of procurement
• Supporting skills development for current and emerging procurement policy areas (new)
• Measuring the impact of the programme.

The Skills and Capability Plan is attached at Annex D. We are undergoing a programme of engagement with key stakeholder groups including WLGA, NHS Shared Services Partnership, University of South Wales, Professor Kevin Morgan, and Cardiff University to share the skills proposal through a cycle of reviews. We undertook a full stakeholder mapping exercise during February to ensure effective engagement to inform the strategic direction of the programme.

Significant work has been undertaken in preparation for leaving the EU, particularly in relation to preparing for the possibility of a no-deal Brexit. This included working with the UK government and departments across the Welsh Government to monitor and manage supply related risks to help ensure, for example, the continuity of supply of critical products such as medicines and medical products to all parts of the UK.

It also involved conducting a review of all contracts within the Welsh Government to assess the risk of a no-deal Brexit, thereby informing any mitigation measures required. In addition, we wrote to the top strategic suppliers by spend and the top food suppliers across the Welsh public sector to ask them about their preparedness for Brexit.

Substantial communication and stakeholder engagement work was undertaken to ensure our procurement colleagues across the Welsh public sector were informed of these potential risks and they were encouraged to undertake similar mitigating measures. We provided the Welsh public sector with toolkits to help them with this work which they could use if they wished.

Now that the UK has left the EU and entered a transition period, the way the public sector procures will remain unchanged during this period. Procurement legislation will continue to operate effectively after the transition period has ended even if a free trade deal is not agreed with the EU.

The UK government has sought agreement from the World Trade Organisation (WTO) Government Procurement Agreement (GPA) Committee for the UK to accede in its own right after leaving the EU. Maintaining UK participation in the GPA will allow UK businesses to continue to access an international government procurement market worth an estimated £1.3 trillion (according to WTO) annually across 47 WTO members.

The UK government will have the ability to enter into other free trade agreements (FTAs) which contain procurement chapters e.g. EU, USA, New Zealand, Japan and Australia. These FTAs will provide the regulatory framework in which procurement will operate and which government opportunities are opened up to competition. We are working with the UK government and the other devolved administrations in the development of these procurement chapters to protect the interests of Wales. In doing so, we wish to see our procurement policies continue to enable economic growth, increase employment and deliver environmental priorities in Wales.

A common framework for public procurement is being developed through constructive discussions between the UK government and the other devolved administrations. This will help govern the procurement relationship between our 4 nations.

The work regarding how procurement rules could operate in the future to protect the interests of Wales is currently at the early stages of development.

Sector engagement is being actively delivered through a number of procurement forums including Welsh Local Government Association (WLGA), NHS SMT, Welsh Government Sponsored Bodies (WGSB), North Wales Procurement forum, South West Wales Heads of Procurement, HE Procurement forum and Police Procurement forum.

Case studies and examples of good practice in procurement are being collated for regular circulation and marketing across the Welsh public services, embracing social media and modern marketing methods.

The written statement set out a number of commitments, making clear that a new procurement approach is needed in Wales, details of these commitments are provided below:

1. Greater focus on delivering collaborative procurement agreements aligned to regional and local priorities.
2. Delivery of a smaller number of national contracts where Wales-wide solutions provide the greatest value for a large proportion of the Welsh public sector.
3. The NPS to transition to smaller national contracting operation to manage a reduced portfolio of national contracts, where such agreements can demonstrate delivery of value across a significant majority of Welsh public sector organisations.
4. A new national policy development and delivery support function.
5. Work with stakeholders to develop a new procurement strategy, which clarifies the future operating model and enables the full value of procurement to be realised nationally, regionally and locally.
6. A new capability and capacity programme to equip procurement officers with modern commercial techniques and create a future talent pipeline to help tackle skill shortages and gaps created by different pay and rewards structures.
7. Greater emphasis on driving up community wealth-building across Wales.

