Equality and diversity implications of responsible procurement

Report: 4
Date: 14 April 2011
By: Director of Resources on behalf of the Commissioner

Summary

This report provides members with an update of MPS initiatives to procure responsibly, with particular emphasis on equality and diversity within our supply chain.

A. Recommendation

That members

1. Note, the content of this report covers recent Responsible Procurement successes, the training that procurement staff have received and the key initiatives that have an impact on equality and diversity. These include nett 10 day payments, London Living Wage, Diversity Works for London, ethical sourcing, mandation of CompeteFor and procurement process enhancements.

B. Supporting information

Background

1. In January 2009, the Metropolitan Police Authority (MPA) agreed the Metropolitan Police Services (MPS) Four Year Responsible Procurement Strategy.

2. The term responsible or sustainable procurement can be defined as: - "Pioneering socially, environmentally and economically responsible procurement to deliver improved quality of life and better value for money for our people, our businesses and our city".

3. The aims of the Four Year Responsible Procurement Strategy is to improve three key areas relating to distinct customer groups within the capital under the banner of:

• Our People - improve standards of living and promote opportunities for sustained employment for Londoners
• Our Businesses - Open up opportunities for London’s businesses and to promote equal life changes for all the business community
• Our City - Promote greater environmental sustainability and make London a better place to live and work

4. Since approving the original targets in January 2009, significant progress has been made. Changing priorities and lessons learned during 2009/10 led to the revision of some targets which were approved by the Resources and Productivity Committee on 3rd June 2010.

Recent successes and challenges

5. Since adoption of the Responsible Procurement Strategy in January 2009, the MPS has made great strides to improve policies, processes and procedures regarding the social, environmental and economic impacts of our procurements. As a result we have been externally audited against a number of benchmarking frameworks and have received a number of external awards.

6. The Flexible Framework identifies five key themes People; Policy, Strategy and Communications; Procurement Process; Engaging Suppliers and Measurement and Results. It ensures a consistent approach to risk management and encourages organisations to capture opportunities and stimulate innovation in their supply chains. In January 2010, the MPS employed an external auditor to carry out a gap analysis on performance against the Flexible Framework, the results were extremely positive and we achieved an overall score of 93.6% on Level 5 (the highest score available). The MPS were one of the first organisations to achieve Level 5, the highest level currently achievable, under Defra's Sustainable Procurement Flexible Framework. The MPS intends to carry out a further audit against the Flexible Framework in the spring of 2012.

7. The Mayor of London’s Green Procurement Code is a support service for London based organisations committed to reducing their environmental impact through responsible procurement. The company running the Mayor of London’s Green Procurement Code provides practical advice and online resources to help embed green purchasing into all aspects of an organisation, including sourcing green products. For 2008/09 and 2009/10 the MPS has been successful in achieving gold on the Mayor of London’s Green Procurement Code audits and the MPS has been recommended for Gold for 2010/11. In addition, the MPS, despite strong competition from colleagues at Transport for London and London Fire Brigade won "Best in GLA Group Award" for our work on Responsible Procurement. Furthermore, the MPS had three suppliers in attendance at the awards ceremony, Ricoh, Balfour Beatty Workplace and Mace achieving Bronze, Gold and Silver respectively. This demonstrates our commitment to supporting and developing suppliers.

8. In addition to the Mayoral commitments, as the Associations of Chief Police Officer’s national lead for Sustainable Procurement the MPS are actively promoting, supporting and sharing best practice across the police forces.

9. The MPS Supplier Diversity and Environmental Manager, Fay Davis, was rewarded for her efforts to implement Responsible Procurement within the MPS and won the 2010 Personal Achievement and Exceptional Police Procurement Award from the Association Police Procurement and Contract Professionals. Allan Sneller (Category Manager) won the award for Best Sustainable Procurement Initiative for his work to reuse parts of riot shields, reducing waste to landfill and saving money.

10. Sustainable procurement remains a relatively new challenge for most organisations. Over the last 12 months the MPS has successfully overcome some of the issues facing procurement staff and suppliers.

11. In the past some staff felt legal issues surrounding the Public Contracts Act was preventing them from incorporating sustainability into tenders, a combination of CIPS Responsible Procurement training, a dedicated resource to provide advice on individual contracts and embedding core requirements into the standard procurement process has supported a positive change in attitude internally.

12. Low engagement and interest by suppliers was an issue for the MPS, by holding supplier exhibitions, putting in place contract monitoring and building good working relationships with suppliers has resulted in a number of positive improvements for both the MPS and the suppliers.

