Diversity within Procurement Services

Report: 07
Date: 10 January 2005
By: Commissioner

Summary

This report advises the MPA of the actions taken by Procurement Services and those proposed to address equal opportunities and inclusion of all suppliers in our policies and procedures for tendering.

A. Recommendations

That

1. Members are asked to note the current status of this ongoing policy;
2. Members are asked to endorse the future actions outlined to ensure that our commitment to diversity is adequately reflected in the procurement process; and
3. A report be submitted at the conclusion of phase 1 of the diversity programme plan setting out an evaluation of phase 1 and to help inform the content of phase 2.

B. Supporting information

1. The main purpose of this document is to ensure that Procurement Services (PS) has a strategy in place that will ensure compliance with its responsibilities (on behalf of the MPA) under the Race Relations (Amendment) Act 2000 (RR(A)A). This Act requires us to ensure that we are making concerted efforts to:

• Eliminate discrimination
• Promote equality of opportunity
• Promote good race relations

2. The Metropolitan Police Service (MPS) Diversity Policy states that the MPS:

• Treats everyone fairly
• Is open and honest
• Work in partnership to change to improve
• Enable London to become the safest world city, through taking account of the social, economic and environmental impacts of tenders

3. The MPS policy aims to understand and promote diversity and this is reflected throughout the MPS operations including the supply chain. It ensures that the MPS gives under represented businesses the same opportunity to compete for the supply of goods and services as other suppliers.

4. The current MPS Diversity Strategy ‘Everybody Benefits’ is a fully inclusive strategy that concentrates upon the needs of the individual, both internally and externally. The MPS is committed to equality and actively supports equal opportunities.

5. Diversity is increasingly valued and its social, cultural and economic benefits are recognised, the local communities expect public funds to be used appropriately in order to benefit the community and the funds should be spent in a way that promotes equality of opportunity.

6. The MPS has a Diversity Unit, which ensures that all personnel are trained to deliver a non-discriminatory service and promote equal opportunities in their area of work. Our current procurement procedures include statements acknowledging the diversity of the business community in the UK and welcome tenders from companies of all sizes and backgrounds.

7. Procurement Services currently ensures that equality of opportunity is actively promoted to suppliers as detailed at item 19.

GLAPON

8. Procurement Services represents the MPS at the GLA Procurement Officers Network (GLAPON). This forum was established in 2002, following the recommendation of the Equalities for All Best Value Review to among other things, develop policies, procedures and practices to ensure that equalities considerations are fully integrated into all aspects of the procurement process.

9. The GLA family members include, Transport for London (TfL), London Fire and Emergency Planning Authority (LFEPA), London Development Agency (LDA), the Metropolitan Police Service/Authority (MPS/MPA) and the Greater London Authority (GLA).

10. Promoting diversity within procurement is a challenge that Procurement Services are determined to achieve and by working with GLAPON, we will ensure best practice is embedded in our procedures. Additionally, we will be able to take advantage of work/processes that have already been established with existing GLA family members.

11. GLAPON encourages applications for inclusion in its tendering processes from all London’s diverse communities. Where possible it will endeavour to appoint contractors from London’s diverse communities. It will endeavour to appoint contracts to those suppliers who demonstrate a commitment to promoting equality of opportunity in their own employment practices and service delivery methods and who can demonstrate the ability to assist the GLA achieve statutory responsibilities in this important area. Monitoring will take place on the diversity of business securing GLA contracts and fair employment provisions will be required in all GLA contracts.

How does the MPS define a Diverse Supplier?

12. The MPS Diversity Directorate enables the MPS to be progressive and pro-active in the area of race equality and equalities in general, Procurement Services is committed to ensuring that we replicate this with our suppliers from under represented communities.

13. In terms of categorisation, diverse suppliers in the main are categorised as Small and Medium Enterprises (SMEs) and tend to be based in disadvantaged communities.

For clarity a Small Enterprise is defined as:

• Employing between 0 – 49 employees
• A turnover of not more than £5m

A Medium Enterprise is defined as

• Employing between 50 – 249 employees
• A turnover of not more than £ 28m

A Black Minority Ethnic (BME) is defined as

• People who belong to a Black or other minority ethnic group

14. Presently, Procurement Services does not capture within its business operating system information relating to diverse suppliers. From 2005, however, the MPS intends to use the following methods to categorise diverse suppliers:

• If a percentage (propose to use 50% initially) of the supplier is owned and operated by minority groups or disability groups (i.e. race, gender, sexuality)
• Any organisation that is recognised by local authority as an SME
• If the company is owned by an ethnic minority
• Review the location of the supplier

15. Once this data is collected from our supply base, the information will be entered into our Business Operating System (i.e. SAP) to record diversity details of our suppliers. This data can then be analysed and evaluated and meaningful information can be produced relating to determining the supplier composition (in terms of diversity) to the MPS.

