The Scottish Government

1. Portfolio/Number/Name:O/C1 : Non NHS Procurement

2. Programme/Activity: Please include a short description

eProcurement Scotl@nd programme (see alsohttp://www.eprocurementscotland.com/)

Procurement as a discipline is concerned with managing relationships with suppliers to ensure that an organisation receives the appropriate goods and services at the lowest whole life cost (as distinct from lowest price). In the public sector this has to be achieved within a regulatory framework.

The aim of the eProcurement Scotl@nd (ePS) programme is to utilise best of breed tools and techniques to stimulate improvements in the business culture and effectiveness of Public Sector procurement and the efficiency of staff involved in purchasing across:

• All Public Sector bodies in Scotland including:
• • Scottish Executive and the Agencies;
  • Non-Departmental Public Bodies (NDPBs);
  • Local Authorities;
  • National Health Service Scotland (NHSS);
  • Other Public Bodies (e.g. Police and Fire).
• Suppliers of goods and services to the Public Sector in Scotland.

Total addressable public sector annual spend is estimated to be 6 billion with a target of 3-4 billion in scope by 2006/2007.

The eProcurement Scotl@nd service provides tools, techniques and support to achieve the aim and thereby to enable the public sector to deliver sustainable cost reductions

3. Planned Savings

2005-06

2006-07

2007-08

Cash (m)

50

100

150

Time Releasing (m)

0

0

0

4. Accountable Officer for delivery

John Aldridge

5. Project Manager

Nick Bowd

The programme governance is based on PRINCE 2 methodology with specific roles as follows:-

Senior Responsible Owner: SE. Finance Director

Programme Owner: SE Director of Procurement (N.J. Bowd)

Programme Sponsor: Ian Burdon (SPD, Branch Head - eProcurement)

Service Delivery Manager: Steve Murray, (CISD Branch Head - eCommerce)

P2P and Supplier Development: Tom Wilson (SPD, Branch Head - Special Projects).

A Steering Group, chaired by the SRO and comprising senior SE staff and Local Authority and NHS Chief Executives and Finance Directors is responsible for strategic decision making.

The composition of the Steering Group and other governance issues are currently under consideration as part of the McClelland review of Scottish public sector procurement

6. EGDG account manager

Rowena Simpson

7. Quality Impact

Describe any impact on the quality of service delivery. Be specific and explain if the expectation is positive, negative or neutral.

The expectation is that e-Procurement Scotland will deliver a positive impact on the quality of the procurement process across the public sector in Scotland. Specifically, the following will contribute to improved service delivery: :

• Stimulate collaborative buying over 3-4 billion in scope spend through natural clusters of organisations (e.g. NHSScotland) or where there is common interest in particular commodities, delivering sustainable cost reductions of 200 million per annum by 2006/2007;
• Implement eProcurement Scotl@nd in 50 customer organisations by end 2005 and 125 by 2007. These will vary in size and some organisations will be implemented as part of a larger entity (for example a number of NDPBs and Agencies will be implemented as part of the Scottish Executive);
• Expand coverage (user communities, commodities and suppliers) of existing and future eProcurement Scotl@nd customers;
• Where collaborative opportunities are identified, introduce and exploit enabling sourcing technologies (e.g. eTendering and eAuction) to deliver procurement benefits and eTransactions and interfaces with other systems to lock those benefits into place;
• Review and re-engineer as appropriate p2p processes and ensure best of breed p2p tools and techniques are available and utilised;
• to provide management information to the public sector to deliver further benefits;
• to take a step by step approach to improving processes in the public sector and in relationships with suppliers, both to improve commercial awareness in the public sector and to improve the eBusiness capabilities of suppliers and to seek cost reductions for suppliers, including SMEs, thereby allowing them to maintain competitiveness

8. Dependencies

Explain if your savings are dependant on legislation or other structural changes being achieved.

eProcurement Scotl@nd is a business change programme and success is tied to the degree to which structure and practice changes. There is, therefore, a key dependency on the public sector participating in the programme and taking responsibility for implementing business change in a "whole of public sector" environment and thereby realising the savings opportunities afforded through the ePS programme.

9. Description of efficiency and actions to be taken

9.1 How will the saving be made? Be specific about number/size of contracts, staff, posts dates etc.

Sustainable cost reductions will be realised through a number of implementing measures including the roll-out of e-PS across the public sector and an increase in collaborative buying. Specific targets attached to the uptake and use of e-Procurement Scotl@nd are set out below .

*adjusted to exclude blanket orders placed

Achievement of the benefits is heavily dependant upon the public sector adopting and using the ePS service to obtain consistent data and deliver collaborative procurement, locking the benefits into place through a common service. This means that achievement is dependent upon the pace of roll out and the accumulation of opportunities.

The target of stimulating collaborative buying of 3-4 billion delivering sustainable cost reductions of 200 million per annum is based on the accumulation of opportunity in the form of addressable spend and the targeting of the key saving opportunities.

Of these targets, 50m has been identified as appropriate for the NHS and a separate technical note has been produced detailing the measures in place to achieve this. The 3m target for the Executive is also the subject of a separate technical note.

9.2 What action is critically needed to secure delivery of this saving? Be specific, and name the key action managers if they are outwith your immediate management chain (e.g. in an NDPB.)

ePS is based on an analysis of the needs of Scotland and the need to ensure appropriate disciplines and control in a public sector which is responsible for spending 6billion of taxpayers' money. We need to be certain that this money is spent effectively and efficiently and that suppliers are enabled to compete for business in the knowledge that their requirements are recognised and addressed.