Responsible Procurement Training

13. Procurement Services have attended a full day face to face training course on Responsible Procurement in order to up skill new starters and existing procurement staff. At present 40 staff have been trained with a further 12 attending a course on 31st March 2011. Further sessions will be run to ensure all members of staff are trained. In addition, 5 of the 8 members of the senior management team within procurement services have attended a strategic level briefing session on 22nd March.

14. In conjunction with the GLA, the MPS has implemented an e-learning portal, covering each of the seven themes of Responsible Procurement, to provide a high level overview of Responsible Procurement. The portal is aimed at all staff with buying responsibilities and to increase our supplier’s knowledge of MPS requirements.

15. The MPS is taking a lead role in promoting RP among other police forces in England and Wales. Under an initiative by the Association of Chief Police Officers a national Police Sustainable Procurement Working Group has been established this year to share ideas and best practice and encourage the adoption of buying responsibly. As part of this the MPS has been instrumental in creating a standard RP toolkit for use in other police forces.

Current Initiatives

Nett 10 day payments

16. The Mayor’s Economic Recovery Action Plan (ERAP) launched in December 2008 sets out practical measures to help businesses and Londoners through the recession. The plan includes wide-ranging activities to stimulate economic recovery, one of which is for the GLA group to reduce standard payment terms for SME’s to 10 working days. From a baseline position of 14% in February 2009, the MPS are currently paying 81% of SME’s within 10 working days. During January and February 2011, figures to SME’s fell to 69% and 72% respectively. This was due to the learning curve of our people following the implementation of a new finance system. The MPS target for March 2012 is to reach 90% of SME’s paid within 10 working days.

London Living Wage

17. The London Living Wage (LLW) is a London weighted minimum wage, which takes into account the higher living costs of London and is intended to ensure that those in low-paid jobs are paid a wage that takes into account the high cost of living in the Capital. The figure currently stands at £7.60 per hour; £1.87 above the National Minimum Wage. This financial year the MPS made a positive impact on 691 people’s lives and the economy by encouraging suppliers to pay London Living Wage on facilities management and temporary labour contracts. Supplier have seen beneficial results including easier recruitment, better quality staff, lower staff turnover, better attendance and better productivity, motivation and loyalty. The 2010 London Living Wage was announced by the Mayor in June. The suppliers employing typically low paid staff (facilities management, porterage and temporary labour) have confirmed the relevant rises have been made. The MPS has a target to ensure 750 people working on MPS contracts receive at least the London Living Wage. During 2009 a total of 780 were affected by these rises. However, during 2010 our suppliers were only able to identify 691 people who were paid less than the London Living Wage.

CompeteFor

18. CompeteFor is a free web-based portal that allows organisations to contact suppliers for quotations through a consistent and structured process.

19. The MPS’s target for 2010/11 was to utilise CompeteFor for at least 30 opportunities. As of March 2011 the system has been used for 43 opportunities. This has provided procurement services and business units a good opportunity to test the system and identify where it is most beneficial to the MPS.

20. On 16th February, Procurement Services put forward a paper to Management Board to implement and subsequently mandate CompeteFor in order to identify suitable suppliers for all purchases between £500 and £50,000 across all business areas, when the goods or services to be purchased are not available from an existing corporate contract. This will result in enhanced value for money of purchases, compliance to the MPA regulations, help meet transparency requirements to publish all tenders over £500 and finally meet Mayoral supplier diversity targets. In order to ensure compliance, procurement services will be rejecting Described Requirements without the relevant number of quotes attached.

21. A key benefit in mandating CompeteFor is the ability to make contracts more accessible to a wider supplier base and to target suppliers in the local area. This will support the Responsible Procurement Strategy to enable a diverse range of suppliers including SME’s to bid for our contracts. Thus regenerating the local communities in which we operate.

22. The MPS are provided monthly reports of all contracts awarded through CompeteFor which cover the ownership and diversity of the suppliers business as well as providing employee diversity data. All suppliers registering with CompeteFor must have as a minimum a health and safety policy, equal opportunities and environmental policy.

Diversity Works for London

23. Diversity Works for London is a Mayoral programme that encourages and supports businesses by providing a comprehensive suite of tailored business support products. The program enables companies to improve their diversity proficiency.

24. The MPS’s target was to encourage 10 suppliers to sign up by March 2010 with no target for 2011, at present 13 MPS suppliers have become signatories. Being a signatory to the program provides suppliers with a free support service improving their internal policies on equal opportunities. During 2010, the programme was re-designed including an intermediary level which will enable more suppliers to work towards the standard. The MPS has a target for 1 key supplier to achieve the gold standard by March 2012. This has not been currently been met, however, at present one key supplier is working towards achieving gold. The Gold Standard is a thorough investigation into the organisations policies and processes surrounding equality and diversity.