16. As explained previously, we are collaborating with external organisations, one of which is the Office of Government Commerce (OGC) and its associated bodies. The OGC in the past year have published three reports recognising the part (SMEs) play in generating economic growth and urging that public sector contracts be made more accessible to such enterprises.

17. Using these reports as a reference, the MPS Procurement Strategy encourages SME’s to bid for MPS contracts, and encouraging larger suppliers to subcontract to such firms.

18. Holding ‘ad hoc’ meetings and participating in ‘Meet the Buyer’ events have ensured supplier communication has been achieved. These events are arranged by Business-to-Business Exhibitions and sponsored by Business Link for London (BLL), which is funded by the London Development Agency. At these events the tendering process is explained, along with the ways in which bids are evaluated and decisions are made. This has the direct benefit of helping SMEs and BMEs to ensure that they understand the procurement process and are capable of bidding for future MPS (and GLA) contracts.

Procurement Services current procedures in monitoring Supplier Diversity

19. During the last 12 months the MPS have let contracts for the following goods and services from which the supply base has been predominantly made up of SMEs:

• Specialist consultancies
• Physiotherapy services
• Chiropractic services
• Forensic Analysis of Electronic Devices
• Ad-hoc print requirements
• Ad-hoc stationery

20. The MPS recognises that it has a duty to promote equality through its procurement function. An objective for any procurement organisation is to achieve best value and quality of service provision. Furthermore, account has to be taken of other legislation and policies, together with the economic and social implications of procurement policies.

21. In monitoring promotion of diversity, Procurement Services currently performs the following:

• All tenderers to the MPS are required to supply copies of their Race and Equal Opportunities policies. This process involves the completion by the supplier of a detailed diversity and fairness questionnaire. Relevant questions are included in our commercial questionnaire so our RR(A)A responsibilities are made clear to all potential and incumbent suppliers. Although external providers are not responsible for meeting the general duty, the MPS can influence them through the setting of measurable contract conditions. In this way, the MPS can drive forward equality within other organisations by ensuring they are aware of the requirements and the benefits it may bring them and their employees.
• Organising ‘Meet the Buyer’ events, which has had the direct benefit of helping SMEs and BMEs to ensure that they are fit to bid for future contracts.

22. The following activities form part of Procurement “Ways of Working” and are embedded as standard operating practice.

• Active pursuance/commitment (will be achieved via delivered training) to ensuring that employees and the people we serve are not discriminated against because of their disability, race, colour, ethnic origin, religion, age, sexuality or gender by promoting equality for all in our operations.
• Insistence that suppliers detail how they apply equal opportunities in their selection of sub-contractors through the Invitation To Tender (ITT) process.
• Ensuring that our contract strategies, regulations, policy statements and processes promote open and fair competition as laid down in EU and UK laws.
• Ensuring that service delivery is accessible and responsive to the diversity of people living and working in or visiting London.
• Encouraging the provision of work, service and goods by businesses that support equal opportunity policies and comply with statutory duties.

23. Procurement Services recognises that there is still more work to be done to promote diversity and to embed a consistent approach across the MPS. Additionally, further steps and more importantly, a defined action plan with stated deliverables needs to be compiled and communicated. Detailed below are some of the activities that will be considered during 2005 to ensure that the Procurement Services diversity process is realistic, workable, and capable of being implemented and more importantly delivers benefits to the MPS and the suppliers.

What Procurement Services aims to do in respect of Supplier Diversity?

24. Procurement Services needs to update its current process of identifying and more importantly working with diverse suppliers. The following are considerations that we aim to address and assess over the next 12 months: -

• Review the value added by small firms, social enterprises, voluntary and community sector suppliers and ethnic minority businesses when making procurement decisions, including their role in the supply chain for partnerships, this will enable the MPS to maximise value for all parties.
• Review how we promote race equality through our procurement function via individual contracts.
• Review how we provide best value and quality in the provision of our service, taking due cognisance that utilisation of diverse suppliers may increase costs to the MPS. This aspect will need to be carefully considered when comparing value for money against supporting and promoting community suppliers.
• Take account of other legislation and policies, together with the economic and social implications of procurement policies.

25. The outcome of this high-level review process will be to provide a platform via the compilation and delivery of a Standard Operating Procedure (SOP) that clearly defines our approach and requirements from those involved in any Procurement activity within the MPS.

Diversity – what are Procurement Services activities over the next 3 - 6 months (Phase 1)?