Alongside the written statement, the First Minister set out a series of procurement commitments in his Leadership Manifesto which are cross-cutting across major policy areas. Procurement is involved at some level in delivering upon a range of areas to support a better Wales for all citizens. Details of these commitments are provided below:

1. Use whatever new flexibilities are derived from leaving the European Union to help Welsh-based companies to compete successfully for contracts.
2. Use any new freedoms created through Brexit to make greater use of procurement to build local foundational capacity. And train staff in procurement skills to maximise current potential.
3. Accelerate the Better Jobs Closer to Home programme, in continued partnership with the Wales TUC.
4. Ask each local authority to identify local “anchor institutions” and work with them to audit their contracts to increase the value and volume of procurement from regionally-based SMEs.
5. Invest in a new pan-Wales public sector training programme for ethical procurement, making sure that skill levels of existing staff meet today’s needs and creating the professionals of the future.
6. Raise the status of the procurement profession by addressing the skills deficit and greater regional working.
7. Use the power of procurement and public investment to secure quality services in, for example, the care sector by linking that investment to fair pay and career development.

Procurement transformation: Architecture

Strand 1 – Leadership

We want the Welsh Government to lead by example by becoming an exemplar of procurement best practice.

We will use Government Commercial Standards to keep the Welsh Government at the necessary levels of awareness and capability.

Strand 2 – Policy initiatives driven by data

We will take a targeted and data-driven approach to policy application to ensure we focus efforts where maximum value can be achieved.

We will use a prioritisation tool to help us identify key policy areas, providing an opportunity to implement initiatives so the full value of procurement can be realised nationally, regionally and locally.

Strand 3 – Capability and profile of the procurement profession

We will build capability and resilience across the procurement profession in Wales to address the skills deficit, empower staff and encourage innovation.

We will deliver a new skills and capability plan to equip existing procurement officers with modern commercial techniques, to raise the commercial awareness of everyone else create a future talent pipeline and to raise the status of the profession across Wales.

Strand 4 – A new policy development and delivery service (with toolkits)

We will strengthen policy development and delivery across the Welsh public sector that helps establish a culture that maximises social, economic, environmental and cultural outcomes.

We will provide support, training and tools to help buying organisations maximise the outcomes achieved through procurement.

Strand 5 – Supply chain intervention and analysis

We will implement Cabinet priorities (such as creating local jobs) by analysing data and applying interventions to supply chains throughout Wales.

We are re-structuring supply chains to include local suppliers that will benefit the local economy.

Strand 6 – Marketing and engagement programme

We will join up the Welsh public sector procurement community across Wales.

We will showcase success and share good practice using modern digital technology.

Strand 7 – Digital implementation plan

We will develop a modern infrastructure for digital procurement by collaborating with our colleagues throughout the integrated Welsh public services.

We are developing a progressive future digital procurement strategy, which will include plans to maximise our investment in eSourcing, Procure 2 Pay, spend analysis, contract lifecycle management and strategic supplier management tools.

Strand 8 – New governance process

We will implement a refreshed and overarching governance process for Welsh public sector procurement that supports the delivery of Welsh Government priorities (such as Prosperity For All), as well as other public sector priorities.

Strand 9 – Evolution of NPS

We will evolve into a function that is focussed on category management delivering practical policy integration.

We will support the development of a pipeline of contracts for Wales, and ambition to purchase innovative solutions for the Welsh public sector.

1. Introduction

The purpose of this document is to define the future short to medium priority areas for public sector procurement skills development in Wales. The first theme of this document will be focus on pilot initiatives to begin to future proof the profession and stimulate job creation opportunities through wider initiatives. The 2nd theme is designed to help maximise those core commercial skills which are essential to ensure effective procurement and contract management, while also embedding Welsh Government procurement policy across current and new emerging areas via a suite of new eLearning.

2. Aims and objectives

The aims and objectives of this work-plan are to:

• Provide skills development opportunities through eLearning support to meet today’s needs in current and emerging procurement policy areas
• Create the professionals of the future through engaging with academia and wider education sectors
• Address the skills deficit faced by the Welsh public sector by exploring opportunities to introduce new entrants into the profession via procurement apprenticeships.

