Report of the Local Government Efficiency Review Group

9.1 Role of Procurement
9. Procurement
9.1.1 The role of procurement has gained enhanced status in the past few years
as a management tool to contain costs, achieve quality and improve the
effectiveness in purchasing the inputs necessary to provide public and
private goods and services. The discipline and techniques applied in
effective procurement are a key driver of efficiency and quality in delivering
services to the public. Improvements in procurement are being developed
at central level by the National Procurement Service. At local level, there
has been important progress but as with central government more can be
done.
9.2 Local Government Procurement
9.2.1 Until relatively recently, local authorities used largely to procure on an
individual basis and, as a result, there were different and often inconsistent
approaches to the tendering process. While adhering to EU Directives and
national guidelines on procurement, for smaller items many local authorities
used ‘annual quotation books’ whereby suppliers submitted a quotation list
or catalogue of supplies and services at the start of the year, and buyers
could directly select suppliers from this list as required throughout the year.
9.2.2 Arising from the national e-Procurement strategy for the public sector in
October 2001, the local government sector initiated a project to develop a
sector-level e-Procurement strategy, published in 2003. The purpose of the
strategy was to provide a set of recommendations and an implementation
plan to guide the development of procurement in the sector so that
significant savings could be achieved by exploiting the opportunities for
improving procurement performance. It was recognised that the existing
approach was not always the most effective in terms of leveraging buying
power and ensuring adequate competition in the supply market, and that a
technology based system was required. The overall objectives of the Local
Government e-Procurement Strategy are set out in Appendix 8.
9.2.3 The development of sectoral policies and procedures were needed to
ensure that a more integrated approach was taken across the sector in this
area. A key requirement to addressing this issue was the introduction of a
modern financial management system and a unified coding system. Since
2003 all local authorities have implemented new financial management
systems based on accrual accounting. In all cases the FMS systems can
support the raising of purchase orders through to payment of suppliers
electronically. In general, manual activities such as raising purchase orders
have been automated. In 2008, a standard coding system was introduced.
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