26. As referred to above, a platform will be established that clearly defines an overall approach. To complement this high level review a two-phased approach will be implemented. Phase 1 proposes

• Identifying and delivering consistent methods to establish and develop good working relationships with suppliers and acting as a mentor for them where possible.
• Continue to develop and deliver business seminars (with BLL) to inform diverse suppliers of contracting opportunities, how to tender for MPS contracts and explain the MPS policies and procedures on procurement.
• Offer advice on how to access OJEU notices.
• Offer advice regarding the approach to MPS contracts below the OJEU threshold i.e. £154,000.)
• Consider whether to publish guidance on MPS website for suppliers on how to do business with the MPS, together with details of forthcoming bidding opportunities and contact details of each contract.
• Ensuring that any timescales on tender documents are not restrictive and take into consideration any cultural events that may clash with particular timescales (e.g. Diwali, Eid, and Hanukah).
• Currently the MPS ITT process requires suppliers to demonstrate financial and economic standing by providing three years final accounts. This request at ITT stage will be reviewed to introduce some flexibility and avoid discriminating against smaller and new suppliers, including those from BME’s who might otherwise be disadvantaged. However, the MPS will not enter into a contract with any supplier whose financial standing could jeopardise the completion of the contract in accordance with the stated terms and conditions.
• Identify ways in which bureaucracy can be reduced. This activity will consider (where possible) a simplified suite of ITT requirements for low value procurements (less than current OJEU limits). This activity could increase supplier participation in tendering events and possibly increase competition.
• Procurement Category Managers to be encouraged to research what goods and services local SME’s provide – this will involve research of local supplier directories and consultation with GLAPON.
• Compiling a short form questionnaire that requests information from suppliers. This questionnaire can be promulgated electronically; this will assist with the identification of diverse suppliers.
• Ensuring that all qualified suppliers demonstrate that they have an equal opportunity policy and are adhering to that policy. This will involve compiling appropriate questionnaires, site visits and implementing a more thorough review mechanism.
• Ensuring that MPS contractors do not discriminate in the execution of our contracts (provide summary of MPS equal opportunity policy to contractors with immediate effect).
• Introduce a monitoring system to evaluate contracts with diverse suppliers.
• Training Procurement Services staff on diversity issues and MPS policy.
• Perform a detailed analysis of where the MPS spends its money. This analysis will concentrate on three aspects:
  • Those suppliers who supply goods and services annually in excess of £1m.
  • Those suppliers who supply goods and services annually in excess of £154,000 and up to £1m.
  • Those suppliers who supply goods and services annually in excess of £40,000 and up to £154,000.

27. The above information will be prioritised and it is likely that those suppliers in (2) above will be those suppliers who will be addressed first. The rationale behind this approach is that these suppliers will likely be receiving repeat orders from the MPS, and due to the price banding (>£154000 and <£1m), they are more likely to be in the category of SME that we aim to work within the future.

28. Upon completion of Phase 1, Procurement Services will have:

• A database of diverse suppliers to the MPS;
• Website links detailing forthcoming contracts;
• Improved training and awareness for Procurement Services staff;
• Identified and (if appropriate) implemented a short form ITT process which may assist with increasing the number of suppliers interested in working with the MPS, with the added advantage that this may increase competition;
• Established a communication network that seeks to improve relations with diverse suppliers.

29. The output from the above activities will be reviewed and evaluated, depending on the outcome. It is planned to then enter a second phase, which will further develop supplier relationships and build upon the work completed in Phase 1.

Diversity – what are Procurement Services activities over the next 6-12 months (Phase 2)?

30. Once Phase 1 has been evaluated, consideration will then be given to Phase 2. The overall aim of Phase 2 is to gain more involvement in diverse business communities:

