Julie Welsh is one of an increasing number of senior procurement folk who have made the leap from the private sector to the public. 15 years ago, when working for Scottish Power, she focused on CSR (corporate social responsibility) in Scotland as part of her MBA studies, and this interest has stayed at the core of her work since.
She was fascinated by the idea that CSR might not be a cost but could be both commercially sensible and achieve wider positive results. On joining Renfrew Council 12 years ago, as the first “head of service” in procurement at the time across Scottish local government, she started working to align these two goals, designing procurement approaches and tenders that reflected both. Fortunately, her CEO saw the benefits (“as long as we delivered results”, as she says) and gave her programme full support.
Whilst Welsh modestly calls much of the work “common sense”, the council won awards and was the first to be rated “superior” in the local government procurement capability assessments. Then, in 2014, Welsh became the CEO of Scotland Excel, which acts as a procurement shared service organisation for local government across the nation. Excel focuses on goods and services of high importance to the sector, such as social care, housing, waste management, and school supplies but also runs an “academy” to deliver CIPS training as well as leadership and other courses in order to increase capacity and capability in councils. Scotland Excel also supports councils on major projects and runs capability assessments.
The Scotland Excel contracts are not mandated but the contract portfolio is valued at £2Bn per annum. “we’ve definitely got better at marketing what we do”, Welsh says. She reports into a committee of 40 (!) elected councillors, who “desperately want to use the power of procurement in many different ways”.
It is a challenging balance, as councils want and need excellent value for money, but they seek social value benefits too, such as suppliers paying the living wage and driving local employment, as well as saving the planet. This can be a difficult balance to achieve, as she explains. “Procurement can be seen as a panacea for everything the politicians want to achieve in the field of social value. But we dilute the benefit if we try to do everything every time”.
Welsh reports to the committee every six months, and has explained to the group that the focus on social value needs to be determined at the strategy development stage of the procurement process. “So for example, when we look at security services, there has been a major focus on combatting organised crime, as well as pushing for suppliers to pay the living wage to staff”.
But there are challenges. “We don’t have much buying power really in that industry, for instance, so I have to explain to councillors that we can’t always make the things happen that we’d like to”. There is another challenge in that particular market when the police have intelligence that a certain company might not be totally legitimate – but can’t say enough for the firm to be excluded legally from the process!
It is also illegal under EU procurement regulations to make it mandatory for bidders to pay the living wage; Welsh is hoping that after Brexit, new UK regulations may be more flexible. “But we have had successes. Across our portfolio, more than 80% of our suppliers pay the living wage and when our customers have a choice of rates, as they do in our social care agency staff framework, more than 90% choose to pay the supplier more in order to support the living wage.”
Again, the issue of focus comes into play. “In social care, we’ve concentrated on sustainable rates and staff welfare more than other wider social benefits – we judged that was the real priority”. Welsh has looked to agree standard rates with care providers but “agreeing what is a reasonable profit margin is a stumbling block!” Welsh sees social care as “an important moral issue – it is unique and also highly political”. A new framework for supported living services has seen rates increasing, but will councils accept this, even though the reasons are valid?
The Covid pandemic has of course brought new challenges, both in terms of sourcing some items and also the effect on the environment, which itself has been a growing area of interest in recent years for councils. “We give users options in areas such as plastics, but compostable plastic items – in catering or PPE for instance – cost four times as much as the standard. That is additional money which is difficult for cash-strapped councils to find”.
Scotland Excel has just put in place its first new-build housing framework, with a focus on sustainable job creation. “When we first started, we didn’t really know what we could get from suppliers but now we think more pointedly about the benefits we want from each framework”.
There is no standard rule in terms of the weighting given to social value during supplier selection processes, “but for most services, it is in the 10-20% range”. It might not be so high for relatively commoditised goods. As Welsh puts it, “we have got smarter about how we do these things, and it’s important not to think one size fits all”.
Some of the recent news around contracts awarded without competition suggests that there are some risks post Brexit, which worries Welsh. “Public procurement is so much better than it was 20 years ago, but the regulations should protect us from a culture where winning contracts comes from who you know rather than what you can do”. In fact, she says “there is much that public bodies can do without bending rules to help local companies. We encourage leaders to be creative, to think about a solutions perspective rather than simply process. In fact, that’s really what we try and do at Excel – help our customers find great solutions”.
Getting that combination of value for money, supplier delivery and social value will always be tricky and will always need skilled procurement work. But Welsh and her team at Excel seem to be meeting that challenge in the Scottish local government world, embracing procurement with purpose as a fundamental principle of their work.