Skills and Employment

25. Skills shortages have begun to emerge in London within a number of industries particularly in technical and engineering fields. Furthermore, the current economic downturn has brought forwards short-term training needs, with a necessity to develop a workforce capable of learning and applying new skills. Therefore the MPS has targets to provide 50 apprenticeship and 5 ex-offender opportunities within our supply chain.
26. During National Apprenticeship Week, the MPS hosted an event to encourage suppliers to provide apprenticeship opportunities; key suppliers were present from both the more traditional construction apprenticeships but also more modern apprenticeships such as ICT. This has led to further discussion with strategic suppliers, who although, in early stages of discussions are interested in potentially either transferring existing staff onto apprenticeship programs or recruiting new members of staff on apprenticeship programs.

27. As a direct result of intervention from the MPS, during an event hosted by the Mayor Boris Johnson, on Monday 15th March, Mace, our construction contractor, made a public declaration to provide work trial opportunities for 5 ex-offenders the MPS construction project starting in April 2011. If successful the ex-offenders may be offered a permanent position following the work trial.

Ethical Sourcing

28. The MPS is in the process of piloting an Ethical Sourcing Implementation Plan, the objective of this plan is to provide a strategy for the MPS to reduce the potential risk of poor labour standards within the supply chain. It will provide a clear direction to procurers to ensure they handle ethical sourcing issues appropriately and explore how the MPS will handle a negative situation should it arise.

29. Initially the scope of this strategy will cover the supply chains most at risk for of poor labour conditions these may include but not limited to; uniform, catering and electronic goods, prioritised by products originating from low cost sourcing countries.

Procurement Process Improvements

30. When pre-qualifying suppliers the MPS require each organisation to sign up to a Responsible Procurement code of conduct. The MPS conducts its business in accordance with this Code of Conduct and expects its suppliers and contractors to observe the Code of Conduct and to demonstrate a similar commitment to improving ethical, supplier diversity and environmental practices. Specifically referring to the Ethical Trading Initiative (ETI) Base Code, which is founded on the conventions of the International Labour Organisation (ILO) and is an internationally recognised code of labour practice.

31. In addition to the code of conduct, as part of the pre-qualification questionnaire the MPS asks suppliers to confirm they comply with the Equalities Act. This pre-qualification questionnaire is based on the GLA Group standard questions to simplify the process for all suppliers bidding for GLA Group opportunities.

32. At present as part of the vendor set up process the MPS asks if the supplier is classified as an SME. From summer 2011, as part of the new vendor set up process, the MPS will be asking suppliers to declare if they are women, BME, LGBT or disabled led organisations. It should be noted that we cannot require suppliers to provide this information by law and will therefore have to provide them an option to “not disclose” this information if they so wish.

33. Following contract award, Contract Managers within the MPS have a standard toolkit of 15 modules developed by Procurement Services to enable efficient contract management. One of these modules is Responsible Procurement and provides Contract Managers guidance surrounding the seven themes of Responsible Procurement and helps prioritise suppliers based on risk and expenditure.

C. Other organisational & community implications

Equality and Diversity Impact

1. The four-year Responsible Procurement plan aims to further improve the diversity of the workforce within London and increase the life opportunities for those who suffer prejudice and discrimination. Furthermore, the MPS is supporting and enabling young people into sustainable employment. The targets will drive diversity within our supplier base and open opportunities to a broad range of organisations. Any impact would be positive.

Consideration of MET Forward

2. Responsible Procurement has a positive impact on MetForward in term of giving us better value for money. Particularly in relation to the implementing and mandating CompeteFor where enhanced compliance to the MPA regulations will result in cost savings.

Financial Implications

3. The activities carried out and proposed, as set out in this report, are all covered by existing business wide budgets as set out in the 2010/13 Business Plan.

Legal Implications

4. There are no legal implications in respect of the recent responsible procurement successes set out in this report.

Environmental Implications

5. The Responsible Procurement program covers social, economic and environmental issues and continues to have a positive impact on the supply chain.

Risk Implications

6. There are reputation risks surrounding not being responsible in our procurement activity, particularly surrounding ethical sourcing.

D. Background papers

• Responsible Procurement update and targets

E. Contact details

Report author: Fay Davis, Supplier Diversity and Environmental Manager, MPS

For information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

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