• Ensure that the supply base better reflects the community in which the MPS operates;
• Use recognised trade associations, directories and exhibitions to identify diverse suppliers;
• Encouraging large suppliers to offer diverse suppliers opportunities to subcontract;
• Develop a strategy for the MPS SMEs to participate in “clustering” opportunities where minority target groups are encouraged to come together to bid for a piece of work. This may prove difficult to achieve in practice.
• Compile a database of diverse suppliers and the goods and services they supply;
• Consider whether a specified number (%) of ITT’s are sent to minority suppliers (using above database as reference);
• Review whether specific annual targets for procurement of goods and services from minority groups can be implemented;
• Develop a policy for choosing publications in which to advertise to encourage greater diversity and competition. Provision of an information and publicity service, including use of printed material. Posters and development of the website should be seen as an effective way of communicating with the diverse population living and working in London;
• Review whether advertising tender information and procedures in ethnic minority press will derive benefit;
• Review whether advertising tender information in other languages in order to attract diverse suppliers will derive benefit;
• Continue to develop the MPS’ supplier adoption strategy with the primary aim being to assist SME’s/BME’s to become ‘fit to compete’ for contracts from a range of MPS purchasers, by demystifying the tendering process and breaking down the barriers between the MPS and SME’s/BME’s through sharing information about procurement opportunities and offering procurement training and mentoring;
• Continue to challenge existing internal policy/procedures and culture that will make engagement with SME’s and BME’s easier.
• Consider allowing SME’s to bid for some part contracts;
• Identify community stakeholders, customers internal and external – through group meetings, intranet and Internet, staff notice boards, appropriate media i.e. The Job and ethnic newspapers to aide communication of MPS Diversity approach;
• Adopt ‘The Diversity Excellence Model’. The Diversity Excellence Model™ has evolved from the EFQM Excellence Model®. The purpose of the Diversity Excellence Model™ is to help organisations self – assess their own “reality” and measure their progress by specifically assessing their ability to manage diversity;

31. Upon completion of Phase 2, Procurement Services will have thoroughly reviewed alternative methods of attracting interest from diverse suppliers in working with the MPS. The output from this phase will be reviewed and the methods identified as adding value will be developed into a Standard Operating Procedure.

How to encourage staff, Borough Occupational Command Units and Operational Command Units (BOCUs/OCUs) to use Diverse Suppliers

32. Members are aware that Procurement Services operational remit is applicable to spend in excess of £40,000. Below this threshold, the BOCUs/OCUs operate in accordance with MPS SOP’s. It is recognised, that a process must be developed that assists the BOCUs /OCUs to recognise the importance of Diversity in the supply base.

33. The main focus of work to achieve acceptance within the BOCUs/OCUs is:

• Compile and issue a SOP that fully reflects the Diversity Policy and the relevant activities above.
• Actively market the policy by:
  • Ensuring that staff are aware that Diversity Policy is about lowering barriers and not lowering standards;
  • Educate staff on the increased competition that would be created by introducing diverse suppliers;
  • Run seminars to make staff aware and to change attitudes towards diverse suppliers – within the seminars the main points would be: -
    • Enhancement of good relations with the local communities by inclusion;
    • Creation of job opportunities for the local community;
    • Promote efficiency and cost reduction as advantages of SME’s;
    • Enhances and develops skills of local people.

34. Procurement Services recognises and acknowledges that for Diversity to be addressed at all stages of the procurement process then the continued support of senior MPS colleagues and the MPA is key.

Programme Plan

35. A top-level programme plan is shown below – this plan illustrates the key activities outlined in this paper.

Phase 1

• Improve e-processes Q1 Q2
• Review ITT processes Q1
• Compile/Issue ITT questionnaires Q1 Q2
• Questionnaire data entry Q2
• SAP Data analysis/Banding Q1
• Staff Awareness/training Q1 Q2

Phase 2

• Supplier Consultation Q3 Q4
• Develop Publication Policy Q3
• Review supplier "off-setting" Q3 Q4

BOCU/OCU awareness

• Compile SOP Q3
• Education/Training Q3 Q4.

C. Race and equality impact

1. The policy will ensure that under represented suppliers in our community are not treated unfairly when requesting and accessing MPS information and appropriate information is communicated to them in a bespoke manner were necessary.

2. The Commission for Racial Equality has produced a guide for public authorities on how they should promote equality of opportunity for their own staff and local businesses regardless of the ethnicity of ownership and ensure services are designed and delivered in a way that meets the needs of all users.

3. Before any recommendation for a contract to be awarded is made to the Authority, the equal opportunity and diversity policies of the prospective contractors are rigorously examined to ensure transparency and that the promotion of equality of opportunity is evident.

4. Detailed diversity and fairness related questions are included in our commercial questionnaire so our RR(A)A responsibilities are made clear to all our potential and actual contractors. Though external providers are not responsible for meeting the general duty, the MPS can influence through the setting of measurable contract conditions. In this way the MPS can drive forward race equality within other organisations by ensuring they are aware of the requirements and the benefits it will bring them and their employees.

D. Financial implications

There are no immediate financial implications arising from the report but any increased cost of promoting diverse suppliers would need to be flagged and considered accordingly.

E. Legal implications

There are no specific legal implications arising from this report but Procurement Services can confirm compliance with procurement regulations and all relevant EU and UK Government Directives

F. Background papers

None

G. Contact details

Report author: Anthony Doyle, Acting Director of Procurement Services

For more information contact:

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

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