Sustainable procurement

Report: 13
Date: 20 July 2006
By: Commissioner

Summary

This report briefs members on the new GLA Group Statement on Sustainable Procurement and seeks approval for MPA commitment to this statement and the principles enshrined in it subject to approval of individual initiatives and policy changes at a later date.

A. Recommendations

That

1.  Members are asked to approve the adoption of the GLA Group Sustainable Procurement Statement as shown at Appendix 1 and take steps towards its implementation. Implementation of the policy will be in such a way as to achieve value for money, and subject in all cases to compliance with all relevant law (including public procurement law, the Best Value law, the Police Act 1996, the GLA Act 1999 and the Race Relations Amendment Act 2000). Individual policies and decisions regarding the implementation of individual goals and initiatives within the Statement requiring approval will be sought through appropriate committees on a case by case basis.

B. Supporting information

1. The MPA and MPS have supported the GLA Group’s aims to address equal opportunities and inclusion issues within its supplier base. The GLA Group Sustainable Procurement Policy has been prepared by officers of all functional bodies through a group chaired by the Policy Director – Equalities and Policing.

2. The Metropolitan Police Procurement Strategy states that Procurement Services will aim to ensure its contract strategies, regulations, policy statements and processes

• Promote open and fair competition;
• Ensure service delivery is accessible and responsive to the diversity of people living and working in or visiting London;
• Encourage the provision of work, service and goods by businesses that promote equality; and
• Enable London to become the safest world city, through taking account of the social, economic and environmental impacts of tenders.

3. To support this strategy Procurement Services sought approval for its Diversity Policy from the Equal Opportunities and Diversity Board in January 2005.

4. The objective of the Procurement Services Diversity Policy was to ensure that PS had a strategy in place that would support the aims of the GLA family with regard to sustainable procurement whilst also ensuring compliance with its responsibilities (on behalf of the MPA) with relevant legislation such as the Race Relations (Amendment) Act 2000.

5. In order to achieve the objective Procurement Services has, in conjunction with other MPS departments, undertook a series of activities including:

• An ongoing review of the MPS tender process
• The introduction of an equal opportunities questionnaire into MPS tendering documentation
• Data analysis from SAP to identify SME’s
• Supplier consultation
• Staff awareness training on diversity.
• Engagement with the GLA family through GLAPON
• The attainment of B2 status on the Mayor Green Procurement Code

A detailed briefing of actions undertaken, objectives achieved and future actions planned was given to Equal Opportunities and Diversity Board on 1 December 2005.

6. The GLA are now seeking to implement a statement of common principles and aims regarding sustainable procurement across the GLA Group. This statement is felt to be a key factor in helping the GLA group achieve its goals to promote economic growth, social inclusion and environmental sustainability.

7. The statement references a number of key areas where the GLA seeks to target improvements through a series of aims and aspirational goals covering the following topics; namely

• Diversity of ownership and employees within its supplier base
• Employment conditions for every supplier’s workforce
• Training and development opportunities for the GLA Community
• Ethical sourcing
• Environmentally sustainable procurement

8. These areas have been the subject of varying degrees of on-going evaluation and implementation within the GLA Group and the MPS. A number of areas, such as those related to equality and diversity and environmental concerns, are well advanced with Procurement Services leading and implementing a range of initiatives over the last three years. Others, for example the provision of fair wage clauses within contracts, have been the subject of limited discussion and implementation within the GLA family.

9. As a functional body, the MPA is asked to make a commitment to explore these areas in greater detail and to aspire to reflect the aims of the Statement within its supplier base. Commitment to the Statement will not constitute a carte blanche approval to all the individual goals contained within the Statement without due recognition of the attendant legal, policy, process, operational and financial implications that the implementation of these goals could entail, and the effect that these implications may have when judged against the overriding requirement of the Authority to achieve best value in the provision of its services.

10. A number of the initiatives have, for example, the potential to increase the cost of goods and, in particular, services to the MPA. An example of this is the possible implications of seeking to impose minimum wage standards, in line with the GLA Living wage, or link the wage levels of suppliers within London to those within the GLA under Fair Employment clauses. These initiatives have yet to be either fully explored by the MPS on both internal and supplier labour costs or tested in the market through a tender exercise. An initial estimate of the impact of introducing the GLA Living Wage for;

• The approximate 600+ employees of our outsourced cleaning contracts would involve an increase in annual costs over £3 million per annum
• catering grades within the MPS provisionally indicates that an increase of approximate £160k per annum in labour costs would result.

11. This would obviously be a cost that the MPA could seek to negate through an appropriate increase in productivity and performance. However owing to our lack of testing through actual discussions or tendering with the MPS Supplier Base, it would seem sensible, at this point, to assume the adoption of minimum wage standards will involve increased costs to the MPA from our suppliers. In addition, owing to the possible administrative and labour relations difficulties that suppliers could face as a result of maintaining separate workforces on differing wage levels for the MPS and their other customers, the imposition of initiatives relating to wage standards may discourage suppliers from bidding for our contracts and thus limit our ability to source from the right supplier at the right cost. These are reasons for a cautious approach to implementation.

12. In order to enforce some initiatives, the MPA may have to re-examine and change internal policy, regulations and processes. For example, the current procurement policy, based on the MPA Contract Regulations, devolves authority to procure goods and services below £40,000, under controlled processes, to operational units. It is more difficult to enforce policies regarding the use and monitoring the use of targeted supplier groups (e.g. small and ethnic owned business entities) in a devolved procurement environment yet the size of expenditure that is devolved is probably best suited for those targeted supplier groups.

13. The MPS continues to support environmental procurement whether through our ongoing increased expenditure on products made of recycled material or our recent commitment to be a pathfinder organisation for the latest development of the Mayor’s green procurement code. However the Statement contains goals with regard to areas such as the provision of vehicles with low emissions of local air pollutants and climate change gases. This is obviously an area that the MPS has and continues to examine with particular regard to the operational performance of such vehicles- a critical factor with regard to the extent in which we can support the goals contained within the Statement.

14. Therefore it is clear that each of the goals contained within the paper must be the subject of ongoing research and analysis by the relevant departments over the coming months and, whilst the MPA should commit to the Statement as a whole, related individual policy decisions or decisions regarding the implementation of initiatives or standards across either the MPA supplier base or individual contracts should be the subject of further appropriate review and approval through:

• Individual reports to this Committee
• As named items for approval as part of individual report to this Committee seeking Contract award.

C. Race and equality impact

1. This report and the adoption of the statement builds upon the previous work undertaken and reinforces the policy 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 where necessary.

2. 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.

3. 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

1. There are no immediate financial implications arising from the report but any increased cost associated with fulfilling the aims and principles will have to be presented for approval when ascertained on a case by case as per section C7 above.

E. Background papers

• Procurement Services Diversity Policy

F. Contact details

Report author: Anthony Doyle Director of Procurement Services, MPS

For more information contact:

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

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