This involves proper analysis and management of demand across the whole range of goods and services which the Scottish government purchases; identifying existing contracts which buyers are entitled to utilise or the letting of contracts locally, regionally or nationally which are optimised for the use of the greatest appropriate aggregation of purchasers; the negotiation of those contracts once for the benefit of many rather than multiple times for the 'benefit' of one only; and compliance with those contracts once established. It involves looking at the day to day purchasing processes and the levels of administration involved in the process from purchase order to payment and using the best available tools and techniques to reform administrative processes as required while retaining proper regularity and auditability.

However all of this is dependent on local organisations adopting the service and then ensuring that they have appropriate structures in place to implement the service and deliver benefits.

The ePS programme office is equipped to support the change; delivery of the benefits requires the commitment of the users of the service. The greater the managed demand the greater the benefits; the lower the managed demand, the lower the benefits.

The timing of collaborative purchasing is dependent upon existing timetables and limits on recompeting existing commodity contracts.

10. Impact on Staffing to achieve the efficiency gain

If there are to be any changes in staff numbers (at activity level) to achieve the efficiency gain, please indicate how many full time equivalents and how far you expect savings to be achieved by natural wastage (show additions as + and reductions as -).

2005- 06

2006- 07

2007- 08

+

-

Net

Explanation

Any issues relating to operational deployment of local staff are entirely a matter for local management in Local Government, the NHS or central government and local circumstances.

11. Benefits

In general, the benefits of the Scottish Executive Efficiency Plan are the enhanced outputs from the resources Ministers have been able to allocate in SR04. But if there is a direct connection between this efficiency saving and the enhancement of a particular service please describe it here.

Funding for the eProcurement Scotl@nd programme is to provide the central resource necessary to support the implementation of ePS which is fundamental to driving and securing the necessary collaboration and improvements in procurement practice across the public sector, which will enable the public sector to deliver sustainable cost reductions of 200 million per annum. These cost reductions take a number of forms. For Efficient Government purposes these benefits can be treated as 'cash releasing'.

12. Gross/Net Cash Savings

12.1 Please set out the gross recurring saving and any offsetting recurring expenditure.

Non-NHS procurement will deliver 150 million cost reduction per annum as a contribution to the 200m cost reduction per year from public sector procurement

2005/06 50m
2006/07 100m
2007/08 150m

12.2 Against what budget does this expenditure and saving fall?

12.3 Has this saving been built into your budget?

12.4 If so, what is the maximum allowable expenditure against the budget data, in each year, for that saving to be delivered?

12.5 If not, how do you propose to invest the additional cash back into public services?

12.6 What plans do you have to exceed the required saving? Explain by how much in each year.

13. Time - release savings

13.1 Please explain any time-releasing savings indicated at question 3.

N/A

13.2 Please describe the method you plan to use to calculate the cash equivalent of those time release savings.

N/A

14. Measurement and Monitoring

14.1 How are you proposing to measure the expected efficiency benefits (e.g. in terms of costs, level of output or quality of service)?

There are a number of benefits streams contributing to cost reductions measured by various means, for example 'before' and 'after' expenditure levels per commodity, measured process costs, assessments of costs avoided etc.

14.2 What monitoring & reporting procedures will be put in place to measure the efficiency savings (How often will progress towards the target be monitored? Who will have lead responsibility for reporting progress and what procedures will be in place?)

Accurate figures for procurement spend in Scottish Local Authorities are not available: such figures as exist from various sources for local government expenditure which is, or ought to be, subject to professional procurement management are not easily reconcilable. This is one of the key problems which ePS aims to rectify through the accumulation of consistent management data which can then be used as the basis for strategic decision making.The ePS programme office already publishes a monthly report to customers indicating movement against various KPIs. As early implementation sites are now increasing transaction volumes these KPIs will be expanded to include benefits tracking including financial benefits tracking. The ePS team will publish progress at http://www.eprocurementscotland.com - where a number of case studies are already published - and to the Efficient Government team on a quarterly basis.

14.3 Monitoring Data: Sources, validation and risks

• What data will be used to measure progress? Is all the required information quantifiable and readily available? If not what action will be taken to rectify this?
  
  
• What measures will be in place to validate the accuracy of the data? Who will take responsibility for this?
  
  
• Are there any issues or risks relating to how you plan to use the data? (e.g. accuracy, difficulties in collection)
  
  It is the responsibility of customer organisations to report to the ePS programme office and ePS customer managers are now in place to assist customers as appropriate. Assistance includes the dissemination of templates and models against which benefits should be tracked: these templates are currently being reviewed with customers before being finalised.
  
  The programme office routinely performs random sample checking on data to ensure consistency.
  
  When customer sites are busy implementing and resource is scarce, benefits reporting can drop down the local priority list. ePS customer managers will assist here. Data is also more likely to be reported retrospectively and after local auditing for accuracy which introduces a delay. Data is more likely to be available at natural points in the business/financial cycle such as the end of financial periods.
  
  Validation of the target figures is based on analysis of savings already delivered by or as a consequence of the eProcurement Scotl@nd programme since its inception in November 2001 and the other benefits achieved to date.