3. Stakeholder mapping

The way in which stakeholders are engaged with to deliver the work-plan is crucial to its success. Stakeholder mapping will be undertaken adopting the model below. A core group of key stakeholders will be established to influence the strategic direction with an anticipated virtual sub group of stakeholders receiving a cycle of consultations on work-plan progress over time, given the opportunity to shape future direction.

Stakeholder mapping happened in February.

4. Priority areas and key timescales

Section 1: Future proofing

Student sandwich placement scheme

This initiative outlines a pilot proposal for collaboration between Value Wales and Welsh Universities to place students in their final year of their procurement related degree studies into the Welsh procurement community. Placement students will gain valuable procurement expertise, while helping to tackle the skills shortages and gaps faced by the procurement community across Wales. The intention is to deploy students on key projects to influence positive procurement outcomes, while also helping to plug the procurement capacity shortage faced by the Welsh public sector.

This initiative has been in place between the University of South Wales and Cardiff Council since 2013, and NHS Shared Services Partnership for the last 3 years. Proving successful year on year, with many students becoming employed on a full time basis following their placement.

Students are recruited during October to commence with a view to starting the placement during May. Students would need to be temporarily employed by Welsh Government and deployed into public service organisations. It is assumed the salary point of entry will be Welsh Government Team Support band.

Procurement apprenticeship pilot scheme for the deprived areas of Wales

This initiative addresses the procurement apprenticeships landscape as of January 2020 and considers the introduction of a pilot procurement apprenticeship programme for Wales. The aspiration is to implement an all Wales procurement apprenticeships initiative by working with Welsh Universities and public sector bodies. This would give young people the opportunity to enter a procurement workplace and learn while they earn.

We intend to offer 16-19 year olds in deprived areas of Wales, the opportunity to develop procurement expertise in a profession where Wales sees a serious capacity deficit, while also stimulating potential job creation and skills development for a valuable demographic group. By addressing the capacity shortage across the Welsh procurement community, it will support the Well Being of Future Generations Act and Prosperity For All by providing skills development opportunities for young people in the most deprived areas of Wales (as reported by the The Welsh Index of Multiple Deprivation (WIMD 2019).

The apprenticeship programme would align ‘the skills people gain and the skills the economy needs’. This initiative would focus upon Degree Apprenticeships and lead to full accreditation of CIPS Graduate Diploma via either CIPS study or a Masters Degree programme.

Top 10 most deprived areas overall

Source: StatsWales

Section 2: Procurement & Commercial Skills Development Programme

The following 4 eLearning modules make up the suite of learning produced by the Procurement Commercial Directorate within the Welsh Government. This proposal will see the content made generic, revised and updated and made available free of charge to the Welsh procurement community, hosted on Learning@Wales, the national eLearning platform managed by the Digital Learning Wales Team.

• Procurement overview
• Sourcing the supplier
• Contract & Supplier Management Toolkit
• Legal Hints & Tips (created in collaboration with Welsh Government Legal Services – to be renamed Commercial Awareness).

Section 3: Raising the profile of procurement

Effective procurement is underpinned by senior leaders who are able to promote the vital strategic importance of the procurement function. This proposal will explore what mechanisms can be implemented for senior leaders and elected members at induction stage to ensure they are armed with the knowledge of the regulatory framework in which public sector procurement must operate, and an understanding of the added value effective procurement can bring to enable them to champion the profession.

Section 4: Supporting skills development for current and emerging procurement policy areas

This proposal will see a suite of commercial and procurement eLearning modules and tutorials to help practitioners embed current and emerging policy theory into procurement application. A phased approach will take place to ensure the highest quality provision and robust user testing prior to launch and wider rollout.

Phase 1

• Understanding and Implementing Project Bank Accounts start February 2020
• Decarbonisation opportunities through procurement start February 2020

Phase 2

• WRAP and Procurement – start March/April 2020
• Community Wealth Building through procurement start March/April 2020

Phase 3

• Future needs analysis i.e. Social Partnerships, etc.

Section 5: Measurement and impact

Engagement with the programme will be monitored via regular MI reports across all modular eLearning provisions. We will analyse where engagement is low and take steps to promote the programme and drive up engagement. We will respond to feedback and make enhancements where required or provide further support where needed.